As filed with the Securities and Exchange Commission on - -------------------------------------------------------------------------------- November 13, 2001 UNITED STATES 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 Commission File Number September 30, 2001 0-17440 FEDERAL AGRICULTURAL MORTGAGE CORPORATION (Exact name of registrant as specified in its charter) Federally chartered instrumentality of the United States 52-1578738 (State or other jurisdiction of (I.R.S. employer identification number) incorporation or organization) 919 18th Street, N.W., Suite 200 Washington, D.C. 20006 (Address of principal executive offices) (Zip code) (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 12 months (or for 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 [ ] As of November 1, 2001, there were 1,030,780 shares of Class A Voting Common Stock, 500,301 shares of Class B Voting Common Stock and 9,863,983 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. These consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present 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 as of the dates and for the periods presented. These consolidated financial statements should be read in conjunction with the audited 2000 consolidated 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 consolidated financial statements is included herein: Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000.. 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2000.............................................. 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000.............................................. 5 Notes to Consolidated Financial Statements.................................. 6
<TABLE> <CAPTION> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2001 2000 ------------ ------------ (unaudited) (audited) <S> <C> <C> Assets: Cash and cash equivalents $ 478,132 $ 537,871 Investment securities 989,343 836,757 Farmer Mac guaranteed securities 1,705,578 1,679,993 Loans 141,001 30,279 Financial derivatives 864 - Interest receivable 40,507 55,681 Guarantee fees receivable 4,098 5,494 Prepaid expenses and other assets 17,693 14,824 ------------ ------------ Total Assets $ 3,377,216 $ 3,160,899 ------------ ------------ Liabilities and Stockholders' Equity: Liabilities: Notes payable Due within one year $ 2,337,765 $ 2,201,691 Due after one year 827,862 767,492 ------------ ------------ Total notes payable 3,165,627 2,969,183 Financial derivatives 32,926 - Accrued interest payable 18,967 20,852 Accounts payable and accrued expenses 15,240 26,880 Reserve for losses 14,744 11,323 ------------ ------------ Total Liabilities 3,247,504 3,028,238 Stockholders' Equity: Common stock: Class A Voting, $1 par value, no maximum authorization, 1,030,780 shares issued and outstanding as of September 30, 2001 and December 31, 2000. 1,031 1,031 Class B Voting, $1 par value, no maximum authorization, 500,301 shares issued and outstanding as of September 30, 2001 and December 31, 2000. 500 500 Class C Non-Voting, $1 par value, no maximum authorization, 9,849,224 and 9,620,112 shares issued and outstanding as of September 30, 2001 and December 31, 2000. 9,849 9,621 Additional paid-in capital 76,892 72,773 Accumulated other comprehensive income 13,403 31,498 Retained earnings 28,037 17,238 ------------ ------------ Total Stockholders' Equity 129,712 132,661 ------------ ------------ Total Liabilities and Stockholders' Equity $ 3,377,216 $ 3,160,899 ------------ ------------ See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------------------- ------------------------------ Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 Sept. 30, 2000 -------------- -------------- -------------- -------------- (unaudited) <S> <C> <C> <C> <C> Interest income: Investments and cash equivalents $ 15,604 $ 23,760 $ 53,840 $ 68,758 Farmer Mac guaranteed securities 27,714 26,671 84,935 71,763 Loans 1,842 586 3,185 2,332 ----------- ------------ ----------- ---------- Total interest income 45,160 51,017 141,960 142,853 Interest expense 37,292 46,685 122,218 129,661 ----------- ------------ ----------- ---------- Net interest income 7,868 4,332 19,742 13,192 Gains/(Losses) on financial derivatives and trading assets (295) - (1,043) - Other income: Guarantee fees 4,177 2,972 11,273 8,309 Miscellaneous 137 78 420 250 ----------- ------------ ----------- ---------- Total other income 4,314 3,050 11,693 8,559 ----------- ------------ ----------- ---------- Total revenues 11,887 7,382 30,392 21,751 Expenses: Compensation and employee benefits 1,414 1,037 4,147 3,353 Regulatory fees 245 150 712 451 General and administrative 883 888 3,137 2,777 ----------- ------------ ----------- ---------- Total operating expenses 2,542 2,075 7,996 6,581 Provision for losses 1,962 1,068 4,739 3,442 ----------- ------------ ----------- ---------- Total expenses 4,504 3,143 12,735 10,023 ----------- ------------ ----------- ---------- Income before income taxes 7,383 4,239 17,657 11,728 Income tax expense 2,455 1,505 6,132 4,164 ----------- ------------ ----------- ---------- Net income before cumulative effect 4,928 2,734 11,525 7,564 of change in accounting principles Cumulative effect of change in accounting principles, net of taxes of $400 - - (726) - ----------- ------------ ----------- ---------- Net income $ 4,928 $ 2,734 $ 10,799 $ 7,564 ----------- ------------ ----------- ---------- Earnings per share: Basic earnings per share $ 0.43 $ 0.25 $ 0.95 $ 0.69 Diluted earnings per share $ 0.41 $ 0.24 $ 0.91 $ 0.66 Earnings per share before cumulative effect of change in accounting principles: Basic earnings per share $ 0.43 $ 0.25 $ 1.02 $ 0.69 Diluted earnings per share $ 0.41 $ 0.24 $ 0.98 $ 0.66 See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> FEDERAL AGRICULTURAL MORTGAGE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Nine Months Ended --------------------------------- Sept. 30, 2001 Sept. 30, 2000 --------------- --------------- (unaudited) <S> <C> <C> <C> <C> <C> <C> Cash flows from operating activities: Net income $ 10,799 $ 7,564 Adjustments to reconcile net income to cash provided by operating activities: Net amortization of investment premiums and discounts (680) 1,313 Decrease in interest receivable 15,174 4,850 Decrease in guarantee fees receivable 1,396 691 Decrease (increase) in other assets (2,881) 143 Amortization of debt premiums, discounts and issuance 75,745 89,728 Decrease in accrued interest payable (1,885) (7,001) Decrease in other liabilities (1,788) (340) Proceeds from repayment of trading investment securit 18,185 - Mark to market on trading securities and derivatives 116 - Settlement of financial derivatives (5,757) - Amortization of settled financial derivatives contracts 153 - Provision for losses (net of charge-offs) 3,421 3,442 ------------ ------------ Net cash provided by operating activities 111,998 100,390 Cash flows from investing activities: Purchases of investment securities (434,561) (204,666) Purchases of Farmer Mac guaranteed securities (217,304) (338,589) Purchases of loans (212,944) (401,664) Proceeds from repayment of investment securities 281,400 152,949 Proceeds from repayment of Farmer Mac guaranteed securities 218,307 390,760 Proceeds from repayment of loans 2,360 709 Proceeds from sale of Farmer Mac guaranteed securitie 65,929 76,024 Purchases of office equipment (41) (11) ------------ ------------ Net cash used in investing activities (296,854) (324,488) Cash flows from financing activities: Proceeds from issuance of discount notes 76,929,322 46,613,148 Proceeds from issuance of medium-term notes 138,200 65,853 Payments to redeem discount notes (76,777,540) (46,299,039) Payments to redeem medium-term notes (169,210) (33,300) Proceeds from common stock issuance 4,345 1,966 ------------ ------------ Net cash provided by financing activities 125,117 348,628 ------------ ------------ Net increase (decrease) in cash and cash equivalents (59,739) 124,530 Cash and cash equivalents at beginning of period 537,871 336,282 ------------ ------------ Cash and cash equivalents at end of period $ 478,132 $ 460,812 ------------ ------------ See accompanying notes to consolidated financial statements. </TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies (a) Cash and Cash Equivalents Farmer Mac considers highly liquid investment securities with original maturities of three months or less to be cash equivalents. Changes in the balance of cash and cash equivalents are reported in the Consolidated Statements of Cash Flows. The following table sets forth information regarding certain cash and non-cash transactions for the nine months ended September 30, 2001 and 2000. <TABLE> <CAPTION> Nine Months Ended September 30, ------------------- 2001 2000 -------- ------- (in thousands) <S> <C> <C> Cash paid for: Interest $62,372 $ 42,333 Income taxes 5,000 3,825 Non-cash activity: Real estate owned acquired through foreclosure - - Loans securitized as AMBS 99,862 340,619 </TABLE> (b) Loans As of September 30, 2001, loans held by Farmer Mac included $17.1 million held for sale and $123.9 million held for investment. As of December 31, 2000, loans held by Farmer Mac included $11.6 million held for sale and $18.7 million held for investment. See "New Accounting Standards" below for a discussion of SFAS 140. (c) Earnings Per Share Basic earnings per share are based on the weighted average number of common shares outstanding. Diluted earnings per share are based on the weighted average number of common shares outstanding adjusted to include all potentially dilutive common stock. The following schedule reconciles basic and diluted earnings per share for the three and nine months ended September 30, 2001 and 2000: <TABLE> <CAPTION> September 30, 2001 September 30, 2000 -------------------------------------- ---------------------------------- Dilutive Dilutive stock Diluted stock Diluted Basic EPS options EPS Basic EPS options EPS -------------------------------------- ---------------------------------- (in thousands, except per share amounts) <S> <C> <C> <C> <C> <C> <C> Three months ended: Net income $ 4,928 $ 4,928 $ 2,734 $ 2,734 Weighted average shares 11,366 524 11,890 11,123 291 11,414 Earnings per share $ 0.43 $ 0.41 $ 0.25 $ 0.24 Nine months ended: Net income $ 10,799 $ 10,799 $ 7,564 $ 7,564 Weighted average shares 11,276 477 11,753 11,039 444 11,483 Earnings per share $ 0.95 $ 0.91 $ 0.69 $ 0.66 </TABLE> (d) Reclassifications Certain reclassifications of prior period information were made to conform to the current period presentation. (e) New Accounting Standards As amended, Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133") became effective as of January 1, 2001. SFAS 133 requires financial derivatives to be measured and recorded at fair value. Pursuant to generally accepted accounting practices prior to SFAS 133, derivatives were accounted for as off-balance sheet items and disclosed in the consolidated financial statement footnotes. The cumulative effect of this change in accounting principles recognized on January 1, 2001 was a reduction to net income of $726,000 and a negative adjustment to other comprehensive income within stockholders' equity of $8.6 million. As part of the implementation of SFAS 133, Farmer Mac reclassified certain investments from held to maturity and available for sale securities to trading securities. The Corporation expects that SFAS 133 will increase volatility in earnings and accumulated other comprehensive income. In September 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS 140"). SFAS 140 was applied as of April 1, 2001 as required by the standard. SFAS 140 does not materially affect the Corporation's results of operations or financial position, but does result in the Corporation classifying as loans certain AMBS that were previously classified as Farmer Mac guaranteed securities. (f) Financial Derivatives Farmer Mac enters into derivative instruments as an end-user, not for speculative purposes. Farmer Mac enters into interest-rate contracts, including interest-rate swaps and caps, to adjust the characteristics of Farmer Mac's debt to match more closely the characteristics of the Corporation's assets or to provide better returns on its investments. Farmer Mac enters into forward sale contracts of GSE debt and mortgage-backed securities and U.S. Treasury based futures contracts to manage interest-rate risk exposure related to loan purchases and anticipated debt issuances. Interest-rate swaps used to hedge corporate debt investments, and forward sale contracts used to hedge Farmer Mac's loan portfolio, are classified and accounted for as fair value hedges. Interest-rate swaps and forward sale contracts used to hedge anticipated debt issuances are classified and accounted for as cash flow hedges. Other financial derivatives, such as futures and interest-rate caps, are not assigned an accounting hedge designation. Farmer Mac's financial derivatives are carried at their fair values. For fair value hedges, the changes in the fair values of the derivatives, along with the changes in fair values of the hedged items, are recorded in earnings. For cash flow hedges, the changes in the fair values of the derivatives are recorded in other comprehensive income and any hedge ineffectiveness is recorded in earnings. For derivative instruments not assigned an accounting hedge designation, the changes in fair value are recorded in earnings. Net after-tax charges against earnings under SFAS 133 during third quarter 2001 totaled $190,000, and the net after-tax decrease to other comprehensive income totaled $14.1 million. Substantially all of this amount represents the estimated present value of the cost of settled forward sale contracts and the net interest payments on interest-rate swap contracts, using fair values as of September 30, 2001, and assuming no change in interest rates. Farmer Mac estimates that $2.6 million of the amount currently reported in accumulated other comprehensive income will be reclassified into earnings within the next twelve months. The Corporation entered into those interest-rate swap contracts to derive a lower effective fixed-rate cost of borrowing for periods of up to 15 years than would otherwise have been available to the Corporation in the conventional debt market. For the quarter ended September 30, 2001, the ineffectiveness of designated hedges included in Farmer Mac's net income was immaterial. Note 2. Off-Balance Sheet Guaranteed Securities For information regarding the off-balance sheet risks associated with Farmer Mac's guarantees of AMBS, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Credit Risk." Note 3. Comprehensive Income Comprehensive income (loss) is comprised of net income plus other changes in stockholders' equity not resulting from investments by or distributions to stockholders. The following table sets forth comprehensive income (loss) for the three and nine months ended September 30, 2001 and 2000. The changes in unrealized gains on securities available-for-sale are net of the related deferred tax expense of $15.1 million and $2.7 million for the three and nine months ended September 30, 2001, respectively, and deferred tax expense of $1.8 million and $1.6 million for the three and nine months ended September 30, 2000, respectively. The change in the fair value of financial derivatives classified as cash flow hedges for the three and nine months ended September 30, 2001 is net of the related deferred tax benefit of $7.8 million and $7.9 million, respectively. <TABLE> <CAPTION> Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2001 2000 2001 2000 -------- --------- -------- -------- (in thousands) <S> <C> <C> <C> <C> Net income $ 4,928 $ 2,734 $ 10,799 $ 7,564 Change in unrealized gain on securities available-for-sale, net of taxes 27,445 3,303 4,966 2,948 Cumulative effect of change in accounting principles - (8,632) - Change in the fair value of financial derivatives classified as cash flow hedges (14,148) - (14,429) - -------- --------- -------- ------- Comprehensive income (loss) $ 18,225 $ 6,037 $ (7,296) $10,512 -------- --------- -------- ------- </TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Special Note Regarding Forward-Looking Statements Certain statements made in this Form 10-Q are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management's current expectations for Farmer Mac's future financial results, business prospects and business developments. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and typically are accompanied by, and identified with, such terms as "anticipates," "believes," "estimates," "expects," "intends," "plans," "should" and similar expressions. The following management's discussion and analysis includes forward-looking statements addressing Farmer Mac's prospects for earnings and growth in loan purchase, guarantee and securitization volume; trends in net interest income, delinquencies and provision for losses; changes in capital position; and other business and financial matters. 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 or events could cause Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the forward-looking statements, including: uncertainties regarding the rate and direction of development of the secondary market for agricultural mortgage loans; substantial changes in interest rates, the agricultural economy (including agricultural land values, commodity prices, export demand for U.S. agricultural products and federal assistance to farmers) or the general economy; uncertainties as to the intended operation of the new risk-based capital standard promulgated by the Farm Credit Administration, which Farmer Mac is required to comply with by May 23, 2002; the implementation of additional statutory or regulatory restrictions applicable to Farmer Mac or restrictions on Farmer Mac's investment authority; 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; the availability of debt funding in sufficient quantities and at favorable rates to support continued growth; the rate of growth in agricultural mortgage indebtedness; the size of the agricultural mortgage market; borrower preferences for fixed-rate agricultural mortgage indebtedness; the willingness of lenders to sell agricultural mortgage loans into the Farmer Mac secondary market; the willingness of investors to invest in agricultural mortgage-backed securities; competition in the origination or purchase of agricultural mortgage loans and the sale of agricultural mortgage-backed and debt securities; or changes in Farmer Mac's status as a government-sponsored enterprise. The foregoing factors are not exhaustive. Other sections of this report may include additional factors that could adversely affect Farmer Mac's business and its financial performance. Furthermore, new risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor assess the effects of such factors on Farmer Mac's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from the expectations expressed or implied by the forward-looking statements. Given these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed in this report. Furthermore, Farmer Mac undertakes no obligation to release publicly the results of revisions to any forward-looking statements that may be made to reflect any future events or circumstances. Results of Operations Operating Results. SFAS 133 requires the change in the fair values of certain financial derivatives to be reflected in the Corporation's net income or other comprehensive income. Management believes that reporting results by reference to operating income and operating revenues, excluding the cumulative effect of the change in accounting principles recognized on January 1, 2001 under SFAS 133 and its ongoing effects during the reporting periods, provides meaningful operating measures of Farmer Mac's financial performance. Such information is presented to supplement, not replace, net income, revenues, cash from operations, or any other operating or liquidity performance measures prescribed by generally accepted accounting principles. Overview. Net income for third quarter 2001, including the cumulative and ongoing effects of SFAS 133 during the quarter, was $4.9 million or $0.41 per share. Net income for third quarter 2000 was $2.7 million or $0.24 per share. Net income for the nine months ended September 30, 2001 was $10.8 million compared to $7.6 million for the nine months ended September 30, 2000. This represents a 71 percent increase in net income per share. Operating income totaled $5.0 million for third quarter 2001, or $0.42 per share, compared to $2.7 million, or $0.24 per share, for third quarter 2000. Operating income for the nine months ended September 30, 2001 was $12.3 million, or $1.01 per share, compared to $7.6 million, or $0.66 per share, for the nine months ended September 30, 2000. Farmer Mac's revenue growth continued in third quarter 2001, reflecting the effects of outstanding guarantee volume as of September 30, 2001 that was more than $1 billion higher than at the close of third quarter 2000 and net interest income earned on higher average interest-earning asset balances that were 82 percent higher than during third quarter 2000. During third quarter 2001, Farmer Mac (1) purchased $42.4 million of guaranteed portions of loans guaranteed by the United States Department of Agriculture ("USDA"), (2) purchased $69.6 million of Farmer Mac I loans and (3) added $246.5 million in long-term standby purchase commitments. Farmer Mac's outstanding guarantee volume increased during third quarter 2001 despite continued unfavorable economic conditions in the agricultural sector. Weak market opportunities for agricultural commodities and products and low commodity prices have persisted throughout 2001. Total direct governmental payments to the agricultural sector for 2000 as reported by the USDA were a record $22.9 billion. Although the USDA forecast for 2001 reflects slightly lower government payments of $20.0 billion, the decline is primarily due to a $2.5 billion reduction in deficiency payments resulting from higher crop prices. Overall, USDA is forecasting net cash income on farms at $60.8 billion, or 6 percent above the 2000 level and substantially above the 1990-2000 average of $55.0 billion. Nationwide, USDA currently forecasts farm real estate values to rise during 2001 to $932.9 billion, up slightly over 2000. Regionally, farm real estate values may vary with differing rates of increase, or even decreases, depending on commodities grown and regional economic factors. As unfavorable economic conditions in the agricultural sector persist, Farmer Mac has focused its marketing efforts on increasing awareness of the significance of its brand name and building relationships among agricultural lenders. Although Farmer Mac believes it is positioned well in the marketplace and that its planned marketing strategies for the remainder of 2001 and the first half of 2002 will produce portfolio transactions in the coming quarters, the timing and total volume of those transactions is uncertain at this time. During second quarter 2001, Farmer Mac, at the request of the Agriculture Committees in both the Senate and House of Representatives, presented testimony in connection with Congress' consideration of the reauthorization of the farm bill. In that testimony and in discussions with Committee staff and others who expressed interest in Farmer Mac's suggestion, the Corporation suggested that Congress consider adding the authority to establish a secondary market for rural development loans to the Corporation's authorities. At this time, there is no legislation being considered by Congress that includes a rural development secondary market proposal. Set forth below is a more detailed discussion of Farmer Mac's results of operations. Net Interest Income. Net interest income was $7.9 million for third quarter 2001 and $19.7 million year-to-date, compared to $4.3 million and $13.2 million for the same periods in 2000. The strength in the net interest yield is a result of continued emphasis on sound interest rate risk management and debt issuance strategies and a $781,000 increase from the income recognition due to yield maintenance payments received in conjunction with borrower prepayments during year-to-date 2001. The income realized from yield maintenance payments is, in effect, the accelerated present value of an expected future income stream which, in turn, leads to slightly reduced net interest income in future reporting periods. The timing and size of these payments varies greatly and, as such, variations should not be considered indicative of positive or negative trends to gauge future financial results. The following table provides information regarding the average balances and rates of interest-earning assets and funding for the nine months ended September 30, 2001 and 2000. <TABLE> <CAPTION> Nine Months Ended September 30, ------------------------------------------------------------------------------------------- 2001 2000 --------------------------------------------- ------------------------------------------- Average Income/ Average Average Income/ Average Balance Expense Rate Balance Expense Rate --------------- -------------- ------------- --------------- -------------- ------------ (dollars in thousands) <S> <C> <C> <C> <C> <C> <C> Interest-earning assets: Cash and cash equivalents $ 541,659 $ 18,720 4.61% $ 511,150 $ 24,400 6.37% Investments 893,184 35,116 5.24% 888,745 44,358 6.66% Farmer Mac guaranteed securities 1,705,561 84,938 6.64% 1,397,364 71,763 6.85% Loans 65,279 3,186 6.51% 38,756 2,332 8.02% --------------- -------------- ------------- --------------- -------------- ------------ Total interest earning assets 3,205,683 141,960 5.90% 2,836,015 142,853 6.72% --------------- -------------- --------------- -------------- Funding: Discount notes 2,174,237 79,034 4.85% 1,986,821 89,844 5.96% Medium-term notes 905,744 43,184 6.36% 811,169 39,817 6.47% ---------------- -------------- -------------- --------------- -------------- ------------ Total interest-bearing liabilities 3,079,981 122,218 5.29% 2,797,990 129,661 6.18% Net non-interest bearing funding 125,702 - - 38,025 - - ---------------- -------------- -------------- --------------- -------------- ------------ Total funding $ 3,205,683 122,218 5.08% $2,836,015 129,661 6.10% ---------------- -------------- -------------- --------------- -------------- ------------ Net interest income/yield $ 19,742 0.82% $ 13,192 0.62% -------------- -------------- -------------- ------------ </TABLE> The following table 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 changes in volume (change in volume multiplied by old rate) and changes in rate (change in rate multiplied by old volume). Combined rate/volume variances, the third element of the calculation, are allocated based on their relative size. <TABLE> <CAPTION> Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30, 2000 -------------------------------------- Increase/(Decrease) Due to -------------------------------------- Rate Volume Total -------------------------------------- (in thousands) <S> <C> <C> <C> Income from interest-earning assets Cash and cash equivalents $ (7,243) $ 1,563 $(5,680) Investments (9,472) 230 (9,242) Farmer Mac guaranteed securities (2,097) 15,272 13,175 Loans (326) 1,180 854 ----------- --------- --------- Total (19,138) 18,245 (893) Expense from interest-bearing liabilities (22,431) 14,988 (7,443) ----------- --------- --------- Change in net interest income $ 3,293 $ 3,257 $ 6,550 ----------- --------- --------- </TABLE> Other Income. Other income, which is comprised of guarantee fee income and miscellaneous income, totaled $4.3 million for third quarter 2001 and $11.7 million for year-to-date 2001, compared to $3.1 million and $8.6 million, respectively, in 2000. Guarantee fee income, the largest component of other income, was $4.2 million for third quarter 2001, compared to $3.0 million for third quarter 2000. The relative increase in guarantee fee income reflects an increase in the average balance of outstanding guarantees. Miscellaneous income was $137,000 for third quarter 2001, compared to $78,000 for third quarter 2000. Expenses. During third quarter 2001, operating expenses totaled $2.5 million, compared to $2.1 million for third quarter 2000. Operating expenses as a percentage of operating revenues were 21 percent for third quarter 2001, compared to 28 percent for third quarter 2000. Farmer Mac's provision for principal and interest losses was $2.0 million for third quarter 2001 and $4.7 million for year-to-date 2001, compared to $1.1 million and $3.4 million for the same periods in 2000. As of September 30, 2001, Farmer Mac's reserve for losses totaled $14.7 million, or 0.44 percent of outstanding post-1996 Act loans and AMBS, compared to $10.0 million, or 0.43 percent, as of September 30, 2000. The provision for income taxes totaled $2.5 million for second quarter 2001 and $6.1 million year-to-date, compared to $1.5 million and $4.2 million for the same periods in 2000. Farmer Mac's effective tax rate for third quarter 2001 was 33.3 percent compared to 35.5 percent for third quarter 2000. The reduction in the effective rate for reflects the effects of certain tax-advantaged investment securities. Business Volume. The following table sets forth the amount of loans purchased or guaranteed, and AMBS issued during the periods indicated: <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, -------------------------- ----------------------- 2001 2000 2001 2000 ------------ ------------ ---------- ----------- (in thousands) <S> <C> <C> <C> <C> Purchase and guarantee volume: Farmer Mac I Loans & AMBS $ 69,561 $ 292,658 $ 203,600 $ 396,519 LTSPC 246,472 158,291 795,675 192,700 Farmer Mac II 42,396 40,036 147,115 157,476 ------------ ------------ ---------- ----------- Total loans purchased or guaranteed $ 358,429 $ 490,985 $1,146,390 $ 746,695 ------------ ------------ ---------- ----------- AMBS issuances: Retained $ - $ 272,497 $ 33,392 $ 340,619 Sold 26,609 20,247 65,930 144,815 ------------ ------------ ---------- ----------- Total AMBS issuances $ 26,609 $ 292,744 $ 99,322 $ 485,434 ------------ ------------ ---------- ----------- </TABLE> See "Overview" above for a discussion regarding loans purchased and guaranteed by Farmer Mac. Indicators of future loan purchase volume in the immediately succeeding reporting period include outstanding commitments to purchase loans and the total balance of loans submitted for approval or approved but not yet purchased. Many purchase commitments entered into by Farmer Mac are mandatory delivery commitments. If a seller obtains a mandatory commitment and is unable to deliver the loans as required thereunder, Farmer Mac requires the seller to pay a fee to modify, extend or cancel the commitment. As of September 30, 2001, outstanding commitments to purchase or guarantee Farmer Mac I loans totaled $19.0 million, compared to $11.0 million as of September 30, 2000. Of the total Farmer Mac I commitments outstanding as of September 30, 2001 and 2000, $15.8 million and $5.2 million, respectively, were mandatory commitments. Loans submitted for approval or approved but not yet committed to purchase totaled $137.1 million as of September 30, 2001, compared to $109.1 million as of September 30, 2000. Not all of these loans are purchased, as some are denied for credit reasons or withdrawn by the seller. While significant progress has been made in developing the secondary market for agricultural mortgages, Farmer Mac continues to face the challenges of establishing a market where none previously existed. Use of Farmer Mac's programs is increasing among lenders, reflecting the competitive rates, terms and products offered and the advantages Farmer Mac's programs provide. For Farmer Mac to maximize its business development and profitability over the long term, the use of Farmer Mac's programs and products by agricultural mortgage lenders, whether traditional or non-traditional, must continue to expand. Balance Sheet Review During the nine month period ended September 30, 2001, total assets increased by $216 million, primarily due to an increase in on-balance sheet program assets (Farmer Mac guaranteed securities and loans). For further information regarding both on- and off-balance sheet guaranteed securities, see "Supplemental Information" below. Total liabilities increased by $219 million from December 31, 2000 to September 30, 2001 primarily due to an increase in notes payable. Average return on equity, excluding the effects of Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, and SFAS 133, reached 17.7 percent for third quarter 2001, compared to 11.3 percent for third quarter 2000. As of September 30, 2001, Farmer Mac's statutory core capital totaled $116.3 million, compared to $101.2 million as of December 31, 2000. As of September 30, 2001, the statutory core capital balance exceeded Farmer Mac's statutory minimum capital requirement by approximately $8.2 million. On April 12, 2001, the Farm Credit Administration ("FCA") issued its final risk-based capital regulation for Farmer Mac. The regulation became effective on May 23, 2001, and Farmer Mac will be required to meet the risk-based capital standards by May 23, 2002. As noted in our June 12, 2000 comment letter to the FCA on the proposed regulation, Farmer Mac believes that certain significant aspects of the risk-based capital regulation do not comply with the authorizing statute. We have maintained a dialogue with FCA regarding the application of the regulation and the complex underlying economic model - particularly the provisions that suggest to us that the FCA went outside the authorizing statute. If no change is made to the regulation before compliance is required, it could lead to an increase in the capital requirement for certain newly guaranteed program assets and so alter Farmer Mac's strategic plan for future growth. While we are at this time uncertain whether the regulation, as issued, would alter that strategic plan, we continue to expect that any issues raised by the regulation will be resolved in accordance with the authorizing statute before Farmer Mac is required to meet the risk-based capital standards. Risk Management Interest-Rate Risk. Farmer Mac's asset and liability management objective is to limit the effects of changes in interest rates on its equity and earnings to within acceptable risk tolerance levels. In doing so, Farmer Mac uses callable debt and derivative financial instruments, including interest-rate swaps and caps (collectively "interest-rate contracts"), forward sale contracts involving GSE debt and mortgage-backed securities and futures contracts involving U.S. Treasury securities. Farmer Mac uses interest-rate contracts to alter the interest-rate characteristics of specific investments or debt, which enable Farmer Mac better to match the interest-rate characteristics of its investments and debt. As of September 30, 2001 and December 31, 2000, the notional amount of interest-rate contracts totaled $1.0 billion and $1.1 billion, respectively. Farmer Mac uses forward sale and futures contracts to reduce its interest-rate risk exposure to loans committed or purchased and not yet sold or funded as retained investments. As of September 30, 2001, the notional amount of outstanding forward sale and futures contracts totaled $111.8 million, compared to $8.6 million as of December 31, 2000. One method Farmer Mac uses to monitor its exposure to interest-rate risk is to measure the sensitivity of its market value of equity ("MVE") to an immediate and permanent parallel shift of the U.S. Treasury yield curve. The following schedule summarizes the results of Farmer Mac's MVE sensitivity analysis as of September 30, 2001 and December 31, 2000. <TABLE> <CAPTION> Percentage Change in MVE from Base Case --------------------------------------- Interest Rate September 30, December 31, Scenario 2001 2000 -------------- ------------------ ------------------ <S> <C> <C> <C> + 300 bp -5.3% -10.2% + 200 bp -1.8% -5.9% + 100 bp 0.4% -2.0% - 100 bp -2.6% -0.5% - 200 bp -5.8% -3.2% - 300 bp -13.8% -6.5% </TABLE> Credit Risk. The outstanding principal balance of loans held and securities guaranteed by Farmer Mac as of September 30, 2001 and December 31, 2000 is summarized in the table below. <TABLE> <CAPTION> September 30, December 31, 2001 2000 ---------------- ----------------- (in thousands) <S> <C> <C> Farmer Mac I: Post-1996 Act $ 3,337,021 $ 2,508,997 Pre-1996 Act 58,813 83,513 Farmer Mac II 608,944 517,703 ---------------- ----------------- Total $ 4,004,778 $ 3,110,213 ---------------- ----------------- </TABLE> Farmer Mac assumes 100 percent of the credit risk on post-1996 Act Farmer Mac I loans; pre-1996 Act Farmer Mac I loans back securities that are supported by mandatory 10 percent first loss subordinated interests that mitigate credit exposure; Farmer Mac II loans are guaranteed by the USDA. Farmer Mac believes it has little or no credit risk exposure to pre-1996 Act Farmer Mac I loans because of the first loss subordinated interests related to pools of those loans, or to Farmer Mac II loans because of the USDA guarantee. As of September 30, 2001, post-1996 Act Farmer Mac I loans that were 90 days or more past due, in foreclosure or in bankruptcy represented 2.16 percent of the outstanding principal balance of all post-1996 Act Farmer Mac I loans, compared to 1.80 percent as of September 30, 2000 and 1.72 percent as of June 30, 2001. Farmer Mac anticipates fluctuations in the delinquency rate from quarter to quarter, with higher levels likely as of March 31 and September 30 of each year due to the semiannual payment characteristics of most Farmer Mac loans. The following table shows Farmer Mac I delinquencies distributed by post-1996 Act loans and pre-1996 Act loans. <TABLE> <CAPTION> Farmer Mac I Delinquencies (1) (2) -------------------------------------------------------------------- As of: Post-1996 Act Pre-1996 Act Total --------------- -------------- ------- <S> <C> <C> <C> September 30, 2001 2.16% 4.66% 2.21% June 30, 2001 1.72% 3.69% 1.77% March 31, 2001 2.62% 5.83% 2.72% December 31, 2000 1.25% 6.49% 1.44% September 30, 2000 1.80% 5.55% 1.96% June 30, 2000 1.25% 4.12% 1.41% March 31, 2000 1.45% 4.89% 1.65% (1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy. (2) 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 first loss subordinated interests representing approximately 10 percent of the balance of the loans backing each security. </TABLE> Farmer Mac maintains a reserve to cover losses incurred on post-1996 Act Farmer Mac I loans. Management believes that existing post-1996 Act delinquent loans have current loan-to-value ratios that adequately protect against losses at liquidation, with the exception of certain loans that are secured in whole or in part by depreciable assets or by real estate planted with commodities that do not benefit from direct governmental payments. Farmer Mac expects to incur losses upon the liquidation of some of those delinquent loans, such as the $750,000 in losses recognized during third quarter 2001. Management believes further potential losses are adequately covered by the reserve for losses, based on the value of the collateral securing the loans and Farmer Mac's loan collection experience. In certain collateral liquidation scenarios Farmer Mac may recover amounts previously written off if liquidation proceeds exceed previous estimates. During third quarter 2001, Farmer Mac recovered approximately $352,000 of previously written off assets. As of September 30, 2001, the weighted-average original loan-to-value ratio for all post-1996 Act loans was 49.4 percent. Farmer Mac's provision for principal and interest losses was $2.0 million for third quarter 2001, compared to $1.1 million for third quarter 2000 and $1.4 million for second quarter 2001. As of September 30, 2001, Farmer Mac's net reserve for losses totaled $14.7 million, or 0.44 percent of outstanding post-1996 Act loans and AMBS, compared to $10.0 million (0.43 percent) as of September 30, 2000. The following schedule summarizes the changes in the reserve for losses for the three and nine months ended September 30, 2001 and 2000: <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ----------------- ------------------- 2001 2000 2001 2000 -------- ------- -------- ---------- (in thousands) <S> <C> <C> <C> <C> Beginning balance $13,180 $ 8,958 $11,323 $ 6,584 Provision for losses 1,962 1,068 4,739 3,442 Net charge-offs (398) - (1,318) - -------- ------- -------- -------- Ending balance $14,744 $10,026 $14,744 $10,026 -------- ------- -------- -------- </TABLE> The following table summarizes the post-1996 Act delinquencies by original loan-to-value ratio (calculated by dividing the original loan principal balance by the original appraised value): <TABLE> <CAPTION> Distribution of Post-1996 Act Delinquencies by UPB as of Sept. 30, 2001 ------------------------------------------------ (original loan-to-value ratio) <S> <C> <C> 0.00% to 40.00% 3% 40.01% to 50.00% 10% 50.01% to 60.00% 41% 60.01% to 70.00% 43% 70.01% to 80.00% 3% --------- Total 100% --------- </TABLE> As of September 30, 2001, the weighted average original loan-to-value ratio for post-1996 Act Farmer Mac I loans that were 90 days or more past due, in foreclosure or in bankruptcy was 59.1 percent.
The following table segregates the post-1996 Act Farmer Mac I loan portfolio and delinquencies as of September 30, 2001 by year of origination, geographic region and commodity. <TABLE> <CAPTION> Distribution of Post-1996 Act Delinquency Loans Rate ---------------- ------------------ <S> <C> <C> By year of origination: Before 1996 27% 0.50% 1996 8% 5.88% 1997 10% 4.83% 1998 18% 3.92% 1999 20% 1.33% 2000 10% 0.90% 2001 7% 0.00% ---------------- ------------------ Total 100% 2.16% ---------------- ------------------ By geographic region: (1) Northwest 34% 3.76% Southwest 42% 1.46% Mid-North 12% 1.05% Mid-South 4% 1.38% Northeast 4% 0.96% Southeast 4% 1.64% --------------- ------------------ Total 100% 2.16% --------------- ------------------ By commodity: Crops 46% 2.17% Permanent plantings 30% 2.89% Livestock 19% 1.27% Part-Time Farm 3% 1.65% Other 2% 0.00% --------------- ------------------ Total 100% 2.16% --------------- ------------------ (1) Geographic regions - Mid-North (IA, IL, IN, MI, MN, MO, WI); Mid-South (KS, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NC, NH, NJ, NY, OH, PA, RI, TN, VA, VT, WV); Northwest (ID, MT, ND, NE, OR, SD, WA, WY); Southeast (AL, AR, FL, GA, LA, MS, SC); and Southwest (AZ, CA, CO, HI, NM, NV, UT). </TABLE> Supplemental Information The following tables present quarterly and annual information regarding loan purchases and guarantees and outstanding guarantees. <TABLE> <CAPTION> Farmer Mac Purchases and Guarantees - -------------------------------------------------------------------------------------- Farmer Mac I ---------------------------- Loans & AMBS LTSPC Farmer Mac II Total --------------------------------------------------- (in thousands) <S> <C> <C> <C> <C> For the quarter ended: September 30, 2001 $ 69,561 $ 246,472 $ 42,396 $ 358,429 June 30, 2001 85,439 499,508 57,012 641,959 March 31, 2001 48,600 49,695 47,707 146,002 December 31, 2000 45,727 180,502 36,029 262,258 September 30, 2000 292,658 158,291 40,036 490,985 June 30, 2000 45,578 34,409 94,870 174,857 March 31, 2000 58,283 - 22,570 80,853 December 31, 1999 168,828 229,984 18,511 417,323 For the year ended: December 31, 2000 442,246 373,202 193,505 1,008,953 December 31, 1999 568,236 637,685 116,148 1,322,069 </TABLE> <TABLE> <CAPTION> Outstanding Guarantees (1) - --------------------------------------------------------------------------------------------------------------------- Farmer Mac I ----------------------------------------------- Post-1996 Act ------------------------------- Loans & AMBS (2) LTSPC Pre-1996 Act Farmer Mac II Total Held in Portfolio (3) -------------------- ---------- --------------- ----------------- (in thousands) <S> <C> <C> <C> <C> <C> <C> As of: September 30, 2001 $1,605,160 $1,731,861 $ 58,813 $ 608,944 $4,004,778 $1,804,391 June 30, 2001 1,572,800 1,537,061 65,709 579,251 3,754,821 1,763,676 March 31, 2001 1,466,443 1,083,528 72,646 549,003 3,171,620 1,648,896 December 31, 2000 1,615,914 862,804 83,513 517,703 3,079,934 1,581,905 September 30, 2000 1,621,516 707,850 92,536 491,820 2,913,722 1,571,315 June 30, 2000 1,354,623 575,143 100,414 467,352 2,497,532 1,292,359 March 31, 2000 1,310,710 551,423 107,403 387,992 2,357,528 1,268,889 December 31, 1999 1,266,522 575,097 118,214 383,266 2,343,099 1,237,623 (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 USDA. (2) Periods prior to June 30, 2001 include only AMBS. (3) Included in total outstanding guarantees. </TABLE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk Farmer Mac is exposed to market risk attributable to changes in interest rates. Farmer Mac manages this market risk by entering into various financial transactions, including derivative financial instruments, and by monitoring its exposure to changes in interest rates. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Interest-Rate Risk" for further information regarding Farmer Mac's exposure to interest-rate risk and strategies to manage such risk. For information regarding Farmer Mac's use of derivative financial instruments, including Farmer Mac's accounting policies for such instruments, see Note 1(f) to the Consolidated Financial Statements. PART II - OTHER INFORMATION Item 1. Legal Proceedings Farmer Mac is not a party to any material pending legal proceedings. Item 2. Changes in Securities and Use of Proceeds (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. Pursuant to Farmer Mac's policy that 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 9, 2001, Farmer Mac issued an aggregate of 623 shares of its Class C Non-Voting Common Stock, at an issue price of $31.98 per share, to the twelve Directors who elected to receive such stock in lieu of their cash retainers. On August 27, 2001, Farmer Mac granted options under its 1997 Stock Option Plan to purchase 1,000 shares of Class C Non-Voting Common Stock, at an exercise price of $34.90 per share, to a non-officer employee in connection with such employee's commencement of employment. On September 4, 2001, Farmer Mac granted options under its 1997 Stock Option Plan to purchase 200 shares of Class C Non-Voting Common Stock, at an exercise price of $34.91 per share, to a non-officer employee in connection with such employee's commencement of employment. On September 25, 2001, Farmer Mac granted options under its 1997 Stock Option Plan to purchase an aggregate of 9,750 shares of Class C Non-Voting Common Stock, at an exercise price of $31.20 per share, to eight non-officer employees as incentive compensation. On September 27, 2001, Farmer Mac awarded an aggregate of 5,250 restricted shares of its Class C Non-Voting Common Stock to sixteen non-officer employees of Farmer Mac as incentive compensation. 50% of the restricted stock granted as incentive compensation vests on August 31, 2002, and the remaining 50% vests on August 31, 2003. (d) Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders 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 By-Laws of the Registrant (Form 10-Q filed August 12, 1999). +* 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). +* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996). +* 10.1.3- Amended and Restated 1997 Incentive Plan (Form 10-Q filed August 14, 1997). +* 10.2 - Employment Agreement dated May 5, 1989 between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.4 to Form 10-K filed February 14, 1990). +* 10.2.1 - Amendment No. 1 dated as of January 10, 1991 to Employment Contract between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.4 to Form 10-K filed April 1, 1991). +* 10.2.2 - Amendment to Employment Contract dated as of June 1, 1993 between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.5 to Form 10-Q filed November 15, 1993). +* 10.2.3 - Amendment No. 3 dated as of June 1, 1994 to Employment Contract between Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.6 to Form 10-Q filed August 15, 1994). * Incorporated by reference to the indicated prior filing. + Management contract or compensatory plan.
+* 10.2.4 - Amendment No. 4 dated as of February 8, 1996 to Employment Contract between Henry D. Edelman and the Registrant (Form 10-K filed March 29, 1996). +* 10.2.5 - Amendment No. 5 dated as of June 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 (Form 10-Q filed November 14, 1997). +* 10.2.7 - Amendment No. 7 dated as of June 4, 1998 to Employment Contract between Henry D. Edelman and the Registrant (Form 10-Q filed August 14, 1998). +* 10.2.8 - Amendment No. 8 dated as of June 3, 1999 to Employment Contract between Henry D. Edelman and the Registrant (Form 10-Q filed August 12, 1999). +* 10.2.9 - Amendment No. 9 dated as of June 1, 2000 to Employment Contract between Henry D. Edelman and the Registrant (Form 10-Q filed August 14, 2000). +* 10.2.10- Amendment No. 10 dated as of June 7, 2001 to Employment Contract between Henry D. Edelman and the Registrant.(Form 10-Q filed August 14, 2001). +* 10.3 - Employment Agreement dated May 11, 1989 between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.5 to Form 10-K filed February 14, 1990). +* 10.3.1 - Amendment dated December 14, 1989 to Employment Agreement between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.5 to Form 10-K filed February 14, 1990). +* 10.3.2 - Amendment No. 2 dated February 14, 1991 to Employment Agreement between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.7 to Form 10-K filed April 1, 1991). * Incorporated by reference to the indicated prior filing. + Management contract or compensatory plan.
+* 10.3.3 - Amendment to Employment Contract dated as of June 1, 1993 between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.9 to Form 10-Q filed November 15, 1993). +* 10.3.4 - Amendment No. 4 dated June 1, 1993 to Employment Contract between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.10 to Form 10-K filed March 31, 1994). +* 10.3.5 - Amendment No. 5 dated as of June 1, 1994 to Employment Contract between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.12 to Form 10-Q filed August 15, 1994). +* 10.3.6 - Amendment No. 6 dated as of June 1, 1995 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14, 1995). +* 10.3.7 - Amendment No. 7 dated as of February 8, 1996 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-K filed March 29, 1996). +* 10.3.8 - Amendment No. 8 dated as of June 13, 1996 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14, 1996). +* 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed November 14, 1997). +* 10.3.10- Amendment No. 10 dated as of June 4, 1998 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14, 1998). +* 10.3.11- Amendment No. 11 dated as of June 3, 1999 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 12, 1999). +* 10.3.12- Amendment No. 12 dated as of June 1, 2000 to Employment Contract between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14, 2000). +* 10.3.13- Amendment No. 13 dated as of June 7, 2001 to Employment Contract between Nancy E. Corsiglia and the Registrant. (Form 10-Q filed August 14, 2001). * Incorporated by reference to the indicated prior filing. + Management contract or compensatory plan.
+* 10.4 - Employment Agreement dated June 13, 1989 between Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.6 to Form 10-K filed February 14, 1990). +* 10.4.1 - Amendment No. 1 dated February 14, 1991 to Employment Agreement between Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.9 to Form 10-K filed April 1, 1991). +* 10.4.2 - Amendment to Employment Contract dated as of June 1, 1993 between Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.12 to Form 10-Q filed November 15, 1993). +* 10.4.3 - Amendment No. 3 dated June 1, 1993 to Employment Contract between Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.14 to Form 10-K filed March 31, 1994). +* 10.4.4 - Amendment No. 4 dated as of June 1, 1994 to Employment Contract between Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.17 to Form 10-Q filed August 15, 1994). +* 10.4.5 - Amendment No. 5 dated as of June 1, 1995 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed August 14, 1995). +* 10.4.6 - Amendment No. 6 dated as of February 8, 1996 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-K filed March 29, 1996). +* 10.4.7 - Amendment No. 7 dated as of June 13, 1996 to Employment Contract between Thomas R. Clark and the Registrant(Form 10-Q filed August 14, 1996). +* 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed November 14, 1997). +* 10.4.9 - Amendment No. 9 dated as of June 4, 1998 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed August 14, 1998). +* 10.4.10- Amendment No. 10 dated as of June 3, 1999 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed August 12, 1999). * Incorporated by reference to the indicated prior filing. + Management contract or compensatory plan.
+* 10.4.11- Amendment No. 11 dated as of June 1, 2000 to Employment Contract between Thomas R. Clark and the Registrant (Form 10-Q filed August 14, 2000). +* 10.4.12- Employment Contract Novation dated as of January 1, 2001 between Thomas R. Clark and the Registrant (Form 10-K filed March 26, 2001). +* 10.5 - Employment Contract dated as of September 1, 1997 between Tom D. Stenson and the Registrant (Previously filed as Exhibit 10.8 to Form 10-Q filed November 14, 1997). +* 10.5.1 - Amendment No. 1 dated as of June 4, 1998 to Employment Contract between Tom D. Stenson and the Registrant (Previously filed as Exhibit 10.8.1 to Form 10-Q filed August 14, 1998). +* 10.5.2 - Amendment No. 2 dated as of June 3, 1999 to Employment Contract between Tom D. Stenson and the Registrant (Form 10-Q filed August 12, 1999). +* 10.5.3 - Amendment No. 3 dated as of June 1, 2000 to Employment Contract between Tom D. Stenson and the Registrant (Form 10-Q filed August 14, 2000). +* 10.5.4 - Amendment No. 4 dated as of June 7, 2001 to Employment Contract between Tom D. Stenson and the Registrant. (Form 10-Q August 14,2001). +* 10.6 - Employment Contract dated February 1, 2000 between Jerome G. Oslick and the Registrant (Form 10-Q filed May 11, 2000). +* 10.6.1 - Amendment No. 1 dated as of June 1, 2000 to Employment Contract between Jerome G. Oslick and the Registrant (Form 10-Q filed August 14, 2000). +* 10.6.2 - Amendment No. 2 dated as of June 7, 2001 to Employment Contract between Jerome G. Oslick and the Registrant. (Form 10-Q filed August 14, 2001). * 10.9 - Lease Agreement, dated September 30, 1991 between 919 Eighteenth Street, N.W. Associates Limited Partnership and the Registrant (Previously filed as Exhibit 10.20 to Form 10-K filed March 30, 1992). 21 - Farmer Mac Mortgage Securities Corporation, a Delaware corporation. * Incorporated by reference to the indicated prior filing. + Management contract or compensatory plan.
* 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. On July 20, 2001, the Registrant filed a report on Form 8-K that attached a press release announcing the Registrant's financial results for second quarter 2001. * Incorporated by reference to the indicated prior filing. + 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 13, 2001 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 - Finance (Principal Financial Officer)
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 13, 2001 By: -------------------------------------------------- Henry D. Edelman President and Chief Executive Officer (Principal Executive Officer) -------------------------------------------------- Nancy E. Corsiglia Vice President - Finance (Principal Financial Officer)