Farmer Mac Announces Record Earnings

January 20, 2000

The Federal Agricultural Mortgage Corporation (Farmer Mac) ended 1999 with record diluted earnings per share of 62 cents, a 63% increase over 1998 diluted earnings per share of 38 cents. Net income for 1999 was $6.9 million, also 63% more than 1998 net income of $4.2 million.

Fourth quarter 1999 diluted earnings per share of 17 cents represent a 70% increase over a year earlier. Net income for fourth quarter 1999 was $1.9 million compared to $1.1 million in 1998 and $1.8 million in third quarter 1999.

Continuing economic stress in agriculture reduced mortgage demand, said Farmer Mac President and CEO Henry D. Edelman. That curtailed the purchase volume of newly originated loans during the four quarter. "Nevertheless our small but growing market share and expanding seller network should result in continued increases in program volume during 2000, regardless of the economic condition of the agricultural sector," Edelman says.

Net interest income increased by $4.4 million to $15 million for 1999 over 1998 as a result of a 41% increase in the average balance of interest-earning assets. Growth in interest-earning assets was due primarily to an increase in on-balance sheet program assets which increased by $624.5 million during 1999. Net interest yield on earning assets was .64% in 1999 compared to .63% a year earlier.

For fourth quarter 1999, net interest income was $3.6 million compared to $3 million a year earlier and $3.8 million for the third quarter 1999.

Net interest yield on interest-earning assets was .54% in fourth quarter 1999, .63% in fourth quarter 1998 and .58% in their quarter 1999. The decline in net interest yield in fourth quarter 1999 was attributed to tighter spreads on new investments as well as an increase in the proportion of long-term funding.

Operating expenses totaled $8.3 million for 1999 compared to $7.7 million for 1998. Operating expenses equaled 37% of total revenues in 1999 compared to 49% in 1998. Fourth quarter operating expenses totaled $1.9 million or 31% of total revenue compared to $2 million or 48% and $2.2 million, or 39%, for fourth quarter 1998 and third quarter 1999 respectively.

Capital totaled $87.1 million Dec. 31 compared with $80.9 million Dec. 31, 1998. Those capital balances were in excess of Farmer Mac's regulatory minimum capital requirements while the surplus over the fully phased-in regulatory minimum capital requirement was reduced from $22.9 million on Dec. 31, 1998, to $9.2 million a year later.

As a result of the reduction in surplus capital and growth in program assets, return on equity increased from 5.4% in 1998 to 8.2% in 1999.

The entire Farmer Mac report can be accessed on the Internet at http://www.prnewswire.com.