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)
|
Large
accelerated filer £
|
Accelerated
filer T
|
Non-accelerated
filer £
|
Item
1.
|
Condensed
Consolidated Financial
Statements
|
Condensed
Consolidated Balance Sheets (as restated) as of June 30, 2006 and
December 31, 2005
|
5
|
|
Condensed
Consolidated Statements of Operations (as restated) for the three
and six
months ended June 30, 2006 and 2005
|
6
|
|
Condensed
Consolidated Statements of Cash Flows (as restated) for the six months
ended June 30, 2006 and 2005
|
7
|
|
Notes
to Condensed Consolidated Financial Statements (as
restated)
|
8
|
June
30,
2006
|
December
31,
2005
|
||||||
(As
Restated)*
|
(As
Restated)*
|
||||||
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
348,951
|
$
|
458,852
|
|||
Investment
securities
|
2,007,895
|
1,621,941
|
|||||
Farmer
Mac Guaranteed Securities
|
1,303,921
|
1,330,976
|
|||||
Loans
held for sale
|
54,801
|
41,956
|
|||||
Loans
held for investment
|
732,334
|
762,436
|
|||||
Allowance
for loan losses
|
(2,734
|
)
|
(4,876
|
)
|
|||
Loans
held for investment, net
|
729,600
|
757,560
|
|||||
Real
estate owned
|
1,039
|
3,532
|
|||||
Financial
derivatives
|
23,040
|
8,719
|
|||||
Interest
receivable
|
63,652
|
67,509
|
|||||
Guarantee
and commitment fees receivable
|
25,784
|
22,170
|
|||||
Deferred
tax asset, net
|
2,497
|
3,223
|
|||||
Prepaid
expenses and other assets
|
6,321
|
25,007
|
|||||
Total
Assets
|
$
|
4,567,501
|
$
|
4,341,445
|
|||
Liabilities
and Stockholders' Equity:
|
|||||||
Liabilities:
|
|||||||
Notes
payable:
|
|||||||
Due
within one year
|
$
|
3,040,620
|
$
|
2,587,704
|
|||
Due
after one year
|
1,186,872
|
1,406,527
|
|||||
Total
notes payable
|
4,227,492
|
3,994,231
|
|||||
Financial
derivatives
|
21,039
|
29,162
|
|||||
Accrued
interest payable
|
29,034
|
29,250
|
|||||
Guarantee
and commitment obligation
|
21,685
|
17,625
|
|||||
Accounts
payable and accrued expenses
|
13,277
|
21,371
|
|||||
Reserve
for losses
|
3,518
|
3,777
|
|||||
Total
Liabilities
|
4,316,045
|
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, 9,361,305
and 9,559,554 shares issued and outstanding as
of June 30, 2006 and December 31, 2005, respectively
|
9,361
|
9,560
|
|||||
Additional
paid-in capital
|
83,740
|
83,058
|
|||||
Accumulated
other comprehensive income
|
(176
|
)
|
15,247
|
||||
Retained
earnings
|
122,000
|
101,633
|
|||||
Total
Stockholders' Equity
|
251,456
|
246,029
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
4,567,501
|
$
|
4,341,445
|
*
|
See
Note 6 to the condensed consolidated financial
statements
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30, 2006
|
June
30, 2005
|
June
30, 2006
|
June
30, 2005
|
||||||||||
(As
Restated)*
|
(As
Restated)*
|
(As
Restated)*
|
(As
Restated)*
|
||||||||||
Interest
income:
|
|||||||||||||
Investments
and cash equivalents
|
$
|
30,298
|
$
|
14,765
|
$
|
56,996
|
$
|
27,352
|
|||||
Farmer
Mac Guaranteed Securities
|
18,953
|
18,672
|
36,990
|
36,999
|
|||||||||
Loans
|
11,847
|
11,470
|
23,230
|
23,591
|
|||||||||
Total
interest income
|
61,098
|
44,907
|
117,216
|
87,942
|
|||||||||
Interest
expense
|
51,020
|
31,966
|
96,471
|
61,120
|
|||||||||
Net
interest income
|
10,078
|
12,941
|
20,745
|
26,822
|
|||||||||
Recovery/(provision)
for loan losses
|
594
|
203
|
1,606
|
787
|
|||||||||
Net
interest income after recovery/(provision) for loan losses
|
10,672
|
13,144
|
22,351
|
27,609
|
|||||||||
Guarantee
and commitment fees
|
5,288
|
4,889
|
10,337
|
9,845
|
|||||||||
Gains/(losses)
on financial derivatives and trading assets
|
9,908
|
(14,562
|
)
|
21,608
|
(4,697
|
)
|
|||||||
Gains/(losses)
on the sale of real estate owned
|
304
|
(67
|
)
|
514
|
(80
|
)
|
|||||||
Representation
and warranty claims income
|
718
|
-
|
718
|
79
|
|||||||||
Other
income
|
58
|
367
|
227
|
687
|
|||||||||
Total
revenues
|
26,948
|
3,771
|
55,755
|
33,443
|
|||||||||
Expenses:
|
|||||||||||||
Compensation
and employee benefits
|
2,673
|
1,899
|
5,577
|
3,675
|
|||||||||
General
and administrative
|
2,577
|
2,275
|
5,335
|
4,264
|
|||||||||
Regulatory
fees
|
588
|
576
|
1,175
|
1,152
|
|||||||||
Real
estate owned operating costs, net
|
22
|
59
|
137
|
37
|
|||||||||
Provision/(recovery)
for losses
|
592
|
(91
|
)
|
(104
|
)
|
(192
|
)
|
||||||
Total
operating expenses
|
6,452
|
4,718
|
12,120
|
8,936
|
|||||||||
Income/(loss)
before income taxes
|
20,496
|
(947
|
)
|
43,635
|
24,507
|
||||||||
Income
tax expense/(benefit)
|
6,559
|
(944
|
)
|
14,046
|
7,565
|
||||||||
Net
income/(loss)
|
13,937
|
(3
|
)
|
29,589
|
16,942
|
||||||||
Preferred
stock dividends
|
(560
|
)
|
(560
|
)
|
(1,120
|
)
|
(1,120
|
)
|
|||||
Net
income/(loss) available to common stockholders
|
$
|
13,377
|
$
|
(563
|
)
|
$
|
28,469
|
$
|
15,822
|
||||
Earnings
per common share:
|
|||||||||||||
Basic
earnings (loss) per common share
|
$
|
1.21
|
$
|
(0.05
|
)
|
$
|
2.57
|
$
|
1.37
|
||||
Diluted
earnings (loss) per common share
|
$
|
1.18
|
$
|
(0.05
|
)
|
$
|
2.50
|
$
|
1.36
|
||||
Common
stock dividends per common share
|
$
|
0.10
|
$
|
0.10
|
$
|
0.20
|
$
|
0.20
|
*
|
See
Note 6 to the condensed consolidated financial
statements
|
Six
Months Ended
|
|||||||
June
30, 2006
|
June
30, 2005
|
||||||
(As
Restated)*
|
(As
Restated)*
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
29,589
|
$
|
16,942
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Net
(accretion)/amortization of investment premiums and
discounts
|
(1,237
|
)
|
1,267
|
||||
Net
amortization of debt premiums, discounts and issuance
costs
|
58,220
|
26,960
|
|||||
Proceeds
from repayment of trading investment securities
|
1,001
|
1,525
|
|||||
Purchases
of loans held for sale
|
(31,316
|
)
|
(27,781
|
)
|
|||
Proceeds
from repayment of loans held for sale
|
5,344
|
6,643
|
|||||
Net
change in fair value of trading securities and financial
derivatives
|
(22,420
|
)
|
(5,472
|
)
|
|||
Amortization
of SFAS 133 transition adjustment on financial derivatives
|
298
|
377
|
|||||
(Gains)/losses
on the sale of real estate owned
|
(514
|
)
|
80
|
||||
Total
(recovery)/provision for losses
|
(1,711
|
)
|
(979
|
)
|
|||
Deferred
income taxes
|
1,527
|
(1,769
|
)
|
||||
Stock-based
compensation expense
|
955
|
-
|
|||||
Decrease
in interest receivable
|
3,857
|
8,323
|
|||||
Decrease/(increase)
in guarantee and commitment fees receivable
|
(3,614
|
)
|
759
|
||||
Decrease/(increase)
in other assets
|
28,794
|
1,807
|
|||||
Increase
in accrued interest payable
|
(216
|
)
|
(2,747
|
)
|
|||
Decrease
in other liabilities
|
(9,086
|
)
|
(3,436
|
)
|
|||
Net
cash provided by operating activities
|
59,471
|
22,499
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of available-for-sale investment securities
|
(1,913,573
|
)
|
(1,026,241
|
)
|
|||
Purchases
of Farmer Mac II Guaranteed Securities and
|
|||||||
AgVantage
Farmer Mac Guaranteed Securities
|
(108,600
|
)
|
(92,834
|
)
|
|||
Purchases
of loans held for investment
|
(25,058
|
)
|
(11,141
|
)
|
|||
Purchases
of defaulted loans
|
(4,565
|
)
|
(3,804
|
)
|
|||
Proceeds
from repayment of investment securities
|
1,524,967
|
899,988
|
|||||
Proceeds
from repayment of Farmer Mac Guaranteed Securities
|
117,990
|
127,460
|
|||||
Proceeds
from repayment of loans
|
68,426
|
69,781
|
|||||
Proceeds
from sale of loans and Farmer Mac Guaranteed Securities
|
3,033
|
22,012
|
|||||
Proceeds
from sale of real estate owned
|
2,819
|
572
|
|||||
Net
cash used in investing activities
|
(334,561
|
)
|
(14,207
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of discount notes
|
37,272,236
|
22,405,440
|
|||||
Proceeds
from issuance of medium-term notes
|
117,200
|
204,183
|
|||||
Payments
to redeem discount notes
|
(37,100,394
|
)
|
(22,304,773
|
)
|
|||
Payments
to redeem medium-term notes
|
(114,000
|
)
|
(339,840
|
)
|
|||
Tax
benefit from tax deductions in excess of compensation cost
recognized
|
348
|
-
|
|||||
Proceeds
from common stock issuance
|
2,112
|
650
|
|||||
Purchases
of common stock
|
(8,974
|
)
|
(10,965
|
)
|
|||
Dividends
paid
|
(3,339
|
)
|
(3,416
|
)
|
|||
Net
cash provided by/(used in) financing activities
|
165,189
|
(48,721
|
)
|
||||
Net
decrease in cash and cash equivalents
|
(109,901
|
)
|
(40,429
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
458,852
|
430,504
|
|||||
Cash
and cash equivalents at end of period
|
$
|
348,951
|
$
|
390,075
|
*
|
See
Note 6 to the condensed consolidated financial
statements
|
Note
1.
|
Accounting
Policies
|
(a)
|
Cash
and Cash Equivalents
|
Six
Months Ended
|
|||||||
June
30, 2006
|
June
30, 2005
|
||||||
(in
thousands)
|
|||||||
Cash
Paid For
|
|||||||
Interest
|
$
|
40,360
|
$
|
33,295
|
|||
Income
taxes
|
4,500
|
6,700
|
|||||
Non-cash
activity:
|
|||||||
Real
estate owned acquired through foreclosure
|
-
|
460
|
|||||
Loans
acquired and securitized as Farmer Mac Guaranteed
Securities
|
3,033
|
22,012
|
|||||
Loans
previously under LTSPCs exchanged for Farmer Mac Guaranteed
Securities
|
550,114
|
-
|
(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.
|
June
30, 2006
|
|||||||||||||
Allowance
for
Loan
Losses
|
REO
Valuation
Allowance
|
Reserve
for
Losses
|
Total
Allowance
for
Losses
|
||||||||||
(in
thousands)
|
|||||||||||||
Three
Months Ended:
|
|||||||||||||
Beginning
balance
|
$
|
3,883
|
$
|
-
|
$
|
2,931
|
$
|
6,814
|
|||||
Provision/(recovery)
for losses
|
(594
|
)
|
5
|
587
|
(2
|
)
|
|||||||
Net
charge-offs
|
(555
|
)
|
(5
|
)
|
-
|
(560
|
)
|
||||||
Ending
balance
|
$
|
2,734
|
$
|
-
|
$
|
3,518
|
$
|
6,252
|
|||||
Six
Months Ended:
|
|||||||||||||
Beginning
balance
|
$
|
4,876
|
$
|
-
|
$
|
3,777
|
$
|
8,653
|
|||||
Provision/(recovery)
for losses
|
(1,606
|
)
|
155
|
(259
|
)
|
(1,710
|
)
|
||||||
Net
charge-offs
|
(536
|
)
|
(155
|
)
|
-
|
(691
|
)
|
||||||
Ending
balance
|
$
|
2,734
|
$
|
-
|
$
|
3,518
|
$
|
6,252
|
June
30, 2005
|
|||||||||||||
Allowance
for
Loan
Losses
|
|
REO
Valuation
Allowance
|
|
Reserve
for
Losses
|
|
Total
Allowance
for
Losses
|
|||||||
(in
thousands)
|
|||||||||||||
Three
Months Ended:
|
|||||||||||||
Beginning
balance
|
$
|
3,846
|
$
|
-
|
$
|
12,485
|
$
|
16,331
|
|||||
Provision
for losses
|
(203
|
)
|
-
|
(91
|
)
|
(294
|
)
|
||||||
Net
recoveries
|
27
|
-
|
-
|
27
|
|||||||||
Ending
balance
|
$
|
3,670
|
$
|
-
|
$
|
12,394
|
$
|
16,064
|
|||||
Six
Months Ended:
|
|||||||||||||
Beginning
balance
|
$
|
4,395
|
$
|
-
|
$
|
12,706
|
$
|
17,101
|
|||||
Provision/(recovery)
for losses
|
(787
|
)
|
120
|
(312
|
)
|
(979
|
)
|
||||||
Net
(charge-offs)/recoveries
|
62
|
(120
|
)
|
-
|
(58
|
)
|
|||||||
Ending
balance
|
$
|
3,670
|
$
|
-
|
$
|
12,394
|
$
|
16,064
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Allowance
for loan losses
|
$
|
2,734
|
$
|
4,876
|
|||
Real
estate owned valuation allowance
|
-
|
-
|
|||||
Reserve
for losses:
|
|||||||
On-balance
sheet Farmer Mac I Guaranteed Securities
|
1,505
|
2,068
|
|||||
Off-balance
sheet Farmer Mac I Guaranteed Securities
|
1,324
|
1,078
|
|||||
LTSPCs
|
689
|
631
|
|||||
Total
|
$
|
6,252
|
$
|
8,653
|
June
30, 2006
|
December
31, 2005
|
||||||||||||||||||
Balance
|
Specific
Allowance
|
Net
Balance
|
Balance
|
Specific
Allowance
|
Net
Balance
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Impaired
assets:
|
|||||||||||||||||||
Specific
allowance for losses
|
$
|
1,360
|
$
|
(15
|
)
|
$
|
1,345
|
$
|
2,445
|
$
|
(161
|
)
|
$
|
2,284
|
|||||
No
specific allowance for losses
|
67,412
|
-
|
67,412
|
71,177
|
-
|
71,177
|
|||||||||||||
Total
|
$
|
68,772
|
$
|
(15
|
)
|
$ |
68,757
|
$
|
73,622
|
$
|
(161
|
)
|
$
|
73,461
|
(c)
|
Financial
Derivatives
|
As
of June 30, 2006
|
As
of December 31, 2005
|
||||||||||||
Notional
Amount
|
Fair
Value
|
Notional
Amount
|
Fair
Value
|
||||||||||
Interest
rate swaps:
|
|||||||||||||
Pay-fixed
|
$
|
774,669
|
$
|
6,337
|
$
|
710,678
|
$
|
(17,228
|
)
|
||||
Receive-fixed
|
279,000
|
(12,802
|
)
|
205,000
|
(5,752
|
)
|
|||||||
Basis
|
372,899
|
8,525
|
389,496
|
2,801
|
|||||||||
Treasury
futures
|
11
|
(4
|
)
|
-
|
-
|
||||||||
Agency
forwards
|
110,026
|
(55
|
)
|
91,178
|
(264
|
)
|
|||||||
Total
|
$ |
1,536,605
|
$
|
2,001
|
$ |
1,396,352
|
$
|
(20,443
|
)
|
(d)
|
Earnings
Per Common Share
|
June
30, 2006
|
June
30, 2005
|
||||||||||||||||||
Basic
EPS
|
Dilutive
stock
options
|
Diluted
EPS
|
Basic
EPS
|
Dilutive
stock
options
(1)
|
Diluted
EPS
|
||||||||||||||
(in
thousands, except per share amounts)
|
|||||||||||||||||||
Three
Months Ended:
|
|||||||||||||||||||
Net
income/(loss) available to common stockholders
|
$
|
13,377
|
$
|
13,377
|
$
|
(563
|
)
|
$
|
(563
|
)
|
|||||||||
Weighted-average
shares
|
11,083
|
256
|
11,339
|
11,409
|
-
|
11,409
|
|||||||||||||
Earnings/(loss)
per common share
|
$
|
1.21
|
$
|
1.18
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
|||||||||
Six
Months Ended:
|
|||||||||||||||||||
Net
income available to common stockholders
|
$
|
28,469
|
$
|
28,469
|
$
|
15,822
|
$
|
15,822
|
|||||||||||
Weighted
average shares
|
11,095
|
287
|
11,382
|
11,548
|
56
|
11,604
|
|||||||||||||
Earnings
per common share
|
$
|
2.57
|
$
|
2.50
|
$
|
1.37
|
$
|
1.36
|
(1)
|
For
the three months ended June 30, 2005, approximately 42,000 stock
options
were not included in the loss per share computation because they
would
have been anti-dilutive.
|
(e)
|
Stock-Based
Compensation
|
Three
Months
Ended
June
30, 2005
|
Six
Months
Ended
June
30, 2005
|
||||||
(in
thousands, except per share amounts)
|
|||||||
Net
income/(loss) available to common stockholders, as
reported
|
$
|
(563
|
)
|
$
|
15,822
|
||
Deduct:
Total stock-based employee compensation expense determined under
fair
value-based method for all awards, net of tax
|
(1,838
|
)
|
(1,838
|
)
|
|||
Pro
forma net income/(loss) available to
|
|||||||
common
stockholders
|
$
|
(2,401
|
)
|
$
|
13,984
|
||
Earnings
per common share:
|
|||||||
Basic
- as reported
|
$
|
(0.05
|
)
|
$
|
1.37
|
||
Basic
- pro forma
|
$
|
(0.21
|
)
|
$
|
1.21
|
||
Diluted
- as reported
|
$
|
(0.05
|
)
|
$
|
1.36
|
||
Diluted
- pro forma
|
$
|
(0.21
|
)
|
$
|
1.21
|
June
30, 2006
|
June
30, 2005
|
||||||||||||
Shares
|
Weighted-
Average
Exercise
Price
|
Shares
|
Weighted-
Average
Exercise
Price
|
||||||||||
Three
Months Ended:
|
|||||||||||||
Outstanding,
beginning of period
|
2,091,208
|
$
|
22.68
|
1,803,484
|
$
|
22.72
|
|||||||
Granted
|
358,928
|
26.35
|
432,561
|
20.59
|
|||||||||
Exercised
|
(75,111
|
)
|
17.26
|
(38,066
|
)
|
14.01
|
|||||||
Canceled
|
(75,091
|
)
|
28.82
|
(56,679
|
)
|
26.59
|
|||||||
Outstanding,
end of period
|
2,299,934
|
23.23
|
2,141,300
|
22.30
|
|||||||||
Options
exercisable at end of period
|
1,431,465
|
1,397,755
|
|||||||||||
Six
Months Ended:
|
|||||||||||||
Outstanding,
beginning of period
|
2,153,008
|
$
|
22.41
|
1,812,222
|
$
|
22.67
|
|||||||
Granted
|
358,928
|
26.35
|
432,561
|
20.59
|
|||||||||
Exercised
|
(136,911
|
)
|
15.40
|
(39,803
|
)
|
14.11
|
|||||||
Canceled
|
(75,091
|
)
|
28.82
|
(63,680
|
)
|
26.34
|
|||||||
Outstanding,
end of period
|
2,299,934
|
23.23
|
2,141,300
|
22.30
|
|||||||||
Options
exercisable at end of period
|
1,431,465
|
1,397,755
|
Options
Outstanding
|
Options
Exercisable
|
|||||
Range
of
Exercise
Prices
|
Number
of
Shares
|
Weighted-
Average
RemainingContractual
Life
|
Number
of
Shares
|
|||
$10.00
- $19.99
|
401,609
|
6.2
years
|
254,270
|
|||
20.00
- 24.99
|
1,100,058
|
5.9
years
|
743,856
|
|||
25.00
- 29.99
|
607,349
|
7.3
years
|
242,421
|
|||
30.00
- 34.99
|
190,418
|
4.9
years
|
190,418
|
|||
35.00
- 39.99
|
-
|
-
|
-
|
|||
40.00
- 44.99
|
-
|
-
|
-
|
|||
45.00
- 50.00
|
500
|
5.8
years
|
500
|
|||
2,299,934
|
|
1,431,465
|
2006
|
2005
|
2004
|
|||
Risk-free
interest rate
|
5.0%
|
3.9%
|
4.3%
|
||
Expected
years until exercise
|
6
years
|
7
years
|
5
years
|
||
Expected
stock volatility
|
36.9%
|
46.3%
|
47.8%
|
||
Dividend
yield
|
1.6%
|
1.9%
|
0.0%
|
(f)
|
Reclassifications
|
(g)
|
New
Accounting Standards
|
June
30, 2006
|
December
31, 2005
|
||||||||||||||||||
Available-
for-Sale
|
Held-to-
Maturity
|
Total
|
Available-
for-Sale
|
Held-to-
Maturity
|
Total
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Farmer
Mac I
|
$
|
433,493
|
$
|
40,351
|
$
|
473,844
|
$
|
492,158
|
$
|
41,573
|
$
|
533,731
|
|||||||
Farmer
Mac II
|
-
|
830,077
|
830,077
|
-
|
797,245
|
797,245
|
|||||||||||||
Total
|
$
|
433,493
|
$
|
870,428
|
$
|
1,303,921
|
$
|
492,158
|
$
|
838,818
|
$
|
1,330,976
|
|||||||
Amortized
cost
|
$
|
428,325
|
$
|
870,428
|
$
|
1,298,753
|
$
|
477,561
|
$
|
838,818
|
$
|
1,316,379
|
|||||||
Unrealized
gains
|
8,921
|
268
|
9,189
|
18,395
|
448
|
18,843
|
|||||||||||||
Unrealized
losses
|
(3,753
|
)
|
(13,594
|
)
|
(17,347
|
)
|
(3,798
|
)
|
(8,339
|
)
|
(12,137
|
)
|
|||||||
Fair
value
|
$
|
433,493
|
$
|
857,102
|
$
|
1,290,595
|
$
|
492,158
|
$
|
830,927
|
$
|
1,323,085
|
June
30, 2006
|
||||
(dollars
in thousands)
|
||||
Fair
value of beneficial interests retained in Farmer Mac Guaranteed
Securities
|
$
|
1,290,595
|
||
Weighted-average
remaining life (in years)
|
4.8
|
|||
Weighted-average
prepayment speed (annual rate)
|
10.1
|
%
|
||
Effect
on fair value of a 10% adverse change
|
$
|
(53
|
)
|
|
Effect
on fair value of a 20% adverse change
|
$
|
(80
|
)
|
|
Weighted-average
discount rate
|
5.7
|
%
|
||
Effect
on fair value of a 10% adverse change
|
$
|
(17,912
|
)
|
|
Effect
on fair value of a 20% adverse change
|
$
|
(35,802
|
)
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
On-balance
sheet assets
|
|||||||
Farmer
Mac I:
|
|||||||
Loans
|
$
|
778,304
|
$
|
784,422
|
|||
Guaranteed
Securities
|
467,944
|
518,250
|
|||||
Farmer
Mac II:
|
|||||||
Guaranteed
Securities
|
828,939
|
796,224
|
|||||
Total
on-balance sheet
|
$
|
2,075,187
|
$
|
2,098,896
|
|||
Off-balance
sheet assets
|
|||||||
Farmer
Mac I:
|
|||||||
LTSPCs
|
$
|
2,149,677
|
$
|
2,329,798
|
|||
Guaranteed
Securities
|
1,778,288
|
804,785
|
|||||
Farmer
Mac II:
|
|||||||
Guaranteed
Securities
|
34,839
|
39,508
|
|||||
Total
off-balance sheet
|
$
|
3,962,804
|
$
|
3,174,091
|
|||
Total
|
$
|
6,037,991
|
$
|
5,272,987
|
90-Day
Delinquencies
(1)
|
Net
Credit
Losses/(Recoveries)
|
||||||||||||
As
of
June
30,
|
As
of
December
31,
|
For
the Six Months Ended
June
30,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(in
thousands)
|
|||||||||||||
On-balance
sheet assets:
|
|||||||||||||
Farmer
Mac I:
|
|||||||||||||
Loans
|
$
|
18,599
|
$
|
23,308
|
$
|
536
|
$
|
(62
|
)
|
||||
Guaranteed
Securities
|
-
|
-
|
-
|
-
|
|||||||||
Total
on-balance sheet
|
$
|
18,599
|
$
|
23,308
|
$
|
536
|
$
|
(62
|
)
|
||||
Off-balance
sheet assets:
|
|||||||||||||
Farmer
Mac I:
|
|||||||||||||
LTSPCs
|
$
|
2,409
|
$
|
2,153
|
$
|
-
|
$
|
-
|
|||||
Guaranteed
Securities
|
-
|
-
|
-
|
-
|
|||||||||
Total
off-balance sheet
|
$
|
2,409
|
$
|
2,153
|
$
|
-
|
$
|
-
|
|||||
Total
|
$
|
21,008
|
$
|
25,461
|
$
|
536
|
$
|
(62
|
)
|
(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
|
Six
Months Ended
|
|||||||
June
30, 2006
|
June
30, 2005
|
||||||
(in
thousands)
|
|||||||
Proceeds
from new securitizations
|
$
|
3,033
|
$
|
22,012
|
|||
Guarantee
fees received
|
761
|
776
|
|||||
Purchases
of assets from the trusts
|
506
|
1,595
|
|||||
Servicing
advances
|
10
|
5
|
|||||
Repayment
of servicing advances
|
8
|
21
|
Outstanding
Balance of Off-Balance Sheet
|
|||||||
Farmer
Mac Guaranteed Securities
|
|||||||
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Farmer
Mac I Guaranteed Securities
|
$
|
1,778,288
|
$
|
804,785
|
|||
Farmer
Mac II Guaranteed Securities
|
34,839
|
39,508
|
|||||
Total
Farmer Mac I and II
|
$
|
1,813,127
|
$
|
844,293
|
Note
4.
|
Comprehensive
Income
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30, 2006
|
June
30, 2005
|
June
30, 2006
|
June
30, 2005
|
||||||||||
(in
thousands)
|
|||||||||||||
Net
income available to common stockholders
|
$
|
13,377
|
$
|
(563
|
)
|
$
|
28,469
|
$
|
15,822
|
||||
Unrealized
gains/(losses) on securities
|
(10,275
|
)
|
14,700
|
(24,186
|
)
|
(1,657
|
)
|
||||||
Amortization
of FAS 133 transition adjustment on financial derivatives
|
257
|
320
|
458
|
580
|
|||||||||
Other
compehensive income, before tax
|
(10,018
|
)
|
15,020
|
(23,728
|
)
|
(1,077
|
)
|
||||||
Income
tax related to items of other comprehensive income
|
(3,506
|
)
|
5,257
|
(8,305
|
)
|
(376
|
)
|
||||||
Other
comprehensive income/(loss), net of tax
|
(6,512
|
)
|
9,763
|
(15,423
|
)
|
(701
|
)
|
||||||
Comprehensive
income available to common stockholders
|
$
|
6,865
|
$
|
9,200
|
$
|
13,046
|
$
|
15,121
|
Note
5.
|
Investments
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Held-to-maturity
|
$
|
10,602
|
$
|
10,602
|
|||
Available-for-sale
|
1,991,398
|
1,604,419
|
|||||
Trading
|
5,895
|
6,920
|
|||||
$
|
2,007,895
|
$
|
1,621,941
|
As
of June 30, 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
|
$
|
262
|
$
|
-
|
$
|
10,864
|
$
|
10,602
|
$
|
18
|
$
|
-
|
$
|
10,620
|
|||||||||
Total
held-to-maturity
|
$
|
10,602
|
$
|
262
|
$
|
-
|
$
|
10,864
|
$
|
10,602
|
$
|
18
|
$
|
-
|
$
|
10,620
|
|||||||||
Available-for-sale:
|
|||||||||||||||||||||||||
Floating
rate asset-backed securities
|
$
|
448,098
|
$
|
720
|
$
|
-
|
$
|
448,818
|
$
|
336,647
|
$
|
941
|
$
|
-
|
$
|
337,588
|
|||||||||
Floating
rate corporate debt securities
|
407,496
|
507
|
(91
|
)
|
407,912
|
230,787
|
515
|
(10
|
)
|
231,673
|
|||||||||||||||
Fixed
rate corporate debt securities
|
544,484
|
-
|
(9,254
|
)
|
535,230
|
520,381
|
-
|
(1,950
|
)
|
518,050
|
|||||||||||||||
Fixed
rate preferred stock
|
237,918
|
4,947
|
(446
|
)
|
242,419
|
239,033
|
11,687
|
(304
|
)
|
250,416
|
|||||||||||||||
Fixed
rate commercial paper
|
184,153
|
-
|
-
|
184,153
|
90,848
|
-
|
-
|
90,848
|
|||||||||||||||||
Floating
rate mortgage- backed securities
|
162,710
|
576
|
(11
|
)
|
163,275
|
175,441
|
481
|
(78
|
)
|
175,844
|
|||||||||||||||
Fixed
rate mortgage- backed securities
|
10,014
|
-
|
(423
|
)
|
9,591
|
-
|
-
|
-
|
-
|
||||||||||||||||
Total
available-for-sale
|
$
|
1,994,873
|
$
|
6,750
|
$
|
(10,225
|
)
|
$
|
1,991,398
|
$
|
1,593,137
|
$
|
13,624
|
$
|
(2,342
|
)
|
$
|
1,604,419
|
|||||||
|
|||||||||||||||||||||||||
Trading:
|
|||||||||||||||||||||||||
Adjustable
rate mortgage-backed securities
|
$
|
5,866
|
$
|
29
|
$
|
-
|
$
|
5,895
|
$
|
6,867
|
$
|
53
|
$
|
-
|
$
|
6,920
|
|||||||||
Total
trading
|
$
|
5,866
|
$
|
29
|
$
|
-
|
$
|
5,895
|
$
|
6,867
|
$
|
53
|
$
|
-
|
$
|
6,920
|
Investment
Securities
Available-for-Sale
as
of June 30, 2006
|
||||||||||
Amortized
Cost
|
Fair
Value
|
Yield
|
||||||||
(dollars
in thousands)
|
||||||||||
Due
within one year
|
$
|
253,008
|
$
|
252,955
|
4.95
|
%
|
||||
Due
after one year through five years
|
946,390
|
937,159
|
5.14
|
%
|
||||||
Due
after five years through ten years
|
112,886
|
116,576
|
7.41
|
%
|
||||||
Due
after ten years
|
682,589
|
684,708
|
5.81
|
%
|
||||||
Total
|
$
|
1,994,873
|
$
|
1,991,398
|
5.47
|
%
|
Note
6.
|
Restatement
of Condensed Consolidated Financial
Statements
|
June
30, 2006
|
December
31, 2005
|
||||||||||||
Selected
Balance Sheet Date:
|
As
Previously
Reported
|
As
Restated
|
As
Previously
Reported
|
As
Restated
|
|||||||||
(in
thousands)
|
|||||||||||||
Assets:
|
|||||||||||||
Deferred
tax asset, net
|
$
|
950
|
$
|
2,497
|
$
|
2,397
|
$
|
3,223
|
|||||
Total
Assets
|
4,565,954
|
4,567,501
|
4,340,619
|
4,341,445
|
|||||||||
Liabilities
and Stockholders' Equity:
|
|||||||||||||
Notes
payable: Due after one year
|
1,181,875
|
1,186,872
|
1,403,598
|
1,406,527
|
|||||||||
Total
notes payable
|
4,222,495
|
4,227,492
|
3,991,302
|
3,994,231
|
|||||||||
Total
Liabilities
|
4,311,048
|
4,316,045
|