Farm Credit System Banks Purchase $60 Million of Farmer Mac Senior Cumulative Perpetual Preferred Stock

NEW YORK--()--The Farm Credit System announced today that its five System Banks made a $60 million investment in the Federal Agricultural Mortgage Corporation (Farmer Mac) (NYSE: AGM and AGM.A).

AgFirst FCB; AgriBank, FCB; CoBank, ACB; Farm Credit Bank of Texas and U.S. AgBank, FCB have purchased $60 million in aggregate of senior cumulative perpetual preferred stock of Farmer Mac, which provides a secondary market for agricultural real estate loans, rural home mortgages and rural utility loans. An additional $5 million of Farmer Mac senior cumulative perpetual preferred stock has been purchased by Zions Bancorporation of Salt Lake City.

The $65 million in total financing will enable Farmer Mac to strengthen its capital position and comply with its minimum regulatory capital requirements.

Farmer Mac enhances the availability of agricultural mortgages, and more recently, rural utility loans, thereby assisting in the steady and dependable flow of capital to American farmers and ranchers and rural America, said Robert B. Engel, president and chief executive officer of CoBank, ACB, speaking on behalf of his fellow System Bank presidents. In that regard, Farmer Mac has been a valued partner to the Farm Credit System, insurance companies, commercial banks and the National Rural Utilities Cooperative Finance Corporation.

Given the unprecedented turmoil in the broader financial services industry, at a time when so many institutions are struggling to maintain adequate levels of capital and liquidity, were extremely pleased that the Farm Credit System is favorably positioned to support Farmer Mac through this new investment. Agriculture is a key economic driver in our economy, providing food, thousands of jobs and biofuels that help make our nation more energy-independent. The Systems mission is to help ensure that U.S. agriculture has the capital it needs to continue to fulfill these essential roles, and we are proud that we are able to do so.

Jamie B. Stewart Jr., president and chief executive officer of the Federal Farm Credit Banks Funding Corporation, noted that the Farm Credit System continues to experience strong overall financial performance. As previously announced, the System reported combined net income of over $1.5 billion in the first six months of 2008. At June 30, 2008, credit quality in its $162 billion loan portfolio remained generally favorable, and liquidity and capital levels were in excess of all regulatory minimums. At June 30, 2008, the Systems combined assets totaled $208 billion.

As a group, the Systems network of Banks and Associations remain focused on serving the credit and related financial services needs of Americas farmers, ranchers, agricultural cooperatives and other rural borrowers, while maintaining our foundation of strength and stability on behalf of both our shareholders and the investors who buy our debt securities, Stewart said.

The senior cumulative perpetual preferred stock purchased by the Banks can be redeemed by Farmer Mac in the future with cash or qualifying assets. It pays an initial 10 percent annual dividend in the first year. The dividend rate increases by 2 percent in each of the first three years and remains fixed thereafter. The preferred stock is callable, at par value, after nine months, and on any quarterly dividend date thereafter. It is senior to all other Farmer Mac capital.

Under the investment agreement, the System Banks are provided with certain protective rights and will nominate three observers to the Farmer Mac board of directors. The investment has been reviewed and approved by the Systems regulator, the Farm Credit Administration.

About the Farm Credit System

The Farm Credit System is a federally chartered network of borrower-owned lending institutions and related service organizations. The System specializes in providing financing and related services to borrowers in the agricultural and rural sectors through the five System Banks and 93 affiliated Associations. Unlike commercial banks, the Banks are not authorized to take deposits and they principally obtain their funds through the issuance of Systemwide debt securities.

About Farmer Mac

Farmer Mac is a stockholder-owned instrumentality of the United States chartered by Congress to establish a secondary market for agricultural real estate and rural housing mortgage loans and rural utilities loans and to facilitate capital market funding for USDA-guaranteed farm program and rural development loans. Farmer Macs Class C non-voting and Class A voting common stocks are listed on the New York Stock Exchange under the symbols AGM and AGM.A, respectively. Additional information about Farmer Mac is available on Farmer Macs website at www.farmermac.com.

Additional Information

The Federal Farm Credit Banks Funding Corporation has posted questions and answers regarding the Farm Credit System and Farmer Mac on its website at www.farmcredit-ffcb.com in the Breaking News section.

Copies of financial and other press releases, as well as other information regarding the System, including its annual and quarterly information statements, are available on the Funding Corporations website. For further information and copies of annual and quarterly information statements, contact:

Daniel M. Bienz, Vice President
Financial Analysis and Disclosure
Federal Farm Credit Banks Funding Corporation
10 Exchange Place, Suite 1401
Jersey City, NJ 07302
(201) 200-8070

E-mail - DBienz@farmcredit-ffcb.com

or
Kyle Henley
Corporate Communications Manager
CoBank, ACB
P.O. Box 5110
Denver, CO 80217
303-694-5862

E-mail - khenley@cobank.com

Forward-Looking Statements

Any forward-looking statements in this press release are based on current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from expectations due to a number of risks and uncertainties. More information about these risks and uncertainties is contained in the Systems annual and quarterly information statements. The System undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts

Federal Farm Credit Banks Funding Corporation
Daniel M. Bienz, Vice President
Financial Analysis and Disclosure
201-200-8070
DBienz@farmcredit-ffcb.com
or
CoBank, ACB
Kyle Henley
Corporate Communications Manager
303-694-5862
khenley@cobank.com

Contacts

Federal Farm Credit Banks Funding Corporation
Daniel M. Bienz, Vice President
Financial Analysis and Disclosure
201-200-8070
DBienz@farmcredit-ffcb.com
or
CoBank, ACB
Kyle Henley
Corporate Communications Manager
303-694-5862
khenley@cobank.com