UNITED STATES
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): October 16, 2003
Federal Agricultural Mortgage Corporation
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(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 (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1133 21st Street, N.W., Suite 600, Washington, D.C. 20036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 872-7700
No change
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(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99 Press release dated October 16, 2003.
Item 9. Regulation FD Disclosure.
On October 16, 2003, the U.S. General Accounting Office ("GAO") released a
report on the Registrant that addressed topics identified in a previous request
letter from the Senate Committee on Agriculture, Nutrition and Forestry to GAO.
On that same day, the Registrant issued a press release addressing the GAO
report. A copy of the press release is attached to this report as Exhibit 99 and
is incorporated herein by reference.
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 hereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By: /s/ Jerome G. Oslick
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Name: Jerome G. Oslick
Title: Vice President - General Counsel
Dated: October 16, 2003
EXHIBIT INDEX
Exhibit No. Description Page No.
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99 Press Release Dated October 16, 2003 5
Exhibit 99
FARMER MAC
NEWS
FOR IMMEDIATE RELEASE CONTACT
October 16, 2003 Jerome Oslick
202-872-7700
GAO Finds Improved Financial Condition
With Increased Mission Activities at Farmer Mac
Washington, D.C. - The Federal Agricultural Mortgage Corporation ("Farmer
Mac" NYSE: AGM and AGM.A) has received today the October 16, 2003 General
Accounting Office ("GAO") Report on Farmer Mac addressing topics in the June
2002 request letter from the Senate Committee on Agriculture, Nutrition and
Forestry to GAO. In that letter, the Chairman and Ranking Member of the
Committee asked GAO's assistance "to ensure that Farmer Mac's mission continues
to be met in a financially sound manner."
Farmer Mac is pleased with the Report's conclusions on those topics,
particularly that its financial condition has improved while its mission
activities have increased. Additionally, the Report made recommendations to
Farmer Mac for enhancement of its risk management and corporate governance
practices, which Farmer Mac has, in many instances, already undertaken. In
addressing the topics specified in the Senate Committee's letter, GAO (in its
third review of Farmer Mac in the past six years) determined:
o Farmer Mac's financial condition has improved since GAO's last report, with
capital in excess of required levels and increased income;
o Farmer Mac has made progress in the enhancement of credit controls and
mortgage asset management, though GAO recommended improvements to the
measurement and monitoring of associated risks;
o Farmer Mac's interest rate risk is being managed effectively;
o Farmer Mac's investment practices and strategies have resulted in liquid,
high-quality investments, while non-mission investments have been reduced
as a percentage of mission-related assets;
o Farmer Mac's mission-related agricultural mortgage activities have
increased, and GAO suggested that Congress consider establishing more
specific mission criteria;
o Farmer Mac's executive compensation is in line with the recommendations of
outside compensation experts; and
o Farmer Mac has no significant shortcomings in corporate governance, and its
Board of Directors is further updating corporate governance practices while
taking actions to ensure compliance with recent Sarbanes-Oxley Act and NYSE
listing requirements, as they become effective.
Many of the actions recommended in the GAO Report were already underway at
Farmer Mac as part of its commitment to ensure that best practices are being
applied in its risk management operations, including:
o First, as part of its credit risk management, Farmer Mac has developed and
has implemented a loan classification system. That system is the basis for
Farmer Mac's new capital adequacy model, which provides an additional
measure of the sufficiency of corporate capital beyond the statutory
minimum and risk-based capital levels established by Congress. That system
will also be the vehicle for the migration of Farmer Mac's current loss
reserve methodology, based on historical industry data, to a methodology
based on its own historical portfolio loss and loan performance experience.
o Second, Farmer Mac has formalized its long-standing contingency funding
plan to provide for the Corporation's continuing liquidity.
o Third, Farmer Mac has enhanced the documentation requirements for its loan
underwriting decisions and loss reserve methodology.
Farmer Mac President Henry D. Edelman stated, "When the GAO Report was
requested, the purpose was to ensure that Farmer Mac's mission for farmers,
ranchers and rural homeowners would continue to be met in a financially sound
manner. The Report makes it clear that there are no significant issues with
respect to Farmer Mac's financial stability, corporate governance, executive
compensation, or investment practices, and that Farmer Mac has increased its
mission-related activities. We appreciate GAO's recommendations to Farmer Mac
and in those areas in which we need to improve, we either are doing so or plan
to."
Farmer Mac is a stockholder-owned instrumentality of the United States
chartered by Congress to establish a secondary market for agricultural real
estate and rural housing mortgage loans and to facilitate capital market funding
for USDA-guaranteed farm program and rural development loans. Farmer Mac's Class
C and Class A common stocks are listed on the New York Stock Exchange under the
symbols AGM and AGM.A, respectively. Additional information about Farmer Mac
(including the full text of Farmer Mac's comment letter on the GAO Report and a
link to the Report itself) is available on Farmer Mac's website at
www.farmermac.com.
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