Federal Agricultural Mortgage : Farmer Mac Reports Second Quarter 2017 Financial Results

WASHINGTON, August 9, 2017- The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today announced its results for the fiscal quarter ended June 30, 2017, which included $414.3 million in net new business volume growth that brought total outstanding business volume to $18.3 billion as of June 30, 2017. Farmer Mac's net income attributable to common stockholders for second quarter 2017 was $17.5 million ($1.62 per diluted common share), compared to

$18.6 million ($1.73 per diluted common share) in first quarter 2017 and $12.0 million ($1.13 per diluted common share) in second quarter 2016. Farmer Mac's second quarter 2017 core earnings, a non-GAAP measure, were $16.0 million ($1.48 per diluted common share), compared to $15.6 million ($1.45 per diluted common share) in first quarter 2017 and $13.0 million ($1.23 per diluted common share) in second quarter 2016.

"We are proud to report another strong quarter, as outstanding business volume reached a new record high of $18.3 billion and core earnings grew by 22 percent year-over-year," said President and Chief Executive Officer Tim Buzby. "Our financial results reflect a continuation of the positive trends we've seen over the last several quarters, with new business volume growth, improvements in spreads, and strong profitability. The relative demand for our agricultural real estate financing products and solutions has increased significantly as more customers are recognizing the value Farmer Mac can provide and are choosing different products and solutions across our lines of business. This growth reflects our team's dedication to understanding our customers' needs and continuing to deliver upon our mission throughout agricultural economic cycles. Despite certain sectors of the agricultural economy remaining under

pressure, our credit quality remains favorable and within our expectations despite showing signs of the expected normalization related to the current agricultural credit cycle. We believe our financial outlook is strong as we continue to expand our customer base and innovate our product set to meet the needs of our customers in a more challenging environment."

Farmer Mac's net income attributable to common stockholders for second quarter 2017 was

$17.5 million ($1.62 per diluted common share), compared to $12.0 million ($1.13 per diluted common share) for second quarter 2016. The $5.5 million increase compared to second quarter 2016 was driven by an increase in net interest income of $3.5 million, after-tax. Also contributing to the year-over-year increase was the effect of fair value changes on financial derivatives and hedged assets, which was a $1.4 million after-tax gain in second quarter 2017 compared to a $1.3 million after-tax loss in second quarter 2016. The increase was offset in part by a $0.8 million after-tax increase in non-interest expense primarily attributable to higher compensation and employee benefits expenses.

Core earnings in second quarter 2017 were $16.0 million ($1.48 per diluted common share), compared to $15.6 million ($1.45 per diluted common share) in first quarter 2017 and $13.0 million ($1.23 per diluted common share) in second quarter 2016. The $0.4 million sequential increase in core earnings was attributable to a $1.8 million after-tax increase in net effective spread and an increase in net realized gains of $0.5 million after-tax on the sale of real estate owned properties. The increase was offset in part by (1) a $0.8 million after-tax decrease in other income, primarily driven by a decrease in fees received upon the inception of swaps and (2) a $0.5 million decrease in tax benefits recognized from stock-based awards. Other offsetting factors included: (1) a decrease of $0.2 million after-tax in guarantee and commitment fees driven by the refinancing during second quarter 2017 of a $1.0 billion AgVantage security reported as off-balance sheet business volume in the Institutional Credit line of business upon which Farmer Mac previously earned a guarantee fee to an on-balance sheet asset upon which Farmer Mac earns interest income and (2) an increase of $0.2 million after-tax in compensation and employee

benefits expenses primarily due to higher payouts of variable incentive compensation during second quarter 2017 resulting from actual performance exceeding certain performance target amounts.

The $3.0 million year-over-year increase in core earnings was primarily attributable to higher total revenues, which included (1) a $3.0 million after-tax increase in net effective spread and (2) a $0.1 million after-tax increase in guarantee and commitment fee income. Farmer Mac also realized net gains of $0.5 million after-tax in second quarter 2017 on the sale of real estate owned properties compared to no sales of real estate owned properties in second quarter 2016. Partially offsetting the year-over-year increase was a

$0.7 million after-tax increase in compensation and employee benefit expenses due primarily to an increase in staffing, related employee health insurance costs and benefits, and higher payouts of variable incentive compensation resulting from actual performance exceeding certain performance target amounts.

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 2017, Farmer Mac added $1.9 billion of new business volume, compared to

$1.3 billion in second quarter 2016. Specifically, Farmer Mac:

• purchased $1.3 billion of AgVantage securities, including $36.7 million in AgVantage securities for smaller institutional customers;

• purchased $312.2 million of newly originated Farm & Ranch loans;

• purchased $115.8 million of USDA Securities;

• added $55.9 million of Farm & Ranch loans under LTSPCs;

• issued $53.5 million of Farmer Mac Guaranteed USDA Securities; and

• purchased $25.0 million of Rural Utilities loans.

After $1.4 billion of maturities and principal paydowns on existing business during second quarter 2017, Farmer Mac's outstanding business volume increased by $414.3 million from March 31, 2017 to

$18.3 billion as of June 30, 2017. The increase in Farmer Mac's outstanding business volume was driven

by broad-based portfolio growth across most of Farmer Mac's products and lines of business, including Farm & Ranch loans, AgVantage securities, USDA Securities, and Rural Utilities loans.

In April 2017, Farmer Mac purchased and retained $1.0 billion of AgVantage securities issued by Metropolitan Life Insurance Company ("MetLife"). MetLife used the proceeds from Farmer Mac's purchase of $1.0 billion in AgVantage securities to refinance an AgVantage security of the same amount that matured in April 2017. Previously, Farmer Mac held $30.0 million of the $1.0 billion AgVantage security that matured in April 2017 on-balance sheet and earned a spread between the interest income earned on that portion of the security and the related funding costs. The remaining $970.0 million of the

$1.0 billion AgVantage security that matured in April 2017 had previously been sold to third parties and reported as off-balance sheet business volume in the Institutional Credit line of business on which Farmer Mac earned a guarantee fee of approximately 0.15 percent on an annual basis. For the newly purchased

$1.0 billion in AgVantage securities, which are now held entirely on-balance sheet, Farmer Mac will earn weighted average net effective spread income of approximately 0.42 percent on an annual basis. The newly purchased AgVantage securities are comprised of three maturities - $500.0 million of a one-year security, which is callable in six months, $250.0 million of a two-year security, and $250.0 million of a three-year security.

The new business volume in AgVantage securities for second quarter 2017 also included purchases of $250.0 million from Rabo Agrifinance, Inc. ("Rabo"). The AgVantage securities purchased from Rabo in second quarter 2017 included $150.0 million in AgVantage securities used to refinance AgVantage securities that matured in second quarter 2017 and $50.0 million in AgVantage securities that Rabo used to refinance an AgVantage security that matured in early July 2017. Farmer Mac also experienced net portfolio growth of $36.7 million in AgVantage securities for smaller institutional customers in second quarter 2017.