As filed with the Securities and Exchange
Commission on November 9, 2010
|
UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
WASHINGTON,
D.C. 20549
|
FORM
10-Q
|
Federally
chartered instrumentality
of
the United States
|
52-1578738
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
employer identification number)
|
|
1133
Twenty-First Street, N.W., Suite 600
Washington,
D.C.
|
20036
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
Non-accelerated
filer
x
|
Smaller
reporting company
o
|
Item
1.
|
Condensed Consolidated
Financial Statements
|
Condensed
Consolidated Balance Sheets as of September 30, 2010 and December 31,
2009
|
3
|
Condensed
Consolidated Statements of Operations for the three and nine months ended
September
30,
2010 and 2009
|
4
|
Condensed
Consolidated Statements of Equity for the nine months ended
September
30,
2010 and 2009
|
5
|
Condensed
Consolidated Statements of Cash Flows for the nine months ended
September
30,
2010 and 2009
|
6
|
Notes
to Condensed Consolidated Financial Statements
|
7
|
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 453,273 | $ | 654,794 | ||||
Investment
securities:
|
||||||||
Available-for-sale,
at fair value
|
1,375,518 | 1,041,923 | ||||||
Trading,
at fair value
|
81,913 | 89,972 | ||||||
Total
investment securities
|
1,457,431 | 1,131,895 | ||||||
Farmer
Mac Guaranteed Securities:
|
||||||||
Available-for-sale,
at fair value
|
2,434,467 | 2,524,867 | ||||||
Trading,
at fair value
|
- | 874,129 | ||||||
Total
Farmer Mac Guaranteed Securities
|
2,434,467 | 3,398,996 | ||||||
USDA
Guaranteed Securities:
|
||||||||
Available-for-sale,
at fair value
|
970,901 | - | ||||||
Trading,
at fair value
|
354,539 | - | ||||||
Total
USDA Guaranteed Securities
|
1,325,440 | - | ||||||
Loans:
|
||||||||
Loans
held for sale, at lower of cost or fair value
|
981,985 | 666,534 | ||||||
Loans
held for investment, at amortized cost
|
88,498 | 93,478 | ||||||
Loans
held for investment in consolidated trusts, at amortized
cost
|
1,292,716 | - | ||||||
Allowance
for loan losses
|
(9,442 | ) | (6,292 | ) | ||||
Total
loans, net of allowance
|
2,353,757 | 753,720 | ||||||
Real
estate owned, at lower of cost or fair value
|
3,434 | 739 | ||||||
Financial
derivatives, at fair value
|
52,471 | 15,040 | ||||||
Interest
receivable
|
67,424 | 67,178 | ||||||
Guarantee
and commitment fees receivable
|
34,058 | 55,016 | ||||||
Deferred
tax asset, net
|
- | 24,146 | ||||||
Prepaid
expenses and other assets
|
40,987 | 37,289 | ||||||
Total
Assets
|
$ | 8,222,742 | $ | 6,138,813 | ||||
Liabilities,
Mezzanine Equity and Equity:
|
||||||||
Liabilities:
|
||||||||
Notes
payable:
|
||||||||
Due
within one year
|
$ | 3,645,811 | $ | 3,662,898 | ||||
Due
after one year
|
2,979,147 | 1,908,713 | ||||||
Total
notes payable
|
6,624,958 | 5,571,611 | ||||||
Debt
securities of consolidated trusts held by third parties
|
849,430 | - | ||||||
Financial
derivatives, at fair value
|
144,715 | 107,367 | ||||||
Accrued
interest payable
|
45,094 | 39,562 | ||||||
Guarantee
and commitment obligation
|
30,922 | 48,526 | ||||||
Accounts
payable and accrued expenses
|
20,239 | 23,445 | ||||||
Deferred
tax liability, net
|
2,441 | - | ||||||
Reserve
for losses
|
9,575 | 7,895 | ||||||
Total
Liabilities
|
7,727,374 | 5,798,406 | ||||||
Commitments
and Contingencies (Note 5)
|
||||||||
Mezzanine
Equity:
|
||||||||
Series
B redeemable preferred stock, par value $1,000 per share, 150,000 shares
authorized, issued and outstanding as of December 31, 2009 (redemption
value $150,000,000)
|
- | 144,216 | ||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock:
|
||||||||
Series
C, par value $1,000 per share, 100,000 shares authorized, 57,578 shares
issued and outstanding
|
57,578 | 57,578 | ||||||
Common
stock:
|
||||||||
Class
A Voting, $1 par value, no maximum authorization, 1,030,780 shares
outstanding
|
1,031 | 1,031 | ||||||
Class
B Voting, $1 par value, no maximum authorization, 500,301 shares
outstanding
|
500 | 500 | ||||||
Class
C Non-Voting, $1 par value, no maximum authorization, 8,746,123 shares
outstanding
as of September 30, 2010 and 8,610,918 shares
outstanding as of December 31, 2009
|
8,746 | 8,611 | ||||||
Additional
paid-in capital
|
99,468 | 97,090 | ||||||
Accumulated
other comprehensive income
|
47,332 | 3,254 | ||||||
Retained
earnings
|
38,860 | 28,127 | ||||||
Total
Stockholders' Equity
|
253,515 | 196,191 | ||||||
Non-controlling
interest - preferred stock
|
241,853 | - | ||||||
Total
Equity
|
495,368 | 196,191 | ||||||
Total
Liabilities, Mezzanine Equity and Equity
|
$ | 8,222,742 | $ | 6,138,813 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||
Interest
income:
|
||||||||||||||||
Investments
and cash equivalents
|
$ | 6,430 | $ | 6,345 | $ | 19,303 | $ | 22,303 | ||||||||
Farmer
Mac and USDA Guaranteed Securities
|
22,971 | 27,668 | 62,597 | 81,232 | ||||||||||||
Loans
|
29,174 | 8,815 | 94,734 | 28,196 | ||||||||||||
Total
interest income
|
58,575 | 42,828 | 176,634 | 131,731 | ||||||||||||
Total
interest expense
|
33,526 | 23,031 | 106,360 | 68,593 | ||||||||||||
Net
interest income
|
25,049 | 19,797 | 70,274 | 63,138 | ||||||||||||
Provision
for loan losses
|
(412 | ) | (3,098 | ) | (1,392 | ) | (939 | ) | ||||||||
Net
interest income after provision for loan losses
|
24,637 | 16,699 | 68,882 | 62,199 | ||||||||||||
Non-interest
(loss)/income:
|
||||||||||||||||
Guarantee
and commitment fees
|
5,977 | 8,168 | 17,606 | 23,486 | ||||||||||||
(Losses)/gains
on financial derivatives
|
(6,864 | ) | (7,733 | ) | (28,508 | ) | 15,506 | |||||||||
(Losses)/gains
on trading assets
|
(1,722 | ) | 25,047 | 6,703 | 56,707 | |||||||||||
Other-than-temporary
impairment losses
|
- | (1,621 | ) | - | (3,994 | ) | ||||||||||
Gains
on sale of available-for-sale investment securities
|
24 | 63 | 264 | 2,913 | ||||||||||||
Gains
on sale of loans and Farmer Mac Guaranteed Securities
|
- | - | - | 1,581 | ||||||||||||
Lower
of cost or fair value adjustment on loans held for sale
|
(906 | ) | - | (3,090 | ) | - | ||||||||||
Other
income
|
140 | 874 | 1,180 | 1,209 | ||||||||||||
Non-interest
(loss)/income
|
(3,351 | ) | 24,798 | (5,845 | ) | 97,408 | ||||||||||
Non-interest
expense:
|
||||||||||||||||
Compensation
and employee benefits
|
4,501 | 2,896 | 11,919 | 10,493 | ||||||||||||
General
and administrative
|
1,775 | 2,432 | 6,329 | 8,332 | ||||||||||||
Regulatory
fees
|
568 | 512 | 1,693 | 1,537 | ||||||||||||
Real
estate owned operating costs, net
|
1,189 | 203 | 1,497 | 208 | ||||||||||||
Provision
for losses
|
105 | 89 | 1,680 | 2,079 | ||||||||||||
Non-interest
expense
|
8,138 | 6,132 | 23,118 | 22,649 | ||||||||||||
Income
before income taxes
|
13,148 | 35,365 | 39,919 | 136,958 | ||||||||||||
Income
tax expense
|
885 | 13,097 | 5,977 | 47,721 | ||||||||||||
Net
income
|
12,263 | 22,268 | 33,942 | 89,237 | ||||||||||||
Less:
Net income attributable to non-controlling interest - preferred stock
dividends
|
(5,546 | ) | - | (15,160 | ) | - | ||||||||||
Net
income attributable to Farmer Mac
|
6,717 | 22,268 | 18,782 | 89,237 | ||||||||||||
Preferred
stock dividends
|
(720 | ) | (4,368 | ) | (3,410 | ) | (12,434 | ) | ||||||||
Loss
on retirement of preferred stock
|
- | - | (5,784 | ) | - | |||||||||||
Net
income available to common stockholders
|
$ | 5,997 | $ | 17,900 | $ | 9,588 | $ | 76,803 | ||||||||
Earnings
per common share and dividends:
|
||||||||||||||||
Basic
earnings per common share
|
$ | 0.58 | $ | 1.77 | $ | 0.94 | $ | 7.58 | ||||||||
Diluted
earnings per common share
|
$ | 0.56 | $ | 1.74 | $ | 0.91 | $ | 7.54 | ||||||||
Common
stock dividends per common share
|
$ | 0.05 | $ | 0.05 | $ | 0.15 | $ | 0.15 |
For the Nine Months Ended
|
||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Preferred
stock:
|
||||||||||||||||
Balance,
beginning of period
|
58 | $ | 57,578 | 9 | $ | 9,200 | ||||||||||
Issuance
of Series C preferred stock
|
- | - | 48 | 47,800 | ||||||||||||
Balance,
end of period
|
58 | $ | 57,578 | 57 | $ | 57,000 | ||||||||||
Common
stock:
|
||||||||||||||||
Balance,
beginning of period
|
10,142 | $ | 10,142 | 10,132 | $ | 10,132 | ||||||||||
Issuance
of Class C common stock
|
122 | 122 | 8 | 8 | ||||||||||||
Exercise
of stock options and SARs
|
13 | 13 | - | - | ||||||||||||
Balance,
end of period
|
10,277 | $ | 10,277 | 10,140 | $ | 10,140 | ||||||||||
Additional
paid-in capital:
|
||||||||||||||||
Balance,
beginning of period
|
$ | 97,090 | $ | 95,572 | ||||||||||||
Stock-based
compensation expense
|
2,187 | 2,160 | ||||||||||||||
Issuance
of Class C common stock
|
33 | 21 | ||||||||||||||
Exercise,
vesting and cancellation of stock options
|
||||||||||||||||
SARs
and restricted stock
|
158 | (1,206 | ) | |||||||||||||
Balance,
end of period
|
$ | 99,468 | $ | 96,547 | ||||||||||||
Retained
earnings/(accumulated deficit):
|
||||||||||||||||
Balance,
beginning of period
|
$ | 28,127 | $ | (52,144 | ) | |||||||||||
Net
income attributable to Farmer Mac
|
18,782 | 89,237 | ||||||||||||||
Cash
dividends:
|
||||||||||||||||
Preferred
stock, Series B ($8.33 per share in 2010 and $75.00 per share in
2009)
|
(1,250 | ) | (11,250 | ) | ||||||||||||
Preferred
stock, Series C ($37.50 per share)
|
(2,160 | ) | (1,184 | ) | ||||||||||||
Common
stock ($0.15 per share)
|
(1,534 | ) | (1,520 | ) | ||||||||||||
Loss
on retirement of preferred stock
|
(5,784 | ) | - | |||||||||||||
Cumulative
effect of adoption of new accounting standard, net of tax
|
2,679 | - | ||||||||||||||
Balance,
end of period
|
$ | 38,860 | $ | 23,139 | ||||||||||||
Accumulated
other comprehensive income/(loss):
|
||||||||||||||||
Balance,
beginning of period
|
$ | 3,254 | $ | (47,412 | ) | |||||||||||
Change
in unrealized gain on available-for-sale securities, net of tax and
reclassification adjustments
|
44,000 | 65,427 | ||||||||||||||
Change
in unrealized gain on financial derivatives, net of tax and
reclassification adjustments
|
78 | 124 | ||||||||||||||
Balance,
end of period
|
$ | 47,332 | $ | 18,139 | ||||||||||||
Total
Stockholders' Equity
|
$ | 253,515 | $ | 204,965 | ||||||||||||
Non-controlling
interest:
|
||||||||||||||||
Balance,
beginning of period
|
$ | - | $ | - | ||||||||||||
Preferred
stock - Farmer Mac II LLC
|
241,853 | - | ||||||||||||||
Balance,
end of period
|
$ | 241,853 | $ | - | ||||||||||||
Total
Equity
|
$ | 495,368 | $ | 204,965 | ||||||||||||
Comprehensive
income:
|
||||||||||||||||
Net
income
|
$ | 33,942 | $ | 89,237 | ||||||||||||
Change
in accumulated other comprehensive income, net of tax
|
44,078 | 65,551 | ||||||||||||||
Comprehensive
income
|
78,020 | 154,788 | ||||||||||||||
Less:
Comprehensive income attributable to non-controlling
interest
|
15,160 | - | ||||||||||||||
Total
comprehensive income
|
$ | 62,860 | $ | 154,788 |
For the Nine Months Ended
|
||||||||
September 30, 2010
|
September 30, 2009
|
|||||||
(in thousands)
|
||||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 33,942 | $ | 89,237 | ||||
Adjustments
to reconcile net income to net cash (used in)/provided by operating
activities:
|
||||||||
Net
amortization of premiums and discounts on loans, investments,
and
|
||||||||
Farmer
Mac and USDA Guaranteed Securities
|
8,421 | 3,123 | ||||||
Amortization
of debt premiums, discounts and issuance costs
|
5,057 | 10,982 | ||||||
Net
change in fair value of trading securities, financial derivatives and
loans held for sale
|
(5,970 | ) | (104,312 | ) | ||||
Amortization
of transition adjustment on financial derivatives
|
120 | 124 | ||||||
Other-than-temporary
impairment losses
|
- | 3,994 | ||||||
Gains
on sale of loans and Farmer Mac Guaranteed Securities
|
- | (1,581 | ) | |||||
Gains
on the sale of available-for-sale investment securities
|
(264 | ) | (2,913 | ) | ||||
Total
provision for losses
|
3,072 | 3,018 | ||||||
Deferred
income taxes
|
809 | 73,629 | ||||||
Stock-based
compensation expense
|
2,188 | 2,159 | ||||||
Proceeds
from repayment and sale of trading investment securities
|
586 | 644 | ||||||
Purchases
of loans held for sale
|
(404,072 | ) | (122,421 | ) | ||||
Proceeds
from repayment of loans held for sale
|
82,988 | 51,896 | ||||||
Net
change in:
|
||||||||
(Increase)/decrease
in interest receivable
|
(246 | ) | 16,852 | |||||
Decrease
in guarantee and commitment fees receivable
|
20,958 | 6,637 | ||||||
Decrease
in other assets
|
522 | 24,287 | ||||||
Increase/(decrease)
in accrued interest payable
|
5,532 | (3,082 | ) | |||||
(Decrease)/increase
in other liabilities
|
(17,865 | ) | 11,725 | |||||
Net
cash (used in)/provided by operating activities
|
(264,222 | ) | 63,998 | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of available-for-sale investment securities
|
(626,678 | ) | (41,721 | ) | ||||
Purchases
of Farmer Mac Guaranteed Securities
|
(1,151,375 | ) | (1,952,704 | ) | ||||
Purchases
of loans held for investment
|
(26,367 | ) | (48,147 | ) | ||||
Purchases
of defaulted loans
|
(5,317 | ) | (19,631 | ) | ||||
Proceeds
from repayment of available-for-sale investment securities
|
213,315 | 148,544 | ||||||
Proceeds
from repayment of Farmer Mac Guaranteed Securities
|
372,862 | 690,741 | ||||||
Proceeds
from repayment of loans held for investment
|
196,424 | 37,308 | ||||||
Proceeds
from sale of available-for-sale investment securities
|
92,767 | 207,879 | ||||||
Proceeds
from sale of trading securities - fair value option
|
5,013 | - | ||||||
Proceeds
from sale of Farmer Mac Guaranteed Securities
|
18,860 | 24,232 | ||||||
Proceeds
from sale of real estate owned
|
- | 31,056 | ||||||
Proceeds
from sale of loans
|
- | 358,953 | ||||||
Net
cash used in investing activities
|
(910,496 | ) | (563,490 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of discount notes
|
50,774,678 | 40,680,191 | ||||||
Proceeds
from issuance of medium-term notes
|
1,977,609 | 2,962,189 | ||||||
Payments
to redeem discount notes
|
(50,262,407 | ) | (41,077,281 | ) | ||||
Payments
to redeem medium-term notes
|
(1,441,590 | ) | (2,103,000 | ) | ||||
Tax
benefit from tax deduction in excess of compensation cost
recognized
|
747 | - | ||||||
Payments
to third parties on debt securities of consolidated trusts
|
(147,832 | ) | - | |||||
Proceeds
from common stock issuance
|
180 | 29 | ||||||
Issuance
costs on retirement of preferred stock
|
(5,784 | ) | - | |||||
Proceeds
from preferred stock issuance - Farmer Mac II LLC
|
241,853 | - | ||||||
Proceeds
from preferred stock issuance
|
- | 47,800 | ||||||
Retirement
of Series B Preferred stock
|
(144,216 | ) | - | |||||
Dividends
paid - Non-controlling interest - preferred stock
|
(15,097 | ) | - | |||||
Dividends
paid on common and preferred stock
|
(4,944 | ) | (13,954 | ) | ||||
Net
cash provided by financing activities
|
973,197 | 495,974 | ||||||
Net
decrease in cash and cash equivalents
|
(201,521 | ) | (3,518 | ) | ||||
Cash
and cash equivalents at beginning of period
|
654,794 | 278,412 | ||||||
Cash
and cash equivalents at end of period
|
$ | 453,273 | $ | 274,894 |
Note
1.
|
Accounting
Policies
|
For the Nine Months Ended
|
||||||||
September 30, 2010
|
September 30, 2009
|
|||||||
(in thousands)
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 57,746 | $ | 58,994 | ||||
Income
taxes
|
12,500 | 10,500 | ||||||
Non-cash
activity:
|
||||||||
Real
estate owned acquired through foreclosure
|
4,643 | 41,086 | ||||||
Loans
acquired and securitized as Farmer Mac Guaranteed
Securities
|
2,185 | 17,224 | ||||||
Consolidation
of Farmer Mac I Guaranteed Securities from off-balance sheet to loans held
for investment in consolidated trusts
|
1,402,556 | - | ||||||
Consolidation
of Farmer Mac I Guaranteed Securities from off-balance sheet to debt
securities of consolidated trusts held by third parties
|
1,402,556 | - | ||||||
Transfers
of available-for-sale Farmer Mac I Guaranteed Securities to loans held for
investment in consolidated trusts, upon the adoption of new consolidation
guidance
|
5,385 | - | ||||||
Transfers
of trading Farmer Mac Guaranteed Securities - Rural Utilities to loans
held for investment in consolidated trusts, upon the adoption of new
consolidation guidance
|
451,448 | - | ||||||
Deconsolidation
of loans held for investment in consolidated trusts - transferred to
off-balance sheet
Farmer
Mac I Guaranteed Securities
|
414,462 | - | ||||||
Deconsolidation
of debt securities of consolidated trusts held by third parties -
transferred to off-balance sheet
Farmer
Mac I Guaranteed Securities
|
414,462 | - | ||||||
Transfers
of Farmer Mac I Guaranteed Securities to loans held for
sale
|
- | 288,012 | ||||||
Transfers
of loans held for investment to loans held for sale
|
- | 617,072 | ||||||
Exchange
of GSE preferred stock - transfer from trading to
available-for-sale
|
- | 90,657 |
|
·
|
economic
conditions;
|
|
·
|
geographic
and agricultural commodity/product concentrations in the
portfolio;
|
|
·
|
the
credit profile of the portfolio;
|
|
·
|
delinquency
trends of the portfolio;
|
|
·
|
historical
charge-off and recovery activities of the portfolio;
and
|
|
·
|
other
factors to capture current portfolio trends and characteristics that
differ from historical experience.
|
|
·
|
non-performing
assets (loans 90 days or more past due, in foreclosure, restructured,
in bankruptcy – including loans performing under either their original
loan terms or a court-approved bankruptcy plan – and real estate owned
(“REO”));
|
|
·
|
loans
for which Farmer Mac has adjusted the timing of borrowers’ payment
schedules, but still expects to collect all amounts due and has not made
economic concessions; and
|
|
·
|
additional
performing loans that have previously been delinquent or are secured by
real estate that produces agricultural commodities or products currently
under stress.
|
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in thousands)
|
||||||||
Allowance
for loan losses
|
$ | 9,442 | $ | 6,292 | ||||
Reserve
for losses:
|
||||||||
Off-balance
sheet Farmer Mac I Guaranteed Securities
|
984 | 2,033 | ||||||
LTSPCs
|
8,591 | 5,862 | ||||||
Total
allowance for losses
|
$ | 19,017 | $ | 14,187 |
September 30, 2010
|
September 30, 2009
|
|||||||||||||||||||||||
Allowance
|
Total
|
Allowance
|
Total
|
|||||||||||||||||||||
for Loan
|
Reserve
|
Allowance
|
for Loan
|
Reserve
|
Allowance
|
|||||||||||||||||||
Losses
|
for Losses
|
for Losses
|
Losses
|
for Losses
|
for Losses
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
For
the Three Months Ended:
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 9,495 | $ | 9,470 | $ | 18,965 | $ | 1,810 | $ | 7,496 | $ | 9,306 | ||||||||||||
Provision
for losses
|
412 | 105 | 517 | 3,098 | 89 | 3,187 | ||||||||||||||||||
Charge-offs
|
(465 | ) | - | (465 | ) | (16 | ) | - | (16 | ) | ||||||||||||||
Recoveries
|
- | - | - | - | - | - | ||||||||||||||||||
Ending
balance
|
$ | 9,442 | $ | 9,575 | $ | 19,017 | $ | 4,892 | $ | 7,585 | $ | 12,477 | ||||||||||||
For
the Nine Months Ended:
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 6,292 | $ | 7,895 | $ | 14,187 | $ | 10,929 | $ | 5,506 | $ | 16,435 | ||||||||||||
Provision
for losses
|
1,392 | 1,680 | 3,072 | 939 | 2,079 | 3,018 | ||||||||||||||||||
Charge-offs
|
(465 | ) | - | (465 | ) | (7,741 | ) | - | (7,741 | ) | ||||||||||||||
Recoveries
|
2,223 | - | 2,223 | 765 | - | 765 | ||||||||||||||||||
Ending
balance
|
$ | 9,442 | $ | 9,575 | $ | 19,017 | $ | 4,892 | $ | 7,585 | $ | 12,477 |
September 30, 2010
|
||||||||||||||||||||||||||||
Weighted-
|
||||||||||||||||||||||||||||
Weighted-
|
Weighted-
|
Weighted-
|
Average
|
|||||||||||||||||||||||||
Average
|
Average
|
Average
|
Remaining
|
|||||||||||||||||||||||||
Notional
|
Fair Value
|
Pay
|
Receive
|
Forward
|
Life
|
|||||||||||||||||||||||
Amount
|
Asset
|
(Liability)
|
Rate
|
Rate
|
Price
|
(in years)
|
||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||
Interest
rate swaps:
|
||||||||||||||||||||||||||||
Pay
fixed callable
|
$ | 26,235 | $ | - | $ | (291 | ) |
5.42%
|
0.42%
|
7.24
|
||||||||||||||||||
Pay
fixed non-callable
|
1,215,137 | 26 | (140,806 | ) |
4.80%
|
0.40%
|
3.82
|
|||||||||||||||||||||
Receive
fixed callable
|
40,000 | 14 | - |
0.29%
|
0.57%
|
0.87
|
||||||||||||||||||||||
Receive
fixed non-callable
|
2,358,083 | 53,387 | (29 | ) |
0.55%
|
1.56%
|
1.74
|
|||||||||||||||||||||
Basis
swaps
|
229,991 | 71 | (3,666 | ) |
1.52%
|
0.46%
|
2.00
|
|||||||||||||||||||||
Credit
default swaps
|
30,000 | 25 | (3 | ) |
1.00%
|
0.00%
|
1.30
|
|||||||||||||||||||||
Agency
forwards
|
117,254 | - | (866 | ) |
104.85
|
|||||||||||||||||||||||
Treasury
futures
|
1,700 | - | 1 |
126.12
|
||||||||||||||||||||||||
Credit
valuation adjustment
|
- | (1,052 | ) | 945 | ||||||||||||||||||||||||
Total
financial derivatives
|
$ | 4,018,400 | $ | 52,471 | $ | (144,715 | ) |
December 31, 2009
|
||||||||||||||||||||||||||||
Weighted-
|
||||||||||||||||||||||||||||
Weighted-
|
Weighted-
|
Weighted-
|
Average
|
|||||||||||||||||||||||||
Average
|
Average
|
Average
|
Remaining
|
|||||||||||||||||||||||||
Notional
|
Fair Value
|
Pay
|
Receive
|
Forward
|
Life
|
|||||||||||||||||||||||
Amount
|
Asset
|
(Liability)
|
Rate
|
Rate
|
Price
|
(in years)
|
||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||
Interest
rate swaps:
|
||||||||||||||||||||||||||||
Pay
fixed callable
|
$ | 65,686 | $ | - | $ | (1,725 | ) |
5.70%
|
0.27%
|
7.78
|
||||||||||||||||||
Pay
fixed non-callable
|
1,236,156 | 5 | (99,913 | ) |
4.95%
|
0.26%
|
4.62
|
|||||||||||||||||||||
Receive
fixed callable
|
300,000 | 236 | - |
0.09%
|
0.54%
|
0.76
|
||||||||||||||||||||||
Receive
fixed non-callable
|
2,262,714 | 14,298 | (2,815 | ) |
0.41%
|
1.80%
|
2.25
|
|||||||||||||||||||||
Basis
swaps
|
262,177 | 294 | (3,673 | ) |
1.63%
|
0.61%
|
2.39
|
|||||||||||||||||||||
Credit
default swaps
|
30,000 | - | (214 | ) |
1.00%
|
0.00%
|
2.14
|
|||||||||||||||||||||
Agency
forwards
|
75,511 | 453 | - |
101.22
|
||||||||||||||||||||||||
Treasury
futures
|
20,500 | 3 | - |
115.47
|
||||||||||||||||||||||||
Credit
valuation adjustment
|
- | (249 | ) | 973 | ||||||||||||||||||||||||
Total
financial derivatives
|
$ | 4,252,744 | $ | 15,040 | $ | (107,367 | ) |
(Losses)/Gains
on
Financial
Derivatives
|
||||||||||||||||
For
the
Three
Months
Ended
|
For
the
Nine
Months
Ended
|
|||||||||||||||
September
30,
2010
|
September
30,
2009
|
September
30,
2010
|
September
30,
2009
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Interest
rate swaps
|
$ | (5,243 | ) | $ | (6,409 | ) | $ | (24,634 | ) | $ | 17,971 | |||||
Agency
forwards
|
(1,089 | ) | (1,223 | ) | (3,026 | ) | (2,301 | ) | ||||||||
Treasury
futures
|
(96 | ) | (47 | ) | (737 | ) | 28 | |||||||||
Credit
default swaps
|
(396 | ) | - | 9 | - | |||||||||||
(6,824 | ) | (7,679 | ) | (28,388 | ) | 15,698 | ||||||||||
Amortization
of derivatives transition adjustment
|
(40 | ) | (54 | ) | (120 | ) | (192 | ) | ||||||||
Total
|
$ | (6,864 | ) | $ | (7,733 | ) | $ | (28,508 | ) | $ | 15,506 |
For the Three Months Ended
|
||||||||||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||||||||||
Net
|
$ per
|
Net
|
$ per
|
|||||||||||||||||||||
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
|||||||||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||||||||||
Basic
EPS
|
||||||||||||||||||||||||
Net
income available to common stockholders
|
$ | 5,997 | 10,277 | $ | 0.58 | $ | 17,900 | 10,140 | $ | 1.77 | ||||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||||||||||
Stock
options, SARs and restricted stock (1)
|
388 | (0.02 | ) | 146 | (0.03 | ) | ||||||||||||||||||
Diluted
EPS
|
$ | 5,997 | 10,665 | $ | 0.56 | $ | 17,900 | 10,286 | $ | 1.74 |
(1)
|
For
the three months ended September 30, 2010 and 2009, stock options and SARs
of 1,354,800 and 1,590,965, respectively, were outstanding but not
included in the computation of diluted earnings per share of common stock
because they were anti-dilutive. For the three months ended
September 30, 2010, 126,000 contingent shares of nonvested restricted
stock were outstanding but not included in the computation of diluted
earnings per share because the performance conditions were not
met.
|
For the Nine Months Ended
|
||||||||||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||||||||||
Net
|
$ per
|
Net
|
$ per
|
|||||||||||||||||||||
Income
|
Shares
|
Share
|
Income
|
Shares
|
Share
|
|||||||||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||||||||||
Basic
EPS
|
||||||||||||||||||||||||
Net
income available to common stockholders
|
$ | 9,588 |
10,211
|
$ | 0.94 | $ | 76,803 |
10,138
|
$ | 7.58 | ||||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||||||||||
Stock
options, SARs and restricted stock (1)
|
365
|
(0.03 | ) |
49
|
(0.04 | ) | ||||||||||||||||||
Diluted
EPS
|
$ | 9,588 |
10,576
|
$ | 0.91 | $ | 76,803 |
10,187
|
$ | 7.54 |
(1)
|
For
the nine months ended September 30, 2010 and 2009, stock options and SARs
of 1,528,938 and 1,784,912, respectively, were outstanding but not
included in the computation of diluted earnings per share of common stock
because they were anti-dilutive. For the nine months ended
September 30, 2010, 111,500 contingent shares of nonvested restricted
stock were outstanding but not included in the computation of diluted
earnings per share because the performance conditions were not
met.
|
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Stock
|
Weighted-
|
Stock
|
Weighted-
|
|||||||||||||
Options
|
Average
|
Options
|
Average
|
|||||||||||||
and
|
Exercise
|
and
|
Exercise
|
|||||||||||||
SARs
|
Price
|
SARs
|
Price
|
|||||||||||||
For
the Three Months Ended:
|
||||||||||||||||
Outstanding,
beginning of period
|
1,923,050
|
$ | 21.53 |
1,755,965
|
$ | 23.06 | ||||||||||
Granted
|
-
|
- |
-
|
- | ||||||||||||
Exercised
|
-
|
- |
-
|
- | ||||||||||||
Canceled
|
(48,250
|
) | 25.43 |
(1,500
|
) | 22.94 | ||||||||||
Outstanding,
end of period
|
1,874,800
|
$ | 21.43 |
1,754,465
|
$ | 23.06 | ||||||||||
For
the Nine Months Ended:
|
||||||||||||||||
Outstanding,
beginning of period
|
1,799,465
|
$ | 22.68 |
2,237,711
|
$ | 25.54 | ||||||||||
Granted
|
247,000
|
12.20 |
165,000
|
5.93 | ||||||||||||
Exercised
|
(21,331
|
) | 13.15 |
-
|
- | |||||||||||
Canceled
|
(150,334
|
) | 22.34 |
(648,246
|
) | 27.27 | ||||||||||
Outstanding,
end of period
|
1,874,800
|
$ | 21.43 |
1,754,465
|
$ | 23.06 | ||||||||||
Stock
options and SARs
|
||||||||||||||||
exercisable
at the end of the period
|
1,440,211
|
$ | 24.53 |
1,398,262
|
$ | 25.17 |
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||
Nonvested
|
Average
|
Nonvested
|
Average
|
|||||||||||||
Restricted
|
Grant-date
|
Restricted
|
Grant-date
|
|||||||||||||
Stock
|
Fair Value
|
Stock
|
Fair Value
|
|||||||||||||
For
the Three Months Ended:
|
||||||||||||||||
Outstanding,
beginning of period
|
181,986
|
$ | 9.66 |
200,548
|
$ | 5.93 | ||||||||||
Granted
|
-
|
- |
-
|
- | ||||||||||||
Canceled
|
-
|
- |
-
|
- | ||||||||||||
Vested
and issued
|
-
|
- |
-
|
- | ||||||||||||
Outstanding,
end of period
|
181,986
|
$ | 9.66 |
200,548
|
$ | 5.93 | ||||||||||
For
the Nine Months Ended:
|
||||||||||||||||
Outstanding,
beginning of period
|
200,548
|
$ | 5.93 |
-
|
$ | - | ||||||||||
Granted
|
111,085
|
12.28 |
200,548
|
5.93 | ||||||||||||
Canceled
|
(11,599
|
) | 8.15 |
-
|
- | |||||||||||
Vested
and issued
|
(118,048
|
) | 5.93 |
-
|
- | |||||||||||
Outstanding,
end of period
|
181,986
|
$ | 9.66 |
200,548
|
$ | 5.93 |
Outstanding
|
Exercisable
|
Vested or Expected to Vest
|
|||||||||||||||
Weighted-
|
Weighted-
|
Weighted-
|
|||||||||||||||
Stock
|
Average
|
Stock
|
Average
|
Stock
|
Average
|
||||||||||||
Range of
|
Options
|
Remaining
|
Options
|
Remaining
|
Options
|
Remaining
|
|||||||||||
Exercise
|
and
|
Contractual
|
and
|
Contractual
|
and
|
Contractual
|
|||||||||||
Prices
|
SARs
|
Life
|
SARs
|
Life
|
SARs
|
Life
|
|||||||||||
$5.00
- $ 9.99
|
273,000
|
8.5 years
|
113,003
|
8.4
years
|
245,001
|
8.5 years
|
|||||||||||
10.00
- 14.99
|
247,000
|
9.5
years
|
-
|
-
|
222,300
|
9.5
years
|
|||||||||||
15.00
- 19.99
|
73,291
|
3.9
years
|
73,291
|
3.9
years
|
73,291
|
3.9
years
|
|||||||||||
20.00
- 24.99
|
483,457
|
3.9
years
|
483,457
|
3.9
years
|
483,457
|
3.9
years
|
|||||||||||
25.00
- 29.99
|
584,384
|
4.0
years
|
556,792
|
3.8
years
|
581,424
|
4.0
years
|
|||||||||||
30.00
- 34.99
|
213,668
|
1.4
years
|
213,668
|
1.4
years
|
213,668
|
1.4
years
|
|||||||||||
1,874,800
|
1,440,211
|
1,819,141
|
Outstanding
|
Expected to Vest
|
|||||||||
Weighted-
|
Weighted-
|
|||||||||
Weighted-
|
Average
|
Average
|
||||||||
Average
|
Nonvested
|
Remaining
|
Nonvested
|
Remaining
|
||||||
Grant-Date
|
Restricted
|
Contractual
|
Restricted
|
Contractual
|
||||||
Fair Value
|
Stock
|
Life
|
Stock
|
Life
|
||||||
$5.00
- $ 9.99
|
75,000
|
1.5
years
|
67,500
|
1.5
years
|
||||||
10.00
- 14.99
|
104,287
|
1.5
years
|
93,858
|
1.5
years
|
||||||
15.00
- 19.99
|
2,699
|
0.5
years
|
2,426
|
0.5
years
|
||||||
181,986
|
163,784
|
2010
|
2009
|
||||||
Risk-free
interest rate
|
3.3%
|
1.5%
|
|||||
Expected
years until exercise
|
|
7 years
|
|
7 years
|
|||
Expected
stock volatility
|
88.3%
|
104.3%
|
|||||
Dividend
yield
|
1.8%
|
3.4%
|
Note
2.
|
Investment
Securities
|
September 30, 2010
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 74,100 | $ | - | $ | (8,414 | ) | $ | 65,686 | |||||||
Floating
rate asset-backed securities
|
11,714 | 7 | (4 | ) | 11,717 | |||||||||||
Floating
rate corporate debt securities
|
154,385 | 521 | (495 | ) | 154,411 | |||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
428,863 | 5,373 | (329 | ) | 433,907 | |||||||||||
Fixed
rate GSE guaranteed mortgage-backed securities
|
4,714 | 314 | - | 5,028 | ||||||||||||
Floating
rate GSE subordinated debt
|
70,000 | - | (15,544 | ) | 54,456 | |||||||||||
Fixed
rate GSE preferred stock
|
80,082 | 5,876 | - | 85,958 | ||||||||||||
Fixed
rate senior agency debt
|
5,495 | 3 | - | 5,498 | ||||||||||||
Fixed
rate U.S. Treasuries
|
558,519 | 338 | - | 558,857 | ||||||||||||
Total
available-for-sale
|
1,387,872 | 12,432 | (24,786 | ) | 1,375,518 | |||||||||||
Trading:
|
||||||||||||||||
Floating
rate asset-backed securities
|
6,122 | - | (4,753 | ) | 1,369 | |||||||||||
Fixed
rate GSE preferred stock
|
83,999 | - | (3,455 | ) | 80,544 | |||||||||||
Total
trading
|
90,121 | - | (8,208 | ) | 81,913 | |||||||||||
Total
investment securities
|
$ | 1,477,993 | $ | 12,432 | $ | (32,994 | ) | $ | 1,457,431 |
December 31, 2009
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 74,100 | $ | - | $ | (1,216 | ) | $ | 72,884 | |||||||
Floating
rate asset-backed securities
|
58,157 | 26 | (40 | ) | 58,143 | |||||||||||
Floating
rate corporate debt securities
|
246,758 | 267 | (1,420 | ) | 245,605 | |||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
404,452 | 1,188 | (1,419 | ) | 404,221 | |||||||||||
Fixed
rate GSE guaranteed mortgage-backed securities
|
6,248 | 289 | - | 6,537 | ||||||||||||
Floating
rate GSE subordinated debt
|
70,000 | - | (22,438 | ) | 47,562 | |||||||||||
Fixed
rate GSE preferred stock
|
90,543 | - | (1,332 | ) | 89,211 | |||||||||||
Fixed
rate U.S. Treasuries
|
117,810 | - | (50 | ) | 117,760 | |||||||||||
Total
available-for-sale
|
1,068,068 | 1,770 | (27,915 | ) | 1,041,923 | |||||||||||
Trading:
|
||||||||||||||||
Floating
rate asset-backed securities
|
6,708 | - | (4,884 | ) | 1,824 | |||||||||||
Fixed
rate GSE preferred stock
|
89,637 | - | (1,489 | ) | 88,148 | |||||||||||
Total
trading
|
96,345 | - | (6,373 | ) | 89,972 | |||||||||||
Total
investment securities
|
$ | 1,164,413 | $ | 1,770 | $ | (34,288 | ) | $ | 1,131,895 |
September 30, 2010
|
||||||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
Unrealized loss position for
|
Unrealized loss position for
|
|||||||||||||||
less than 12 months
|
more than 12 months
|
|||||||||||||||
Unrealized
|
Unrealized
|
|||||||||||||||
Fair Value
|
Loss
|
Fair Value
|
Loss
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Floating
rate corporate debt securities
|
$ | - | $ | - | $ | 99,503 | $ | (495 | ) | |||||||
Floating
rate asset-backed securities
|
- | - | 3,913 | (4 | ) | |||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
- | - | 65,686 | (8,414 | ) | |||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
34,040 | (269 | ) | 15,157 | (60 | ) | ||||||||||
Floating
rate GSE subordinated debt
|
- | - | 54,456 | (15,544 | ) | |||||||||||
Total
|
$ | 34,040 | $ | (269 | ) | $ | 238,715 | $ | (24,517 | ) |
December 31, 2009
|
||||||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
Unrealized loss position for
|
Unrealized loss position for
|
|||||||||||||||
less than 12 months
|
more than 12 months
|
|||||||||||||||
Unrealized
|
Unrealized
|
|||||||||||||||
Fair Value
|
Loss
|
Fair Value
|
Loss
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Floating
rate corporate debt securities
|
$ | - | $ | - | $ | 182,745 | $ | (1,420 | ) | |||||||
Floating
rate asset-backed securities
|
- | - | 17,319 | (40 | ) | |||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
- | - | 72,884 | (1,216 | ) | |||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
116,754 | (645 | ) | 121,877 | (774 | ) | ||||||||||
Floating
rate GSE subordinated debt
|
- | - | 47,562 | (22,438 | ) | |||||||||||
Fixed
rate GSE preferred stock
|
89,211 | (1,332 | ) | - | - | |||||||||||
Fixed
rate U.S. Treasuries
|
117,760 | (50 | ) | - | - | |||||||||||
Total
|
$ | 323,725 | $ | (2,027 | ) | $ | 442,387 | $ | (25,888 | ) |
Investment Securities Available-for-Sale
|
||||||||||||
as of September 30, 2010
|
||||||||||||
Amortized
|
Weighted-
|
|||||||||||
Cost
|
Fair Value
|
Average Yield
|
||||||||||
(dollars in thousands)
|
||||||||||||
Due
within one year
|
$ | 588,416 | $ | 589,005 |
|
0.05%
|
||||||
Due
after one year through five years
|
140,915 | 140,678 |
0.64%
|
|||||||||
Due
after five years through ten years
|
94,607 | 96,392 |
2.82%
|
|||||||||
Due
after ten years
|
563,934 | 549,443 |
2.67%
|
|||||||||
Total
|
$ | 1,387,872 | $ | 1,375,518 |
1.37%
|
Note
3.
|
Farmer
Mac Guaranteed Securities and USDA Guaranteed
Securities
|
September 30, 2010
|
||||||||||||
Available-
|
||||||||||||
for-Sale
|
Trading
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Farmer
Mac I
|
$ | 608,794 | $ | - | $ | 608,794 | ||||||
Farmer
Mac II
|
41,980 | - | 41,980 | |||||||||
Rural
Utilities
|
1,783,693 | - | 1,783,693 | |||||||||
Farmer
Mac Guaranteed Securities
|
2,434,467 | - | 2,434,467 | |||||||||
USDA
Guaranteed Securities
|
970,901 | 354,539 | 1,325,440 | |||||||||
Total
|
$ | 3,405,368 | $ | 354,539 | $ | 3,759,907 | ||||||
Amortized
cost
|
$ | 3,331,151 | $ | 352,467 | $ | 3,683,618 | ||||||
Unrealized
gains
|
74,702 | 2,072 | 76,774 | |||||||||
Unrealized
losses
|
(485 | ) | - | (485 | ) | |||||||
Fair
value
|
$ | 3,405,368 | $ | 354,539 | $ | 3,759,907 |
December 31, 2009
|
||||||||||||
Available-
|
||||||||||||
for-Sale
|
Trading
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Farmer
Mac I
|
$ | 56,864 | $ | - | $ | 56,864 | ||||||
Farmer
Mac II
|
764,792 | 422,681 | 1,187,473 | |||||||||
Rural
Utilities
|
1,703,211 | 451,448 | 2,154,659 | |||||||||
Total
|
$ | 2,524,867 | $ | 874,129 | $ | 3,398,996 | ||||||
Amortized
cost
|
$ | 2,493,644 | $ | 817,631 | $ | 3,311,275 | ||||||
Unrealized
gains
|
39,657 | 56,569 | 96,226 | |||||||||
Unrealized
losses
|
(8,434 | ) | (71 | ) | (8,505 | ) | ||||||
Fair
value
|
$ | 2,524,867 | $ | 874,129 | $ | 3,398,996 |
|
September 30,
|
December 31,
|
||||||
|
2010
|
2009
|
||||||
(dollars
in thousands)
|
||||||||
Fair
value of beneficial interests retained in Farmer Mac and USDA Guaranteed
Securities
|
$ | 3,759,907 | $ | 3,398,996 | ||||
|
||||||||
Weighted-average
remaining life (in years)
|
3.2 | 3.7 | ||||||
|
||||||||
Weighted-average
prepayment speed (annual rate)
|
5.2 | % | 3.8 | % | ||||
Effect
on fair value of a 10% adverse change
|
$ | (1,385 | ) | $ | (18 | ) | ||
Effect
on fair value of a 20% adverse change
|
$ | (2,658 | ) | $ | (36 | ) | ||
|
||||||||
Weighted-average
discount rate
|
2.4 | % | 2.8 | % | ||||
Effect
on fair value of a 10% adverse change
|
$ | (20,115 | ) | $ | (22,081 | ) | ||
Effect
on fair value of a 20% adverse change
|
$ | (40,424 | ) | $ | (44,531 | ) |
Outstanding
Balance of Farmer Mac Loans and Loans Underlying
Farmer
Mac and USDA Guaranteed Securities and LTSPCs
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
On-balance
sheet:
|
||||||||
Farmer
Mac I:
|
||||||||
Loans
|
$ | 875,709 | $ | 733,422 | ||||
Loans
held in trusts:
|
||||||||
Beneficial
interests owned by Farmer Mac
|
3,781 | 5,307 | ||||||
Beneficial
interests owned by third party investors
|
847,794 | - | ||||||
Farmer
Mac Guaranteed Securities - AgVantage
|
591,500 | 48,800 | ||||||
Farmer
Mac II:
|
||||||||
USDA
Guaranteed Securities
|
1,278,814 | - | ||||||
Farmer
Mac Guaranteed Securities
|
42,921 | 1,164,996 | ||||||
Rural
Utilities:
|
||||||||
Loans
|
198,921 | 28,644 | ||||||
Loans
held in trusts:
|
||||||||
Beneficial
interests owned by Farmer Mac
|
400,228 | 412,948 | ||||||
Farmer
Mac Guaranteed Securities - AgVantage
|
1,737,200 | 1,675,000 | ||||||
Total
on-balance sheet
|
$ | 5,976,868 | $ | 4,069,117 | ||||
Off-balance
sheet:
|
||||||||
Farmer
Mac I:
|
||||||||
AgVantage
|
$ | 2,945,000 | $ | 2,945,000 | ||||
LTSPCs
|
1,697,578 | 2,165,706 | ||||||
Farmer
Mac Guaranteed Securities
|
795,400 | 1,492,239 | ||||||
Farmer
Mac II:
|
||||||||
Farmer
Mac Guaranteed Securities
|
44,258 | 34,802 | ||||||
Rural
Utilities:
|
||||||||
AgVantage
|
17,104 | 14,240 | ||||||
Total
off-balance sheet
|
$ | 5,499,340 | $ | 6,651,987 | ||||
Total
|
$ | 11,476,208 | $ | 10,721,104 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Unpaid
principal balance at acquisition date
|
$ | 1,914 | $ | 14,029 | $ | 5,317 | $ | 19,666 | ||||||||
Contractually
required payments receivable
|
1,965 | 14,029 | 5,435 | 19,675 | ||||||||||||
Impairment
recognized subsequent to acquisition
|
376 | 16 | 2,116 | 7,741 | ||||||||||||
Recovery/release
of allowance for defaulted loans
|
10 | - | 2,934 | - |
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
Outstanding
balance
|
$ | 34,619 | $ | 50,409 | ||||
Carrying
amount
|
30,502 | 29,994 |
90-Day
|
Net Credit
|
|||||||||||||||||||
Delinquencies (1)
|
(Recoveries)/Losses (2)
|
|||||||||||||||||||
As of
|
As of
|
As of
|
For the Nine Months Ended
|
|||||||||||||||||
September 30,
|
December 31,
|
September 30,
|
September 30,
|
September 30,
|
||||||||||||||||
2010
|
2009
|
2009
|
2010
|
2009
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
On-balance
sheet assets:
|
||||||||||||||||||||
Farmer
Mac I:
|
||||||||||||||||||||
Loans
|
$ | 40,846 | $ | 35,470 | $ | 47,288 | $ | (275 | ) | $ | 6,976 | |||||||||
Total
on-balance sheet
|
$ | 40,846 | $ | 35,470 | $ | 47,288 | $ | (275 | ) | $ | 6,976 | |||||||||
Off-balance
sheet assets:
|
||||||||||||||||||||
Farmer
Mac I:
|
||||||||||||||||||||
LTSPCs
|
$ | 23,954 | $ | 14,056 | $ | 12,150 | $ | - | $ | - | ||||||||||
Guaranteed
Securities
|
- | - | - | - | - | |||||||||||||||
Total
off-balance sheet
|
$ | 23,954 | $ | 14,056 | $ | 12,150 | $ | - | $ | - | ||||||||||
Total
|
$ | 64,800 | $ | 49,526 | $ | 59,438 | $ | (275 | ) | $ | 6,976 |
(1)
|
Includes
loans and loans underlying Farmer Mac I Guaranteed Securities and LTSPCs
that are 90 days or more past due, in foreclosure, restructured after
delinquency, and in bankruptcy, excluding loans performing under either
their original loan terms or a court-approved bankruptcy
plan.
|
(2)
|
Includes
loans and loans underlying Farmer Mac I Guaranteed Securities, LTSPCs and
REO.
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Net
income
|
$ | 12,263 | $ | 22,268 | $ | 33,942 | $ | 89,237 | ||||||||
Available-for-sale
securities, net of tax:
|
||||||||||||||||
Net
unrealized holding gains
|
15,852 | 30,237 | 44,206 | 64,178 | ||||||||||||
Reclassification
adjustment for realized (gains)/losses
|
(15 | ) | 414 | (206 | ) | 1,249 | ||||||||||
Net
change from available-for-sale securities (1)
|
15,837 | 30,651 | 44,000 | 65,427 | ||||||||||||
Financial
derivatives, net of tax:
|
||||||||||||||||
Reclassification
for amortization of financial derivatives transition adjustment
(2)
|
26 | 34 | 78 | 124 | ||||||||||||
Other
comprehensive income, net of tax
|
15,863 | 30,685 | 44,078 | 65,551 | ||||||||||||
Comprehensive
income
|
28,126 | 52,953 | 78,020 | 154,788 | ||||||||||||
Less:
Comprehensive income attributable to non-controlling
interest
|
5,546 | - | 15,160 | - | ||||||||||||
Total
comprehensive income
|
$ | 22,580 | $ | 52,953 | $ | 62,860 | $ | 154,788 |
(1)
|
Unrealized
gains on available for sale securities is shown net of income tax expense
of $8.5 million and $16.5 million for the three months ended September 30,
2010 and 2009, respectively, and $23.7 million and $35.2 million for the
nine months ended September 30, 2010 and 2009,
respectively.
|
(2)
|
Amortization
of financial derivatives transition adjustment is shown net of income tax
expense of $14,000 and $19,000 for the three months ended September 30,
2010 and 2009, respectively, and $42,000 and $67,000 for the nine months
ended September 30, 2010 and 2009,
respectively.
|
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
Available-for-sale
securities:
|
||||||||
Beginning
balance
|
$ | 3,300 | $ | (47,214 | ) | |||
Net
unrealized gains, net of tax
|
44,000 | 50,514 | ||||||
Ending
balance
|
$ | 47,300 | $ | 3,300 | ||||
Financial
derivatives:
|
||||||||
Beginning
balance
|
$ | (46 | ) | $ | (198 | ) | ||
Amortization
of financial derivatives transition adjustment, net of tax
|
78 | 152 | ||||||
Ending
balance
|
$ | 32 | $ | (46 | ) | |||
Accumulated
other comprehensive income, net of tax
|
$ | 47,332 | $ | 3,254 |
For the Nine Months Ended
|
||||||||
September 30, 2010
|
September 30, 2009
|
|||||||
(in
thousands)
|
||||||||
Proceeds
from new securitizations
|
$ | 18,860 | $ | 17,224 | ||||
Guarantee
fees received
|
5,610 | 9,673 | ||||||
Purchases
of assets from the trusts
|
(3,456 | ) | (841 | ) | ||||
Servicing
advances
|
(14 | ) | (11 | ) | ||||
Repayments
of servicing advances
|
22 | 10 |
Outstanding
Balance of Off-Balance Sheet
|
||||||||
Farmer Mac Guaranteed
Securities
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
Farmer
Mac I:
|
||||||||
AgVantage
|
$ | 2,945,000 | $ | 2,945,000 | ||||
Farmer
Mac Guaranteed Securities
|
795,400 | 1,492,239 | ||||||
Farmer
Mac II Guaranteed Securities
|
44,258 | 34,802 | ||||||
Rural
Utilities AgVantage
|
17,104 | 14,240 | ||||||
Total
off-balance sheet Farmer Mac Guaranteed Securities
|
$ | 3,801,762 | $ | 4,486,281 |
|
·
|
Class
A Voting Common Stock, which may be held only by banks, insurance
companies and other financial institutions or similar entities that are
not institutions of the Farm Credit System. By federal statute, no
holder of Class A Voting Common Stock may directly or indirectly be a
beneficial owner of more than 33 percent of the outstanding shares of that
class of stock;
|
|
·
|
Class
B Voting Common Stock, which may be held only by institutions of the Farm
Credit System. There are no restrictions on the maximum holdings of
Class B Voting Common Stock; and
|
|
·
|
Class
C Non-Voting Common Stock, which has no ownership
restrictions.
|
|
·
|
Series
B preferred stock, which was newly issued on September 30, 2008 and on
December 15, 2008, was temporary equity and is reported as Mezzanine
Equity on the condensed consolidated balance sheets because it contained
redemption features that, although remote, were not solely within the
control of Farmer Mac, and was repurchased and retired on January 25, 2010
such that none was outstanding on September 30, 2010;
and
|
|
·
|
Series
C preferred stock, which was newly issued during fourth quarter 2008 and
during 2009, is a component of Stockholders’ Equity on the condensed
consolidated balance sheets.
|
|
·
|
Minimum
capital – Farmer Mac’s minimum capital level is equal to the sum of
2.75 percent of Farmer Mac’s aggregate on-balance sheet assets, as
calculated for regulatory purposes, plus 0.75 percent of the aggregate
off-balance sheet obligations of Farmer Mac, including Farmer Mac
Guaranteed Securities and LTSPCs;
|
|
·
|
Critical
capital – Farmer Mac’s critical capital level is equal to 50 percent
of the minimum capital requirement at that time;
and
|
|
·
|
Risk-based
capital – the Farm Credit Administration (“FCA”) has established a
risk-based capital stress test for Farmer
Mac.
|
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or
liabilities.
|
Level
2
|
Quoted
prices in markets that are not active or financial instruments for which
all significant inputs are observable, either directly or
indirectly.
|
Level
3
|
Prices
or valuations that require unobservable inputs that are significant to the
fair value measurement.
|
Assets and Liabilities Measured at Fair Value as
of September 30, 2010
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||||
Recurring:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Investment
Securities:
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | - | $ | - | $ | 65,686 | $ | 65,686 | ||||||||
Floating
rate asset-backed securities
|
- | 11,717 | - | 11,717 | ||||||||||||
Floating
rate corporate debt securities
|
- | 154,411 | - | 154,411 | ||||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
- | 433,907 | - | 433,907 | ||||||||||||
Fixed
rate GSE guaranteed mortgage-backed securities
|
- | 5,028 | - | 5,028 | ||||||||||||
Floating
rate GSE subordinated debt
|
- | 54,456 | - | 54,456 | ||||||||||||
Fixed
rate GSE preferred stock
|
- | 85,958 | - | 85,958 | ||||||||||||
U.S.
Treasuries
|
558,857 | - | - | 558,857 | ||||||||||||
Senior
agency debt
|
- | 5,498 | - | 5,498 | ||||||||||||
Total
available-for-sale
|
558,857 | 750,975 | 65,686 | 1,375,518 | ||||||||||||
Trading:
|
||||||||||||||||
Floating
rate asset-backed securities
|
- | - | 1,369 | 1,369 | ||||||||||||
Fixed
rate GSE preferred stock
|
- | 80,544 | - | 80,544 | ||||||||||||
Total
trading
|
- | 80,544 | 1,369 | 81,913 | ||||||||||||
Total
Investment Securities
|
558,857 | 831,519 | 67,055 | 1,457,431 | ||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Farmer
Mac I
|
- | - | 608,794 | 608,794 | ||||||||||||
Farmer
Mac II
|
- | - | 41,980 | 41,980 | ||||||||||||
Rural
Utilities
|
- | - | 1,783,693 | 1,783,693 | ||||||||||||
Total
available-for-sale
|
- | - | 2,434,467 | 2,434,467 | ||||||||||||
Trading
- Farmer Mac II
|
- | - | - | - | ||||||||||||
Total
Farmer Mac Guaranteed Securities
|
- | - | 2,434,467 | 2,434,467 | ||||||||||||
USDA
Guaranteed Securities:
|
||||||||||||||||
Available-for-sale
|
- | - | 970,901 | 970,901 | ||||||||||||
Trading
|
- | - | 354,539 | 354,539 | ||||||||||||
Total
USDA Guaranteed Securities
|
- | - | 1,325,440 | 1,325,440 | ||||||||||||
Financial
derivatives
|
- | 52,471 | - | 52,471 | ||||||||||||
Total
Assets at fair value
|
$ | 558,857 | $ | 883,990 | $ | 3,826,962 | $ | 5,269,809 | ||||||||
Liabilities:
|
||||||||||||||||
Financial
derivatives
|
$ | 1 | $ | (141,095 | ) | $ | (3,621 | ) | $ | (144,715 | ) | |||||
Total
Liabilities at fair value
|
$ | 1 | $ | (141,095 | ) | $ | (3,621 | ) | $ | (144,715 | ) | |||||
Nonrecurring:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Loans
held for sale, at lower of cost or fair value
|
$ | - | $ | - | $ | 195,692 | $ | 195,692 | ||||||||
Loans
held for investment, at fair value
|
- | - | 3,476 | 3,476 | ||||||||||||
REO
|
- | - | 3,719 | 3,719 | ||||||||||||
Total
Nonrecurring Assets at fair value
|
$ | - | $ | - | $ | 202,887 | $ | 202,887 |
Assets and Liabilities Measured at Fair Value as
of December 31, 2009
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||||
Recurring:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Investment
Securities:
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | - | $ | - | $ | 72,884 | $ | 72,884 | ||||||||
Floating
rate asset-backed securities
|
- | 58,143 | - | 58,143 | ||||||||||||
Floating
rate corporate debt securities
|
- | 245,605 | - | 245,605 | ||||||||||||
Floating
rate Government/GSE guaranteed mortgage-backed securities
|
- | 404,221 | - | 404,221 | ||||||||||||
Fixed
rate GSE guaranteed mortgage-backed securities
|
- | 6,537 | - | 6,537 | ||||||||||||
Floating
rate GSE subordinated debt
|
- | - | 47,562 | 47,562 | ||||||||||||
Fixed
rate GSE preferred stock
|
- | - | 89,211 | 89,211 | ||||||||||||
U.S.
Treasuries
|
117,760 | - | - | 117,760 | ||||||||||||
Total
available-for-sale
|
117,760 | 714,506 | 209,657 | 1,041,923 | ||||||||||||
Trading:
|
||||||||||||||||
Floating
rate asset-backed securities
|
- | - | 1,824 | 1,824 | ||||||||||||
Fixed
rate GSE preferred stock
|
- | - | 88,148 | 88,148 | ||||||||||||
Total
trading
|
- | - | 89,972 | 89,972 | ||||||||||||
Total
Investment Securities
|
117,760 | 714,506 | 299,629 | 1,131,895 | ||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||
Available-for-sale:
|
||||||||||||||||
Farmer
Mac I
|
- | - | 56,864 | 56,864 | ||||||||||||
Farmer
Mac II
|
- | - | 764,792 | 764,792 | ||||||||||||
Rural
Utilities
|
- | - | 1,703,211 | 1,703,211 | ||||||||||||
Total
available-for-sale
|
- | - | 2,524,867 | 2,524,867 | ||||||||||||
Trading:
|
||||||||||||||||
Farmer
Mac II
|
- | - | 422,681 | 422,681 | ||||||||||||
Rural
Utilities
|
- | - | 451,448 | 451,448 | ||||||||||||
Total
trading
|
- | - | 874,129 | 874,129 | ||||||||||||
Total
Farmer Mac Guaranteed Securities
|
- | - | 3,398,996 | 3,398,996 | ||||||||||||
Financial
derivatives
|
3 | 15,037 | - | 15,040 | ||||||||||||
Total
Assets at fair value
|
$ | 117,763 | $ | 729,543 | $ | 3,698,625 | $ | 4,545,931 | ||||||||
Liabilities:
|
||||||||||||||||
Financial
derivatives
|
$ | - | $ | 103,714 | $ | 3,653 | $ | 107,367 | ||||||||
Total
Liabilities at fair value
|
$ | - | $ | 103,714 | $ | 3,653 | $ | 107,367 | ||||||||
Nonrecurring:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Loans
held for sale
|
$ | - | $ | - | $ | 28,505 | $ | 28,505 | ||||||||
Total
Nonrecurring Assets at fair value
|
$ | - | $ | - | $ | 28,505 | $ | 28,505 |
Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended September 30, 2010
|
||||||||||||||||||||||||
Beginning
Balance
|
Purchases,
Sales,
Issuances
and
Settlements,
net
|
Realized and
Unrealized
Gains/(Losses)
included in
Income
|
Unrealized
Gains/(Losses)
included in
Other
Comprehensive
Income
|
Net Transfers In
and/or Out
|
Ending
Balance
|
|||||||||||||||||||
|
(in
thousands)
|
|||||||||||||||||||||||
Recurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investment
Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 63,344 | $ | - | $ | - | $ | 2,342 | $ | - | $ | 65,686 | ||||||||||||
Floating
rate GSE subordinated debt
|
- | - | - | - | - | - | ||||||||||||||||||
Fixed
rate GSE preferred stock
|
- | - | - | - | - | - | ||||||||||||||||||
Total
available-for-sale investment securities
|
63,344 | - | - | 2,342 | - | 65,686 | ||||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Floating
rate asset-backed securities(1)
|
1,412 | (185 | ) | 142 | - | - | 1,369 | |||||||||||||||||
Fixed
rate GSE preferred stock
|
- | - | - | - | - | - | ||||||||||||||||||
Total
trading investment securities
|
1,412 | (185 | ) | 142 | - | - | 1,369 | |||||||||||||||||
Total
Investment Securities
|
64,756 | (185 | ) | 142 | 2,342 | - | 67,055 | |||||||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Farmer
Mac I
|
47,821 | 547,942 | - | 13,031 | - | 608,794 | ||||||||||||||||||
Farmer
Mac II
|
40,436 | 1,214 | - | 330 | - | 41,980 | ||||||||||||||||||
Rural
Utilities
|
1,629,883 | 150,000 | - | 3,810 | - | 1,783,693 | ||||||||||||||||||
Total
available-for-sale
|
1,718,140 | 699,156 | - | 17,171 | - | 2,434,467 | ||||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Farmer
Mac II
|
- | - | - | - | - | - | ||||||||||||||||||
Rural
Utilities
|
- | - | - | - | - | - | ||||||||||||||||||
Total
trading
|
- | - | - | - | - | - | ||||||||||||||||||
Total
Farmer Mac Guaranteed Securities
|
1,718,140 | 699,156 | - | 17,171 | - | 2,434,467 | ||||||||||||||||||
USDA
Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale
|
880,424 | 88,117 | - | 2,360 | - | 970,901 | ||||||||||||||||||
Trading(2)
|
386,496 | (29,890 | ) | (2,067 | ) | - | - | 354,539 | ||||||||||||||||
Total
USDA Guaranteed Securities
|
1,266,920 | 58,227 | (2,067 | ) | 2,360 | - | 1,325,440 | |||||||||||||||||
Total
Assets at fair value
|
$ | 3,049,816 | $ | 757,198 | $ | (1,925 | ) | $ | 21,873 | $ | - | $ | 3,826,962 | |||||||||||
Liabilities:
|
||||||||||||||||||||||||
Financial
derivatives(3)
|
$ | (3,678 | ) | $ | - | $ | 57 | $ | - | $ | - | $ | (3,621 | ) | ||||||||||
Total
Liabilities at fair value
|
$ | (3,678 | ) | $ | - | $ | 57 | $ | - | $ | - | $ | (3,621 | ) | ||||||||||
Nonrecurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans
held for sale, at lower of cost or fair value
|
$ | 163,065 | $ | - | $ | (906 | ) | $ | - | $ | 33,533 | $ | 195,692 | |||||||||||
Loans
held for investment, at fair value
|
4,256 | - | (374 | ) | - | (406 | ) | 3,476 | ||||||||||||||||
REO
|
- | - | (1,483 | ) | - | 5,202 | 3,719 | |||||||||||||||||
Total
Nonrecurring Assets at fair value
|
$ | 167,321 | $ | - | $ | (2,763 | ) | $ | - | $ | 38,329 | $ | 202,887 |
(1)
|
Unrealized
gains are attributable to assets still held as of September 30, 2010 and
are recorded in (losses)/gains on trading
assets.
|
(2)
|
Includes
unrealized losses of $3.6 million attributable to assets still held as of
September 30, 2010 that are recorded in (losses)/gains on trading
assets.
|
(3)
|
Unrealized
gains are attributable to liabilities still held as of September 30, 2010
and are recorded in (losses)/gains on financial
derivatives.
|
Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended September 30, 2009
|
||||||||||||||||||||||||
Beginning
Balance
|
Purchases,
Sales,
Issuances
and
Settlements,
net
|
Realized and
Unrealized
Gains/(Losses)
included in
Income
|
Unrealized
Gains/(Losses)
included in
Other
Comprehensive
Income
|
Net Transfers In
and/or Out
|
Ending
Balance
|
|||||||||||||||||||
|
(in
thousands)
|
|||||||||||||||||||||||
Recurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investment
Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 68,716 | $ | - | $ | - | $ | 4,019 | $ | - | $ | 72,735 | ||||||||||||
Floating
rate GSE subordinated debt
|
54,187 | - | - | 6,129 | - | 60,316 | ||||||||||||||||||
Fixed
rate GSE preferred stock
|
- | (35 | ) | - | 7,904 | 90,657 | 98,526 | |||||||||||||||||
Total
available-for-sale
|
122,903 | (35 | ) | - | 18,052 | 90,657 | 231,577 | |||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Floating
rate asset-backed securities(1)
|
1,937 | (172 | ) | 83 | - | - | 1,848 | |||||||||||||||||
Fixed
rate GSE preferred stock(2)
|
183,500 | (309 | ) | 3,056 | - | (90,657 | ) | 95,590 | ||||||||||||||||
Total
trading
|
185,437 | (481 | ) | 3,139 | - | (90,657 | ) | 97,438 | ||||||||||||||||
Total
Investment Securities
|
308,340 | (516 | ) | 3,139 | 18,052 | - | 329,015 | |||||||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Farmer
Mac I
|
55,632 | 1,493 | - | 686 | - | 57,811 | ||||||||||||||||||
Farmer
Mac II
|
644,572 | 42,323 | - | 9,134 | - | 696,029 | ||||||||||||||||||
Rural
Utilities
|
1,424,077 | 425,000 | - | 6,268 | - | 1,855,345 | ||||||||||||||||||
Total
available-for-sale
|
2,124,281 | 468,816 | - | 16,088 | - | 2,609,185 | ||||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Farmer
Mac II(3)
|
447,957 | (19,978 | ) | 8,874 | - | - | 436,853 | |||||||||||||||||
Rural
Utilities(1)
|
447,174 | (6,085 | ) | 13,034 | - | - | 454,123 | |||||||||||||||||
Total
trading
|
895,131 | (26,063 | ) | 21,908 | - | - | 890,976 | |||||||||||||||||
Total
Farmer Mac Guaranteed Securities
|
3,019,412 | 442,753 | 21,908 | 16,088 | - | 3,500,161 | ||||||||||||||||||
Total
Assets at fair value
|
$ | 3,327,752 | $ | 442,237 | $ | 25,047 | $ | 34,140 | $ | - | $ | 3,829,176 | ||||||||||||
Liabilities:
|
||||||||||||||||||||||||
Financial
Derivatives(4)
|
$ | (3,350 | ) | $ | - | $ | (585 | ) | $ | - | $ | - | $ | (3,935 | ) | |||||||||
Total
Liabilities at fair value
|
$ | (3,350 | ) | $ | - | $ | (585 | ) | $ | - | $ | - | $ | (3,935 | ) | |||||||||
Nonrecurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans
held for sale
|
$ | - | $ | - | $ | (315 | ) | $ | - | $ | 28,644 | $ | 28,329 | |||||||||||
REO
|
43,260 | (31,609 | ) | - | - | (1,474 | ) | 10,177 | ||||||||||||||||
Total
Nonrecurring Assets at fair value
|
$ | 43,260 | $ | (31,609 | ) | $ | (315 | ) | $ | - | $ | 27,170 | $ | 38,506 |
(1)
|
Unrealized
gains are attributable to assets still held as of September 30, 2009 and
are recorded in (losses)/gains on trading
assets.
|
(2)
|
Includes
unrealized gains of approximately $3.5 million attributable to assets
still held as of September 30, 2009 that are recorded in (losses)/gains on
trading assets.
|
(3)
|
Includes
unrealized gains of approximately $9.5 million attributable to assets
still held as of September 30, 2009 that are recorded in (losses)/gains on
trading assets.
|
(4)
|
Unrealized
losses are attributable to liabilities still held as of September 30, 2009
and are recorded in (losses)/gains on financial
derivatives.
|
Level
3 Assets and Liabilities Measured at Fair Value for the Nine Months Ended
September 30, 2010
|
||||||||||||||||||||||||
Beginning
Balance
|
Purchases,
Sales,
Issuances
and
Settlements,
net
|
Realized and
Unrealized
Gains/(Losses)
included in
Income
|
Unrealized
Gains/(Losses)
included in
Other
Comprehensive
Income
|
Net Transfers In
and/or Out
|
Ending Balance
|
|||||||||||||||||||
|
(in
thousands)
|
|||||||||||||||||||||||
Recurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investment
Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 72,884 | $ | - | $ | - | $ | (7,198 | ) | $ | - | $ | 65,686 | |||||||||||
Floating
rate GSE subordinated debt
|
47,562 | - | - | - | (47,562 | ) | - | |||||||||||||||||
Fixed
rate GSE preferred stock
|
89,211 | - | - | - | (89,211 | ) | - | |||||||||||||||||
Total
available-for-sale
|
209,657 | - | - | (7,198 | ) | (136,773 | ) | 65,686 | ||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Floating
rate asset-backed securities(1)
|
1,824 | (587 | ) | 132 | - | - | 1,369 | |||||||||||||||||
Fixed
rate GSE preferred stock
|
88,148 | - | - | (88,148 | ) | - | ||||||||||||||||||
Total
trading
|
89,972 | (587 | ) | 132 | - | (88,148 | ) | 1,369 | ||||||||||||||||
Total
Investment Securities
|
299,629 | (587 | ) | 132 | (7,198 | ) | (224,921 | ) | 67,055 | |||||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Farmer
Mac I
|
56,864 | 542,677 | - | 14,638 | (5,385 | ) | 608,794 | |||||||||||||||||
Farmer
Mac II
|
764,792 | 1,411 | - | (1,039 | ) | (723,184 | ) | 41,980 | ||||||||||||||||
Rural
Utilities
|
1,703,211 | 62,201 | - | 18,281 | - | 1,783,693 | ||||||||||||||||||
Total
available-for-sale
|
2,524,867 | 606,289 | - | 31,880 | (728,569 | ) | 2,434,467 | |||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Farmer
Mac II
|
422,681 | - | - | (422,681 | ) | - | ||||||||||||||||||
Rural
Utilities
|
451,448 | - | - | - | (451,448 | ) | - | |||||||||||||||||
Total
trading
|
874,129 | - | - | - | (874,129 | ) | - | |||||||||||||||||
Total
Farmer Mac Guaranteed Securities
|
3,398,996 | 606,289 | - | 31,880 | (1,602,698 | ) | 2,434,467 | |||||||||||||||||
USDA
Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale
|
- | 225,696 | - | 22,021 | 723,184 | 970,901 | ||||||||||||||||||
Trading(2)
|
- | (76,679 | ) | 8,537 | - | 422,681 | 354,539 | |||||||||||||||||
Total
USDA Guaranteed Securities
|
- | 149,017 | 8,537 | 22,021 | 1,145,865 | 1,325,440 | ||||||||||||||||||
Total
Assets at fair value
|
$ | 3,698,625 | $ | 754,719 | $ | 8,669 | $ | 46,703 | $ | (681,754 | ) | $ | 3,826,962 | |||||||||||
Liabilities:
|
||||||||||||||||||||||||
Financial
derivatives(3)
|
$ | (3,653 | ) | $ | - | $ | 32 | $ | - | $ | - | $ | (3,621 | ) | ||||||||||
Total
Liabilities at fair value
|
$ | (3,653 | ) | $ | - | $ | 32 | $ | - | $ | - | $ | (3,621 | ) | ||||||||||
Nonrecurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans
held for sale, at lower of cost or fair value
|
$ | 28,505 | $ | - | $ | (3,090 | ) | $ | - | $ | 170,277 | $ | 195,692 | |||||||||||
Loans
held for investment, at fair value
|
- | - | (1,042 | ) | - | 4,518 | 3,476 | |||||||||||||||||
REO
|
- | - | (1,483 | ) | - | 5,202 | 3,719 | |||||||||||||||||
Total
Nonrecurring Assets at fair value
|
$ | 28,505 | $ | - | $ | (5,615 | ) | $ | - | $ | 179,997 | $ | 202,887 |
(1)
|
Unrealized
gains are attributable to assets still held as of September 30, 2010 and
are recorded in (losses)/gains on trading
assets.
|
(2)
|
Includes
unrealized gains of $4.0 million attributable to assets still held as of
September 30, 2010 that are recorded in (losses)/gains on trading
assets.
|
(3)
|
Unrealized
gains are attributable to liabilities still held as of September 30, 2010
and are recorded in (losses)/gains on financial
derivatives.
|
Level 3 Assets and Liabilities Measured at Fair Value for the Nine Months Ended September 30, 2009
|
||||||||||||||||||||||||
Beginning
Balance
|
Purchases,
Sales,
Issuances
and
Settlements,
net
|
Realized and
Unrealized
Gains/(Losses)
included in
Income
|
Unrealized
Gains/(Losses)
included in
Other
Comprehensive
Income
|
Net Transfers
In
and/or Out
|
Ending Balance
|
|||||||||||||||||||
|
(in
thousands)
|
|||||||||||||||||||||||
Recurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investment
Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Floating
rate auction-rate certificates backed by Government guaranteed student
loans
|
$ | 178,577 | $ | (119,850 | ) | $ | - | $ | 14,008 | $ | - | $ | 72,735 | |||||||||||
Floating
rate GSE subordinated debt
|
- | - | - | 11,184 | 49,132 | 60,316 | ||||||||||||||||||
Fixed
rate GSE preferred stock
|
- | (35 | ) | - | 7,904 | 90,657 | 98,526 | |||||||||||||||||
Total
available-for-sale
|
178,577 | (119,885 | ) | - | 33,096 | 139,789 | 231,577 | |||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Floating
rate asset-backed securities(1)
|
2,211 | (645 | ) | 282 | - | - | 1,848 | |||||||||||||||||
Fixed
rate GSE preferred stock(2)
|
161,552 | (990 | ) | 25,685 | - | (90,657 | ) | 95,590 | ||||||||||||||||
Total
trading
|
163,763 | (1,635 | ) | 25,967 | - | (90,657 | ) | 97,438 | ||||||||||||||||
Total
Investment Securities
|
342,340 | (121,520 | ) | 25,967 | 33,096 | 49,132 | 329,015 | |||||||||||||||||
Farmer
Mac Guaranteed Securities:
|
||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
Farmer
Mac I
|
349,292 | (2,188 | ) | - | (1,281 | ) | (288,012 | ) | 57,811 | |||||||||||||||
Farmer
Mac II
|
522,565 | 160,574 | - | 12,890 | - | 696,029 | ||||||||||||||||||
Rural
Utilities
|
639,837 | 1,195,000 | - | 20,508 | - | 1,855,345 | ||||||||||||||||||
Total
available-for-sale
|
1,511,694 | 1,353,386 | - | 32,117 | (288,012 | ) | 2,609,185 | |||||||||||||||||
Trading:
|
||||||||||||||||||||||||
Farmer
Mac II(3)
|
496,863 | (67,320 | ) | 7,310 | - | - | 436,853 | |||||||||||||||||
Rural
Utilities(1)
|
442,687 | (11,994 | ) | 23,430 | - | - | 454,123 | |||||||||||||||||
Total
trading
|
939,550 | (79,314 | ) | 30,740 | - | - | 890,976 | |||||||||||||||||
Total
Farmer Mac Guaranteed Securities
|
2,451,244 | 1,274,072 | 30,740 | 32,117 | (288,012 | ) | 3,500,161 | |||||||||||||||||
Total
Assets at fair value
|
$ | 2,793,584 | $ | 1,152,552 | $ | 56,707 | $ | 65,213 | $ | (238,880 | ) | $ | 3,829,176 | |||||||||||
Liabilities:
|
||||||||||||||||||||||||
Financial
Derivatives(4)
|
$ | (3,719 | ) | $ | - | $ | (216 | ) | $ | - | $ | - | $ | (3,935 | ) | |||||||||
Total
Liabilities at fair value
|
$ | (3,719 | ) | $ | - | $ | (216 | ) | $ | - | $ | - | $ | (3,935 | ) | |||||||||
Nonrecurring:
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans
held for sale
|
$ | - | $ | - | $ | (315 | ) | $ | - | $ | 28,644 | $ | 28,329 | |||||||||||
REO
|
- | (31,609 | ) | - | - | 41,786 | 10,177 | |||||||||||||||||
Total
Nonrecurring Assets at fair value
|
$ | - | $ | (31,609 | ) | $ | (315 | ) | $ | - | $ | 70,430 | $ | 38,506 |
(1)
|
Unrealized
gains are attributable to assets still held as of September 30, 2009 and
are recorded in (losses)/gains on trading
assets.
|
(2)
|
Includes
unrealized gains of $15.6 million for assets still held as of September
30, 2009 that are recorded in (losses)/gains on trading
assets.
|
(3)
|
Includes
unrealized gains of approximately $8.6 million attributable to assets
still held as of September 30, 2009 that are recorded in (losses)/gains on
trading assets.
|
(4)
|
Unrealized
losses are attributable to liabilities still held as of September 30, 2009
and are recorded in (losses)/gains on financial
derivatives.
|
September 30, 2010
|
December 31, 2009
|
|||||||||||||||
Fair Value
|
Carrying
Amount
|
Fair Value
|
Carrying
Amount
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Financial
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 453,273 | $ | 453,273 | $ | 654,794 | $ | 654,794 | ||||||||
Investment
securities
|
1,457,431 | 1,457,431 | 1,131,895 | 1,131,895 | ||||||||||||
Farmer
Mac Guaranteed Securities
|
2,434,467 | 2,434,467 | 3,398,996 | 3,398,996 | ||||||||||||
USDA
Guaranteed Securities
|
1,325,440 | 1,325,440 | - | - | ||||||||||||
Loans
|
2,463,376 | 2,353,757 | 779,185 | 753,720 | ||||||||||||
Financial
derivatives
|
52,471 | 52,471 | 15,040 | 15,040 | ||||||||||||
Interest
receivable
|
67,424 | 67,424 | 67,178 | 67,178 | ||||||||||||
Guarantee
and commitment fees receivable:
|
||||||||||||||||
LTSPCs
|
11,093 | 12,558 | 14,591 | 15,896 | ||||||||||||
Farmer
Mac Guaranteed Securities
|
20,101 | 21,500 | 36,135 | 39,120 | ||||||||||||
Financial
liabilities:
|
||||||||||||||||
Notes
payable:
|
||||||||||||||||
Due
within one year
|
3,643,972 | 3,645,811 | 3,665,282 | 3,662,898 | ||||||||||||
Due
after one year
|
3,134,578 | 2,979,147 | 1,964,526 | 1,908,713 | ||||||||||||
Debt
securities of consolidated trusts held by third parties
|
913,697 | 849,430 | - | - | ||||||||||||
Financial
derivatives
|
144,715 | 144,715 | 107,367 | 107,367 | ||||||||||||
Accrued
interest payable
|
45,094 | 45,094 | 39,562 | 39,562 | ||||||||||||
Guarantee
and commitment obligations:
|
||||||||||||||||
LTSPCs
|
10,153 | 11,617 | 13,370 | 14,676 | ||||||||||||
Farmer
Mac Guaranteed Securities
|
17,906 | 19,305 | 30,865 | 33,850 |
Core
|
Reconciling
|
GAAP
|
||||||||||||||||||||||||||
Farmer
Mac
I
|
Farmer
Mac
II
|
Rural
Utilities
|
Corporate
|
Earnings
|
Adjustments
|
Amounts
|
||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
Interest
income (1)
|
$ | 24,748 | $ | 14,430 | $ | 14,074 | $ | 6,430 | $ | 59,682 | $ | (1,107 | ) | $ | 58,575 | |||||||||||||
Interest
income related to consolidated trusts owned by third parties reclassified
to guarantee fee income
|
(952 | ) | - | - | - | (952 | ) | 952 | - | |||||||||||||||||||
Interest
expense (2)
|
(16,130 | ) | (11,773 | ) | (10,959 | ) | (3,625 | ) | (42,487 | ) | 8,961 | (33,526 | ) | |||||||||||||||
Net
effective spread
|
7,666 | 2,657 | 3,115 | 2,805 | 16,243 | 8,806 | 25,049 | |||||||||||||||||||||
Guarantee
and commitment fees
|
5,492 | 52 | 1,385 | - | 6,929 | (952 | ) | 5,977 | ||||||||||||||||||||
Other
income/(expense) (3)
|
1,548 | 295 | 1 | (385 | ) | 1,459 | (10,787 | ) | (9,328 | ) | ||||||||||||||||||
Non-interest
income/(loss)
|
7,040 | 347 | 1,386 | (385 | ) | 8,388 | (11,739 | ) | (3,351 | ) | ||||||||||||||||||
Provision
for loan losses
|
(412 | ) | - | - | - | (412 | ) | - | (412 | ) | ||||||||||||||||||
Reserve
for losses
|
(105 | ) | - | - | - | (105 | ) | - | (105 | ) | ||||||||||||||||||
Other
non-interest expense
|
(4,632 | ) | (579 | ) | (1,170 | ) | (1,652 | ) | (8,033 | ) | - | (8,033 | ) | |||||||||||||||
Non-interest
expense (4)
|
(4,737 | ) | (579 | ) | (1,170 | ) | (1,652 | ) | (8,138 | ) | - | (8,138 | ) | |||||||||||||||
Income
before income taxes
|
9,557 | 2,425 | 3,331 | 768 | 16,081 | (2,933 | ) | 13,148 | ||||||||||||||||||||
Income
tax (expense)/benefit
|
(3,345 | ) | (849 | ) | (1,166 | ) | 3,448 | (1,912 | ) | 1,027 | (885 | ) | ||||||||||||||||
Net
income before dividends
|
6,212 | 1,576 | 2,165 | 4,216 | 14,169 | (1,906 | ) | 12,263 | ||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | (720 | ) | (720 | ) | - | (720 | ) | ||||||||||||||||||
Net
income
|
6,212 | 1,576 | 2,165 | 3,496 | 13,449 | (1,906 | ) | 11,543 | ||||||||||||||||||||
Non-controlling
interest
|
- | - | - | (5,546 | ) | (5,546 | ) | - | (5,546 | ) | ||||||||||||||||||
Segment
core earnings
|
$ | 6,212 | $ | 1,576 | $ | 2,165 | $ | (2,050 | ) | $ | 7,903 | $ | (1,906 | ) | $ | 5,997 | ||||||||||||
Total
assets at carrying value
|
$ | 2,393,213 | $ | 1,388,054 | $ | 2,431,811 | $ | 2,009,664 | $ | - | $ | - | $ | 8,222,742 | ||||||||||||||
Total
on- and off-balance sheet program assets at principal
balance
|
7,761,847 | 1,365,993 | 2,353,453 | - | - | - | 11,481,293 |
Core
|
Reconciling
|
GAAP
|
||||||||||||||||||||||||||
Farmer
Mac
I
|
Farmer
Mac
II
|
Rural
Utilities
|
Corporate
|
Earnings
|
Adjustments
|
Amounts
|
||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
Interest
income (1)
|
$ | 9,381 | $ | 12,010 | $ | 15,042 | $ | 6,345 | $ | 42,778 | $ | 50 | $ | 42,828 | ||||||||||||||
Interest
expense (2)
|
(4,617 | ) | (10,512 | ) | (12,445 | ) | (3,291 | ) | (30,865 | ) | 7,834 | (23,031 | ) | |||||||||||||||
Net
effective spread
|
4,764 | 1,498 | 2,597 | 3,054 | 11,913 | 7,884 | 19,797 | |||||||||||||||||||||
Guarantee
and commitment fees
|
5,679 | 701 | 1,788 | - | 8,168 | - | 8,168 | |||||||||||||||||||||
Other
(expense)/income (3)
|
873 | 28 | 2 | (1,973 | ) | (1,070 | ) | 17,700 | 16,630 | |||||||||||||||||||
Non-interest
income/(loss)
|
6,552 | 729 | 1,790 | (1,973 | ) | 7,098 | 17,700 | 24,798 | ||||||||||||||||||||
Provision
for loan losses
|
(3,098 | ) | - | - | - | (3,098 | ) | - | (3,098 | ) | ||||||||||||||||||
Reserve
for losses
|
(89 | ) | - | - | - | (89 | ) | - | (89 | ) | ||||||||||||||||||
Other
non-interest expense
|
(2,890 | ) | (876 | ) | (642 | ) | (1,635 | ) | (6,043 | ) | - | (6,043 | ) | |||||||||||||||
Non-interest
expense (4)
|
(2,979 | ) | (876 | ) | (642 | ) | (1,635 | ) | (6,132 | ) | - | (6,132 | ) | |||||||||||||||
Income
before income taxes
|
5,239 | 1,351 | 3,745 | (554 | ) | 9,781 | 25,584 | 35,365 | ||||||||||||||||||||
Income
tax expense
|
(1,833 | ) | (474 | ) | (1,311 | ) | (525 | ) | (4,143 | ) | (8,954 | ) | (13,097 | ) | ||||||||||||||
Net
income before dividends
|
3,406 | 877 | 2,434 | (1,079 | ) | 5,638 | 16,630 | 22,268 | ||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | (4,368 | ) | (4,368 | ) | - | (4,368 | ) | ||||||||||||||||||
Segment
core earnings
|
$ | 3,406 | $ | 877 | $ | 2,434 | $ | (5,447 | ) | $ | 1,270 | $ | 16,630 | $ | 17,900 | |||||||||||||
Total
assets at carrying value
|
$ | 828,779 | $ | 1,152,334 | $ | 2,348,213 | $ | 1,404,405 | $ | - | $ | - | $ | 5,733,731 | ||||||||||||||
Total
on- and off-balance sheet program assets at principal
balance
|
7,374,021 | 1,141,570 | 2,266,592 | - | - | - | 10,782,183 |
(1)
|
Includes
reconciling adjustments for yield maintenance income and discount
amortization on certain prepaid loans, and amortization of premiums on
assets consolidated at fair value to reflect core earnings
amounts.
|
(2)
|
Based
on effective funding cost determined for each operating segment, including
the expense related to interest rate swaps, which is included in
(Losses)/gains on financial derivatives on the GAAP financial
statements.
|
(3)
|
Includes
reconciling adjustments for the reclassification of yield maintenance,
discount amortization of certain prepaid loans and the expense related to
interest rate swaps and fair value adjustments on loans held for sale
and financial derivatives.
|
(4)
|
Includes
directly attributable costs and an allocation of indirectly attributable
costs based on headcount.
|
Core
|
Reconciling
|
GAAP
|
||||||||||||||||||||||||||
Farmer Mac I
|
Farmer Mac II
|
Rural Utilities
|
Corporate
|
Earnings
|
Adjustments
|
Amounts
|
||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
Interest
income (1)
|
$ | 80,512 | $ | 40,863 | $ | 42,011 | $ | 19,303 | $ | 182,689 | $ | (6,055 | ) | $ | 176,634 | |||||||||||||
Interest
income related to consolidated
|
||||||||||||||||||||||||||||
trusts
owned by third parties reclassified
|
||||||||||||||||||||||||||||
to
guarantee fee income
|
(3,701 | ) | - | - | - | (3,701 | ) | 3,701 | - | |||||||||||||||||||
Interest
expense (2)
|
(54,461 | ) | (33,495 | ) | (33,557 | ) | (10,876 | ) | (132,389 | ) | 26,029 | (106,360 | ) | |||||||||||||||
Net
effective spread
|
22,350 | 7,368 | 8,454 | 8,427 | 46,599 | 23,675 | 70,274 | |||||||||||||||||||||
Guarantee
and commitment fees
|
16,527 | 403 | 4,377 | - | 21,307 | (3,701 | ) | 17,606 | ||||||||||||||||||||
Other
income/(expense) (3)
|
2,823 | 298 | 1 | (1,599 | ) | 1,523 | (24,974 | ) | (23,451 | ) | ||||||||||||||||||
Non-interest
income/(loss)
|
19,350 | 701 | 4,378 | (1,599 | ) | 22,830 | (28,675 | ) | (5,845 | ) | ||||||||||||||||||
Provision
for loan losses
|
(1,392 | ) | - | - | - | (1,392 | ) | - | (1,392 | ) | ||||||||||||||||||
Reserve
for losses
|
(1,680 | ) | - | - | - | (1,680 | ) | - | (1,680 | ) | ||||||||||||||||||
Other
non-interest expense
|
(11,267 | ) | (2,159 | ) | (3,322 | ) | (4,690 | ) | (21,438 | ) | - | (21,438 | ) | |||||||||||||||
Non-interest
expense (4)
|
(12,947 | ) | (2,159 | ) | (3,322 | ) | (4,690 | ) | (23,118 | ) | - | (23,118 | ) | |||||||||||||||
Income
before income taxes
|
27,361 | 5,910 | 9,510 | 2,138 | 44,919 | (5,000 | ) | 39,919 | ||||||||||||||||||||
Income
tax (expense)/benefit
|
(9,577 | ) | (2,068 | ) | (3,329 | ) | 7,247 | (7,727 | ) | 1,750 | (5,977 | ) | ||||||||||||||||
Net
income before dividends
|
17,784 | 3,842 | 6,181 | 9,385 | 37,192 | (3,250 | ) | 33,942 | ||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | (3,410 | ) | (3,410 | ) | (5,784 | ) | (9,194 | ) | |||||||||||||||||
Net
income
|
17,784 | 3,842 | 6,181 | 5,975 | 33,782 | (9,034 | ) | 24,748 | ||||||||||||||||||||
Non-controlling
interest
|
- | - | - | (15,160 | ) | (15,160 | ) | - | (15,160 | ) | ||||||||||||||||||
Segment
core earnings
|
$ | 17,784 | $ | 3,842 | $ | 6,181 | $ | (9,185 | ) | $ | 18,622 | $ | (9,034 | ) | $ | 9,588 | ||||||||||||
Total
assets at carrying value
|
$ | 2,393,213 | $ | 1,388,054 | $ | 2,431,811 | $ | 2,009,664 | $ | - | $ | - | $ | 8,222,742 | ||||||||||||||
Total
on- and off-balance sheet program
|
||||||||||||||||||||||||||||
assets
at principal balance
|
7,761,847 | 1,365,993 | 2,353,453 | - | - | - | 11,481,293 |
Core
|
Reconciling
|
GAAP
|
||||||||||||||||||||||||||
Farmer Mac I
|
Farmer Mac II
|
Rural Utilities
|
Corporate
|
Earnings
|
Adjustments
|
Amounts
|
||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
Interest
income (1)
|
$ | 33,971 | $ | 35,109 | $ | 39,925 | $ | 22,303 | $ | 131,308 | $ | 423 | $ | 131,731 | ||||||||||||||
Interest
expense (2)
|
(18,493 | ) | (30,752 | ) | (35,276 | ) | (12,430 | ) | (96,951 | ) | 28,358 | (68,593 | ) | |||||||||||||||
Net
effective spread
|
15,478 | 4,357 | 4,649 | 9,873 | 34,357 | 28,781 | 63,138 | |||||||||||||||||||||
Guarantee
and commitment fees
|
17,439 | 2,044 | 4,003 | - | 23,486 | - | 23,486 | |||||||||||||||||||||
Other
income/(expense) (3)
|
3,050 | 33 | 8 | (1,967 | ) | 1,124 | 72,798 | 73,922 | ||||||||||||||||||||
Non-interest
income/(loss)
|
20,489 | 2,077 | 4,011 | (1,967 | ) | 24,610 | 72,798 | 97,408 | ||||||||||||||||||||
Provision
for loan losses
|
(939 | ) | - | - | - | (939 | ) | - | (939 | ) | ||||||||||||||||||
Reserve
for losses
|
(2,079 | ) | - | - | - | (2,079 | ) | - | (2,079 | ) | ||||||||||||||||||
Other
non-interest expense
|
(9,576 | ) | (3,054 | ) | (2,240 | ) | (5,700 | ) | (20,570 | ) | - | (20,570 | ) | |||||||||||||||
Non-interest
expense (4)
|
(11,655 | ) | (3,054 | ) | (2,240 | ) | (5,700 | ) | (22,649 | ) | - | (22,649 | ) | |||||||||||||||
Income
before income taxes
|
23,373 | 3,380 | 6,420 | 2,206 | 35,379 | 101,579 | 136,958 | |||||||||||||||||||||
Income
tax expense
|
(8,180 | ) | (1,183 | ) | (2,247 | ) | (558 | ) | (12,168 | ) | (35,553 | ) | (47,721 | ) | ||||||||||||||
Net
income before dividends
|
15,193 | 2,197 | 4,173 | 1,648 | 23,211 | 66,026 | 89,237 | |||||||||||||||||||||
Preferred
stock dividends
|
- | - | - | (12,434 | ) | (12,434 | ) | - | (12,434 | ) | ||||||||||||||||||
Segment
core earnings
|
$ | 15,193 | $ | 2,197 | $ | 4,173 | $ | (10,786 | ) | $ | 10,777 | $ | 66,026 | $ | 76,803 | |||||||||||||
Total
assets at carrying value
|
$ | 828,779 | $ | 1,152,334 | $ | 2,348,213 | $ | 1,404,405 | $ | - | $ | - | $ | 5,733,731 | ||||||||||||||
Total
on- and off-balance sheet program
|
||||||||||||||||||||||||||||
assets
at principal balance
|
7,374,021 | 1,141,570 | 2,266,592 | - | - | - | 10,782,183 |
(1)
|
Includes
reconciling adjustments for yield maintenance income and discount
amortization on certain prepaid loans, and amortization of premiums on
assets consolidated at fair value to reflect core earnings
amounts.
|
(2)
|
Based
on effective funding cost determined for each operating segment, including
the expense related to interest rate swaps, which is included in
(Losses)/gains on financial derivatives on the GAAP financial
statements.
|
(3)
|
Includes
reconciling adjustments for the reclassification of yield maintenance,
discount amortization of certain prepaid loans and the expense related to
interest rate swaps and fair value adjustments on loans held for sale
and financial derivatives.
|
(4)
|
Includes
directly attributable costs and an allocation of indirectly attributable
costs based on headcount.
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
prospects
for earnings;
|
|
·
|
prospects
for growth in loan purchase, guarantee, securitization, and LTSPC
volume;
|
|
·
|
trends
in net interest income;
|
|
·
|
trends
in portfolio credit quality, delinquencies, and provisions for
losses;
|
|
·
|
trends
in expenses;
|
|
·
|
trends
in non-program investments;
|
|
·
|
prospects
for asset impairments and allowance for
losses;
|
|
·
|
changes
in capital position; and
|
|
·
|
other
business and financial matters.
|
|
·
|
the
availability to Farmer Mac and Farmer Mac II LLC of debt financing on
reasonable rates and terms;
|
|
·
|
legislative
or regulatory developments that could affect Farmer
Mac;
|
|
·
|
fluctuations
in the fair value of assets held by Farmer Mac and Farmer Mac II
LLC;
|
|
·
|
the
rate and direction of development of the secondary market for agricultural
mortgage and rural utilities loans, including lender interest in Farmer
Mac credit products and the Farmer Mac secondary
market;
|
|
·
|
the
general rate of growth in agricultural mortgage and rural utilities
indebtedness;
|
|
·
|
borrower
preferences for fixed rate
indebtedness;
|
|
·
|
the
impact of economic conditions and real estate values on agricultural
mortgage lending;
|
|
·
|
the
willingness of investors to invest in Farmer Mac Guaranteed
Securities;
|
|
·
|
developments
in the financial markets, including possible investor, analyst and rating
agency reactions to events involving GSEs, including Farmer Mac;
and
|
|
·
|
the
future level of interest rates, commodity prices, and export demand for
U.S. agricultural products.
|
For the Three Months Ended
|
||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Per Diluted
|
Per Diluted
|
|||||||||||||||
Share
|
Share
|
|||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||
GAAP
net income available
|
||||||||||||||||
to
common stockholders
|
$ | 5,997 | $ | 0.56 | $ | 17,900 | $ | 1.74 | ||||||||
Less
the net of tax effects of:
|
||||||||||||||||
Unrealized
gains on financial derivatives
|
2,106 | 0.20 | 830 | 0.08 | ||||||||||||
Unrealized
(losses)/gains on trading assets
|
(1,119 | ) | (0.10 | ) | 16,279 | 1.59 | ||||||||||
Amortization
of premiums on assets consolidated at fair value
|
(1,863 | ) | (0.17 | ) | - | - | ||||||||||
Net
effects of settlements on agency forward contracts
|
(441 | ) | (0.05 | ) | (479 | ) | (0.05 | ) | ||||||||
Lower
of cost or fair value adjustment on loans held for sale
|
(589 | ) | (0.06 | ) | - | - | ||||||||||
Core
earnings
|
$ | 7,903 | $ | 0.74 | $ | 1,270 | $ | 0.12 |
For the Nine Months Ended
|
||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||
Per Diluted
|
Per Diluted
|
|||||||||||||||
Share
|
Share
|
|||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||
GAAP
net income available
|
||||||||||||||||
to
common stockholders
|
$ | 9,588 | $ | 0.91 | $ | 76,803 | $ | 7.54 | ||||||||
Less
the net of tax effects of:
|
||||||||||||||||
Unrealized
(losses)/gains on financial derivatives
|
(23 | ) | - | 30,839 | 3.03 | |||||||||||
Unrealized
gains on trading assets
|
4,357 | 0.41 | 36,859 | 3.61 | ||||||||||||
Amortization
of premiums on assets consolidated at fair value
|
(5,246 | ) | (0.50 | ) | - | - | ||||||||||
Issuance
costs on the retirement of preferred stock
|
(5,784 | ) | (0.55 | ) | - | - | ||||||||||
Net
effects of settlements on agency forward contracts
|
(329 | ) | (0.02 | ) | (1,672 | ) | (0.16 | ) | ||||||||
Lower
of cost or fair value adjustment on loans held for sale
|
(2,009 | ) | (0.19 | ) | - | - | ||||||||||
Core
earnings
|
$ | 18,622 | $ | 1.76 | $ | 10,777 | $ | 1.06 |
For the Nine Months Ended
|
||||||||||||||||||||||
September 30, 2010
|
September 30, 2009
|
|||||||||||||||||||||
Average
|
Income/
|
Average
|
Average
|
Income/
|
Average
|
|||||||||||||||||
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
|||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||
Interest-earning
assets:
|
||||||||||||||||||||||
Cash
and investments
|
$ | 1,576,100 | $ | 19,303 |
1.63%
|
$ | 1,457,216 | $ | 22,303 |
2.04%
|
||||||||||||
Loans
and Farmer Mac and USDA
|
||||||||||||||||||||||
Guaranteed
Securities (1)
|
4,328,706 | 112,070 |
3.45%
|
3,527,656 | 109,428 |
4.14%
|
||||||||||||||||
Total
interest-earning assets
|
5,904,806 | 131,373 |
2.97%
|
4,984,872 | 131,731 |
3.52%
|
||||||||||||||||
Funding:
|
||||||||||||||||||||||
Notes
payable due within one year
|
2,981,082 | 7,353 |
0.33%
|
3,109,850 | 20,306 |
0.87%
|
||||||||||||||||
Notes
payable due after one year (2)
|
2,502,849 | 57,447 |
3.06%
|
1,662,863 | 48,287 |
3.87%
|
||||||||||||||||
Total
interest-bearing liabilities (3)
|
5,483,931 | 64,800 |
1.58%
|
4,772,713 | 68,593 |
1.92%
|
||||||||||||||||
Net
non-interest-bearing funding
|
420,875 | - | 212,159 | - | ||||||||||||||||||
Total
funding
|
5,904,806 | 64,800 |
1.46%
|
4,984,872 | 68,593 |
1.83%
|
||||||||||||||||
Net
interest income/yield prior to
|
||||||||||||||||||||||
consolidation
of certain trusts
|
5,904,806 | 66,573 |
1.50%
|
|
4,984,872 | 63,138 |
1.69%
|
|||||||||||||||
Net
effect of consolidated trusts (4)
|
1,158,766 | 3,701 |
0.43%
|
- | - |
0.00%
|
||||||||||||||||
Adjusted
net interest income/yield
|
$ | 7,063,572 | $ | 70,274 |
1.33%
|
$ | 4,984,872 | $ | 63,138 |
1.69%
|
(1)
|
Excludes
interest income of $45.3 million related to consolidated trusts with
beneficial interests owned by third
parties.
|
(2)
|
Includes
current portion of long-term notes.
|
(3)
|
Excludes
interest expense of $41.6 million related to consolidated trusts with
beneficial interests owned by third
parties.
|
(4)
|
Includes
the effect of consolidated trusts with beneficial interests owned by third
party investors.
|
For the Nine Months Ended September
30, 2010
|
||||||||||||
Compared to the Nine Months Ended
|
||||||||||||
September 30, 2009
|
||||||||||||
Increase/(Decrease) Due to
|
||||||||||||
Rate
|
Volume
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Income
from interest-earning assets:
|
||||||||||||
Cash
and investments
|
$ | (4,714 | ) | $ | 1,714 | $ | (3,000 | ) | ||||
Loans
and Farmer Mac and USDA
|
||||||||||||
Guaranteed
Securities
|
(19,829 | ) | 22,471 | 2,642 | ||||||||
Total
|
(24,543 | ) | 24,185 | (358 | ) | |||||||
Expense
from interest-bearing liabilities
|
(13,186 | ) | 9,393 | (3,793 | ) | |||||||
Change
in net interest income prior to
|
||||||||||||
consolidation
of certain trusts (1)
|
$ | (11,357 | ) | $ | 14,792 | $ | 3,435 |
For
the Three Months Ended
|
For
the Nine Months Ended
|
||||||||||||||||||||||||||||
September 30, 2010
|
September 30, 2009
|
September 30, 2010
|
September 30, 2009
|
||||||||||||||||||||||||||
Dollars
|
Yield
|
Dollars
|
Yield
|
Dollars
|
Yield
|
Dollars
|
Yield
|
||||||||||||||||||||||
(dollars in thousands)
|
|||||||||||||||||||||||||||||
Net
interest income/yield
|
$ | 24,097 |
1.54%
|
$ | 19,797 |
1.54%
|
$ | 66,573 |
1.50%
|
$ | 63,138 |
1.69%
|
|||||||||||||||||
Expense
related to financial derivatives
|
(8,961 | ) |
-0.57%
|
(7,834 | ) |
-0.61%
|
(26,029 | ) |
-0.59%
|
(28,358 | ) |
-0.76%
|
|||||||||||||||||
Yield
maintenance payments
|
(339 | ) |
-0.02%
|
(50 | ) |
0.00%
|
(595 | ) |
-0.01%
|
(423 | ) |
-0.01%
|
|||||||||||||||||
Amortization
of premiums on assets consolidated at fair value
|
2,867 |
0.18%
|
- |
-
|
8,071 |
0.18%
|
- |
-
|
|||||||||||||||||||||
Amortization
of discounts on certain prepaid loans (1)
|
(1,421 | ) |
-0.09%
|
- |
-
|
(1,421 | ) |
-0.03%
|
- |
-
|
|||||||||||||||||||
Net
effective spread
|
$ | 16,243 |
1.04%
|
$ | 11,913 |
0.93%
|
$ | 46,599 |
1.05%
|
$ | 34,357 |
0.92%
|
|
·
|
the
reclassification of $2.0 million from the reserve for losses to the
allowance for loan losses upon adoption of new consolidation guidance in
first quarter 2010;
|
|
·
|
increased
provisions of $1.6 million; offset
by
|
|
·
|
recoveries
of $2.2 million on a loan secured by an ethanol
plant.
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Realized:
|
||||||||||||||||
Expense
related to financial derivatives
|
$ | (8,961 | ) | $ | (7,834 | ) | $ | (26,029 | ) | $ | (28,358 | ) | ||||
Losses
due to terminations or net settlements
|
(1,172 | ) | (1,172 | ) | (2,441 | ) | (3,550 | ) | ||||||||
Unrealized
gains/(losses) due to fair value changes
|
3,309 | 1,327 | 82 | 47,606 | ||||||||||||
Amortization
of financial derivatives transition adjustment
|
(40 | ) | (54 | ) | (120 | ) | (192 | ) | ||||||||
(Losses)/gains
on financial derivatives
|
$ | (6,864 | ) | $ | (7,733 | ) | $ | (28,508 | ) | $ | 15,506 |
|
·
|
purchases
of $82.3 million of Farmer Mac I
loans;
|
|
·
|
purchases
of $550.0 million of Farmer Mac I AgVantage
securities;
|
|
·
|
the
placement of $25.4 million of Farmer Mac I loans under
LTSPCs;
|
|
·
|
purchases
of $139.7 million of USDA-guaranteed portions of
loans;
|
|
·
|
purchases
of $35.2 million of Rural Utilities loans;
and
|
|
·
|
the
purchase of $250.0 million of Rural Utilities AgVantage
securities.
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Farmer
Mac I:
|
||||||||||||||||
Loans
|
$ | 82,270 | $ | 40,732 | $ | 258,453 | $ | 108,446 | ||||||||
LTSPCs
|
25,416 | 37,083 | 134,989 | 125,520 | ||||||||||||
AgVantage
|
550,000 | - | 550,000 | - | ||||||||||||
Farmer
Mac II:
|
||||||||||||||||
USDA
Guaranteed Securities
|
132,991 | - | 334,663 | - | ||||||||||||
Farmer
Mac Guaranteed Securities
|
6,676 | 76,119 | 20,354 | 251,496 | ||||||||||||
Rural
Utilities:
|
||||||||||||||||
Loans
|
35,242 | 28,644 | 171,986 | 28,644 | ||||||||||||
Farmer
Mac Guaranteed Securities - AgVantage
|
250,000 | 525,000 | 250,000 | 1,695,000 | ||||||||||||
Total
purchases, guarantees and commitments
|
$ | 1,082,595 | $ | 707,578 | $ | 1,720,445 | $ | 2,209,106 |
Outstanding Balance of Farmer Mac Loans and Loans Underlying
Farmer Mac and USDA Guaranteed Securities and LTSPCs
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
On-balance
sheet:
|
||||||||
Farmer
Mac I:
|
||||||||
Loans
|
$ | 875,709 | $ | 733,422 | ||||
Loans
held in trusts:
|
||||||||
Beneficial
interests owned by Farmer Mac
|
3,781 | 5,307 | ||||||
Beneficial
interests owned by third party investors
|
847,794 | - | ||||||
Farmer
Mac Guaranteed Securities - AgVantage
|
591,500 | 48,800 | ||||||
Farmer
Mac II:
|
||||||||
USDA
Guaranteed Securities
|
1,278,814 | - | ||||||
Farmer
Mac Guaranteed Securities
|
42,921 | 1,164,996 | ||||||
Rural
Utilities:
|
||||||||
Loans
|
198,921 | 28,644 | ||||||
Loans
held in trusts:
|
||||||||
Beneficial
interests owned by Farmer Mac
|
400,228 | 412,948 | ||||||
Farmer
Mac Guaranteed Securities - AgVantage
|
1,737,200 | 1,675,000 | ||||||
Total
on-balance sheet
|
$ | 5,976,868 | $ | 4,069,117 | ||||
Off-balance
sheet:
|
||||||||
Farmer
Mac I:
|
||||||||
AgVantage
|
$ | 2,945,000 | $ | 2,945,000 | ||||
LTSPCs
|
1,697,578 | 2,165,706 | ||||||
Farmer
Mac Guaranteed Securities
|
795,400 | 1,492,239 | ||||||
Farmer
Mac II:
|
||||||||
Farmer
Mac Guaranteed Securities
|
44,258 | 34,802 | ||||||
Rural
Utilities:
|
||||||||
AgVantage
|
17,104 | 14,240 | ||||||
Total
off-balance sheet
|
$ | 5,499,340 | $ | 6,651,987 | ||||
Total
|
$ | 11,476,208 | $ | 10,721,104 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Farmer
Mac I newly originated
|
||||||||||||||||
and
current seasoned loan purchases
|
$ | 82,270 | $ | 40,732 | $ | 258,453 | $ | 108,446 | ||||||||
Defaulted
loans purchased underlying
|
||||||||||||||||
Farmer
Mac I Guaranteed Securities
|
||||||||||||||||
owned
by third party investors
|
1,133 | 841 | 3,456 | 841 | ||||||||||||
Defaulted
loans purchased
|
||||||||||||||||
underlying
LTSPCs
|
781 | 13,188 | 1,861 | 16,608 | ||||||||||||
Defaulted
loans underlying
|
||||||||||||||||
on-balance
sheet Farmer Mac I
|
||||||||||||||||
Guaranteed
Securities transferred
|
||||||||||||||||
to
loans
|
- | - | - | 2,216 | ||||||||||||
Total
loan purchases
|
$ | 84,184 | $ | 54,761 | $ | 263,770 | $ | 128,111 |
|
·
|
loans
held;
|
|
·
|
loans
underlying Farmer Mac Guaranteed Securities;
and
|
|
·
|
loans
underlying LTSPCs.
|
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(in thousands)
|
||||||||
Allowance
for loan losses
|
$ | 9,442 | $ | 6,292 | ||||
Reserve
for losses:
|
||||||||
Off-balance
sheet Farmer Mac I Guaranteed Securities
|
984 | 2,033 | ||||||
LTSPCs
|
8,591 | 5,862 | ||||||
Total
allowance for losses
|
$ | 19,017 | $ | 14,187 |
September 30, 2010
|
September 30, 2009
|
|||||||||||||||||||||||
Allowance
|
Total
|
Allowance
|
Total
|
|||||||||||||||||||||
for Loan
|
Reserve
|
Allowance
|
for Loan
|
Reserve
|
Allowance
|
|||||||||||||||||||
Losses
|
for Losses
|
for Losses
|
Losses
|
for Losses
|
for Losses
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
For
the Three Months Ended:
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 9,495 | $ | 9,470 | $ | 18,965 | $ | 1,810 | $ | 7,496 | $ | 9,306 | ||||||||||||
Provision
for losses
|
412 | 105 | 517 | 3,098 | 89 | 3,187 | ||||||||||||||||||
Charge-offs
|
(465 | ) | - | (465 | ) | (16 | ) | - | (16 | ) | ||||||||||||||
Recoveries
|
- | - | - | - | - | - | ||||||||||||||||||
Ending
balance
|
$ | 9,442 | $ | 9,575 | $ | 19,017 | $ | 4,892 | $ | 7,585 | $ | 12,477 | ||||||||||||
For
the Nine Months Ended:
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 6,292 | $ | 7,895 | $ | 14,187 | $ | 10,929 | $ | 5,506 | $ | 16,435 | ||||||||||||
Provision
for losses
|
1,392 | 1,680 | 3,072 | 939 | 2,079 | 3,018 | ||||||||||||||||||
Charge-offs
|
(465 | ) | - | (465 | ) | (7,741 | ) | - | (7,741 | ) | ||||||||||||||
Recoveries
|
2,223 | - | 2,223 | 765 | - | 765 | ||||||||||||||||||
Ending
balance
|
$ | 9,442 | $ | 9,575 | $ | 19,017 | $ | 4,892 | $ | 7,585 | $ | 12,477 |
Outstanding
|
||||||||||||||||||||||
Loans,
|
Less:
|
|||||||||||||||||||||
Guarantees (1),
|
Non-
|
REO and
|
||||||||||||||||||||
LTSPCs,
|
performing
|
Performing
|
90-day
|
|||||||||||||||||||
and REO
|
Assets
|
Percentage
|
Bankruptcies
|
Delinquencies
|
Percentage
|
|||||||||||||||||
(dollars
in thousands)
|
||||||||||||||||||||||
As
of:
|
||||||||||||||||||||||
September
30, 2010
|
$ | 4,225,346 | $ | 78,448 |
1.86%
|
$ | 13,649 | $ | 64,800 |
1.53%
|
||||||||||||
June
30, 2010
|
4,299,417 | 71,300 |
1.66%
|
15,289 | 56,011 |
1.30%
|
||||||||||||||||
March
31, 2010
|
4,303,663 | 83,977 |
1.95%
|
13,542 | 70,435 |
1.64%
|
||||||||||||||||
December
31, 2009
|
4,396,642 | 62,020 |
1.41%
|
12,494 | 49,526 |
1.13%
|
||||||||||||||||
September
30, 2009
|
4,379,450 | 84,779 |
1.94%
|
25,341 | 59,438 |
1.36%
|
||||||||||||||||
June
30, 2009
|
4,471,567 | 97,123 |
2.17%
|
54,816 | 42,307 |
0.95%
|
||||||||||||||||
March
31, 2009
|
4,530,892 | 96,175 |
2.12%
|
9,941 | 86,234 |
1.90%
|
||||||||||||||||
December
31, 2008
|
4,983,963 | 80,032 |
1.61%
|
12,912 | 67,120 |
1.35%
|
||||||||||||||||
September
30, 2008
|
4,989,755 | 32,883 |
0.66%
|
21,402 | 11,481 |
0.23%
|
(1)
|
Excludes
loans underlying AgVantage
securities.
|
(2)
|
Includes
loans 90 days or more past due, in foreclosure, restructured after
delinquency, in bankruptcy (including loans performing under either their
original loan terms or a court-approved bankruptcy plan) and real estate
owned.
|
(3)
|
Geographic
regions - Northwest (AK, ID, MT, ND, NE, OR, SD, WA, WY); Southwest (AZ,
CA, CO, HI, NM, NV, UT); 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); and Southeast (AL, AR, FL, GA, LA, MS,
SC).
|
Cumulative Original Loans, Guarantees and LTSPCs
|
As of September 30, 2010
|
Cumulative
|
||||||||||||
Original Loans,
|
Cumulative
|
Cumulative
|
||||||||||
Guarantees and
|
Net Credit
|
Loss
|
||||||||||
LTSPCs
|
Losses
|
Rate
|
||||||||||
(dollars in thousands)
|
||||||||||||
By
year of origination:
|
||||||||||||
Before
1997
|
$ | 3,451,840 | $ | 1,593 |
0.05%
|
|||||||
1997
|
767,854 | 2,256 |
|
0.29%
|
|
|||||||
1998
|
1,145,154 | 3,885 |
0.34%
|
|||||||||
1999
|
1,167,499 | 1,291 |
|
0.11%
|
|
|||||||
2000
|
763,650 | 2,550 |
0.33%
|
|||||||||
2001
|
1,126,530 | 170 |
0.02%
|
|
||||||||
2002
|
1,135,026 | - |
0.00%
|
|||||||||
2003
|
937,640 | 58 |
0.01%
|
|||||||||
2004
|
652,723 | 32 |
0.00%
|
|||||||||
2005
|
778,910 | 131 |
|
0.02%
|
||||||||
2006
|
812,141 | 7,689 |
0.95%
|
|||||||||
2007
|
584,491 | 1,215 |
0.21%
|
|||||||||
2008
|
580,409 | 2,824 |
0.49%
|
|||||||||
2009
|
328,958 | 1,193 |
0.36%
|
|||||||||
2010
|
297,291 | - |
0.00%
|
|||||||||
Total
|
$ | 14,530,116 | $ | 24,887 |
0.17%
|
|||||||
By
geographic region (1):
|
|
|||||||||||
Northwest
|
$ | 2,656,010 | $ | 10,694 |
0.40%
|
|||||||
Southwest
|
5,669,882 | 7,013 |
0.12%
|
|||||||||
Mid-North
|
2,483,782 | 6,659 |
0.27%
|
|||||||||
Mid-South
|
1,353,014 | (314 | ) |
-0.02%
|
||||||||
Northeast
|
1,339,228 | 83 |
0.01%
|
|||||||||
Southeast
|
1,028,200 | 752 |
0.07%
|
|||||||||
Total
|
$ | 14,530,116 | $ | 24,887 |
0.17%
|
|||||||
By
commodity/collateral type:
|
||||||||||||
Crops
|
$ | 5,837,782 | $ | 2,312 |
0.04%
|
|||||||
Permanent
plantings
|
3,217,294 | 9,378 |
0.29%
|
|||||||||
Livestock
|
3,764,237 | 3,266 |
0.09%
|
|||||||||
Part-time
farm/rural housing
|
1,023,635 | 429 |
0.04%
|
|||||||||
Ag
storage and processing
|
||||||||||||
(including
ethanol facilities) (2)
|
545,556 | 9,502 |
|
1.74%
|
||||||||
Other
|
141,612 | - |
0.00%
|
|
||||||||
Total
|
$ | 14,530,116 | $ | 24,887 |
0.17%
|
(1)
|
Geographic
regions - Northwest (AK, ID, MT, ND, NE, OR, SD, WA, WY); Southwest (AZ,
CA, CO, HI, NM, NV, UT); 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); and Southeast (AL, AR, FL, GA, LA, MS,
SC).
|
(2)
|
Several
of the loans underlying agricultural storage and processing LTSPCs are for
facilities under construction and, as of September 30, 2010, approximately
$34.4 million of the loans were not yet disbursed by the
lender.
|
|
·
|
issuers
of AgVantage securities and other investments held or guaranteed by Farmer
Mac;
|
|
·
|
sellers
and servicers; and
|
|
·
|
interest
rate swap contract counterparties.
|
September 30, 2010
|
December 31, 2009
|
|||||||||||||||||||
Credit
|
Required
|
Credit
|
Required
|
|||||||||||||||||
Counterparty
|
Balance
|
Rating
|
Collateralization
|
Balance
|
Rating
|
Collateralization
|
||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
MetLife
(1)
|
$ | 2,750,000 |
AA-
|
103%
|
$ | 2,500,000 |
AA-
|
103%
|
||||||||||||
CFC
|
1,754,304 |
A
|
100%
|
1,689,240 |
A
|
100%
|
||||||||||||||
M&I
Bank (2)
|
475,000 |
BBB
|
106%
|
475,000 |
BBB
|
106%
|
||||||||||||||
Rabo
Agrifinance, Inc.
|
300,000 |
N/A
|
106%
|
- |
-
|
-
|
||||||||||||||
Other
(3)
|
11,500 |
N/A
|
111% to 120%
|
18,800 |
N/A
|
111% to 120%
|
||||||||||||||
Total
outstanding
|
$ | 5,290,804 | $ | 4,683,040 |
(1)
|
Includes
securities issued by Metropolitan Life Insurance Company and MetLife
Insurance Company of Connecticut.
|
(2)
|
M&I
Bank was downgraded to BBB- on October 21,
2010.
|
(3)
|
Consists
of AgVantage securities issued by 4 different issuers as of September 30,
2010 and 6 different issuers as of December 31,
2009.
|
Percentage Change in MVE from
Base Case
|
||||||||
Interest Rate
|
September 30,
|
December 31,
|
||||||
Scenario
|
2010
|
2009
|
||||||
+
300 bp
|
|
7.4%
|
-23.1%
|
|||||
+
200 bp
|
7.4%
|
-13.8%
|
|
|||||
+
100 bp
|
5.0%
|
-5.4%
|
|
|||||
-
100 bp
|
*
|
*
|
||||||
-
200 bp
|
*
|
*
|
||||||
-
300 bp
|
*
|
|
*
|
|
*
|
As
of the date indicated, a parallel shift of the U.S. Treasury yield curve
by the number of basis points indicated produced negative interest rates
for portions or all of this curve.
|
|
·
|
“pay-fixed”
interest rate swaps, in which it pays fixed rates of interest to, and
receives floating rates of interest from,
counterparties;
|
|
·
|
“receive-fixed”
interest rate swaps, in which it receives fixed rates of interest from,
and pays floating rates of interest to,
counterparties;
|
|
·
|
“basis
swaps,” in which it pays variable rates of interest based on one index to,
and receives variable rates of interest based on another index from,
counterparties; and
|
|
·
|
“credit
default swaps,” in which it pays a periodic fee to a counterparty in
exchange for the counterparty’s agreement to make payments in the event of
an instrument’s default or other credit
event.
|
|
·
|
principal
and interest payments and ongoing guarantee and commitment fees received
on loans, Farmer Mac Guaranteed Securities, and
LTSPCs;
|
|
·
|
principal
and interest payments received from investment securities;
and
|
|
·
|
the
issuance of new discount notes and medium-term
notes.
|
September
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(in thousands)
|
||||||||
Cash
and cash equivalents
|
$ | 453,273 | $ | 654,794 | ||||
Investment
securities:
|
||||||||
Guaranteed
by U.S. Government agencies
|
766,343 | 341,874 | ||||||
Guaranteed
by GSEs
|
291,403 | 234,206 | ||||||
Preferred
stock issued by GSEs
|
166,502 | 177,359 | ||||||
Corporate
debt securities
|
154,411 | 245,605 | ||||||
Asset-backed
securities principally backed by Government guaranteed student loans
(1)
|
78,772 | 132,851 | ||||||
Total
|
$ | 1,910,704 | $ | 1,786,689 |
(1)
|
None
of Farmer Mac's asset-backed securities were backed by sub-prime or Alt-A
residential or commercial mortgages or home-equity
loans.
|
Farmer Mac Purchases, Guarantees and LTSPCs
|
||||||||||||||||||||
Farmer Mac I
|
Farmer Mac
II
|
Rural Utilities
|
||||||||||||||||||
Loans and
|
and USDA
|
Loans and
|
||||||||||||||||||
Guaranteed
|
Guaranteed
|
Guaranteed
|
||||||||||||||||||
Securities
|
LTSPCs (1)
|
Securities
|
Securities
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
For
the quarter ended:
|
||||||||||||||||||||
September
30, 2010
|
$ | 632,270 | $ | 25,416 | $ | 139,667 | $ | 285,242 | $ | 1,082,595 | ||||||||||
June
30, 2010
|
98,235 | 32,430 | 123,062 | 77,726 | 331,453 | |||||||||||||||
March
31, 2010
|
77,948 | 77,143 | 92,288 | 59,018 | 306,397 | |||||||||||||||
December
31, 2009
|
86,872 | 108,646 | 94,936 | 16,009 | 306,463 | |||||||||||||||
September
30, 2009
|
40,732 | 37,083 | 76,119 | 553,644 | 707,578 | |||||||||||||||
June
30, 2009
|
37,900 | 22,717 | 96,322 | 900,000 | 1,056,939 | |||||||||||||||
March
31, 2009
|
29,814 | 65,720 | 79,055 | 270,000 | 444,589 | |||||||||||||||
December
31, 2008
|
72,137 | 121,440 | 87,455 | 230,000 | 511,032 | |||||||||||||||
September
30, 2008
|
508,179 | 239,170 | 83,672 | - | 831,021 | |||||||||||||||
For
the year ended:
|
||||||||||||||||||||
December
31, 2009
|
195,318 | 234,166 | 346,432 | 1,739,653 | 2,515,569 | |||||||||||||||
December
31, 2008
|
671,622 | 530,363 | 303,941 | 1,560,676 | 3,066,602 |
(1)
|
As
of September 30, 2010, approximately $34.4 million of the loans underlying
$545.6 million of AgStorage and processing LTSPCs (including ethanol
facilities) were not yet disbursed by the
lender.
|
Guarantees and LTSPCs and USDA
Guarantees
|
Farmer Mac I
|
Farmer Mac
II
|
Rural
Utilities
|
||||||||||||||||||
Loans and
|
and USDA
|
Loans and
|
||||||||||||||||||
Guaranteed
|
Guaranteed
|
Guaranteed
|
||||||||||||||||||
Securities
|
LTSPCs
|
Securities
|
Securities
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
As
of:
|
||||||||||||||||||||
September
30, 2010
|
$ | 6,059,184 | $ | 1,697,578 | $ | 1,365,993 | $ | 2,353,453 | $ | 11,476,208 | ||||||||||
June
30, 2010 (1)
|
5,544,091 | 1,739,979 | 1,300,945 | 2,173,660 | 10,758,675 | |||||||||||||||
March
31, 2010 (2)
|
5,444,448 | 1,846,244 | 1,237,539 | 2,183,576 | 10,711,807 | |||||||||||||||
December
31, 2009
|
5,224,768 | 2,165,706 | 1,199,798 | 2,130,832 | 10,721,104 | |||||||||||||||
September
30, 2009
|
5,227,939 | 2,135,445 | 1,141,570 | 2,266,592 | 10,771,546 | |||||||||||||||
June
30, 2009
|
5,241,145 | 2,181,712 | 1,115,025 | 1,819,033 | 10,356,915 | |||||||||||||||
March
31, 2009
|
5,313,680 | 2,216,564 | 1,082,215 | 1,319,033 | 9,931,492 | |||||||||||||||
December
31, 2008
|
5,759,773 | 2,224,181 | 1,043,425 | 1,054,941 | 10,082,320 | |||||||||||||||
September
30, 2008
|
5,724,867 | 2,264,880 | 995,639 | 824,941 | 9,810,327 |
(1)
|
The
Loans and Guaranteed Securities and LTSPCs amounts reflect the conversion
of $86.0 million of existing LTSPCs to Farmer Mac I Guaranteed Securities
during second quarter 2010 at the request of a program
participant.
|
(2)
|
The
Loans and Guaranteed Securities and LTSPCs amounts reflect the conversion
of $265.8 million of existing LTSPCs to Farmer Mac I Guaranteed Securities
during first quarter 2010 at the request of a program
participant.
|
Outstanding
Balance of Loans Held and Loans Underlying
|
On-Balance
Sheet Farmer Mac and USDA Guaranteed
Securities
|
5-to-10-Year
|
Total
|
|||||||||||||||
ARMs &
|
1-Month-to-
|
Held in
|
||||||||||||||
Fixed Rate
|
Resets
|
3 Year ARMs
|
Portfolio
|
|||||||||||||
(in thousands)
|
||||||||||||||||
As
of:
|
||||||||||||||||
September
30, 2010
|
$ | 3,099,200 | $ | 1,102,560 | $ | 1,911,904 | $ | 6,113,664 | ||||||||
June
30, 2010
|
2,347,206 | 1,051,722 | 1,914,096 | 5,313,024 | ||||||||||||
March
31, 2010
|
2,431,701 | 1,340,856 | 1,840,181 | 5,612,738 | ||||||||||||
December
31, 2009
|
1,983,749 | 729,700 | 1,439,267 | 4,152,716 | ||||||||||||
September
30, 2009
|
2,138,544 | 685,553 | 1,403,298 | 4,227,395 | ||||||||||||
June
30, 2009
|
1,716,678 | 649,078 | 1,303,332 | 3,669,088 | ||||||||||||
March
31, 2009
|
1,728,174 | 660,398 | 759,535 | 3,148,107 | ||||||||||||
December
31, 2008
|
1,659,983 | 746,623 | 819,234 | 3,225,840 | ||||||||||||
September
30, 2008
|
1,412,136 | 699,611 | 743,146 | 2,854,893 |
Item
3.
|
Quantitative and
Qualitative Disclosures About Market
Risk
|
Item
4.
|
Controls and
Procedures
|
Item
1.
|
Legal
Proceedings
|
Item 1A.
|
Risk
Factors
|
Item 2.
|
Unregistered Sales of
Equity Securities and Use of
Proceeds
|
|
(a)
|
Farmer
Mac is a federally chartered instrumentality of the United States and its
debt and equity securities are exempt from registration pursuant to
Section 3(a)(2) of the Securities Act of
1933.
|
|
(b)
|
Not
applicable.
|
|
(c)
|
None.
|
Item
3.
|
Defaults Upon Senior
Securities
|
|
(a)
|
None.
|
|
(b)
|
None.
|
Item
4.
|
(Removed and
Reserved)
|
Item
5.
|
Other
Information
|
|
(a)
|
None.
|
|
(b)
|
None.
|
Item
6.
|
Exhibits
|
*
|
3.1
|
-
|
Title
VIII of the Farm Credit Act of 1971, as most recently amended by the Food,
Conservation and Energy Act of 2008 (Form 10-Q filed August 12,
2008).
|
*
|
3.2
|
-
|
Amended
and Restated By-Laws of the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
4.1
|
-
|
Specimen
Certificate for Farmer Mac Class A Voting Common Stock (Form 10-Q filed
May 15, 2003).
|
*
|
4.2
|
-
|
Specimen
Certificate for Farmer Mac Class B Voting Common Stock (Form 10-Q filed
May 15, 2003).
|
*
|
4.3
|
-
|
Specimen
Certificate for Farmer Mac Class C Non-Voting Common Stock (Form 10-Q
filed May 15, 2003).
|
*
|
4.4
|
-
|
Amended
and Restated Certificate of Designation of Terms and Conditions of
Non-Voting Cumulative Preferred Stock, Series C (Previously filed as
Exhibit 4.7 to Form 10-Q filed November 9, 2009).
|
†*
|
10.1
|
-
|
Amended
and Restated 1997 Incentive Plan (Form 10-Q filed November 14,
2003).
|
†*
|
10.1.1
|
-
|
Form
of stock option award agreement under 1997 Incentive Plan (Form 10-K filed
March 16, 2005).
|
†*
|
10.1.2
|
-
|
2008
Omnibus Incentive Plan (Form 10-Q filed August 12,
2008).
|
†*
|
10.1.3
|
-
|
Form
of SAR Agreement under the 2008 Omnibus Incentive Plan (Previously filed
as Exhibit 10 to Form 8-K filed June 11, 2008).
|
†*
|
10.1.4
|
-
|
Form
of Restricted Stock Agreement (Officers) under the 2008 Omnibus Incentive
Plan (Previously filed as Exhibit 10.1 to Form 8-K filed June 10,
2009).
|
†*
|
10.1.5
|
-
|
Form
of Restricted Stock Agreement (Directors) under the 2008 Omnibus Incentive
Plan (Previously filed as Exhibit 10.2 to Form 8-K filed June 10,
2009).
|
†*
|
10.2
|
-
|
Employment
Agreement dated as of March 1, 2009 between Michael A. Gerber and the
Registrant (Form 10-Q filed May 12,
2009).
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
†*
|
10.3
|
-
|
Compiled
Amended and Restated Employment Contract dated as of June 5, 2008 between
Tom D. Stenson and the Registrant (Previously filed as Exhibit 10.4 to
Form 10-Q filed August 12, 2008).
|
†*
|
10.4
|
-
|
Compiled
Amended and Restated Employment Contract dated June 5, 2008 between
Timothy L. Buzby and the Registrant (Previously filed as Exhibit 10.5 to
Form 10-Q filed August 12, 2008).
|
†*
|
10.4.1
|
-
|
Amendment
No. 6 to Employment Contract between Timothy L. Buzby and the Registrant,
dated as of April 2, 2009 (Form 10-Q filed August 10,
2009).
|
†*
|
10.5
|
-
|
Compiled
Amended and Restated Employment Contract dated June 5, 2008 between Mary
K. Waters and the Registrant (Previously filed as Exhibit 10.6 to Form
10-Q filed August 12, 2008).
|
10.6
|
-
|
Exhibit
number reserved for future use.
|
|
*
|
10.7
|
-
|
Farmer
Mac I Seller/Servicer Agreement dated as of August 7, 1996 between Zions
First National Bank and the Registrant (Form 10-Q filed November 14,
2002).
|
*
|
10.8
|
-
|
Medium-Term
Notes U.S. Selling Agency Agreement dated as of October 1, 1998 between
Zions First National Bank and the Registrant (Form 10-Q filed November 14,
2002).
|
*
|
10.9
|
-
|
Discount
Note Dealer Agreement dated as of September 18, 1996 between Zions First
National Bank and the Registrant (Form 10-Q filed November 14,
2002).
|
*#
|
10.10
|
-
|
ISDA
Master Agreement and Credit Support Annex dated as of June 26, 1997
between Zions First National Bank and the Registrant (Form 10-Q filed
November 14, 2002).
|
*#
|
10.11
|
-
|
Amended
and Restated Master Central Servicing Agreement dated as of May 1, 2004
between Zions First National Bank and the Registrant (Previously filed as
Exhibit 10.11.2 to Form 10-Q filed August 9, 2004).
|
*#
|
10.11.1
|
-
|
Amendment
No. 1 to Amended and Restated Master Central Servicing Agreement between
Zions First National Bank and the Registrant, dated as of June 1, 2009
(Form 10-Q filed August 10,
2009).
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
**#
|
10.11.2
|
-
|
Amendment
No. 2. To Amended and Restated Master Central Servicing Agreement between
Zions First National Bank and the Registrant, dated as of August 25,
2010.
|
*#
|
10.12
|
-
|
Loan
Closing File Review Agreement dated as of August 2, 2005 between Zions
First National Bank and the Registrant (Form 10-Q filed November 9,
2005).
|
*#
|
10.13
|
-
|
Long
Term Standby Commitment to Purchase dated as of August 1, 1998 between
AgFirst Farm Credit Bank and the Registrant (Form 10-Q filed November 14,
2002).
|
*#
|
10.13.1
|
-
|
Amendment
No. 1 dated as of January 1, 2000 to Long Term Standby Commitment to
Purchase dated as of August 1, 1998 between AgFirst Farm Credit Bank and
the Registrant (Form 10-Q filed November 14, 2002).
|
*
|
10.13.2
|
-
|
Amendment
No. 2 dated as of September 1, 2002 to Long Term Standby Commitment to
Purchase dated as of August 1, 1998, as amended by Amendment No. 1 dated
as of January 1, 2000, between AgFirst Farm Credit Bank and the Registrant
(Form 10-Q filed November 14, 2002).
|
*
|
10.14
|
-
|
Lease
Agreement, dated June 28, 2001 between EOP – Two Lafayette, L.L.C. and the
Registrant (Previously filed as Exhibit 10.10 to Form 10-K filed March 27,
2002).
|
*#
|
10.15
|
-
|
Long
Term Standby Commitment to Purchase dated as of August 1, 2007 between
Farm Credit Bank of Texas and the Registrant (Previously filed as Exhibit
10.20 to Form 10-Q filed November 8, 2007).
|
*#
|
10.16
|
-
|
Long
Term Standby Commitment to Purchase dated as of June 1, 2003 between Farm
Credit Bank of Texas and the Registrant (Form 10-Q filed November 9,
2004).
|
*#
|
10.16.1
|
-
|
Amendment
No. 1 dated as of December 8, 2006 to Long Term Standby Commitment to
Purchase dated as of June 1, 2003 between Farm Credit Bank of Texas and
the Registrant (Form 10-K filed March 15, 2007).
|
*#
|
10.17
|
-
|
Central
Servicer Delinquent Loan Servicing Transfer Agreement dated as of July 1,
2004 between AgFirst Farm Credit Bank and the Registrant (Form 10-Q filed
November 9, 2004).
|
†*
|
10.18
|
-
|
Form
of Indemnification Agreement for Directors (Previously filed as Exhibit
10.1 to Form 8-K filed April 9,
2008).
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
†*
|
10.19
|
-
|
Description
of compensation agreement between the Registrant and its directors (Form
10-Q filed August 9, 2007).
|
†*
|
10.20
|
-
|
Agreement
and General Release dated as of January 30, 2009 between Henry D. Edelman
and the Registrant (Form 10-Q filed May 12, 2009).
|
†*
|
10.21
|
-
|
Agreement
and General Release dated as of February 6, 2009 between Nancy E.
Corsiglia and the Registrant (Form 10-Q filed May 12,
2009).
|
*
|
10.22
|
Master
Trust, Sale and Servicing Agreement dated as of October 20, 2006 between
CFC Advantage, LLC, National Rural Utilities Cooperative Finance
Corporation, U.S. Bank National Association, and the Registrant (Form 10-Q
filed August 9, 2010).
|
|
*
|
10.23
|
Registration
Rights Agreement Series 2007-1 dated as of February 15, 2007 between CFC
Advantage, LLC, National Rural Utilities Cooperative Finance Corporation,
and the Registrant (Form 10-Q filed August 9, 2010).
|
|
*
|
10.24
|
Registration
Rights Agreement Series 2007-2 dated as of August 10, 2007 between CFC
Advantage, LLC, National Rural Utilities Cooperative Finance Corporation
and the Registrant (Form 10-Q filed August 9, 2010).
|
|
*
|
10.25
|
Note
Purchase Agreement dated as of December 15, 2008 between Farmer Mac
Mortgage Securities Corporation, National Rural Utilities Cooperative
Finance Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
|
*
|
10.25.1
|
First
Amendment to Note Purchase Agreement dated as of July 13, 2009 between
Farmer Mac Mortgage Securities Corporation, National Rural Utilities
Cooperative Finance Corporation, and the Registrant (Form 10-Q filed
August 9, 2010).
|
|
*
|
10.26
|
Pledge
Agreement dated as of December 15, 2008 between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance
Corporation, U.S. Bank Trust National Association, and the Registrant
(Form 10-Q filed August 9, 2010).
|
|
*
|
10.26.1
|
First
Amendment to Pledge Agreement dated as of September 23, 2009 between
Farmer Mac Mortgage Securities Corporation, National Rural Utilities
Cooperative Finance Corporation, U.S. Bank Trust National Association, and
the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
*
|
10.27
|
Setoff
Rights Letter Agreement dated as of December 15, 2008 between National
Rural Utilities Cooperative Finance Corporation, Farmer Mac Mortgage
Securities Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
10.28
|
Note
Purchase Agreement dated as of February 5, 2009 between Farmer Mac
Mortgage Securities Corporation, National Rural Utilities Cooperative
Finance Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
10.28.1
|
First
Amendment to Note Purchase Agreement dated as of July 13, 2009 between
Farmer Mac Mortgage Securities Corporation, National Rural Utilities
Cooperative Finance Corporation, and the Registrant (Form 10-Q filed
August 9, 2010).
|
*
|
10.29
|
Pledge
Agreement dated as of February 5, 2009 between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance
Corporation, U.S. Bank Trust National Association, and the Registrant
(Form 10-Q filed August 9, 2010).
|
*
|
10.29.1
|
First
Amendment to Pledge Agreement dated as of September 23, 2009 between
Farmer Mac Mortgage Securities Corporation, National Rural Utilities
Cooperative Finance Corporation, U.S. Bank Trust National Association, and
the Registrant (Form 10-Q filed August 9, 2010).
|
*
|
10.30
|
Setoff
Rights Letter Agreement dated as of February 5, 2009 between National
Rural Utilities Cooperative Finance Corporation, Farmer Mac Mortgage
Securities Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
10.31
|
Note
Purchase Agreement dated as of March 23, 2009 between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance
Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
10.32
|
Pledge
Agreement dated as of March 23, 2009 between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance
Corporation, U.S. Bank Trust National Association, and the Registrant
(Form 10-Q filed August 9, 2010).
|
*
|
10.32.1
|
First
Amendment to Pledge Agreement dated as of September 23, 2009 between
Farmer Mac Mortgage Securities Corporation, National Rural Utilities
Cooperative Finance Corporation, U.S. Bank Trust National Association, and
the Registrant (Form 10-Q filed August 9,
2010).
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
*
|
10.33
|
Setoff
Rights Letter Agreement dated as of March 23, 2009 between National Rural
Utilities Cooperative Finance Corporation, Farmer Mac Mortgage Securities
Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
|
*
|
10.34
|
Note
Purchase Agreement dated as of May 22, 2009 between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance
Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
|
*
|
10.35
|
Pledge
Agreement dated as of May 22, 2009 between Farmer Mac Mortgage Securities
Corporation, National Rural Utilities Cooperative Finance Corporation,
U.S. Bank Trust National Association, and the Registrant (Form 10-Q filed
August 9, 2010).
|
|
*
|
10.36
|
Setoff
Rights Letter Agreement dated as of May 22, 2009 between National Rural
Utilities Cooperative Finance Corporation, Farmer Mac Mortgage Securities
Corporation, and the Registrant (Form 10-Q filed August 9,
2010).
|
|
*
|
10.37
|
Master
Sale and Servicing Agreement dated as of July 24, 2009 between National
Rural Utilities Cooperative Finance Corporation and the Registrant (Form
10-Q filed August 9, 2010).
|
|
*
|
10.37.1
|
Amendment
No. 1 to Master Sale and Servicing Agreement dated as of February 1, 2010
between National Rural Utilities Cooperative Finance Corporation and the
Registrant (Form 10-Q filed August 9, 2010).
|
|
*#
|
10.38
|
Credit
Support Agreement dated as of September 1, 2009 between National Rural
Utilities Cooperative Finance Corporation and the Registrant (Form 10-Q
filed August 9, 2010).
|
|
*
|
10.39
|
Indenture
dated as of September 1, 2009 between National Rural Utilities Cooperative
Finance Corporation, U.S. Bank National Association and the Registrant
(Form 10-Q filed August 9, 2010).
|
|
*
|
21
|
-
|
List
of Registrant’s subsidiaries (Form 10-K filed March 16,
2010).
|
**
|
31.1
|
-
|
Certification
of Chief Executive Officer relating to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2010, pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
**
|
31.2
|
-
|
Certification
of Chief Financial Officer relating to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2010, pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
**
|
32
|
-
|
Certification
of Chief Executive Officer and Chief Financial Officer relating to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2010, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of
2002.
|
*
|
Incorporated
by reference to the indicated prior
filing.
|
**
|
Filed
with this report.
|
†
|
Management
contract or compensatory plan.
|
#
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
By:
|
/s/ Michael A.
Gerber
|
|
Michael
A. Gerber
President
and Chief Executive Officer
(Principal
Executive Officer)
|
/s/ Timothy L.
Buzby
|
||
Timothy
L. Buzby
Senior
Vice President – Chief Financial Officer and Treasurer
(Principal
Financial Officer)
|
Federal
Agricultural Mortgage Corporation
|
|
By:
|
/s/ Jerome G. Oslick |
Name:
Jerome G. Oslick
|
|
Title:
Senior Vice President - General Counsel
|
|
Zions
First National Bank
|
|
By:
|
/s/ Rodney Avey |
Name:
Rodney Avey
|
|
Title:
Vice
President
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of the Federal
Agricultural Mortgage Corporation for the fiscal quarter ended September
30, 2010;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/ Michael A. Gerber
|
||
Michael
A. Gerber
|
||
Chief
Executive Officer
|
||
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of the Federal
Agricultural Mortgage Corporation for the fiscal quarter ended September
30, 2010;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/ Timothy L. Buzby
|
||
Timothy
L. Buzby
|
||
Chief
Financial Officer
|
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Corporation.
|
/s/ Michael A. Gerber
|
Michael
A. Gerber
|
Chief
Executive Officer
|
/s/ Timothy L. Buzby
|
Timothy
L. Buzby
|
Chief
Financial Officer
|