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

WASHINGTON, November 9, 2016 - The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today announced its results for the fiscal quarter ended September 30, 2016, which included $131 million in net new business volume growth that brought total outstanding business volume to $17.2 billion as of September 30, 2016. Farmer Mac's net income attributable to common stockholders for third quarter 2016 was $16.4 million ($1.54 per diluted common share), compared to $8.4 million ($0.74 per diluted common share) in third quarter 2015. Farmer Mac's third quarter 2016 core earnings, a non-GAAP measure, were $14.4 million ($1.36 per diluted common share), compared to $13.0 million ($1.23 per diluted common share) in second quarter 2016 and $13.2 million ($1.17 per diluted common share) in third quarter 2015.

"Our third quarter results continued the strong performance we have seen throughout 2016, as reflected by significant new business volume, improving spreads, good credit quality, and strong profitability," said President and Chief Executive Officer Tim Buzby. "In particular, agricultural loan purchases within the Farm & Ranch and USDA Guarantees lines of business were very strong, totaling more than $400 million, as we are getting to review more opportunities in a market where credit is a bit tighter. We are maintaining our credit requirements and our underwriting discipline, but we believe the relative value that our GSE model brings to bear is greater when credit becomes more scarce. We continue to believe that Farmer Mac is well positioned to deliver upon its mission in this kind of market environment."

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

$16.4 million ($1.54 per diluted common share), compared to $8.4 million ($0.74 per diluted common share) for third quarter 2015. The increase in third quarter 2016 compared to third quarter 2015 was primarily due to the effects of unrealized fair value changes on financial derivatives and hedged assets, which was a $0.9 million after-tax gain in third quarter 2016, compared to a $4.5 million after-tax loss in third quarter 2015.

Core earnings in third quarter 2016 were $14.4 million ($1.36 per diluted common share), compared to $13.0 million ($1.23 per diluted common share) in second quarter 2016, and $13.2 million ($1.17 per diluted common share) in third quarter 2015. The $1.4 million sequential quarterly increase in core earnings was primarily attributable to a $0.8 million after-tax increase in net effective spread, a non- GAAP measure. Also contributing to the increase was a decrease in credit-related expenses resulting from net releases from the allowance for losses of $20,000 after-tax in third quarter 2016 compared to net provisions of $0.3 million after-tax in second quarter 2016. Operating expenses also decreased sequentially by $0.3 million after-tax, driven by lower general and administrative (G&A) expenses and lower compensation and benefits expenses. The decrease in G&A expenses was attributable to a decrease in legal and accounting fees. The decrease in compensation and benefits expenses was due to seasonally higher payroll taxes during second quarter 2016 related to payouts of variable incentive compensation which did not recur during third quarter 2016.

The year-over-year $1.2 million increase in core earnings was primarily attributable to an increase in net effective spread of $1.2 million after-tax and an increase in guarantee and commitment fee income of $0.1 million after-tax. The increase was offset in part by an increase of $0.1 million after-tax in credit- related expenses due to a decrease in the release from the allowance for losses in third quarter 2016 compared to third quarter 2015. Operating expenses were flat between third quarter 2016 and third quarter 2015, as lower G&A expenses were offset by an increase in compensation and benefits expenses.

The lower G&A expenses were attributable to a decrease in legal fees and outside professional services fees for application and information systems consulting. The higher compensation and benefits expenses resulted from an increase in headcount and employee health insurance costs.

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 third quarter 2016, Farmer Mac added $1.1 billion of new business volume, with purchases of AgVantage securities and Farm & Ranch loans and long-term standby purchase commitments ("LTSPCs") driving the volume growth. Specifically, Farmer Mac:

• purchased $528.2 million of AgVantage securities, including $16.0 million in Farm Equity AgVantage securities;

• purchased $282.7 million of newly originated Farm & Ranch loans;

• added $155.7 million of Farm & Ranch loans under LTSPCs;

• purchased $87.3 million of USDA Securities;

• issued $31.9 million of Farmer Mac Guaranteed USDA Securities; and

• purchased $20.0 million of Rural Utilities loans.

After $974.6 million of maturities and principal paydowns on existing business during third quarter 2016, Farmer Mac's outstanding business volume increased by $131.2 million from June 30, 2016 to $17.2 billion as of September 30, 2016. The increase in Farmer Mac's outstanding business volume was driven by net portfolio growth in Farm & Ranch loans of $149.9 million and USDA Securities of

$60.5 million. The new business volume in the Institutional Credit line of business included the purchase of a $500.0 million AgVantage security from Metropolitan Life Insurance Company ("MetLife") and the purchase of $16.0 million under Farm Equity AgVantage facilities with agricultural real estate investment funds. MetLife used the proceeds from Farmer Mac's purchase of the $500 million AgVantage security to refinance an AgVantage security of the same amount that matured in third quarter 2016.

Net interest income was $35.6 million in third quarter 2016, compared to $32.2 million in third quarter 2015. In percentage terms, net interest income for third quarter 2016 was 0.89 percent, compared to 0.90 percent in third 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. The increase in short-term rates on assets and liabilities indexed to LIBOR did 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 were (1) growth in outstanding business volume, (2) a wider spread on a large AgVantage security that was refinanced in third quarter 2016 compared to the spread on the original security, and (3) an increase in the net effect of consolidated trusts due to an increase in securitization activity of Farm & Ranch loans during 2015 and the first nine months of 2016. Farmer Mac earns the difference between the interest income recognized on loans in consolidated trusts and the related interest expense recognized on debt securities of consolidated trusts held by third parties. The year-over-year decrease in net interest income in percentage terms primarily related to (1) a higher average balance maintained in lower-earning cash and investment securities in third quarter 2016 compared to third quarter 2015 to increase Farmer Mac's liquidity position and (2) a tighter spread on a large AgVantage security that was refinanced in first quarter 2016 at a shorter maturity than the original security.

Farmer Mac's net effective spread, a non-GAAP measure, was $32.2 million in third quarter 2016, compared to $31.0 million in second quarter 2016 and $30.4 million in third quarter 2015. In percentage terms, net effective spread for third quarter 2016 was 0.86 percent, compared to 0.84 percent in second