Good morning, and welcome to the Federal Agricultural Mortgage Corporation First Quarter 2012 Investors Conference call. [Operator instructions] Please note this event is being recorded. And I would now like to turn the conference over to Michael Gerber, CEO. Please go ahead.

Thank you, Emily, and good morning, everybody. I am Mike Gerber, the President and CEO at Farmer Mac. And the Farmer Mac management team and I are pleased to welcome you to our First Quarter 2012 Investor Conference Call. Before we begin this morning, I’ll ask Jerry Oslick, Farmer Mac’s General Counsel, to comment on the forward-looking statements that may be made today.

Thanks, Mike. In addition to historical information, this conference call may include forward-looking statements that reflect management's current expectations for Farmer Mac's future financial results, business prospects and business developments. Management's expectations for the corporation's future necessarily involve a number of assumptions and estimates and the evaluation of risks and uncertainties. Various factors or events could cause Farmer Mac's actual results to differ materially from expectations as expressed or implied by the forward-looking statements. Some of these factors and events are identified in our press release issued yesterday and discussed in Farmer Mac’s quarterly report on Form 10-Q for first quarter 2012. The Form 10-Q and Form 8-K containing the press release were filed yesterday with the SEC. Any forward-looking statements made by Farmer Mac during this call represent management’s current expectations. Farmer Mac undertakes no obligation to release publicly the results of revisions to any such forward-looking statements to reflect any future events or circumstances, except as otherwise mandated by the SEC. A recording of this call will be available on our website after the conclusion of the call.

Thank you, Jerry. We are pleased to report another quarter of excellent results here at Farmer Mac. Well, first quarter 2012 numbers continued the upward trend of the past several years. Highlights include strong GAAP and quarter earnings; solid new business volume resulting in an increase in aggregate outstanding program volume; and credit quality also remains high. First quarter 2012 core earnings were $11.8 million compared to $9.1 million in the first quarter 2011. This is a 30% increase. GAAP earnings were $22.2 million for the quarter and also compare favorably to GAAP earnings of $18.3 million in the first quarter 2011. This increase in both GAAP and core earnings were primarily attributable to higher net interest income. During first quarter 2012, Farmer Mac added $616.2 million of new program volume. That brought Farmer Mac's outstanding program volume to $12.1 billion as of March 31, 2012. That was a net increase of $153.1 million from December 31, 2011. Of note is that the added new program volume in the first quarter came as a result of growth in all of our product volumes. Credit quality also remained strong, primarily as a result of the continuing healthy Ag economy. Farmer Mac’s 90-day delinquencies were $53.1 million or 1.21% of the Farmer Mac I portfolio as of March 31, 2012. That’s down from $57.3 million or 1.33% as of March 31, 2011. Importantly, there continues to be no delinquent ethanol loans as of March 31, 2012. In addition, as we analyze the overall credit quality of our program business, we take into account more than just the Farmer Mac I agricultural loan delinquencies. The total program business includes AgVantage securities and rural utilities loans, neither of which have any delinquencies, and USDA Guaranteed Securities, or Farmer Mac II, that are backed by the full faith and credit of the United States. When these are taken into consideration, the overall level of 90-day delinquent loans in all of Farmer Mac’s programs was just 0.44% as of March 31, 2012. That compares to 0.48% a year ago. Credit quality is the key component to our long-term success. Strength in the Ag sector across most -- in the Ag world across most commodity sectors has helped our efforts to improve the credit quality of our portfolio. With that as a background, what I’d like to do is turn to Tim Buzby, our CFO, to cover our financial results in greater detail. Tim?

Thanks, Mike. As mentioned, first quarter core earnings were $11.8 million or $1.08 per diluted share, up from $9.1 million or $0.85 per share a year earlier. Farmer Mac uses core earnings and non-GAAP financial measures to measure corporate economic performance and develop financial plans because in 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 not intended to replace GAAP information, but rather to supplement it. Core earnings for first quarter 2011 benefited from higher net interest income of $34.2 million, compared to $27.0 million in first quarter 2011. The increase in net interest income in first quarter 2012 was primarily attributable to the cumulative purchases of AgVantage securities throughout 2011 and 2012 that Farmer Mac has held on balance sheet. The overall net effective spread for first quarter 2012 was 94 basis points, which is the same level it was during first quarter 2011. The increase in net interest income was partially offset by provisions for losses of $0.5 million in first quarter 2012, compared to a net release from the allowance for losses of $0.7 million in the same period in 2011. There were no charge-offs recorded against the allowance during first quarter. The first quarter 2012 GAAP net income attributable to common stock holders was $22.2 million or $2.04 per diluted share, compared to net income of $18.3 million or $1.72 per diluted share for first quarter 2011. As with core earnings, 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 the periodic increases in the fair values of financial derivatives, which rose as a result of the longer-term interest rates trending upward during each of those quarters. 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. As of quarter end, Farmer Mac's$498 million of regulatory core capital exceeded the statutory minimum capital requirement of $361 million by $137 million, an excess of 38%. Capital surplus was up from $126 million at year end 2011 due to the additional retained earnings during first quarter. More complete information on Farmer Mac’s performance for the quarter is set forward with the 10-Q we filed yesterday with the SEC. With that, I will turn the discussion back to you, Mike.

Thanks, Tim. As you can see from the numbers, Farmer Mac continues to make progress. Strong core earnings, the addition of new volume despite weaker demand at the retail level, and continued high credit quality all contributed to another quarter of improving results. These results have helped us continue to build our capital, which builds long-term strength. Based on this performance, we doubled the quarterly dividend on our common stock during the first quarter. With the current level of strong commodity prices and a generally healthy agriculture economy, many producers are using cash rather than debt to make purchases. Resulting strong returns for producers continue to affect the growth in program assets in the short term. This is healthy for the industry over the long term, and producers should be well positioned for the future. In addition, the current economic slowdown has reduced demand for electricity, resulting in less capital needs for rural utilities. As these cycles change, Farmer Mac is well positioned also to take advantage of the expected growth in loan volume. Strong product lines, growth in the number of institutions that sell loans to us, and a changing regulatory environment in the banking industry all provide us significant opportunities to continue to build our portfolio and accomplish the mission for which we were created. We continue to aggressively pursue opportunities to bring capital and liquidity to rural America as well as provide value to you, our shareholders. And we look forward to sharing those results with you. At this time, we’ll be glad to take any questions you might have and I will turn the call back over to Emily to take care or that.

[Operator instructions] And our first question will come from Mike Turner of Compass Point.

Just wanted to ask about your growth outlook, both the Ag and the rural utilities business. It sounds like the Ag business is almost going too well. And then thoughts on the rural utilities sector, do you expect originations may be able to grow from here or do you see a softening? And then, embedded in that, what's kind of the best environment for the Ag business, looking forward?

Well, obviously we don’t -- as we’ve talked before, we don’t give forward-looking statements. But what I would say is that as we think about where we are, there is no doubt that the growth -- or that the solid returns producers have today are impacting the growth of loan volume. And on the rural utility side, it is really the combination of lower demand for electric combined with an uncertain regulatory environment that they are dealing with. Those things, well, at least on the agricultural side, is healthy for the industry and allows producers to get their balance sheets in good shape. The business that we have is lumpy business. It comes in fits and starts, so it’s very difficult for us to look forward and, with a very clear crystal ball, see how that growth will come in. For us, the environment where we are able to grow really is one in which Ag producers are healthy but expanding their businesses. It's one where the build-out that is -- will come in the rural utility business is underway. And I think, thirdly, as signs that interest rates are going to go up, we will see more demand for the kinds of products that we have as well. So all of those things would contribute. As I said in my remarks, I’m pleased that all the product lines have had growth this quarter and in the recent past. That continues to allow us to, during this period of time, have stable volume in what we do.

Great, that’s helpful. And I know the farm bill's coming up for -- I believe it’s the 5-year renewal this year. Are there any aspects of that, that you’re watching now that could be beneficial or, alternatively, detrimental to your business?

Well, it’s hard to -- given the debate that is going on and understanding exactly where they are going to land, it’s hard to even handicap how it will come out and what it will look like, and what the impact will be. I think today, producers are in a strong enough position that some of the negative or the reduced dollars that come will not impact them immediately and directly. We are watching carefully crop insurance and some of the risk management tools that are important to producers. Those would be ones that we would want to see and understand how they’re going to play out. But overall, I think it’s really way too early to handicap the impact. I would suggest that, based on what we’ve seen, fewer dollars are going to be available. And I think that will impact. The other piece that -- one other piece I would mention that we're watching carefully is the dollars that USDA, in their lending programs, might have as they go forward. That could, as well, impact us positively, frankly, as some of those programs get reduced dollars and producers and rural residents are looking for dollars from someplace else.

Our next question comes from Jordan Hymowitz of Philadelphia Financial.

First of all, I want to commend you guys on the very good research report that was written about you by the former -- the analyst that just spoke. I thought he did an excellent job. Couple of questions. You raised the dividend last quarter, and there was a lot of pressure on the last call. And while you raised, it fell very low. How often are you going to re-evaluate the dividend? Is it like a quarterly thing, a semi-annual thing, an annual thing?

We evaluate that every quarter with our board: look at the options; look at where we are and what we see as growth opportunities; the need for capital; and balance that with bringing shareholder value to you.

Our next question comes from Matthew Dodson, Edmunds White Partners.

It's Jon Evans. Can you talk a little bit about -- so over the last, I think, 6 quarters your delinquencies had gone down sequentially, which would have been abnormal seasonality. This quarter was more normal seasonality. Do you believe that we’ve just got to a trough on the credit quality because, obviously, the credit quality is so good? Or could you speak a little bit to that?

Well, I think the more normal seasonality here really only impacts us in a couple of quarters , if you look at the way the numbers have gone. So while it has been 6 sequentially, we would typically only see bump-ups because of seasonality in a couple of those. So I am not ready yet today to say the trend of, "Okay we had one where it bumped back up is the trough." I do think that the timeframe that producers, in general -- and it’s very difficult to generalize them in the agricultural industry, across all of the sectors, but in general, the profitably and the strength and the returns they’ve gotten have continued long enough, that the pace at which improvement occurs is slowing. Whether that means we are at the trough or not, I am not ready to say we are, but I think we are getting down to that level. Recognize, though, that for us and our portfolio, given the size of our individual credits, that any one -- or probably not one so much, but any few number of loans could swing those numbers some and so it could impact those numbers on any given quarter. But to specifically answer your question, I’m not ready to say we are at the trough, but it is -- but we are getting much closer.

[Operator instructions] And we have a follow-up question from Matthew Dodson with Edmunds White Partners.

Can you just follow up on the other person’s question relative to the dividend? And I guess you did grow the portfolio this quarter. Can you talk a little bit about your guys’ -- what you have to have from a regulatory standpoint, what the board feels comfortable from a capital standpoint because, I mean, it looks like you’re going to earn over $4 this year and you’re going to pay out basically 10% in a dividend. And you are growing the portfolio, but the growth isn't robust, so can you just help us understand kind of your guys’ thought process relative to raising the dividend, and maybe what kind of percent of earnings you think you could potentially pay out over time?

Well, let me start with the regulator question. I mean, at the heart of the regulatory relationship -- although it’s not quite this clean, it's really a pass/fail discussion in terms of meeting compliance with the numbers. And so we have cushioned -- clearly, we have a cushion today in an amount that would allow us to grow fairly significantly. Then the question becomes how much we are comfortable with. If you’ve watched and listened to the calls over the past few years, our view was that we needed to continue to build capital to levels that were higher than what historically we’ve had. Part of that is because of the need to be able to hold larger hold positions and credits, the need to build long-term strength in the company, as well as mange the earnings portfolio -- or the earnings using the derivatives and those things, and have room so that we are not backed up against the wall at any given time. And so we’ve done that. And as you’ve seen, I think, by the statement of raising the dividends, we are reaching a level today where those capital levels are where we’re comfortable with, given the mix of our portfolio today. That could change, but -- and given the mix, the mix quality, that's -- we’re comfortable with that. So I think as we look at that, it’s hard to pinpoint a number and say how many dollars of earnings we’re going to pay out. But I think the fact that we moved the dividend, it was intended to be a statement that said, "We’ve gotten the company going in the right direction, and at a pace we are comfortable improving the dividend." And I think we will continue to look aggressively at whether or not we can raise those numbers as we go along.

The next question is a follow-up from Jordan Hymowitz of Philadelphia Financial.

Do you think the rural utilities business volume will accelerate because of the Obama administration's accelerated push-out of coal?

Yes. There will need to be. There are couple of things happening in that industry, and that is one of the significant ones, as well as, with the uncertainty we’ve seen, there just haven’t been any plants built along the way here -- or very few plants built along the way. And so I do believe that as the regulatory and legislative environment becomes more clear, you’re going to see plants -- well, capital expenditures need to be made to meet the new regulatory requirements. And that will be added to or aided -- growth will be aided, in addition to that, by what the economy does and whether demand for electric really picks up, and I think that will determine how quickly they move. But yes, we see opportunities long-term in the rural utilities business as these plants transition from primarily a coal-based industry to at least a mixed, if not more of a gas fired or other sources of energy, industry.

Our next question comes from -- another follow-up from Matthew Dodson of Edmunds White Partners.

You guys have been very aggressive, taken down your high-cost funds. Can you talk about your net interest margin going forward and how we should think about it throughout the year?

Yes, why don't -- Tim, why don’t you take that one?

Sure, the net effective spread was 94 basis points in the first quarter. If you look back over 2011, as I said earlier, it was the same number, 94 basis points, in the first quarter and it fluctuated up to 96 basis points during 2011. So it’s been pretty consistent over the last 5 quarters or so. And that's driven by the mix of business, as we put on new program business. Depending on the spreads at which that business was brought in, that number can move. It can also move as we make up our liquidity portfolio changes as well. We’ve noted in prior quarters that when we add Treasurys to our portfolio for liquidity purposes, that actually brings the margin down because that margin is 94 basis points over all of our interest-earning assets and liabilities. So I think, based on the consistency that we’ve seen over the past several quarters, the current level is kind of within our expectations. And as we look forward, we don’t expect, at this point, to see any major shift in a range around the current level.

At this time, we're not showing any questions.

Well, Emily, then to all of you on the call, thank you for being on the call. Thank you for your questions and comments. We look forward to sharing results next quarter with you, and everybody have a great spring. Thank you.

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