-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HeZK88d8GxYeiJokzUN42j3V7AOqnyuRcluXwkvOWoMyT6eCQjKttIG29d5mI7xT GPCSHZeBXiZ2Ysr4NkRzQw== 0001017527-98-000003.txt : 19980123 0001017527-98-000003.hdr.sgml : 19980123 ACCESSION NUMBER: 0001017527-98-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980122 ITEM INFORMATION: FILED AS OF DATE: 19980122 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL AGRICULTURAL MORTGAGE CORP CENTRAL INDEX KEY: 0000845877 STANDARD INDUSTRIAL CLASSIFICATION: FEDERAL & FEDERALLY-SPONSORED CREDIT AGENCIES [6111] IRS NUMBER: 521578738 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-17440 FILM NUMBER: 98511033 BUSINESS ADDRESS: STREET 1: 919 18TH ST N W STREET 2: STE 200 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2028727700 MAIL ADDRESS: STREET 1: 919 18TH STREET NW STREET 2: SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20006 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 21, 1998 ----------------------------------- Federal Agricultural Mortgage Corporation (Exact Name of Registrant as Specified in its Charter) Federally chartered instrumentality of the United States 0-17440 52-1578738 State or Other Jurisdiction of Incorporation (Commission (IRS Employer File Number) Identification No.) 919 18th Street, N.W., Suite 200, Washington, D.C. 20006 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (202) 872-7700 - -------------------------------------------------------------------------------- N/A (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events On January 21, 1998, the Federal Agricultural Mortgage Corporation issued a press release announcing financial results for the year ended December 31, 1997, a copy of which is attached hereto. Item 7. Financial Statements and Exhibits Exhibit 99(1) - Press Release (including Consolidated Balance Sheets at December 31, 1997 and 1996; Consolidated Statements of Income for the quarters ended December 31, 1997 and December 31, 1996 and for the years ended December 31, 1997 and 1996; and Supplemental Information for the quarters ended December 31, 1997, September 30, 1997, June 30, 1997, March 31, 1997 and December 31, 1996). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FEDERAL AGRICULTURAL MORTGAGE CORPORATION (Registrant) By: /s/ Michael T. Bennett Michael T. Bennett Vice President Date: January 22, 1998 EX-99 2 PRESS RELEASE Exhibit Index Exhibit 99(1) FOR IMMEDIATE RELEASE CONTACT January 21, 1998 Tom Clark 202-872-7700 FARMER MAC ANNOUNCES FAVORABLE RESULTS FOR 1997 Washington, D.C. -- The Federal Agricultural Mortgage Corporation (Farmer Mac, NASDAQ: FAMCA and FAMCK) today reported net income of $4.6 million for 1997 and $1.3 million for fourth quarter 1997. Net income for 1997 and fourth quarter 1997 includes a $250 thousand tax benefit associated with the future use of operating losses incurred in prior years. Excluding the effect of the tax benefit, net income would have been $4.4 million for 1997, an increase of $3.6 million compared to net income of $777 thousand for 1996, and $1.0 million for fourth quarter 1997, compared to $1.2 million for third quarter 1997 and $14 thousand for fourth quarter 1996. Diluted earnings per share for 1997 and fourth quarter 1997 were $0.46 and $0.12, respectively, for Classes A and B common stock and $1.39 and $0.37, respectively, for Class C common stock. Excluding the effect of the foregoing tax benefit, earnings per share for 1997 would have been $0.44 for Classes A and B common stock and $1.31 for Class C common stock, as compared to $0.14 and $0.43, respectively, for 1996. Similarly, earnings per share for fourth quarter 1997 would have been $0.10 for Classes A and B common stock and $0.30 for Class C common stock, as compared to $0.12 and $0.36, respectively, for third quarter 1997 and $0.00 and $0.01, respectively, for fourth quarter 1996. Earnings per share reflect the 3-to-1 dividend and liquidation preference accorded to Class C common stock compared to Classes A and B common stock, as well as the 400,000 share Class C common stock offering completed in November 1997. Farmer Mac's president and chief executive officer, Henry D. Edelman, observed that "the Board and management are pleased with the Corporation's year-end financial results. During 1997, Farmer Mac made significant progress developing its programs and continued building shareholder value through profitable operations. Fourth quarter net income (excluding the tax benefit) was up significantly from the comparable period in 1996, but down modestly from the third quarter of 1997, as a result of quarter-to-quarter fluctuations in loan purchases and issuances of guaranteed securities. Management expects those fluctuations to continue as long as Farmer Mac remains in the developmental phase of implementing its 1996 revised legislative authorities. A relatively small number of active participants continue to be the major producers in the Farmer Mac I seller network, which tends to amplify quarterly fluctuations in securitization transactions. As Farmer Mac's seller network expands and a greater number of larger and more active participants sell loans into the program, management anticipates that quarterly fluctuations should diminish." "Due, in part, to the longer than expected lead-time between marketing initiatives and the commencement of seller activities, Farmer Mac's loan purchase volume has not been increasing as rapidly as management anticipated following the passage of the Corporation's revised legislative authorities," Mr. Edelman noted. "Loan volume continues to be the primary focus of Farmer Mac's current program development efforts. Aggressive efforts have been undertaken to boost near-term volume, including the expansion of the number of field representatives marketing the program and providing customer service support, and the recruitment into the program of new sellers, particularly mortgage bankers and other non-traditional agricultural mortgage lenders, who have the potential to generate large volumes of business and are receptive to the securitization of loans through Farmer Mac. We believe that Farmer Mac made good overall progress in 1997 and laid a foundation for the growth of program volume during 1998." Net Interest Income Net interest income totaled $7.2 million for 1997 compared to $2.7 million for 1996. Net interest income for fourth quarter 1997 was $2.0 million, up slightly from third quarter 1997 and an increase of $1.2 million compared to fourth quarter 1996. The increases in net interest income compared to 1996 were attributable to increases in the balance of program (Farmer Mac I and II securities and loans held for securitization) and non-program (cash and cash equivalents and investments) assets. The increase in the balance of non-program assets was due to expansion of Farmer Mac's debt issuance program beginning in early 1997 to improve spreads on its debt and mortgage-backed securities (and, thereby, the mortgage rates available to farmers and ranchers) by increasing its market presence and investor recognition of its securities. Other Income Other income totaled $5.2 million for 1997, an increase of $2.4 million compared to $2.8 million for 1996. The increase in other income was due to increases in guarantee fee income and the gain on issuance of agricultural mortgage-backed securities (AMBS). Guarantee fee income increased from $1.6 million for 1996 to $2.6 million for 1997, as the outstanding balance of guaranteed securities increased from $631.3 million at December 31, 1996 to $842.9 million at December 31, 1997. Gain on issuance of AMBS totaled $2.4 million for 1997 compared to $1.1 million for 1996. Farmer Mac issued $197.5 million of AMBS in 1997 compared to $149.3 million in 1996. Other income totaled $989 thousand for fourth quarter 1997, compared to $1.3 million for third quarter 1997 and $657 thousand for fourth quarter 1996. Guarantee fee income totaled $718 thousand for fourth quarter 1997, compared to $725 thousand for third quarter 1997 and $492 thousand for fourth quarter 1996. During fourth quarter 1997, Farmer Mac issued $25.6 million of AMBS resulting in a $251 thousand gain. Farmer Mac issued $50.9 million and $27.5 million of AMBS during third quarter 1997 and fourth quarter 1996, respectively. Gains resulting from those issuances totaled $592 thousand and $156 thousand, respectively. Other Expenses Other expenses totaled $7.8 million for 1997 compared to $5.1 million for 1996. For fourth quarter 1997, other expenses totaled $1.9 million compared to $2.1 million for third quarter 1997 and $1.4 million for fourth quarter 1996. The increases compared to 1996 were attributable to increased compensation and other costs related to expanded operations under Farmer Mac's revised legislative authorities. Farmer Mac's provision for losses, a component of other expenses, totaled $990 thousand for 1997 and $210 thousand for fourth quarter 1997, compared to $262 thousand for 1996 and $61 thousand for fourth quarter 1996 and $260 thousand for third quarter 1997. Income Tax Benefit As a result of the use of net operating loss carryforwards, including a $250 thousand tax benefit associated with the future use of operating losses incurred in prior years, Farmer Mac recorded tax benefits of $115 thousand for 1997 and $219 thousand for fourth quarter 1997. If profits continue at current levels, all of Farmer Mac's remaining net operating loss carryforwards would be utilized in 1998, resulting in a higher effective tax rate for the year. Credit At December 31, 1997, loans 90 days or more past due, in bankruptcy or in foreclosure represented 0.26 percent of the principal amount of all loans underlying Farmer Mac guaranteed securities, compared to 0.73 percent at December 31, 1996. Farmer Mac's allowance for losses on guaranteed securities totaled $1.6 million at December 31, 1997 compared to $655 thousand at December 31, 1996. Capital Farmer Mac's capital was $75.1 million at December 31, 1997, compared with $47.2 million at December 31, 1996. Farmer Mac issued 400 thousand shares of Class C non-voting common stock on November 26, 1997, which generated approximately $23.0 million in new equity capital. At December 31, 1997 and 1996, Farmer Mac's capital balances were in excess of regulatory minimum capital requirements. Forward-Looking Statements In addition to historical information, this release includes forward-looking statements reflecting management's current expectations as to Farmer Mac's future business prospects, business development and financial results. Management's expectations for Farmer Mac's future necessarily involve assumptions, estimates and the evaluation of risks and uncertainties. Various factors could cause actual events or results to differ materially from those expectations. Some of the important factors that could cause Farmer Mac's actual results to differ materially from management's expectations include uncertainties regarding the rate and direction of development of the secondary market for agricultural mortgage loans, as well as the possible establishment of additional statutory or regulatory restrictions applicable to Farmer Mac, such as the imposition of regulatory risk-based capital requirements in excess of statutory minimum and critical capital levels or restrictions on Farmer Mac's investment authority. These and other factors are discussed in detail under the caption "Risk Factors" in the Offering Circular included as an exhibit to Farmer Mac's current report on Form 8-K filed with the Securities and Exchange Commission on December 9, 1997. The forward-looking statements contained herein represent management's expectations as of the date of this release. Farmer Mac undertakes no obligation to release publicly the results of any revisions to the forward-looking statements made herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. Farmer Mac is a federally-chartered instrumentality of the United States created by Congress to establish a secondary market for agricultural real estate and rural housing mortgage loans, and to facilitate capital market funding for U.S. Department of Agriculture guaranteed farm program and rural development loans. Farmer Mac's Class A and Class C common stocks are traded on NASDAQ under the symbols FAMCA and FAMCK, respectively. Additional information about Farmer Mac (as well as the Form 8-K referenced above) is available on Farmer Mac's web page at www.farmermac.com.
Dec. 31, Dec. 31, 1997 1996 ----------- ----------- (unaudited) (audited) Assets: Cash and cash equivalents $ 177,617 $ 68,912 Investment securities 656,264 81,280 Farmer Mac I and II securities 442,311 419,260 Loans held for securitization 47,177 12,999 Interest and guarantee fees receivable 21,442 15,566 Other investments 473 4,519 Prepaid expenses and other assets 2,851 568 ----------- ----------- Total Assets $ 1,348,135 $ 603,104 =========== =========== Liabilities and Stockholders' Equity: Debentures, notes and bonds, net: Due within one year $ 856,028 $ 259,164 Due after one year 402,803 287,128 Accrued interest payable and other liabilities 12,598 8,952 Allowance for losses on guaranteed securities 1,645 655 ----------- ----------- Total Liabilities 1,273,074 555,899 Stockholders' Equity 75,061 47,205 ----------- ----------- Total Liabilities and Stockholders' Equity $ 1,348,135 $ 603,104 =========== ===========
* * * * * Federal Agricultural Mortgage Corporation Consolidated Statements of Income (in thousands, except per share amounts) Quarter Ended Year Ended -------------------- -------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 1997 1996 1997 1996 --------- --------- -------- --------- (unaudited)(unaudited) (unaudited)(audited) Interest income: Farmer Mac I and II securities $ 7,929 $ 7,461 $ 47,371 $ 29,672 Investments and cash equivalents 14,013 2,151 30,541 6,964 Loans held for securitization 689 249 2,241 717 --------- --------- -------- --------- Total interest income 22,631 9,861 80,153 37,353 Interest expense 20,625 9,076 72,992 34,623 --------- --------- -------- --------- Net interest income 2,006 785 7,161 2,730 Other income: Guarantee fees 718 492 2,575 1,623 Gain on issuance of AMBS, net 251 156 2,362 1,070 Miscellaneous 20 9 253 63 --------- --------- -------- --------- Total other income 989 657 5,190 2,756 --------- --------- -------- --------- Total revenue 2,995 1,442 12,351 5,486 Other expenses: Compensation and employee benefits 775 640 3,422 2,361 Professional fees 340 136 1,500 828 Board of Directors fees and expenses 164 84 212 320 Regulatory fees 80 35 331 250 General and administrative 367 460 1,385 1,060 Provision for losses 210 61 990 262 --------- --------- -------- --------- Total other expenses 1,936 1,416 7,840 5,081 --------- --------- -------- --------- Income (loss) before income tax and extraordinary item 1,059 26 4,511 405 Provision for income taxes (219) 12 (115) 12 --------- --------- -------- --------- Income before extraordinary item 1,278 14 4,626 393 Extraordinary gain from early extinguishment of debt - - - 384 --------- --------- -------- --------- Net income $ 1,278 $ 14 $ 4,626 $ 777 ========= ========= ======== ========= Earnings per Class A and B Voting Common Stock: Basic earnings before extraordinary item $ 0.13 $ - $ 0.48 $ 0.07 Basic net earnings $ 0.13 $ - $ 0.48 $ 0.15 Diluted earnings defore extraordinary item $ 0.12 $ - $ 0.46 $ 0.07 Diluted net earnings $ 0.12 $ - $ 0.46 $ 0.14 Earnings per Class C Non-Voting Common Stock: Basic earnings before extraordinary item $ 0.38 $ 0.01 $ 1.44 $ 0.22 Basic net earnings $ 0.38 $ 0.01 $ 1.44 $ 0.44 Diluted earnings before extraordinary item $ 0.37 $ 0.01 $ 1.39 $ 0.22 Diluted net earnings $ 0.37 $ 0.01 $ 1.39 $ 0.43
Federal Agricultural Mortgage Corporation Supplemental Information The following tables set forth quarterly activity regarding: mandatory commitments to purchase loans; purchases of loans; AMBS issuances; delinquencies; and outstanding guaranteed securities issued under the Farmer Mac I and II Programs. Mandatory Commitments to Purchase Loans - ----------------------------------------------------------------------------- Fixed Rate Loans ------------------------------- 10 and 7 Year 5 Year 1,3 and 5 Part-Time For the 15 Year Balloon Balloon Year ARMs Farm Total quarter ended: -------------------------------------------------------------- (Dollars in Thousands) December 31, 1997 $ 22,465 $ - $ 11,157 $ 14,513 $ 575 $ 48,710 September 30, 1997 23,066 - 18,116 5,982 - 47,164 June 30, 1997 19,196 2,485 54,980 9,283 - 85,944 March 31, 1997 37,471 - 14,234 3,325 - 55,030 December 31, 1996 15,417 - 11,693 - - 27,110 -------------------------------------------------------------- $117,615 $ 2,485 $110,180 $33,103 $ 575 $263,958
Purchases of Loans - ----------------------------------------------------------------------------- Fixed Rate Loans ------------------------------- 10 and 7 Year 5 Year 1,3 and 5 Part-Time For the 15 Year Balloon Balloon Year ARMs Farm Total quarter ended: ------------------------------------------------------------ (Dollars in Thousands) December 31, 1997 $ 27,753 $ - $ 11,250 $ 9,674 $ 310 $ 48,987 September 30, 1997 19,300 - 19,978 6,800 - 46,078 June 30, 1997 26,325 2,485 53,483 8,990 - 91,283 March 31, 1997 29,647 - 13,678 840 - 44,165 December 31, 1996 22,299 - 14,006 - - 36,305 -------------------------------------------------------------- $125,324 $ 2,485 $112,395 $ 26,304 $ 310 $266,818
AMBS Issuances - ----------------------------------------------------------------------------- Fixed Rate Loans ------------------------------- 10 and 7 Year 5 Year 1,3 and 5 Part-Time For the 15 Year Balloon Balloon Year ARMs Farm Total quarter ended: -------------------------------------------------------------- (Dollars in Thousands) December 31, 1997 $ 16,373 $ - $ 9,256 $ - $ - $ 25,629 September 30, 1997 26,186 - 24,697 - - 50,883 June 30, 1997 57,569 2,485 11,578 - - 71,632 March 31, 1997 32,255 - 17,105 - - 49,360 December 31, 1996 16,766 - 10,702 - - 27,468 -------------------------------------------------------------- $149,149 $ 2,485 $ 73,338 $ - $ - $224,972
Delinquencies (1) - ------------------------------------------------------------ Farmer Mac I --------------------------- As of: AMBS Other (2) Total ------------- ------------- ------------- December 31, 1997 - 0.66% 0.26% September 30, 1997 0.29% 0.93% 0.57% June 30, 1997 - 0.21% 0.10% March 31, 1997 - 0.66% 0.39% December 31, 1996 - 1.11% 0.73%
(1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy. (2) Includes loans underlying securities issued prior to the 1996 enactment of the Corporation's revised legislative authorities. These securities are supported by unguaranteed subordinated interests, which represented 10% of the initial balance of the loans underlying the securities at issuance.
Outstanding Guaranteed Mortgage Securities - --------------------------------------------------------------------------- Farmer Mac I Farmer Held in As of: AMBS Other (1) Mac II Total Portfolio (2) ---------------------------------- ---------------------- (Dollars in Thousands) December 31, 1997 $341,213 $228,904 $272,777 $842,894 $433,807 September 30, 1997 316,214 234,085 263,228 813,527 427,395 June 30, 1997 266,838 243,775 244,502 755,115 418,002 March 31, 1997 195,792 252,134 224,197 672,123 403,685 December 31, 1996 148,918 271,341 211,024 631,283 405,253
(1)Includes securities issued prior to the 1996 enactment of the Corporation's revised legislative authorities. These securities are supported by unguaranteed subordinated interests, which represented 10% of the initial balance of the loans underlying the securities at issuance. (2) Included in total outstanding guaranteed mortgage securities. -----END PRIVACY-ENHANCED MESSAGE-----