Federal Agricultural Mortgage : Farmer Mac Reports Second Quarter 2016 Financial Results

WASHINGTON, August 9, 2016 - The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today announced its results for the fiscal quarter ended June 30, 2016, which included $901 million in net new business volume growth that brought total outstanding business volume to $17.1 billion as of June 30, 2016. Farmer Mac's net income attributable to common stockholders for second quarter 2016 was $12.0 million ($1.13 per diluted common share), compared to $22.2 million ($1.94 per diluted common share) in second quarter 2015. Farmer Mac's second quarter 2016 core earnings, a non-GAAP measure, were $13.0 million ($1.23 per diluted common share), compared to $12.4 million ($1.12 per diluted common share) in first quarter 2016 and $11.6 million ($1.02 per diluted common share) in second quarter 2015.

"We had an excellent second quarter, as reflected by significant net growth in business volume, improving spreads, good credit quality, and strong profitability," said President and Chief Executive Officer Tim Buzby. "While certain segments of agriculture are facing challenges, the overall business environment remains favorable for Farmer Mac. Our $1.3 billion in new business this quarter was generated by healthy contributions by a number of different products across our lines of business. Our Institutional Credit business grew $330 million during the quarter, with the volume balanced across multiple agricultural customers, including significant business with Rabo Agrifinance and MetLife and a new $27 million deal under our Farm Equity AgVantage product. We continue to have more Farm Equity AgVantage deals in the pipeline. Our Farm & Ranch loan purchase business had a great quarter as well, as we purchased $241 million in new loans, facilitated by our business development efforts and an increase

in the demand for agricultural credit. As the agricultural economy continues to adjust to lower commodity prices and the persistence of drought conditions in some portions of the West, we continue to believe that Farmer Mac is well positioned to deliver upon its mission as credit becomes somewhat tighter in agriculture. We believe that our financial outlook is strong and that we have good opportunities in front of us."

Farmer Mac's net income attributable to common stockholders for second quarter 2016 was

$12.0 million ($1.13 per diluted common share), compared to $22.2 million ($1.94 per diluted common share) for second quarter 2015. The decrease in second quarter 2016 compared to second quarter 2015 was primarily due to the effects of unrealized fair value changes on financial derivatives and hedged assets, which was a $1.3 million after-tax loss in second quarter 2016, compared to a $10.4 million after- tax gain in second quarter 2015.

Core earnings in second quarter 2016 were $13.0 million ($1.23 per diluted common share), compared to $12.4 million ($1.12 per diluted common share) in first quarter 2016, and $11.6 million ($1.02 per diluted common share) in second quarter 2015. The $0.6 million sequential quarterly increase in core earnings was primarily due to higher total revenues, which included a $0.7 million after-tax increase in net effective spread, a non-GAAP measure, and a $0.1 million after-tax increase in guarantee and commitment fees. The increase was offset in part by an increase in credit-related expenses of $0.2 million after-tax. Operating expenses were relatively flat sequentially, as higher general and administrative expenses related to continued technology and business infrastructure investments and expenses associated with business development efforts and other corporate initiatives were offset by lower compensation costs in second quarter 2016. These lower compensation costs were due to a decrease in stock compensation expense, which reflects the absence of the costs associated with the annual vesting of stock-based awards that occurred in first quarter 2016.

The year-over-year $1.4 million increase in core earnings was attributable to increases in net effective spread of $0.8 million after-tax and guarantee and commitment fee income of $0.5 million after- tax. Also contributing to the increase was a $0.5 million after-tax decrease in credit-related expenses, as provisions to the allowance for losses were $0.3 million after-tax in second quarter 2016 compared to provisions of $0.8 million after-tax in second quarter 2015. Partially offsetting this increase was a $0.2 million after-tax increase in operating expenses driven by higher general and administrative expenses related to continued technology and business infrastructure investments and expenses associated with business development efforts and other corporate initiatives and a $0.2 million after-tax increase in other expenses.

See "Use of Non-GAAP Measures" below for more information about core earnings, core earnings per share, and net effective spread and for a reconciliation of the comparable GAAP measures to these non-GAAP measures.

During second quarter 2016, Farmer Mac added $1.3 billion of new business volume, with long- term standby purchase commitments ("LTSPCs") and purchases of AgVantage securities and Farm & Ranch loans driving the volume growth. Specifically, Farmer Mac:

• added $421.4 million of Rural Utilities loans under LTSPCs;

• purchased $396.2 million of AgVantage securities, including $27.4 million in Farm Equity AgVantage securities;

• purchased $241.1 million of newly originated Farm & Ranch loans;

• purchased $110.6 million of USDA Securities;

• added $58.2 million of Farm & Ranch loans under LTSPCs;

• issued $23.1 million of Farmer Mac Guaranteed USDA Securities; and

• purchased $10.0 million of Rural Utilities loans.

After $359.7 million of maturities and principal paydowns on existing business during second quarter 2016, Farmer Mac's outstanding business volume increased by $901.0 million from March 31, 2016 to $17.1 billion as of June 30, 2016. The increase in Farmer Mac's outstanding business volume was

driven by the addition of $421 million of Rural Utilities loans under LTSPCs and $330 million in net portfolio growth in AgVantage securities within Farmer Mac's Institutional Credit line of business. This Institutional Credit volume included the purchases of $200.0 million in AgVantage securities from Rabo Agrifinance and $150.0 million from MetLife, and the purchase of $27.4 million under Farm Equity AgVantage facilities with an agricultural real estate investment fund. Farmer Mac's Farm & Ranch loan portfolio also grew a net $166.1 million this quarter, which is consistent with Farmer Mac's historical trend of generally higher loan purchase volume during the second quarter.

Net interest income was $34.4 million in second quarter 2016 compared to $31.9 million in second quarter 2015. In percentage terms, net interest income for second quarter 2016 was 0.88 percent compared to 0.90 percent in second quarter 2015. The year-over-year increase in dollars was due to several factors. One factor was the impact of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal Reserve's decision to raise the target range for the federal funds rate in fourth quarter 2015. This effect on net interest income occurred because interest expense used to calculate net interest income does not include all the funding expenses related to these assets, specifically the expense on undesignated financial derivatives. Alternatively, the increase in short-term rates on assets and liabilities indexed to LIBOR would not have a similar effect on net effective spread as described below because net effective spread includes interest expense from all funding related to such assets, including interest expense from undesignated financial derivatives. Also contributing to the year- over-year increase in net interest income was growth in outstanding business volume, an increase in cash basis interest income received on non-accruing Farm & Ranch loans, and an increase in securitization activity of Farm & Ranch loans during 2015 and the first half of 2016. The year-over-year decrease in net interest income in percentage terms primarily related to a tighter spread on a large AgVantage security that was refinanced at a shorter maturity than the original security and a higher average balance maintained in lower-earning cash and investment securities in the first half of 2016 compared to the first half of 2015 to