As filed with the Securities and Exchange Commission on - ---------------------------------------------------------------------------- November 14, 1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - ------------------------------------------------------------------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997. Commission File Number 0-17440 FEDERAL AGRICULTURAL MORTGAGE CORPORATION (Exact name of registrant as specified in its charter) Federally chartered instrumentality 52-1578738 of the United States ---------------------------------- --------------------------------- (State or other jurisdiction of (I.R.S. employer identification incorporation or organization) number) 919 18th Street, N.W., Suite 200, 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 November 7, 1997, there were 996,350 shares of Class A Voting Common Stock, 500,301 shares of Class B Voting Common Stock, 2,678,214 shares of Class C Non-Voting Common Stock outstanding.
PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The following interim consolidated financial statements of the Federal Agricultural Mortgage Corporation ("Farmer Mac" or the "Corporation") have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Such interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted as permitted by such rules and regulations. Management believes that the disclosures are adequate to present fairly the consolidated financial position, consolidated results of operations and consolidated cash flows at the dates and for the periods presented. These condensed financial statements should be read in conjunction with the audited 1996 financial statements of Farmer Mac. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year. The following information concerning Farmer Mac's financial statements is included herein. Consolidated Balance Sheets at September 30, 1997 and December 31, 1996... 3 Consolidated Statements of Operations for the three and nine months ended September 30, 1997 and 1996.................................... 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996........................................... 5 <TABLE> <CAPTION> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) September30, December 31, 1996 1997 ------------- ------------- (unaudited) ASSETS: <S> <C> <C> Cash and cash equivalents.....................$ 246,206 $ 68,912 Interest receivable............................ 14,841 14,821 Guarantee fees receivable...................... 1,031 745 Loans held for securitization.................. 23,821 12,999 Investments.................................... 647,993 85,799 Farmer Mac I and II Securities................. 436,531 416,839 Farmer Mac I and II payments receivable........ 2,102 2,421 Prepaid expenses and other assets.............. 1,628 568 ----------- ------------- TOTAL ASSETS....................................$ 1,374,153 $ 603,104 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY: LIABILITIES: Debentures, notes and bonds, net: Due within one year........................ $ 954,814 $ 259,164 Due after one year......................... 357,981 287,128 ------------ ------------- Total Debentures, notes and bonds, net 1,312,795 546,292 Accrued interest payable................... 7,512 7,231 Accounts payable and accrued expenses...... 1,832 1,721 Reserve for loan losses on sold Guaranteed Securities............................... 1,435 655 ----------- ------------- TOTAL LIABILITIES............................ 1,323,574 555,899 ----------- ------------- STOCKHOLDERS' EQUITY Common stock: Class A Voting, $1 par value, 2,000,000 shares authorized, 995,950 and 990,000 shares issued and outstanding at September 30, 1997 and December 31, 1996, respectively.... 996 990 Class B Voting, $1 par value, 2,000,000 shares authorized, 500,301 and 593,401 shares issued and outstanding at September 30, 1997 and December 31, 1996, respectively.... 500 593 Class C Non-Voting, $1 par value, 4,000,000 shares authorized, 2,677,942 and 2,658,897 shares issued and outstanding at September 30, 1997 and December 31, 1996.................. 2,678 2,659 Additional paid in capital....................... 52,610 52,513 Note receivable for purchase of stock............ - (557) Unrealized gain on securities available-for-sale............................... 936 329 Accumulated deficit.............................. (7,141) (9,322) ---------- ------------- TOTAL STOCKHOLDERS' EQUITY......................... 50,579 47,205 ---------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $ 1,374,153 $ 603,104 ============= ============= See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended September 30, September 30, ----------------------------------------------------- 1997 1996 1997 1996 ---------------------------------------------------- (unaudited) (unaudited) (unaudited) (unaudited) INTEREST INCOME: <S> <C> <C> <C> <C> Investments and cash equivalents.............. $ 14,266 $ 1,348 $ 33,357 $ 4,813 Farmer Mac I and II Securities............... 7,764 7,398 22,612 22,210 Loans held for securitization........... 708 15 1,552 468 --------------------------------------- ------------- TOTAL INTEREST INCOME..... 22,738 8,761 57,521 27,491 INTEREST EXPENSE.......... 20,768 8,125 52,367 25,546 --------------------------------------- ------------- NET INTEREST INCOME....... 1,970 636 5,154 1,945 OTHER INCOME: Guarantee fees............ 725 478 1,857 1,130 Gain on issuance of mortgage-backed securities, net.......... 592 - 2,111 913 Miscellaneous............. 16 4 233 55 -------------------------- ------------------------ TOTAL OTHER INCOME......... 1,333 482 4,201 2,098 ------------------------- -------------------------- OTHER EXPENSES: Compensation and employee benefits......... 939 543 2,647 1,703 Professional fees.......... 486 277 1,175 618 Insurance.................. 51 56 169 161 Rent....................... 56 47 168 123 Regulatory fees............ 16 71 47 214 Board of Directors fees and meeting expenses....... 72 68 251 236 Administrative.............. 199 209 667 408 Provision for losses........ 260 60 780 202 ------------------------------------ ------------- TOTAL OTHER EXPENSES........ 2,079 1,331 5,904 3,665 ----------------------------------- ------------- INCOME BEFORE EXTRAORDINARY ITEM......... 1,224 (213) 3,451 378 Extraordinary gain from early extinguishment of debt.............. - 384 - 384 --------------------------------------- ------------- INCOME BEFORE INCOME TAXES..................... 1,224 171 3,451 762 Provision for income taxes................... 40 - 103 - --------------------------------------- ------------- NET INCOME............... $ 1,184 $ 171 $ 3,348 $ 762 ======================================= ============= </TABLE> <TABLE> EARNINGS PER SHARE BEFORE EXTRAODRINARY ITEM <S> <C> <C> <C> <C> <C> Classes A and B Voting Common stock........... $ 0.12 $ (0.04) $ 0.33 $ 0.07 Class C Non-Voting Common Stock........... $ 0.35 $ (0.12) $ 1.00 $ 0.22 EARNINGS PER SHARE Classes A and B Voting Common stock........... $ 0.12 $ 0.03 $ 0.33 $ 0.15 Class C Non-Voting Common Stock.......... $ 0.35 $ 0.10 $ 1.00 $ 0.44 See accompanying notes to consolidated financial statements. </TABLE> <TABLE> <CAPTION> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Nine Months Ended -------------------------- September 30, September 30, 1997 1996 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: <S> <C> <C> Income from Operations.........................$ 3,348 $ 762 Adjustments to reconcile net income to cash provided by operating activities: Amortization of premium on Farmer Mac I and II Securities................................ 2,449 2,648 Discount Note amortization ................... 33,529 7,898 (Increase) decrease in guarantee fees receivable................................... (286) 40 (Increase) decrease in interest receivable.... (20) 4,160 Decrease (increase) in Farmer Mac I and II payments receivable.......................... 319 (6,724) Increase in prepaid expenses and other assets. (1,025) (322) Amortization and depreciation................. 126 72 Increase in accounts payable and accrued expenses..................................... 111 652 Increase in loans held for securitization..... (10,822) (5,331) Increase (decrease) in accrued interest payable........................... 281 (2,163) Provision for losses......................... 780 202 Extraordinary gain from early extinguishment of debt..................................... - (384) -------------------------- Net cash provided by operating activities....... 28,790 1,510 -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Farmer Mac I and II purchases.................. (63,613) (59,270) Purchases of investments....................... (608,060) (39,488) Proceeds from maturity of investments.......... 46,466 27,005 Proceeds from Farmer Mac I and II principal repayments..................................... 41,472 66,334 Purchases of office equipment.................. (65) (43) -------------------------- Net cash used by investing activities........... (583,800) (5,462) -------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Medium-Term Notes.... 104,918 19,945 Payments to redeem Medium-Term Notes........... (26,820) (73,860) Proceeds from issuance of Discount Notes....... 15,782,342 1,319,598 Discount Notes redeemed........................(15,127,555) (1,235,065) Repurchase of Class B Common Stock............. (1,396) - Proceeds from issuance of common stock......... 815 2,611 -------------------------- Net cash provided by financing activities....... 732,304 33,229 -------------------------- NET INCREASE IN CASH AND CASH EQUIVALENTS....... 177,294 29,277 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 68,912 8,336 ========================== CASH AND CASH EQUIVALENTS AT END OF PERIOD......$ 246,206 $ 37,613 ========================== Supplemental disclosures of cash flow information: Cash paid during the nine-month period for: Interest......................................$ 18,755 $ 19,758 Taxes.........................................$ 34 - See accompanying notes to consolidated financial statements. </TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1. Accounting Policies. (a) Principles of Consolidation Financial information at and for the three and nine months ended September 30, 1997 is consolidated to include the accounts of Farmer Mac and its two wholly owned subsidiaries, Farmer Mac Mortgage Securities Corporation and Farmer Mac Acceptance Corporation. All material intercompany transactions have been eliminated in consolidation. (b) Earnings Per Share In computing earnings per share, the weighted average number of shares outstanding includes the fully dilutive effect of common stock equivalents and is adjusted to reflect the 3-to-1 dividend and liquidation rights ratio applicable to each share of Class C Non-Voting Common Stock relative to each share of Classes A and B Voting Common Stock. The weighted average number of shares outstanding is set forth below for the periods indicated. <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 1997 1996 1997 1996 ----------------------- ----------- ----------- (In Thousands) <S> <C> <C> <C> <C> Class A Voting Common Stock.. 994 990 992 873 Class B Voting Common Stock.. 500 593 510 585 Class C Non-Voting Common Stock...................... 2,857 1,261 2,850 1,227 </TABLE> (c) Reclassifications Certain reclassifications of the 1996 information were made to conform to the 1997 presentation. Note 2. Off-Balance Sheet Farmer Mac Guaranteed Securities. Farmer Mac issues guarantees in the normal course of business to fulfill its statutory purpose of increasing liquidity for agricultural mortgage lenders. Farmer Mac guarantees the timely payment of principal and interest on securities issued under the Farmer Mac I and Farmer Mac II Programs. The following table sets forth the outstanding principal balances of Farmer Mac Guaranteed Securities issued under the Farmer Mac I and II Programs and not held in its portfolio. <TABLE> <CAPTION> September 30, December 30, 1997 1996 ------------ ------------ (Dollars in thousands) <S> <C> <C> Farmer Mac I........... $ 364,561 $ 214,424 Farmer Mac II.......... $ 21,571 $ 11,606 </TABLE> At September 30, 1997, the $364.6 million of Farmer Mac I Securities included $316.2 million of agricultural mortgage-backed securities ("AMBS") issued under Farmer Mac's expanded legislative authorities for which Farmer Mac bears the risk of first loss. The remaining Farmer Mac I Securities were issued prior to the enactment of those authorities and are supported by unguaranteed subordinated interests, which represented 10% of the initial balance of the loans underlying the securities. Loans underlying Farmer Mac II Securities are backed by the "full faith and credit" of the United States by virtue of the Secretary of Agriculture's guarantee of principal and interest on such loans. For further information regarding outstanding Farmer Mac Guaranteed Securities, including those held in portfolio, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Supplemental Information." Note 3. Commitments. At September 30, 1997, Farmer Mac had committed to purchase $11.3 million of Qualified Loans through the Farmer Mac I cash window. With respect to outstanding commitments to purchase Qualified Loans and the $23.8 million in loans held for securitization at September 30, 1997, Farmer Mac had committed to sell forward $16.3 million of AMBS for future settlement. The $18.8 million net purchase position at September 30, 1997 consisted of adjustable-rate and fixed-rate loans not subject to forward sale commitments. The Corporation currently manages interest-rate risk related to fixed-rate loans not offset by forward sale commitments through the use of off-balance sheet derivative financial instruments, such as futures contracts, as discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition - Asset and Liability Management." For information regarding commitments entered into during the period, see "Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Information." Note 4. Interest-Rate Contracts and Hedge Instruments. Interest-rate contracts, including interest-rate swaps and caps, are entered into with the intent of synthetically creating interest-earning assets and debt instruments. As such, the net differential received or paid is recorded as an adjustment to interest income or expense of the associated assets or liabilities, on an accrual basis. As of September 30, 1997, the notional balance of interest-rate contracts outstanding was $278.6 million. Hedge instruments, currently consisting solely of futures contracts, are used by Farmer Mac to manage interest-rate risk exposure related to commitments to purchase Qualified Loans and loans held for securitization. The total notional balance of open futures contracts at September 30, 1997 was $800 thousand. Unrealized gains and losses on futures contracts are deferred as an adjustment to the cost basis of the loans until realized. When the futures contracts are terminated, the realized gains or losses is recognized as part of gain on issuance of mortgage-backed securities, net.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Farmer Mac regularly communicates information concerning its business activities to investors, securities analysts, the news media and others as part of its normal operations. Some of these communications include forward-looking statements pertaining to management's current expectations as to Farmer Mac's future business plans, results of operations and/or financial condition. Forward-looking statements are typically accompanied by, and identified with, such terms as "anticipates," "believes," "expects," "intends," "should" and similar phrases. Management's expectations for the Corporation's future necessarily involve a number of assumptions and estimates and various factors could cause actual results to differ materially from these expectations. The following management's discussion and analysis includes forward-looking statements addressing the Corporation's prospects for earnings, loan volume and securitization growth; trends in net interest income and provision for losses; changes in capital position; and other business and financial matters. Among the factors that could cause actual results to differ from the expectations expressed herein are the following: substantial changes in interest rates, agricultural land values, commodity prices and the general economy; protracted adverse weather, market or other conditions affecting particular geographic regions or particular commodities related to agricultural mortgage loans backing Farmer Mac Guaranteed Securities; legislative or regulatory developments or interpretations of Farmer Mac's statutory charter that could adversely affect Farmer Mac or the ability of certain lenders to participate in its programs or the terms of any such participation; legislative or regulatory restrictions on Farmer Mac's investment authority; the availability of debt funding in sufficient quantities and at attractive spreads to support continued growth; the rate of growth in agricultural mortgage indebtedness; the size of the agricultural mortgage market; borrower preferences for fixed-rate agricultural mortgage indebtedness; the willingness of lenders to sell agricultural mortgage loans to Farmer Mac; the willingness of investors to invest in agricultural mortgage-backed securities versus other investments; competition in the origination or purchase of agricultural mortgage loans and the sale of agricultural mortgage-backed and debt securities; the imposition of significant risk-based capital requirements; or changes in the Corporation's status as a government-sponsored enterprise. Given the foregoing potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed herein. Furthermore, Farmer Mac undertakes no obligation to publicly release the results of revisions to any forward-looking statements that may be made to reflect any future events or circumstances. Results of Operations Overview. Net income for the first nine months of 1997 totaled $3.3 million, compared to $0.8 million for the same period a year ago. For third quarter 1997, Farmer Mac reported net income of $1.2 million, an increase of $1.0 million compared to net income of $0.2 million for third quarter 1996. Net income for the nine and three months ended September 30, 1996 includes a $0.4 million extraordinary gain from early extinguishment of debt. Earnings per share for the nine months ended September 30, 1997 were $0.33 for Classes A and B common stock and $1.00 for Class C common stock, compared to $0.15 and $0.44, respectively, for the nine months ended September 30, 1996. Earnings per share for third quarter 1997 were $0.12 for Classes A and B common stock and $0.35 for Class C common stock, compared to $0.03 and $0.10, respectively, for third quarter 1996. Earnings per share are adjusted to reflect the 3-to-1 dividend and liquidation preference accorded to Class C common stock compared to Classes A and B common stock. Net interest income has contributed significantly to Farmer Mac's improved operating results for the three and nine months ended September 30, 1997. Net interest income is comprised primarily of income from program investments (Farmer Mac I and II Securities and loans held for securitization) and, to a lesser extent, non-program investments (cash and cash equivalents and investment securities). Of these components, the most significant contribution to the recent increases in net interest income has been income from non-program investments. Farmer Mac has increased the size of its non-program investment portfolio (cash and cash equivalents and investment securities) as a result of the implementation of its expanded debt issuance strategy, which is intended to attract more investors to its debt and mortgage-backed securities and thereby improve the liquidity of those securities and reduce its borrowing and securitization costs. Since the strategy's implementation, the Corporation has experienced a tightening of its AMBS spreads relative to other comparable agency securities and anticipates continued improvements in pricing as liquidity and investor recognition of Farmer Mac increase. The proceeds of these increased debt issuances have been invested primarily in high quality, short- and long-term floating rate investments, which have generated significant amounts of net interest income. Farmer Mac's eventual objective for the proceeds of its increased debt issuances is investment in the Farmer Mac I program through the acquisition and securitization of Qualified Loans. During the phase-in of that objective, the term of which is dependent upon growth in Farmer Mac's core guarantee business, Farmer Mac expects to continue to invest in non-program assets. In addition to increased net interest income, Farmer Mac has also realized increased guarantee fee income and gain on issuance of mortgage-backed securities as a result of increased guarantee volumes since enactment of its revised legislative authorities. During the first nine months of 1997, $171.9 million of AMBS, backed by loans acquired through the cash window, were issued to capital market investors, in addition to the $148.2 million of AMBS issued in 1996. Since the enactment of Farmer Mac's revised authorities, over $545.6 million of loans have been submitted to Farmer Mac for approval, of which approximately 59% ($320.1 million) have been securitized and sold, 4% ($23.8 million) have been purchased and are pending securitization, and 11% ($59.3 million) are in various stages of the pipeline. The remaining 26% ($142.4 million) of loans have been either denied by Farmer Mac for credit reasons or withdrawn by the seller. While Farmer Mac's financial condition has improved, future improvements in operating results will depend largely upon growth in Farmer Mac's core business (guarantee fee income and gain on issuance of mortgage-backed securities). Growth in Farmer Mac's core business is dependent upon guarantee volume which, in turn, depends upon the increase in the cumulative volume of loans acquired through the Farmer Mac programs. Loan volume has not been increasing as rapidly as management anticipated following the enactment of its revised legislative authorities due, in part, to the longer than expected lead-time between marketing initiatives and the realization of results. Notwithstanding the slowness in loan volume growth, expenses have been increasing as management seeks to attract more sellers and expand the level of their participation. In that regard, Farmer Mac has begun to assemble a diverse network of sellers ranging from community banks to regional financial institutions including, among others, AgFirst Farm Credit Bank, Columbia, South Carolina; Firstar Bank, Milwaukee, Wisconsin; First Union Bank of Virginia, Harrisonburg, Virginia; Glendale Federal Bank, Glendale, California; Northwest Farm Credit Services, ACA, Spokane, Washington; US Bank National Association, Minneapolis, Minnesota; and Wells Fargo Bank, San Francisco, California. Farmer Mac also has begun to attract the interest of non-traditional agricultural real estate lenders, particularly mortgage bankers and agricultural supply and equipment companies, for whom management believes the advantages of its programs would result in diversification of income sources and more efficient utilization of their existing facilities and personnel at low marginal costs through access to their established customer base. In that regard, management has been advised by GMAC Commercial Mortgage Corporation that it intends immediately to submit an application to become an approved seller. The addition of mortgage bankers and regional financial institutions should signficantly increase the number of outlets offering Farmer Mac loans. Many of these institutions have undertaken, or would be expected to undertake, marketing initiatives, utilizing various media sources, to advertise the availability of Farmer Mac loans. Because most of these institutions are, or will be, new to the Farmer Mac programs, management cannot predict the timing or the level of volume likely to be generated by them, although management does not anticipate any such volume prior to 1998. Based on management's evaluation of the business potential of these and other prospective participants, Farmer Mac will continue to add resources, including additional field personnel and other employees dedicated to customer service, to support these institutions' efforts in establishing and expanding a secondary market presence in the areas they serve, and to attract more sellers who offer the prospect of active participation in Farmer Mac's programs. During the first nine months of 1997, Farmer Mac implemented a training program through which it conducts "seller workshops" in various locations and at various times throughout the country. Farmer Mac believes that these workshops have contributed, and will continue to contribute, to an increased interest in the Corporation's programs and improved the understanding of those programs by participants. Since September 30, 1997, Farmer Mac has expanded its product line with the announcement of additional loan products, including a "part-time farmer" real estate loan, designed for borrowers who live on agricultural properties but derive a significant portion of their income from off-farm employment. This loan product is available for single-family, owner-occupied detached residences located on agricultural production properties of at least 5 acres or with annual gross receipts of $5,000 from production of crops or livestock. Other products added to Farmer Mac's existing line of 5- and 15-year, fixed rate loans include a new three-year, and a refined one-year, adjustable rate loan (ARM), both with features permitting conversion to fixed rates and flexible prepayment terms, and a 10-year, fixed rate loan. During fourth quarter 1997, Farmer Mac expects to consummate the first transaction under its "swap" program, which allows lenders to exchange new or seasoned Qualified Loans for Farmer Mac Guaranteed Securities. That transaction, which will involve the exchange of approximately $1 million of newly originated Qualified Loans for Farmer Mac Guaranteed Securities, is expected to serve as the model for future swap transactions. Swap transactions, whether involving newly originated or existing loans, offer certain advantages to lenders because the Farmer Mac Guaranteed Securities received in exchange for the loans are accorded a lower risk-weight than whole loans under risk-based capital guidelines and can be pledged as collateral and used in repurchase transactions. Notwithstanding the positive business and financial developments of 1996 and the first nine months of 1997, Farmer Mac still faces the challenge of expanding its business in the highly static market for agricultural and rural home mortgage loans. Having obtained the statutory authority to operate under similar guidelines to those of Fannie Mae and Freddie Mac does not ensure the long-term success of Farmer Mac's programs, which continue to receive only gradual acceptance in the agricultural lending community, notwithstanding the competitive rates, terms and products offered and the advantages Farmer Mac believes its programs provide. For Farmer Mac to succeed over the long-term in realizing its business development and profitability goals, agricultural mortgage lenders, whether traditional or non-traditional, must be convinced of the benefits of selling loans to Farmer Mac and must be willing to adapt their business practices to sell loans into the agricultural mortgage secondary market in significant volume. Set forth below is a discussion of certain specific items of the income statement and balance sheet. Average Balances, Income and Expense, Yield and Rates. The following table provides information regarding interest-earning assets and interest-bearing liabilities for the periods indicated. <TABLE> <CAPTION> Nine Months Ended September 30, -------------------------------------------------------- 1997 1996 -------------------------------------------------------- (Dollars in Thousands) Average Income/ Average Average Income/ Average Balances Expense Yield/RateBalances Expense Yield/Rate Assets -------------------------------------------------------------------------------- Interest-earning assets: Farmer Mac I and II <S> <C> <C> <C> <C> <C> <C> Securities.......... $ 423,817 $ 22,612 7.11% $ 407,872 $ 22,210 7.26% Investments and cash equivalents......... 700,019 33,357 6.35% 115,528 4,813 5.55% Loans held for securitization...... 24,234 1,552 8.54% 7,769 468 8.03% -------------------------------------------------------- Total interest- earning assets.... 1,148,070 $ 57,521 6.68% 531,169 $ 27,491 6.90% Other assets.......... 47,685 23,363 -------------------------------------------------------- $1,195,755 $ 554,532 -------------------------------------------------------------------------------- Liabilities and Stockholders' Equity ------------------------------------------------------------------------------ Interest-bearing liabilities: Debentures, notes and bonds, net $1,121,911 $ 52,367 6.22% $ 517,850 $ 25,546 6.58% Other liabilities.... 27,510 23,204 Stockholders' equity. 46,334 13,478 - -------------------------------------------------------------------------------- $1,195,755 $ 554,532 ================================================================================ Net interest income/spread..... $ 5,154 .46% $ 1,945 .32% ================================================================================ Net yield on interest-earning assets............ .60% .49% ================================================================================ </TABLE>
Rate/Volume Analysis. The table below sets forth certain information regarding the changes in the components of Farmer Mac's net interest income for the periods indicated. For each category, information is provided on changes attributable to (a) changes in volume (change in volume multiplied by old rate); (b) changes in rate (change in rate multiplied by old volume); and (c) the total. Combined rate/volume variances, a third element of the calculation, are allocated based on their relative size. <TABLE> <CAPTION> Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30, 1996 ---------------------------------------- Increase (Decrease) Due to Rate Volume Total ------------- -------------------------- (In Thousands) Income from interest-earning assets: Farmer Mac I and II <S> <C> <C> <C> Securities........ $ (430) $ 832 $ 402 Investments and cash equivalents....... 789 27,755 28,544 Loans held for securitization..... 31 1,053 1,084 ------------- -------------------------- Total income from interest-earning assets............. 390 29,640 30,030 Expense on interest- bearing liabilities.. (1,297) 28,118 26,821 ============= ========================== Change in net interest income................ $ 1,687 $ 1,522 $ 3,209 ============= ========================== </TABLE> Net Interest Income. Net interest income totaled $5.2 million for the nine months ended September 30, 1997, compared to $1.9 million for the same period in 1996. Net interest income totaled $2.0 million and $0.6 million for the three months ended September 30, 1997 and 1996. The increases in net interest income were due to an increase in the average balance of interest-earning assets combined with an increase in net interest yield. The increase in the average balance of interest-earning assets was primarily due to an increase in the average balance of investments and cash equivalents resulting from the implementation of Farmer Mac's expanded debt issuance strategy. The increase in net interest yield was due to a shift in the composition of the investment portfolio from short-term, highly liquid investments to longer-term floating-rate investments, which generally have higher spreads. The shift toward long-term floating-rate investments was primarily attributable to growth in securities guaranteed by instrumentalities or agencies of the United States. Other Income. Other income totaled $4.2 million and $1.3 million for the nine and three months ended September 30, 1997, compared to $2.1 million and $0.5 million, respectively, in 1996. The increases in other income were due to increases in gain on issuance of AMBS, net of related expenses, and guarantee fees. During the first nine months of 1997, the Corporation issued $171.9 million of AMBS compared to $120.7 million during the same period a year ago. Gains resulting from those issuances totaled $2.1 million and $0.9 million, respectively. The gain on issuance for the nine months ended September 30, 1996 is net of accrued expenses related to a dispute with Western Farm Credit Bank ("WFCB"), which was subsequently resolved. During third quarter 1997, Farmer Mac issued $50.9 million of AMBS resulting in a $0.6 million gain on issuance. There were no AMBS issuances in third quarter 1996. Guarantee fee income totaled $1.9 million and $0.7 million for the nine and three months ended September 30, 1997, compared to $1.1 million and $0.5 million, respectively, in 1996. The increases in guarantee fee income were due to an increase in the balance of outstanding guaranteed securities and the 25 basis point increase in the guarantee fee rate charged on AMBS issued under Farmer Mac's revised legislative authorities. At September 30, 1997, Farmer Mac had $813.5 million of guaranteed securities outstanding (including Farmer Mac I and II Securities held in portfolio) as compared to $598.2 million at September 30, 1996. Of those amounts, $316.2 million and $120.6 million were issued under the revised authorities as of September 30, 1997 and 1996. Other Expenses. Other expenses totaled $5.9 million and $2.1 million for the nine and three months ended September 30, 1997, as compared to $3.7 million and $1.3 million for the nine and three months ended September 30, 1996. The increases in other expenses were primarily attributable to increased compensation, including annual incentive compensation paid to senior management in June 1997, and other costs related to expanded operations under Farmer Mac's revised legislative authorities. Included in other expenses is the provision for losses, which totaled $780 thousand and $260 thousand for the nine and three months ended September 30, 1997, compared to $202 thousand and $60 thousand, respectively, in 1996. This increase was due to an increase in the outstanding balance of AMBS. Income Tax Expense. As a result of the utilization of net operating loss carryforwards, Farmer Mac's tax expense was limited to $103 thousand and $40 thousand for the nine and three months ended September 30, 1997. No income tax expense was recognized during the nine or three months ended September 30, 1996. Should profits continue at current levels, Farmer Mac will utilize all of its remaining net operating loss carryforwards in 1998, resulting in a higher effective tax rate for 1998. Financial Condition and Capital At September 30, 1997, total assets were $1.4 billion compared to $603.1 million at December 31, 1996. Similarly, discount notes and medium-term notes (net of unamortized debt issuance costs, discounts and premiums) increased by $766.5 million from $546.3 million at December 31, 1996 to $1.3 billion at September 30, 1997. These increases were largely attributable to the implementation of the Corporation's expanded debt issuance strategy resulting in a $739.5 million increase in cash and cash equivalents and investments, which were funded by discount notes with similar terms to maturity or rate resets. Credit Risk. Farmer Mac guarantees the timely payment of principal and interest on securities issued under the Farmer Mac I and Farmer Mac II Programs. The following table sets forth the outstanding principal balance of guaranteed securities issued under these programs. <TABLE> <CAPTION> September 30, December 30, 1997 1996 ------------ ------------ (Dollars in thousands) Farmer Mac I <S> <C> <C> AMBS................... $ 316,214 $ 148,918 Other.................. 234,085 271,341 Farmer Mac II........... 263,228 211,024 </TABLE> Farmer Mac I AMBS represent securities issued under Farmer Mac's revised legislative authorities and for which Farmer Mac bears the risk of first loss. The remaining Farmer Mac I Securities were issued prior to the 1996 enactment of those authorities and are supported by unguaranteed subordinated interests, which represented 10% of the initial balance of the loans underlying the security at the time of issuance. The loans underlying Farmer Mac II Securities are backed by the "full faith and credit" of the United States by virtue of the Secretary of Agriculture's guarantee of principal and interest on such loans. For further information regarding the outstanding balance of Farmer Mac Guaranteed Securities, see "- Supplemental Information." At September 30, 1997, loans 90 days or more past due and loans in foreclosure or bankruptcy represented 0.29% of the principal balance of all loans backing Farmer Mac I AMBS. For further information on delinquencies, see "- Supplemental Information." Farmer Mac maintains an allowance for loan losses to cover anticipated losses on Farmer Mac I AMBS. No loss allowance has been made for Farmer Mac I Securities issued prior to the 1996 revised legislative authorities because of the unguaranteed subordinated interests, or for Farmer Mac II Securities because of the Secretary of Agriculture's guarantee. At September 30, 1997, the allowance for losses on AMBS totaled $1.4 million, compared to $0.7 million at December 31, 1996. This increase was attributable to an increase in the outstanding balance of AMBS sold to investors. Management evaluates the adequacy of the allowance for loan losses on a quarterly basis and considers a number of factors, including: historical charge-off and recovery activity (noting any particular trends in preceding periods); trends in delinquencies, bankruptcies and non-performing loans; trends in loan volume and size of credit risks; current and anticipated economic conditions; the condition of agricultural segments and geographic areas experiencing or expected to experience particular economic adversities, particularly areas where Farmer Mac may have a geographic or commodity concentration; the degree of risk inherent in the composition of the guaranteed portfolio; quality control reviews; and underwriting standards. Farmer Mac considers the amounts in the allowance account to be adequate to cover its exposure to guarantee payments in the Farmer Mac I Program. Asset and Liability Management. Farmer Mac's asset liability management objective is to limit the effect of changes in interest rates on the Corporation's market value of equity and net interest income to within acceptable risk tolerance levels. In doing so, Farmer Mac enters into off-balance sheet derivative financial instruments. The Corporation uses these instruments as an end-user and not for trading or speculative purposes. The primary off-balance sheet derivative financial instruments used by Farmer Mac are interest-rate contracts, including interest-rate swaps and caps. These contracts are used to synthetically create debt instruments and interest-earning assets. When combined with the underlying liability or asset, the interest-rate contracts synthetically create debt and investments that should produce lower effective debt costs or higher effective asset yields than those available through direct debt issuances or investment purchases. At September 30, 1997, the notional amount of interest-rate contracts outstanding was $278.6 million. To a lesser extent, the Corporation uses futures contracts to reduce its exposure to interest-rate risk related to outstanding commitments to purchase Qualified Loans and loans held for securitization. From the purchase commitment date to the sale commitment date, Farmer Mac is subject to the risk that interest rate changes during that period may materially affect the value of the Qualified Loan. To mitigate that risk, the Corporation enters into futures contracts. As of September 30, 1997, Farmer Mac had entered into futures contracts totaling $800 thousand. While derivative financial instruments reduce Farmer Mac's exposure to interest-rate risk, they increase its exposure to credit risk. Credit risk arises from the possibility that a counterparty will be unable to perform according to the terms of the contract, and is equal to the fair value gain on the instrument. Credit risk exposure related to off-balance sheet derivative financial instruments is normally a small percentage of the notional amount and fluctuates as interest rates move up or down. Farmer Mac mitigates this risk by subjecting the transactions to the same approval and monitoring process as is used for on-balance sheet credit transactions, by dealing in the national market with highly rated counterparties, by using International Swaps and Derivatives Association documentation and by requiring the posting of securities as collateral under certain circumstances to reduce exposure. Either party delivers collateral when the fair value of a particular transaction on a net basis exceeds an acceptable threshold of exposure. The threshold level is determined based on the strength of the individual counterparty. Capital. At September 30, 1997, Farmer Mac's stockholders' equity totaled $50.6 million, an increase of $3.4 million from December 31, 1996. Certain transactions related to the settlement with WFCB, which affected stockholders' equity during the first half of 1997, included: the repurchase (and subsequent cancellation) of 93,100 shares of Class B Voting Common Stock; the issuance of 18,784 shares of Class C Non-Voting Common Stock to WFCB pursuant to the exercise of warrants previously issued to WFCB; and the repayment of the $557 thousand note receivable due from WFCB with interest. Farmer Mac also commenced a direct stock purchase program to offer approximately 100,000 shares of Class A Voting Common Stock to interested eligible investors pursuant to which approximately 5,950 shares had been issued as of September 30, 1997. By statute, Farmer Mac's Class A Voting Common Stock can only be held by banks, insurance companies and other financial entities that are not members of the Farm Credit System. On November 12, 1997, Farmer Mac announced its intention to issue an additional 300,000 shares of its Class C Non-Voting Common Stock in an underwritten public offering. Management believes that market conditions make this an attractive time to raise additional capital and enhance the liquidity of its Class C Non-Voting Common Stock. Currently, Farmer Mac has no specific plans for the net proceeds from the offering other than to use them for working capital and other general corporate purposes. At September 30, 1997 and December 31, 1996, Farmer Mac's regulatory required minimum capital was $32.6 million and $7.4 million, compared with actual capital of $50.6 million and $47.2 million. Farmer Mac has not paid and does not expect to pay dividends on its common stock in the near future. Dividends on the common stock are subject to determination and declaration by the Board. There is no preference between holders of the Classes A and B Voting Common Stock and Class C Non-Voting Common Stock relating to dividends. The ratio of dividends paid on each share of Class C Non-Voting Common Stock to each share of Classes A and B Voting Common Stock, however, will be three-to-one. If dividends are to be paid to holders of the Voting Common Stock, such per share dividends to holders of Class A and Class B Voting Common Stock will be equal.
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> Mandatory Commitments to Purchase - ---------------------------------------------------------------------------- Fixed Rate Loans ----------------------------------- 10 and 7 Year 5 Year 1,3 and 5 15 Year Balloon Balloon Year ARMs Total ----------------------- ----------- ---------------------- (Dollars in Thousands) For the quarter ended: <S> <C> <C> <C> <C> <C> September 30, 1997 $ 23,066 $ - $ 18,116 $ 5,982 $ 47,164 June 30, 1997 19,196 2,485 54,980 9,283 85,944 March 31, 1997 37,471 - 14,234 3,325 55,030 December 31, 1996 15,417 - 11,693 - 27,110 September 30, 1996 13,457 - 7,986 - 21,443 ------------ ----------- ----------- ---------------------- $ 108,607 $ 2,485 $107,009 $18,590 $236,691 </TABLE> <TABLE> <CAPTION> Purchases of Loans - ---------------------------------------------------------------------------- Fixed Rate Loans ----------------------------------- 10 and 7 Year 5 Year 1,3 and 5 15 Year Balloon Balloon Year ARMs Total ----------------------- ----------- ---------------------- (Dollars in Thousands) For the quarter ended: <S> <C> <C> <C> <C> <C> September 30,1997 $ 19,300 $ - $ 19,978 $ 6,800 $ 46,078 June 30, 1997 26,325 2,485 53,483 8,990 91,283 March 31, 1997 29,647 - 13,678 840 44,165 December 31, 1996 22,299 - 14,006 - 36,305 September 30, 1996 2,331 - 3,000 - 5,331 ----------- ----------- ----------- ---------------------- $ 99,902 $ 2,485 $ 104,145 $ 16,630 $ 223,162 </TABLE> <TABLE> <CAPTION> AMBS Issuances - ---------------------------------------------------------------------------- Fixed Rate Loans ----------------------------------- 10 and 7 Year 5 Year 1,3 and 5 15 Year Balloon Balloon Year ARMs Total ----------------------- ----------- ---------------------- (Dollars in Thousands) For the quarter ended: <S> <C> <C> <C> <C> <C> September 30, 1997 $ 26,186 $ - $ 24,697 $ $ 50,883 June 30, 1997 57,569 2,485 11,578 - 71,632 March 31, 1997 32,255 - 17,105 - 49,360 December 31, 1996 16,766 - 10,702 - 27,468 September 30, 1996 - - - - - ------------ ----------- ----------- ---------------------- $ 132,776 $ 2,485 $ 64,082 $ - $199,343 </TABLE>
<TABLE> <CAPTION> Delinquencies (1) - ------------------------------------------------------------ Farmer Mac I --------------------------- As of: AMBS Other (2) Total ------------- ------------- ------------- <S> <C> <C> <C> September 30, 1997 0.29% 0.93% 0.57% June 30, 1997 - 0.21% 0.10% March 31, 1997 - 0.66% 0.39% December 31, 1996 - 1.11% 0.73% September 30, 1996 - 2.84% 2.04% </TABLE> (1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy. (2) Includes loans underlying securities issued prior to the 1996 enactment of the Corporation's revised legislative authorities. These securities are supported by unguaranteed subordinated interests, which represented 10% of the initial balance of the loans underlying the securities at issuance. <TABLE> <CAPTION> Outstanding Guaranteed Mortgage Securities - --------------------------------------------------------------------------- Farmer Mac I Farmer ----------------------- Held in As of: AMBS Other (1) Mac II Total Portfolio(2) ---------------------------------- ---------------------- (Dollars in Thousands) <S> <C> <C> <C> <C> <C> September 30, 1997 $ 316,214 $ 234,085 $ 263,228 $ 813,527 $ 427,395 June 30, 1997 266,838 243,775 244,502 755,115 418,002 March 31, 1997 195,792 252,134 224,197 672,123 403,685 December 31, 1996 148,918 271,341 211,024 631,283 405,253 September 30, 1996 120,559 287,334 190,269 598,162 395,728 </TABLE> (1)Includes securities issued prior to the 1996 enactment of the Corporation's revised legislative authorities. These securities are supported by unguaranteed subordinated interests, which represented at 10% of the initial balance of the loans underlying the securities at issuance. (2) Included in total outstanding guaranteed mortgage securities.
PART II - OTHER INFORMATION Item 1. Legal Proceedings. The registrant is not a party to any 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 issued the following shares through September 30, 1997: <TABLE> <CAPTION> Number of Date Shares Price per Share <S> <C> <C> April 11, 1997 100 $ 25.125 April 24, 1997 100 22.50 April 28, 1997 100 22.50 April 29, 1997 300 22.50 May 27, 1997 250 23.00 June 4, 1997 500 22.875 June 9, 1997 100 22.875 July 2, 1997 400 19.50 July 8, 1997 300 16.00 July 8, 1997 300 18.50 July 25, 1997 200 16.125 July 31, 1997 2,000 15.625 August 12, 1997 300 15.625 August 29, 1997 300 15.625 September 9, 1997 200 15.50 September 11, 1997 300 15.25 September 16, 1997 100 15.50 September 24, 1997 100 16.00 </TABLE> Pursuant to Farmer Mac's plan 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 July 16, 1997, Farmer Mac issued an aggregate 61 shares of its Class C Non-Voting Common Stock at an issue price of $36.25 per share to the nine Directors who elected to receive such stock in lieu of cash retainer. (d) Not applicable. 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. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. * 3.1 - Title VIII of the Farm Credit Act of 1971, as most recently amended by the Farm Credit System Reform Act of 1996, P.L. 104-105 (Form 10-K filed March 29, 1996). * 3.2 - Amended and restated Bylaws of the Registrant (Form 10-K filed March 27, 1997). +* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to Form 10-Q filed August 14, 1992). +* 10.1.1 - Amendment No. 1 to Stock Option Plan (Previously filed as Exhibit 10.2 to Form 10-Q filed August 16, 1993). - ------------------ * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996). +* 10.1.3 - 1997 Stock Option Plan (Form 10-Q filed May 15, 1997). +* 10.1.4 - Amended and Restated 1997 Incentive Plan (Form10-Q filed August 14, 1997). +** 10.1.5 - Amended and Restated 1997 Incentive Plan. +* 10.2 - Employment Agreement dated May 5, 1989 between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.4 to Form 10-K filed February 14, 1990). +* 10.2.1 - Amendment No. 1 dated as of January 10, 1991 to Employment Contract between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.4 to Form 10-K filed April 1, 1991). +* 10.2.2 - Amendment to Employment Contract dated as of 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). +* 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 August 14, 1996). +** 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment Contract between Henry D. Edelman and the Registrant. +* 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). - ----------------- * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
+* 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 August 14, 1995). +* 10.3.7 - Amendment No. 7 dated as of February 8, 1996 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-K filed March 29, 1996). +* 10.3.8 - Amendment No. 8 dated as of September 13, 1996 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14, 1996). +** 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment Contract between Nancy E. Corsiglia and the Registrant. +* 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). - ------------------- * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
+* 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 August 14, 1995). +* 10.4.6 - Amendment No. 6 dated as of February 8, 1996 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-K filed March 29, 1996). +* 10.4.7 - Amendment No. 7 dated as of September 13, 1996 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed August 14, 1996). +** 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment Contract between Thomas R. Clark and the Registrant. +* 10.5 - Employment Agreement dated April 29, 1994 between Charles M. Lewis and the Registrant (Previously filed as Exhibit 10.18 to Form 10-Q filed August 15, 1994). +* 10.5.1 - Amendment No. 1 dated as of September 1, 1995 to Employment Contract between Charles M. Lewis and the Registrant (Form 10-Q filed August 14, 1995). - ------------------ * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
+* 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). +* 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 August 14, 1995). +* 10.6.5 - Amendment No. 5 dated as of February 8, 1996 to Employment Contract between Michael T. Bennett and the Registrant (Form 10-K filed March 29, 1996). +* 10.6.6 - Amendment No. 6 dated as of September 13, 1996 to Employment Contract between Michael T. Bennett and the Registrant (Form 10-Q filed August 14, 1996). +** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment Contract between Michael T. Bennett and the Registrant. - ------------------ * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
+* 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 August 14, 1995). +* 10.7.5 - Amendment No. 5 dated as of February 8, 1996 to Employment Contract between Christopher A. Dunn and the Registrant (Form 10-K filed March 29, 1996). +* 10.7.6 - Amendment No. 6 dated as of September 13, 1996 to Employment Contract between Christopher A. Dunn and the Registrant (Form 10-Q filed August 14, 1996). +** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment Contract between Christopher A. Dunn and the Registrant. +** 10.8 - Employment Contract dated as of September 1, 1997 between Tom D. Stenson and the Registrant. * 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). - -------------------- * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
* 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 has not filed any reports on Form 8-K during the quarter ended September 30, 1997. - --------------------- * Incorporated by reference to the indicated prior filing. ** Filed herewith. + Management contract or compensatory plan.
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 November 14, 1997 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)
SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 EXHIBITS TO FORM 10-Q UNDER THE SECURITIES EXCHANGE ACT FO 1934 FEDERAL AGRICULTURAL MORTGAGE CORPORATION
Exhibit Description +** 10.1.5 - Amended and Restated 1997 Incentive Plan. +** 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment Contract between Henry D. Edelman and the Registrant. +** 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment Contract between Nancy E. Corsiglia and the Registrant. +** 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment Contract between Thomas R. Clark and the Registrant. +** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment Contract between Michael T. Bennett and the Registrant. +** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment Contract between Christopher A. Dunn and the Registrant. +** 10.8 - Employment Contract dated as of September 1, 1997 between Tom D. Stenson and the Registrant. - ---------------- ** Filed herewith. + Management contract or compensatory plan.