FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
|
(Exact
name of registrant as specified in its
charter)
|
Federally
chartered instrumentality
of
the United States
|
52-1578738
|
|
(State
or other jurisdiction of
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)
|
(202)
872-7700
|
(Registrant’s
telephone number, including area
code)
|
Yes
x
|
No
o
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
Yes
o
|
No
x
|
Condensed
Consolidated Balance Sheets (as restated) as of March 31, 2006 and
December 31, 2005
|
5
|
Condensed
Consolidated Statements of Operations (as restated) for the three
months
ended March 31, 2006 and 2005
|
6
|
Condensed
Consolidated Statements of Cash Flows (as restated) for the three
months
ended March 31, 2006 and 2005
|
7
|
Notes
to Condensed Consolidated Financial Statements (as
restated)
|
8
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(As
Restated)*
|
(As
Restated)*
|
||||||
(in
thousands)
|
|||||||
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
413,619
|
$
|
458,852
|
|||
Investment
securities
|
1,884,011
|
1,621,941
|
|||||
Farmer
Mac Guaranteed Securities
|
1,297,401
|
1,330,976
|
|||||
Loans
held for sale
|
39,477
|
41,956
|
|||||
Loans
held for investment
|
747,778
|
762,436
|
|||||
Allowance
for loan losses
|
(3,883
|
)
|
(4,876
|
)
|
|||
Loans
held for investment, net
|
743,895
|
757,560
|
|||||
Real
estate owned
|
2,655
|
3,532
|
|||||
Financial
derivatives
|
16,332
|
8,719
|
|||||
Interest
receivable
|
43,344
|
67,509
|
|||||
Guarantee
and commitment fees receivable
|
20,139
|
22,170
|
|||||
Deferred
tax asset, net
|
2,906
|
3,223
|
|||||
Prepaid
expenses and other assets
|
10,816
|
25,007
|
|||||
Total
Assets
|
$
|
4,474,595
|
$
|
4,341,445
|
|||
Liabilities
and Stockholders' Equity:
|
|||||||
Liabilities:
|
|||||||
Notes
payable:
|
|||||||
Due
within one year
|
$
|
2,771,106
|
$
|
2,587,704
|
|||
Due
after one year
|
1,340,385
|
1,406,527
|
|||||
Total
notes payable
|
4,111,491
|
3,994,231
|
|||||
Financial
derivatives
|
24,280
|
29,162
|
|||||
Accrued
interest payable
|
22,554
|
29,250
|
|||||
Guarantee
and commitment obligation
|
16,998
|
17,625
|
|||||
Accounts
payable and accrued expenses
|
45,089
|
21,371
|
|||||
Reserve
for losses
|
2,931
|
3,777
|
|||||
Total
Liabilities
|
4,223,343
|
4,095,416
|
|||||
Stockholders'
Equity:
|
|||||||
Preferred
stock:
|
|||||||
Series
A, stated at redemption/liquidation value, $50 per share,700,000
shares
authorized, issued and outstanding
|
35,000
|
35,000
|
|||||
Common
stock:
|
|||||||
Class
A Voting, $1 par value, no maximum authorization,1,030,780 shares
issued
and outstanding
|
1,031
|
1,031
|
|||||
Class
B Voting, $1 par value, no maximum authorization,500,301 shares issued
and
outstanding
|
500
|
500
|
|||||
Class
C Non-Voting, $1 par value, no maximum authorization,9,570,301 and
9,559,554 shares issued and outstanding as of March 31, 2006 and
December
31, 2005, respectively
|
9,570
|
9,560
|
|||||
Additional
paid-in capital
|
83,962
|
83,058
|
|||||
Accumulated
other comprehensive income
|
6,336
|
15,247
|
|||||
Retained
earnings
|
114,853
|
101,633
|
|||||
Total
Stockholders' Equity
|
251,252
|
246,029
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
4,474,595
|
$
|
4,341,445
|
Three
Months Ended
|
|||||||
March
31, 2006
|
March
31, 2005
|
||||||
(As
Restated)*
|
(As
Restated)*
|
||||||
Interest
income:
|
|||||||
Investments
and cash equivalents
|
$
|
26,698
|
$
|
12,587
|
|||
Farmer
Mac Guaranteed Securities
|
18,037
|
18,327
|
|||||
Loans
|
11,383
|
12,121
|
|||||
Total
interest income
|
56,118
|
43,035
|
|||||
Interest
expense
|
45,451
|
29,154
|
|||||
Net
interest income
|
10,667
|
13,881
|
|||||
Recovery/(provision)
for loan losses
|
1,013
|
584
|
|||||
Net
interest income after recovery/(provision) for loan losses
|
11,680
|
14,465
|
|||||
Guarantee
and commitment fees
|
5,049
|
4,956
|
|||||
Gains
on financial derivatives and trading assets
|
11,700
|
9,866
|
|||||
Gains/(losses)
on the sale of real estate owned
|
210
|
(13
|
)
|
||||
Representation
and warranty claims income
|
-
|
79
|
|||||
Other
income
|
169
|
320
|
|||||
Total
revenues
|
28,808
|
29,673
|
|||||
Expenses:
|
|||||||
Compensation
and employee benefits
|
2,904
|
1,775
|
|||||
General
and administrative
|
2,758
|
1,990
|
|||||
Regulatory
fees
|
588
|
576
|
|||||
Real
estate owned operating costs, net
|
115
|
(22
|
)
|
||||
Provision/(recovery)
for losses
|
(696
|
)
|
(101
|
)
|
|||
Total
operating expenses
|
5,669
|
4,218
|
|||||
Income
before income taxes
|
23,139
|
25,455
|
|||||
Income
tax expense
|
7,488
|
8,510
|
|||||
Net
income
|
15,651
|
16,945
|
|||||
Preferred
stock dividends
|
(560
|
)
|
(560
|
)
|
|||
Net
income available to common stockholders
|
$
|
15,091
|
$
|
16,385
|
|||
Earnings
per common share:
|
|||||||
Basic
earnings per common share
|
$
|
1.36
|
$
|
1.40
|
|||
Diluted
earnings per common share
|
$
|
1.32
|
$
|
1.39
|
|||
Common
stock dividends per common share
|
$
|
0.10
|
$
|
0.10
|
Three
Months Ended
|
|||||||
March
31, 2006
|
March
31, 2005
|
||||||
(As
Restated)*
|
(As
Restated)*
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
15,651
|
$
|
16,945
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Net
amortization of investment premiums and discounts
|
(234
|
)
|
554
|
||||
Amortization
of debt premiums, discounts and issuance costs
|
26,639
|
12,114
|
|||||
Proceeds
from repayment of trading investment securities
|
467
|
651
|
|||||
Purchases
of loans held for sale
|
(13,328
|
)
|
(16,876
|
)
|
|||
Proceeds
from repayment of loans held for sale
|
3,723
|
4,822
|
|||||
Net
change in fair value of trading securities and financial
derivatives
|
(12,501
|
)
|
(15,216
|
)
|
|||
Amortization
of SFAS 133 transition adjusment on financial derivatives
|
131
|
169
|
|||||
(Gains)/losses
on the sale of real estate owned
|
(210
|
)
|
13
|
||||
Total
(recovery)/provision for losses
|
(1,709
|
)
|
(685
|
)
|
|||
Deferred
income taxes
|
5,112
|
(5,385
|
)
|
||||
Stock-based
compensation expense
|
426
|
- | |||||
Decrease
in interest receivable
|
24,165
|
19,998
|
|||||
Decrease
in guarantee and commitment fees receivable
|
2,031
|
1,885
|
|||||
Decrease
in other assets
|
13,228
|
12,871
|
|||||
Decrease
in accrued interest payable
|
(6,696
|
)
|
(740
|
)
|
|||
(Decrease)/increase
in other liabilities
|
21,799
|
(8,947
|
)
|
||||
Net
cash provided by operating activities
|
78,694
|
22,173
|
|||||
|
|||||||
Cash
flows from investing activities:
|
|||||||
Purchases
of available-for-sale investment securities
|
(899,793
|
)
|
(696,142
|
)
|
|||
Purchases
of Farmer Mac II Guaranteed Securities and AgVantage Farmer Mac Guaranteed
Securities
|
(47,528
|
)
|
(44,175
|
)
|
|||
Purchases
of loans held for investment
|
(16,932
|
)
|
(1,664
|
)
|
|||
Purchases
of defaulted loans
|
(4,054
|
)
|
(3,399
|
)
|
|||
Proceeds
from repayment of investment securities
|
639,816
|
600,386
|
|||||
Proceeds
from repayment of Farmer Mac Guaranteed Securities
|
68,723
|
74,356
|
|||||
Proceeds
from repayment of loans
|
44,582
|
45,957
|
|||||
Proceeds
from sale of loans and Farmer Mac Guaranteed Securities
|
1,485
|
2,414
|
|||||
Proceeds
from sale of real estate owned
|
818
|
117
|
|||||
Net
cash used in investing activities
|
(212,883
|
)
|
(22,150
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of discount notes
|
15,145,352
|
13,260,608
|
|||||
Proceeds
from issuance of medium-term notes
|
86,200
|
75,000
|
|||||
Payments
to redeem discount notes
|
(15,095,392
|
)
|
(13,169,737
|
)
|
|||
Payments
to redeem medium-term notes
|
(45,500
|
)
|
(164,740
|
)
|
|||
Tax
benefit from tax deductions in excess of compensation cost
recognized
|
239
|
-
|
|||||
Proceeds
from common stock issuance
|
815
|
45
|
|||||
Purchases
of common stock
|
(1,085
|
)
|
(5,942
|
)
|
|||
Dividends
paid
|
(1,673
|
)
|
(1,720
|
)
|
|||
Net
cash provided by/(used in) financing activities
|
88,956
|
(6,486
|
)
|
||||
Net
decrease in cash and cash equivalents
|
(45,233
|
)
|
(6,463
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
458,852
|
430,504
|
|||||
Cash
and cash equivalents at end of period
|
$
|
413,619
|
$
|
424,041
|
(a)
|
Cash
and Cash Equivalents
|
Three
Months Ended
|
|||||||
March
31, 2006
|
March
31, 2005
|
||||||
(in
thousands)
|
|||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
26,119
|
$
|
17,250
|
|||
Income
taxes
|
-
|
700
|
|||||
Non-cash
activity:
|
|||||||
Real
estate owned acquired through foreclosure
|
-
|
460
|
|||||
Loans
acquired and securitized as Farmer Mac Guaranteed
Securities
|
1,485
|
1,914
|
(b) |
Allowance
for Losses
|
·
|
economic
conditions;
|
·
|
geographic
and agricultural commodity/product concentrations in the
portfolio;
|
·
|
the
credit profile of the portfolio;
|
·
|
delinquency
trends of the portfolio; and
|
·
|
historical
charge-off and recovery activities of the
portfolio.
|
Three
Months Ended
|
|||||||||||||
March
31, 2006
|
|||||||||||||
Allowance
for Loan Losses
|
REO
Valuation Allowance
|
Reserve
for Losses
|
Total
Allowance for Losses
|
||||||||||
(in
thousands)
|
|||||||||||||
Beginning
balance
|
$
|
4,876
|
$
|
-
|
$
|
3,777
|
$
|
8,653
|
|||||
Provision/(recovery)
for losses
|
(1,013
|
)
|
150
|
(846
|
)
|
(1,709
|
)
|
||||||
Net
(charge-offs)/recoveries
|
20
|
(150
|
)
|
-
|
(130
|
)
|
|||||||
Ending
balance
|
$
|
3,883
|
$
|
-
|
$
|
2,931
|
$
|
6,814
|
Three
Months Ended
|
|||||||||||||
March
31, 2005
|
|||||||||||||
Allowance
for Loan Losses
|
REO
Valuation Allowance
|
Reserve
for Losses
|
Total
Allowance for Losses
|
||||||||||
(in
thousands)
|
|||||||||||||
Beginning
balance
|
$
|
4,395
|
$
|
-
|
$
|
12,706
|
$
|
17,101
|
|||||
Provision/(recovery)
for losses
|
(584
|
)
|
120
|
(221
|
)
|
(685
|
)
|
||||||
Net
(charge-offs)/recoveries
|
35
|
(120
|
)
|
-
|
(85
|
)
|
|||||||
Ending
balance
|
$
|
3,846
|
$
|
-
|
$
|
12,485
|
$
|
16,331
|
March
31,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Allowance
for loan losses
|
$
|
3,883
|
$
|
4,876
|
|||
Real
estate owned valuation allowance
|
-
|
-
|
|||||
Reserve
for losses:
|
|||||||
On-balance
sheet Farmer Mac I Guaranteed Securities
|
1,579
|
2,068
|
|||||
Off-balance
sheet Farmer Mac I Guaranteed Securities
|
691
|
1,078
|
|||||
LTSPCs
|
661
|
631
|
|||||
Total
|
$
|
6,814
|
$
|
8,653
|
March
31, 2006
|
December
31, 2005
|
||||||||||||||||||
Balance
|
Specific
Allowance
|
Net
Balance
|
Balance
|
Specific
Allowance
|
Net
Balance
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Impaired
assets:
|
|||||||||||||||||||
Specific
allowance for losses
|
$
|
3,502
|
$
|
(47
|
)
|
$
|
3,455
|
$
|
2,445
|
$
|
(161
|
)
|
$
|
2,284
|
|||||
No
specific allowance for losses
|
64,534
|
-
|
64,534
|
71,177
|
-
|
71,177
|
|||||||||||||
Total
|
$
|
68,036
|
$
|
(47
|
)
|
$
|
67,989
|
$
|
73,622
|
$
|
(161
|
)
|
$
|
73,461
|
(c) |
Financial
Derivatives
|
As
of March 31, 2006
|
As
of December 31, 2005
|
||||||||||||
Notional
Amount
|
Fair
Value
|
Notional
Amount
|
Fair
Value
|
||||||||||
Interest
rate swaps:
|
|||||||||||||
Pay-fixed
|
$
|
777,021
|
$
|
(3,813
|
)
|
$
|
710,678
|
$ |
(17,228
|
) | |||
Receive-fixed
|
259,000
|
(9,923
|
)
|
205,000
|
(5,752
|
)
|
|||||||
Basis
|
373,434
|
5,804
|
389,496
|
2,801
|
|||||||||
Treasury
futures
|
49
|
22
|
-
|
-
|
|||||||||
Agency
forwards
|
31,157
|
(38
|
)
|
91,178
|
(264
|
)
|
|||||||
Total
|
$
|
1,440,661
|
$
|
(7,948
|
)
|
$
|
1,396,352
|
$
|
(20,443
|
)
|
(d) |
Earnings
Per Common Share
|
Three
Months Ended
|
|||||||||||||||||||
March
31, 2006
|
March
31, 2005
|
||||||||||||||||||
Basic
EPS
|
Dilutive
stock options
|
Diluted
EPS
|
Basic
EPS
|
Dilutive
stock options
|
Diluted
EPS
|
||||||||||||||
(in
thousands, except per share amounts)
|
|||||||||||||||||||
|
|
|
|
|
|
||||||||||||||
Net
income available to common stockholders
|
$
|
15,091
|
$
|
15,091
|
$
|
16,385
|
$
|
16,385
|
|||||||||||
Weighted-average
shares
|
11,107
|
318
|
11,425
|
11,687
|
69
|
11,756
|
|||||||||||||
Earnings
per common share
|
$
|
1.36
|
$
|
1.32
|
$
|
1.40
|
$
|
1.39
|
(e) |
Stock-Based
Compensation
|
Three
Months Ended
|
|||||||||||||
March
31, 2006
|
March
31, 2005
|
||||||||||||
Shares
|
Weighted-
Average
Exercise
Price
|
Shares
|
Weighted-
Average
Exercise
Price
|
||||||||||
Outstanding,
beginning of period
|
2,153,008
|
$
|
22.41
|
1,812,222
|
$
|
22.67
|
|||||||
Granted
|
-
|
-
|
-
|
-
|
|||||||||
Exercised
|
(61,800
|
)
|
13.14
|
(1,737
|
)
|
16.38
|
|||||||
Canceled
|
-
|
-
|
(7,001
|
)
|
24.28
|
||||||||
Outstanding,
end of period
|
2,091,208
|
$
|
22.68
|
1,803,484
|
$
|
22.72
|
|||||||
Options
exercisable at end of period
|
1,390,475
|
1,348,577
|
Options
|
||||||||||
Options
Outstanding
|
Exercisable
|
|||||||||
Weighted-
|
||||||||||
Average
|
||||||||||
Range
of
|
Remaining
|
|||||||||
Exercise
|
Number
of
|
Contractual
|
Number
of
|
|||||||
Prices
|
Shares
|
Life
|
Shares
|
|||||||
|
|
|
|
|
|
|
|
|||
$
15.00 - $19.99
|
|
|
453,720
|
|
|
6.2
years
|
|
|
304,215
|
|
20.00 - 24.99
|
|
|
1,139,816
|
|
|
6.1
years
|
|
|
594,588
|
|
25.00 - 29.99
|
|
|
258,421
|
|
|
5.4
years
|
|
|
252,421
|
|
30.00 - 34.99
|
|
|
238,751
|
|
|
4.2
years
|
|
|
238,751
|
|
35.00 - 39.99
|
|
|
-
|
|
|
-
|
|
|
-
|
|
40.00 - 44.99
|
|
|
-
|
|
|
-
|
|
|
-
|
|
45.00 - 50.00
|
|
|
500
|
|
|
6.0
years
|
|
|
500
|
|
|
|
|
2,091,208
|
|
|
|
|
|
1,390,475
|
|
2005
|
2004
|
||||||
Risk-free
interest rate
|
3.9
|
%
|
4.3
|
%
|
|||
Expected
years until exercise
|
7
years
|
5
years
|
|||||
Expected
stock volatility
|
46.3
|
%
|
47.8
|
%
|
|||
Dividend
yield
|
1.9
|
%
|
0.0
|
%
|
(f) |
Reclassifications
|
(g) |
New
Accounting Standards
|
Note 2. |
Farmer
Mac Guaranteed Securities
|
March
31, 2006
|
December
31, 2005
|
||||||||||||||||||
Available-
|
Held-to-
|
Available-
|
Held-to-
|
||||||||||||||||
for-Sale
|
Maturity
|
Total
|
for-Sale
|
Maturity
|
Total
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Farmer
Mac I
|
$
|
447,379
|
$
|
41,865
|
$
|
489,244
|
$
|
492,158
|
$
|
41,573
|
$
|
533,731
|
|||||||
Farmer
Mac II
|
-
|
808,157
|
808,157
|
-
|
797,245
|
797,245
|
|||||||||||||
Total
|
$
|
447,379
|
$
|
850,022
|
$
|
1,297,401
|
$
|
492,158
|
$
|
838,818
|
$
|
1,330,976
|
|||||||
Amortized
cost
|
$
|
437,510
|
$
|
850,022
|
$
|
1,287,532
|
$
|
477,561
|
$
|
838,818
|
$
|
1,316,379
|
|||||||
Unrealized
gains
|
13,596
|
298
|
13,894
|
18,395
|
448
|
18,843
|
|||||||||||||
Unrealized
losses
|
(3,727
|
)
|
(12,931
|
)
|
(16,658
|
)
|
(3,798
|
)
|
(8,339
|
)
|
(12,137
|
)
|
|||||||
Fair
value
|
$
|
447,379
|
$
|
837,389
|
$
|
1,284,768
|
$
|
492,158
|
$
|
830,927
|
$
|
1,323,085
|
|
|
March
31, 2006
|
|
|
|
|
(dollars
in thousands)
|
||
Fair
value of beneficial interests retained in Farmer Mac Guaranteed
Securities
|
$
|
1,284,768
|
||
Weighted-average
remaining life (in years)
|
4.7
|
|||
Weighted-average
prepayment speed (annual rate)
|
10.7
|
%
|
||
Effect
on fair value of a 10% adverse change
|
$
|
66
|
||
Effect
on fair value of a 20% adverse change
|
$
|
143
|
||
Weighted-average
discount rate
|
5.5
|
%
|
||
Effect
on fair value of a 10% adverse change
|
$
|
(18,262
|
)
|
|
Effect
on fair value of a 20% adverse change
|
$
|
(36,609
|
)
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(in
thousands)
|
|||||||
On-balance
sheet assets:
|
|||||||
Farmer
Mac I:
|
|||||||
Loans
|
$
|
779,475
|
$
|
784,422
|
|||
Guaranteed
Securities
|
478,619
|
518,250
|
|||||
Farmer
Mac II:
|
|||||||
Guaranteed
Securities
|
806,984
|
796,224
|
|||||
Total
on-balance sheet
|
$
|
2,065,078
|
$
|
2,098,896
|
|||
Off-balance
sheet assets:
|
|||||||
Farmer
Mac I:
|
|||||||
LTSPCs
|
$
|
2,243,259
|
$
|
2,329,798
|
|||
Guaranteed
Securities
|
1,262,549
|
804,785
|
|||||
Farmer
Mac II:
|
|||||||
Guaranteed
Securities
|
35,379
|
39,508
|
|||||
Total
off-balance sheet
|
$
|
3,541,187
|
$
|
3,174,091
|
|||
Total
|
$
|
5,606,265
|
$
|
5,272,987
|
90-Day
Delinquencies
(1)
|
Net
Credit
Losses/(Recoveries)
|
||||||||||||
As
of
March
31,
|
As
of
December
31,
|
Three
Months Ended
March
31,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(in
thousands)
|
|||||||||||||
On-balance
sheet assets:
|
|||||||||||||
Farmer
Mac I:
|
|||||||||||||
Loans
|
$
|
25,535
|
$
|
23,308
|
$
|
(20
|
)
|
$
|
(35
|
)
|
|||
Guaranteed
Securities
|
-
|
-
|
-
|
-
|
|||||||||
Total
on-balance sheet
|
$
|
25,535
|
$
|
23,308
|
$
|
(20
|
)
|
$
|
(35
|
)
|
|||
Off-balance
sheet assets:
|
|||||||||||||
Farmer
Mac I:
|
|||||||||||||
LTSPCs
|
$
|
3,227
|
$
|
2,153
|
$
|
-
|
$
|
-
|
|||||
Guaranteed
Securities
|
-
|
-
|
-
|
-
|
|||||||||
Total
off-balance sheet
|
$
|
3,227
|
$
|
2,153
|
$
|
-
|
$
|
-
|
|||||
Total
|
$
|
28,762
|
$
|
25,461
|
$
|
(20
|
)
|
$
|
(35
|
)
|
(1) |
Includes
loans and loans underlying post-1996 Act 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.
|
Note 3. |
Off-Balance
Sheet Guarantees and Long-Term Standby Purchase
Commitments
|
Three
Months Ended
|
|||||||
March
31, 2006
|
March
31, 2005
|
||||||
(in
thousands)
|
|||||||
Proceeds
from new securitizations
|
$
|
1,485
|
$
|
1,914
|
|||
Guarantee
fees received
|
670
|
726
|
|||||
Purchases
of assets from the trusts
|
506
|
1,595
|
|||||
Servicing
advances
|
1
|
3
|
|||||
Repayment
of servicing advances
|
4
|
12
|
Outstanding
Balance of Off-Balance Sheet
|
|||||||
Farmer
Mac Guaranteed Securities
|
|||||||
March
31,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Farmer
Mac I Guaranteed Securities
|
$
|
1,262,549
|
$
|
804,785
|
|||
Farmer
Mac II Guaranteed Securities
|
35,379
|
39,508
|
|||||
Total
Farmer Mac I and II
|
$
|
1,297,928
|
$
|
844,293
|
Note 4. |
Comprehensive
Income
|
Three
Months Ended
|
|||||||
March
31, 2006
|
March
31, 2005
|
||||||
(in
thousands)
|
|||||||
Net
income available to common stockholders
|
$
|
15,091
|
$
|
16,385
|
|||
Unrealized
gains/(losses) on securities
|
(13,911
|
)
|
(16,357
|
)
|
|||
Amortization
of FAS 133 transition adjustment on financial derivatives
|
202
|
260
|
|||||
Other
compehensive income, before tax
|
(13,709
|
)
|
(16,097
|
)
|
|||
|
|||||||
Income
tax related to items of other comprehensive income
|
(4,798
|
)
|
(5,634
|
)
|
|||
Other
comprehensive income/(loss), net of tax
|
(8,911
|
)
|
(10,463
|
)
|
|||
Comprehensive
income available to common stockholders
|
$
|
6,180
|
$
|
5,922
|
Note 5. |
Investments
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(in
thousands)
|
|||||||
Held-to-maturity
|
$
|
10,602
|
$
|
10,602
|
|||
Available-for-sale
|
1,866,951
|
1,604,419
|
|||||
Trading
|
6,458
|
6,920
|
|||||
$
|
1,884,011
|
$
|
1,621,941
|
As
of March 31, 2006
|
As
of December 31, 2005
|
||||||||||||||||||||||||
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||||||||
(in
thousands)
|
|||||||||||||||||||||||||
Held-to-maturity:
|
|||||||||||||||||||||||||
Cash
investment in fixed rate guaranteed investment contract
|
$
|
10,602
|
$
|
-
|
$
|
(5
|
)
|
$
|
10,597
|
$
|
10,602
|
$
|
18
|
$
|
-
|
$
|
10,620
|
||||||||
Total
held-to-maturity
|
$
|
10,602
|
$
|
-
|
$
|
(5
|
)
|
$
|
10,597
|
$
|
10,602
|
$
|
18
|
$
|
-
|
$
|
10,620
|
||||||||
Available-for-sale:
|
|||||||||||||||||||||||||
Floating
rate asset-backed securities
|
$
|
417,672
|
$
|
1,048
|
$
|
-
|
$
|
418,720
|
$
|
336,647
|
$
|
941
|
$
|
-
|
$
|
337,588
|
|||||||||
Floating
rate corporate debt securities
|
325,732
|
488
|
(16
|
)
|
326,204
|
230,787
|
515
|
(10
|
)
|
231,673
|
|||||||||||||||
Fixed
rate corporate debt securities
|
544,574
|
-
|
(5,810
|
)
|
538,764
|
520,381
|
-
|
(1,950
|
)
|
518,050
|
|||||||||||||||
Fixed
rate preferred stock
|
238,469
|
6,515
|
(220
|
)
|
244,764
|
239,033
|
11,687
|
(304
|
)
|
250,416
|
|||||||||||||||
Fixed
rate commercial paper
|
158,724
|
-
|
-
|
158,724
|
90,848
|
-
|
-
|
90,848
|
|||||||||||||||||
Floating
rate mortgage-backed securities
|
169,110
|
448
|
(52
|
)
|
169,506
|
175,441
|
481
|
(78
|
)
|
175,844
|
|||||||||||||||
Fixed
rate mortgage-backed securities
|
10,570
|
-
|
(301
|
)
|
10,269
|
-
|
-
|
-
|
-
|
||||||||||||||||
Total
available-for-sale
|
$
|
1,864,851
|
$
|
8,499
|
$
|
(6,399
|
)
|
$
|
1,866,951
|
$
|
1,593,137
|
$
|
13,624
|
$
|
(2,342
|
)
|
$
|
1,604,419
|
|||||||
Trading:
|
|||||||||||||||||||||||||
Adjustable
rate mortgage-backed securities
|
$
|
6,399
|
$
|
59
|
$
|
-
|
$
|
6,458
|
$
|
6,867
|
$
|
53
|
$
|
-
|
$
|
6,920
|
|||||||||
Total
trading
|
$
|
6,399
|
$
|
59
|
$
|
-
|
$
|
6,458
|
$
|
6,867
|
$
|
53
|
$
|
-
|
$
|
6,920
|
Investment
Securities
|
||||||||||
Available-for-Sale
|
||||||||||
as
of March 31, 2006
|
||||||||||
Amortized
Cost
|
|
Fair
Value
|
|
Yield
|
||||||
(dollars
in thousands)
|
||||||||||
Due
within one year
|
$
|
204,113
|
$
|
204,153
|
4.57
|
%
|
||||
Due
after one year through five years
|
889,849
|
884,278
|
4.94
|
%
|
||||||
Due
after five years through ten years
|
113,129
|
115,696
|
7.32
|
%
|
||||||
Due
after ten years
|
657,760
|
662,824
|
5.43
|
%
|
||||||
Total
|
$
|
1,864,851
|
$
|
1,866,951
|
5.22
|
%
|
Note 6. |
Restatement
of Condensed Consolidated Financial
Statements
|
March
31, 2006
|
December
31, 2005
|
||||||||||||
As
Previously
|
As
|
As
Previously
|
As
|
||||||||||
Selected Balance Sheet Data: |
Reported
|
Restated
|
Reported
|
Restated
|
|||||||||
(in
thousands)
|
|||||||||||||
Assets: | |||||||||||||
Deferred
tax asset, net
|
$
|
1,647
|
$
|
2,906
|
$
|
2,397
|
$
|
3,223
|
|||||
Total
Assets
|
4,473,336
|
4,474,595
|
4,340,619
|
4,341,445
|
|||||||||
Liabilities and Stockholder's Equity: | |||||||||||||
Notes
payable: Due after one year
|
1,336,215
|
1,340,385
|
1,403,598
|
1,406,527
|
|||||||||
Total
notes payable
|
4,107,321
|
4,111,491
|
3,991,302
|
3,994,231
|
|||||||||
Total
Liabilities
|
4,219,173
|
4,223,343
|
4,092,487
|
4,095,416
|
|||||||||
Accumulated
other comprehensive income
|
5,290
|
6,336
|
3,339
|
15,247
|
|||||||||
Retained
earnings
|
118,810
|
114,853
|
115,644
|
101,633
|
|||||||||
Total
Stockholders' Equity
|
254,163
|
251,252
|
248,132
|
246,029
|
|||||||||
Total
Liabilities and Stockholders' Equity
|
4,473,336
|
4,474,595
|
4,340,619
|
4,341,445
|
|
For
the three months ended,
March
31, 2006
|
For
the three months ended,
March
31, 2006
|
|||||||||||
|
As
Previously
|
As
|
As
Previously
|
As
|
|||||||||
Selected
Statements of Operations Data:
|
Reported
|
Restated
|
Reported
|
Restated
|
|||||||||
|
(in
thousands, except per share amounts)
|
||||||||||||
Interest
income:
|
|
|
|
|
|||||||||
Farmer
Mac Guaranteed Securities
|
$
|
18,095
|
$
|
18,037
|
$
|
17,081
|
$
|
18,327
|
|||||
Total
interest income
|
56,176
|
56,118
|
41,789
|
43,035
|
|||||||||
Interest
expense
|
47,276
|
45,451
|
33,983
|
29,154
|
|||||||||
Net
interest income
|
8,900
|
10,667
|
7,806
|
13,881
|
|||||||||
Net
interest income after recovery/ (provision) for loan
losses
|
9,913
|
11,680
|
8,390
|
14,465
|
|||||||||
Gains
on financial derivatives and trading assets
|
(2,001
|
)
|
11,700
|
(1,709
|
)
|
9,866
|
|||||||
Total
revenues
|
13,340
|
28,808
|
12,023
|
29,673
|
|||||||||
Income
before income taxes
|
7,671
|
23,139
|
7,805
|
25,455
|
|||||||||
Income
tax expense
|
2,074
|
7,488
|
2,333
|
8,510
|
|||||||||
Net
income
|
5,597
|
15,651
|
5,472
|
16,945
|
|||||||||
Net
income available to common stockholders
|
5,037
|
15,091
|
4,912
|
16,385
|
|||||||||
Earnings
per common share:
|
|||||||||||||
Basic
earnings per common share
|
0.45
|
1.36
|
0.42
|
1.40
|
|||||||||
Diluted
earnings per common share
|
0.44
|
1.32
|
0.42
|
1.39
|
For
the three months ended
|
For
the three months ended
|
||||||||||||
March
31, 2006
|
March
31, 2005
|
||||||||||||
As
Previously
|
As
|
As
Previously
|
As
|
||||||||||
Selected
Statements of Cash Flows Data:
|
Reported
|
Restated
|
Reported
|
Restated
|
|||||||||
(in
thousands)
|
|||||||||||||
Cash
flows from operating activities:
|
|||||||||||||
Net
income
|
$
|
5,597
|
$
|
15,651
|
$
|
5,472
|
$
|
16,945
|
|||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||||||||
Net
change in fair value of trading securities and financial
derivatives
|
1,902
|
(12,501
|
)
|
2,107
|
(15,216
|
)
|
|||||||
Amortization
of SFAS 133 transition adjustment on financial
derivatives
|
89
|
131
|
438
|
169
|
|||||||||
Deferred
income taxes
|
(302
|
)
|
5,112
|
(794
|
)
|
(5,385
|
)
|
||||||
Decrease
in other assets
|
13,741
|
13,228
|
2,053
|
12,871
|
|||||||||
Net
cash provided by operating activities
|
78,100
|
78,694
|
22,065
|
22,173
|
|||||||||
Cash
flows from financing activities:
|
|||||||||||||
Settlement
of financial derivatives
|
594
|
-
|
108
|
-
|
|||||||||
Net
cash provided by/(used in) financing activities
|
89,550
|
88,956
|
(6,378
|
)
|
(6,486
|
)
|
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 provisions for losses;
|
· |
trends
in expenses;
|
· |
changes
in capital position; and
|
· |
other
business and financial matters.
|
· |
increases
in general and administrative expenses attributable to growth of
the
business and the regulatory environment, including the hiring of
additional personnel with expertise in key functional areas;
|
· |
the
rate and direction of development of the secondary market for agricultural
mortgage loans;
|
· |
the
general rate of growth in agricultural mortgage
indebtedness;
|
· |
lender
interest in Farmer Mac credit products and the Farmer Mac secondary
market;
|
· |
borrower
preferences for fixed-rate agricultural mortgage
indebtedness;
|
· |
the
willingness of investors to invest in Farmer Mac Guaranteed Securities;
and
|
· |
possible
reaction in the financial markets to events involving government-sponsored
enterprises other than Farmer Mac.
|
· |
added
$73.2 million of Farmer Mac I loans under
LTSPCs;
|
· |
guaranteed
$500.0 million of AgVantage
securities;
|
· |
purchased
$30.3 million of newly originated and current seasoned Farmer Mac
I loans;
and
|
· |
purchased
$45.1 million of Farmer Mac II USDA-guaranteed portions of
loans.
|