The Federal Agricultural Mortgage Corporation reported strong first quarter 2012 results, as increased earnings benefited from growth in program assets and credit quality remained high.

Farmer Mac's core earnings, a non-GAAP measure, for first quarter 2012 were $11.8 million ($1.08 per diluted common share), up from $9.1 million ($0.85 per diluted common share) in first quarter 2011. Core earnings for first quarter 2012 benefited from higher net interest income of $34.2 million, compared to $27.0 million in first quarter 2011. That increase in income was partially offset by net provisions for losses of $0.5 million in first quarter 2012, compared to a release from the allowance for losses of $0.7 million in the same period in 2011.

Farmer Mac's GAAP net income attributable to common stockholders was $22.2 million ($2.04 per diluted common share) for the three months ended March 31, 2012, compared to $18.3 million ($1.72 per diluted common share) for the same period in 2011. The increase in GAAP net income was primarily attributable to higher net interest income. GAAP net income exceeded core earnings in both periods due to periodic increases in the fair values of financial derivatives.

Farmer Mac uses financial derivatives, primarily interest rate swaps, to mitigate its exposure to interest rate risk and achieve an overall lower effective cost of borrowing. These financial derivatives are not designated in hedge relationships for accounting purposes.

Therefore, as changes in long-term interest rates affect the fair values of the financial derivatives, those fair value changes are recorded in earnings, while much of the offsetting changes in the fair values of related assets and liabilities are not recorded in earnings. Farmer Mac excludes these fair value fluctuations from its core earnings.

Farmer Mac President and Chief Executive Officer Michael Gerber stated, "Our first quarter results continued the momentum Farmer Mac has built over the past several years. GAAP and core earnings were strong, portfolio assets increased, and we doubled the quarterly dividend on our common stock. Solid new business volume across all product lines raised the aggregate outstanding program volume to $12.1 billion as of March 31, 2012.

"Portfolio credit quality also remains high, supported by a generally healthy agricultural economy, as 90-day delinquencies at quarter-end were down compared to first quarter 2011. Farmer Mac is well-positioned to continue to help meet the credit needs of Rural America and to build value for shareholders."

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