Good morning and welcome to the Federal Agricultural Mortgage Corporation Fourth Quarter 2015 Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tim Buzby. Please go ahead.

Thank you. Good morning. I'm Tim Buzby, Farmer Mac's President and CEO. Farmer Mac is pleased to welcome you to our 2015 fourth quarter and year-end investor conference call. Before I begin, I will ask Steve Mullery Farmer Mac’s General Counsel to comment on forward-looking statements that management may make today as well as Farmer Mac’s use of non-GAAP financial measures.

Thanks, Tim. Some of the statements made on this conference call may constitute forward-looking statements under the Securities laws. We make these statements based on our current expectations and assumptions about future events and business performance. We do not undertake any obligation to update these statements after the date of this call. We caution you that forward-looking statements are subject to a number of risks and uncertainties. Actual results may differ materially from results expressed or implied by the forward-looking statements. In evaluating Farmer Mac, you should consider these risks and uncertainties, as well as those described in our 2015 Annual Report on Form 10-K, which was filed with the SEC this morning. Farmer Mac uses core earnings and non-GAAP financial measure to measure corporate economic performance and develop financial plans, because of management’s view, core earnings is a useful alternative measure for understanding Farmer Mac’s economic performance, transaction economics and business trends. This non-GAAP financial measure may not be comparable to similarly-labeled non-GAAP financial measures disclosed by other companies. Farmer Mac’s disclosure of core earnings is intended to be supplemental in nature and is not meant to be considered in isolation from as a substitute for or as more important than the related financial information prepared in accordance with GAAP. A recording of this call will be available on our website for two weeks starting later today.

Thank you, Steve. Farmer Mac had a great year in 2015 across multiple fronts as our growth and financial results continued their positive trends over the course of the year. Additionally, we announced today a significant increase in our common stock dividend which I will discuss in more detail shortly. Today’s announced change to our dividend policy combined with the share repurchase program we announced last September are designed to enhance stockholder value over the long-term and we believe there is significant developments for our common stockholders. In the first quarter 2015 we restructured Farmer Mac’s capital base with redemption of all $250 million of Farmer Mac II Preferred Stock. In 2014, Farmer Mac issued preferred stock to increase its Tier 1 capital position and help fund this redemption. With those items completed Farmer Mac has a strong capital position in place to support our business for the long-term. Farmer Mac recently implemented two significant changes that affect how we return capital to our common stockholders with an eye towards enhancing long-term stockholder value. First in September 2015 we implemented a common stock repurchase program authorizing Farmer Mac to purchase up to $25 million of our Class C common stock through September 2017. We established this program because we believe that the valuation multiples on the stock had become disconnected with what view as the value of and prospects for the Company. By year-end, we had repurchased approximately 362,000 shares at a total price of $10.5 million and we continue to repurchase shares into 2016. More recently as you have read in today's press release, Farmer Mac has increased its regular common stock dividend by more than 60% to $0.26 per share per quarter beginning with the dividend to be paid for first quarter 2016. This increased quarterly dividend amount…

Thanks, Tim. Although certain segments of agriculture are facing their challenges, Farmer Mac is executing well on the opportunities within its markets and we believe the outlook for us is positive in 2016. We have good opportunities to continue growing, developing new customers and innovating our product set. Our 2015 results reflect this, as we grew to a record outstanding business volume of $15.9 billion by year-end 2015. As Tim mentioned this growth was driven primarily from net growth and Farm & Ranch loans, growth in loans under long-term standby purchase commitments and the addition of a new floating rate AgVantage facility. Our spreads have formed and are growing in dollar terms and our credit quality remains very strong. As we have discussed in detail previously, we completed two unique initiatives not related to our program business in first quarter 2015 and fourth quarter 2014. Our capital restructuring initiative and a cash management and initiative respectively. As I cover our financial results for fourth quarter and full-year 2015 I’ll provide insights into prior period comparisons when those prior periods included the effects of these initiatives. Turning to the financials, core earnings were $47 million or $4.15 per diluted common share for 2015, compared to $53 million or $4.67 per diluted common share in 2014. The $6 million decrease compared to 2014 was primarily due to two unique factors. First, the absence since 2015 of the net economic benefit of the cash management and quality initiative completed in 2014, which was $11.4 million and second, the loss of $5.6 million and after-tax preferred dividend income resulting from the fourth quarter 2014 redemption of $78.5 million of high-yielding preferred stock. And increase in operating and credit related expenses also contributed to the year-over-year decreased. Partially offsetting the decrease from 2014 to 2015…

Thanks Dale. Our management team is proud of the results achieved during 2015. Outstanding business volume is at an all-time high, our financial performance is strong and our credit quality remains very favorable. While the agricultural economy continues to adjust to lower commodity prices and the persistent West Coast drought, the overall business climate for Farmer Mac remains positive. We believe that the relative demand for Farmer Mac's products could increase as credit becomes somewhat tighter and we believe this is beginning to occur. We have also taken decisive action for the benefit of stockholders with the implementation of our $25 million share repurchase program and the change to our dividend policy going forward. Farmer Mac’s capital base is strong and our earnings support these higher common stock dividends. Even with the higher dividend payout amount, we still expect to retain enough earnings each year to fund our growth and build equity capital over the longer-term. In terms of delivering upon our mission, Farmer Mac continues to communicate the value of our products and solutions to current and prospective customers. We continue to sign up new banks for our loan purchase and credit protection products. We see strong interest for our Farmer Mac equity AgVantage financing from existing and potential new counterparties. We are also working hard to expand the rest of our institutional credit line of business to new agricultural lenders including large insurance companies. And fulfilling our mission to serve rural America, we are actively seeking to help bring new capital to agricultural and rural communities. At this time, we'd be happy to answer any questions you may have.

Thank you. [Operator Instructions] The first question is from Chas Tyson with KBW.

Hey, Thanks guys. Good morning. Actually, I wanted to pick up with one of the points that Tim just made around the demand for credit and credit availability. We had heard that in 4Q, the demand for credit picked up. This is from income is down, and people obviously need to maintain their operations. Have you guys seen the demand for credit increase incrementally and how have your lending partners responded to that and how should we think about volume in 2016 as compared to 2015? Should we be expecting it to be up considering what's going on in the farm economy?

Thanks. We certainly see opportunities in 2016 for volumes to exceed 2015 as commodity prices are low and cash flows for farmers are down. They are seeking additional funds to put their crops in and fund their operation going forward. That tends to come in often times with the restructuring of the mortgage debt that they may have or levering other land that they may have that is not currently encumbered. So yes, we do see that happening, we hear a number of our business partners talking about things as they are moving forward through tax season and talking with their customers about what they are going to do for financing needs going forward. So we certainly do see opportunities.

Okay, and then also I wanted to ask about what you guys are seeing in terms of loans you've made on - related to livestock. We've seen the prices in that market on cattle and whatnot fall a fair amount from the peak set in 2015. So I'm curious if you guys are seeing any stress in that market or seeing any increased opportunities?

There is some stress in those commodities. It has been a rough period of time over the past several months maybe even up to a year for both dairy and ranching. We have not seen any degradation in our portfolio, so that is fortunate. We are cautious with all the commodities that we lend to. We’re well diversified so even if anyone commodity or two commodities are under any particular stress or pressure, we had the remainder of the portfolio that is not. So we don’t have any particular concerns at this point, but we do pay close attention to all of the commodities in our portfolio.

Okay and then last one for me. In terms of buybacks that you did in 2016, can you say on what the amount of repurchase was in 2016? And if so, is that weighted more towards the beginning of the year, in early January or has it been throughout the quarter so far?

I won’t say whether it’s been - where it’s been waited or what prices we’ve done. We did indicate that we have continued to make purchases in 2016 and we file our 10-Q in May upcoming we’ll disclose the amount that was purchased during the first quarter.

Okay. Thank you very much.

Thanks.

The next question is from Adam Grossbard with Sidoti & Company.

Hi, good afternoon. I was hoping you could provide a little color into what drove the quarter-over-quarter decline in net effective spread yields by line of business specifically for the Farm & Ranch business segment?

Yes, what we had said Adam was basically there - any quarter you are going to have some anomalies up and down on things that are not really related to the core spreads. And what happened this quarter was we simply received a couple hundred thousand dollars in less interest income from we call it cash interest income, when a loan is put on non-accrual and yet they pay us, that’s booked on a cash basis when received and that can be volatile up and down quarter-to-quarter. So what we saw on the fourth quarter compared to third in Farm & Ranch was solely related to that as well as some true-ups on premium amortizations in certain loans. In the absence of those two items, net effective spread would have shown sort of that Steady Eddy performance that you have seem trend over the last three quarters.

Okay. Thank you. That’s very helpful. One last additional question is could you give us an update on any progress you’ve had in the institutional credit segment and your efforts to bring in new customers?

That’s a continuing ongoing effort that we have, what we’ve seen over the course of the past several years actually as many institutions where we’re seeking to provide the institutional credit product to them, if they have substantial liquidity and don't need to borrow money doesn't really go anywhere. Oftentimes with banks as well the financing needs that they have are at the holding company level which is not where the assets to think the pledge is collateral reside. So as things change and as credit becomes - the credit environment changes and liquidity gets pulled out of the system a little bit, we do think there are opportunities there, we continue to stay and touch with these institutions, again in times when we think they may need credit and in times when they don't. It’s a relationship business, we continue to keep in close to them and hopefully the conditions in 2016 will be such that it will be successful in expanding that line of business.

Great. Thanks very much.

The next question is from Jesus Bueno at Compass Point.

Hi, thank you very much for taking my questions. Just very quickly, following up on the question about volume. In terms of the drop in the AgVantage volume, for - on the institutional credit side, it was obviously a large drop quarter over quarter and seems to be well below where you've been running on average. Was there anything, in particular, driving that? I know you said seasonally that - originations can fluctuate, but I guess why was that a managed drop or what exactly drove that?

Yes, Jesus, those typically comps when you see a volume change like that particularly to the downside it’s going to correspond with the maturity that wasn't refinanced, it wasn't refinanced entirely and in this case it related to we had a MetLife bond I believe that was $250 million on a bond that was $300 I believe $300 million which is partially refinanced, the reason that was only partially refinanced was due to sort of collateral issues. Certain lenders at certain points in time are growing their portfolio and other lenders certain points in time are seeing repayments, prepayments that portfolio may shrink a bit. What you generally find with us is they have matched out the collateral that they can pledge and that we can fund against and if the collateral base contracts in many cases they are not able to fully refinance that. So that’s basically what you saw this quarter was the decline in the institutional credit was related to that. It was in the Farm & Ranch segment that was related to Farm & Ranch business or agriculture business I should say. I think it was related to those two issuers. So that was a bit of an anomaly.

Okay. That’s helpful, but I guess it's essentially could we just more often expect the same going forward?

I mean it’s a lumpy business, I hate to use that word, but you might get a partial refinance on one bond and next bond you might get a full refinance. We do disclose the upcoming maturity as well so you can take a look into our filings to see when those are coming due. That kind of situation works both ways, we may see us issue a lot of new bonds in one particular quarter, but that maybe because of large amount matured and if we were successful in the refinance.

I think generically what Tim said is operative though, when you look at the loans, the credit segment in the agriculture sector, on balance you’ll probably going to see the outlook for credit to grow a little bit faster. So the demand is certainly going to be higher this year given the degradation in farm income and some of the restructuring on operating lines and the use of land collateral as a way to that maybe lowly levered or unlevered to help provide the capital to cleanup some of those operating lines. So I think the outlook for that, we put this in our disclosure document that we filed this morning as somewhat a beaten volume perspective. So that should help everybody that should help these large customers of RMIT, and MIT and ABA and others.

And just - in related to your comments on the expectation for increase credit demand. Is that - I noticed that runoffs have especially for the on balance sheet assets the run off is really been at low level. I guess going forward into 2016 do you expect that to continue or do you expect that to normalize a bit more as we progress through 2016?

I would expect prepayments and maturities to be low or slow. The reality is a lot of the refinance and new origination activity is taken place in the last couple of years have been a very low interest rates. So our expectation would be that borrowers would be less inclined to pay down those loans particularly in an environment where their operations maybe a bit under stress from a cash standpoint. They are going to hold their cash rather than pay down a low-interest loan. So yes, I would expect to see prepayments slow as they have been over the course of the past year.

Thank you very much. And also if you could remind me on the Farm & Ranch portfolio, do you have the - what the average LTV was as of - end of the fourth quarter?

Probably right around 50% or so and again keep in mind that’s the original loan the value of the loans, so that doesn’t take - that calculation doesn’t take into consideration the fact that the loan that may have been done seven years ago has paid down and perhaps the land value has also increased over that time period. So it’s 50% original LTV is probably about the average.

And I know you tend to manage your balance sheet to be somewhat interest rate neutral, but if you could just remind us was there any impact at all on your business from the December rate hike?

Just a quick, it was about 47%.

Back on the LTV 47%.

So just under the 50% that Tim mentioned. I'm sorry what was - I was so focused on that. I forgot your second question?

So, not a 47% increase in NII from the rate increase.

Yes, that’s good question. When you get a chance to read the K, what you will see in there is there some more commentary around basis and basis risk. We have seen some disruptions in the swap curve relative to the treasury curve and the rate hike in December did have a part to play in that and it did increase some of the volatility there. It has impacted our cost of funds on certain assets that we fund particularly floating-rate assets and so in some cases we managed at a number of different ways, we certainly looked at pricing and we have taken pricing a bit higher on certain assets to reflect our greater costs of funding those assets. So on balance it hasn't really had a material effect on our financials positive or negative, what we've done has been a bit defensive to offset the negative impacts that we’ve seen so far and then we are going to continue to manage that and keep a close eye on it.

And last question, just regarding the - I guess the charge-offs, and also I guess, just the paydown that was disclosed in the K. The $9.8 million paydown that you received in January, was that balance actually included in your delinquent number that you stated from end of 4Q4 2015?

Yes, it was.

Okay, it looks okay. Great. Well, thank you very much for taking my questions.

Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Tim Buzby for closing remarks.

With no more questions, I’d like to thank you for listening and participate in this morning. I look forward to our next call to report our first quarter 2016 results in May. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.