8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2006

Federal Agricultural Mortgage Corporation

(Exact name of registrant as specified in its charter)

        Federally chartered

        instrumentality of

         the United States           0-17440 52-1578738

(State or other jurisdiction of(Commission(I.R.S. Employer

incorporation or organization)       File Number)Identification No.

1133 21st Street, N.W., Suite 600, Washington, D.C.             ;       20036

(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (202) 872-7700

No change

(Former name or former address, if changed since last report)

Item 2.02. Results of Operations and Financial Condition.

On August 9, 2006, the Registrant issued a press release to announce the Registrant’s financial results for second quarter 2006 and a conference call to discuss those results and the Registrant’s Quarterly Report on Form 10-Q for second quarter 2006. A copy of the press release is attached to this report as Exhibit 99 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a)Not applicable.

(b)Not applicable.

(c)Exhibits:

99 Press release dated August 9, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     FEDERAL AGRICULTURAL MORTGAGE CORPORATION

     By:/s/ Jerome G. Oslick

         Name:Jerome G. Oslick

         Title: Vice President - General Counsel

Dated:August 9, 2006

EXHIBIT INDEX

Exhibit No.DescriptionPage No.

99Press Release Dated August 9, 20065

EX-99

                    Exhibit 99

FARMER MAC NEWS

FOR IMMEDIATE RELEASE                   CONTACT

August 9, 2006           
60;         Mary Waters

           202-872-7700

Farmer Mac Reports Strong New Business Volume

Guarantee Portfolio Currently at Record $7 billion

Washington, D.C. — The Federal Agricultural Mortgage Corporation (Farmer Mac, NYSE: AGM and AGM.A) today reported U.S. GAAP net income for second quarter 2006 of $7.6 million or $0.67 per diluted share, compared to $5.0 million or $0.44 per diluted share for first quarter 2006 and $8.2 million or $0.72 per diluted share for second quarter 2005. For the six months ended June 30, 2006, net income was $12.7 million or $1.11 per diluted share, compared to $13.1 million or $1.13 per diluted share for the six months ended June 30, 2005.  More complete information on Farmer Mac’s performance for the quarter ended June 30, 2006 is set forth in the Form 10-Q filed with the SEC today by Farmer Mac.

Farmer Mac President and Chief Executive Officer Henry D. Edelman stated, “The combined result of second quarter business and a $1.0 billion AgVantage securities transaction in July was to raise Farmer Mac’s portfolio of loans, guarantees, and standbys to nearly $7 billion. This record volume - 25 percent above our March 31, 2006 level - is an important measure of the increased liquidity and lending capacity Farmer Mac is providing to agricultural mortgage lenders who, in turn, extend credit to agriculture and Rural America. Second quarter 2006 new business volume was $657.9 million, following on strong first quarter 2006 volume of $648.5 million and up from $161.9 million during second quarter 2005.

“The increases in business volume through July 2006 were attributable principally to Farmer Mac’s strategic diversification of its marketing focus over the past year to include large program transactions that emphasize high asset quality, backed by increasing numbers of mortgage loans to farmers, ranchers and rural homeowners. These transactions achieve greater protection against adverse credit performance and commensurately lower compensation for the assumption of credit risk and administrative costs, resulting in marginal returns on equity equal to or better than the current net return on equity. We believe the development of innovative ways to serve the financing needs of Rural America can overcome the challenges to the Corporation’s new business development posed by current market and regulatory factors. We are confident in Farmer Mac’s opportunities for increased business volume and income growth.”

The portfolio of loans underlying Farmer Mac’s guarantees and standbys continues to perform well, with 90-day delinquencies in Farmer Mac’s portfolio remaining at low levels, in terms of both dollars and percentages. This underscores both the effectiveness of Farmer Mac’s ongoing credit risk management and the strength of the U.S. agricultural economy. Accordingly, Farmer Mac determined that the appropriate level of allowance for losses as of June 30, 2006 was $6.3 million, reflecting the overall credit quality of its portfolio and the recent upward trends in agricultural land values. In accordance with FAS 123(R), earnings also included the recognition of stock options as compensation expense in the amount of $0.5 million or $0.03 per diluted share for second quarter 2006, and $1.0 million or $0.05 per diluted share for the six months ended June 30, 2006.

Mr. Edelman concluded, “The combination of stronger business volume and solid loan performance reflected in our second quarter 2006 results demonstrates the direction in which the Board and management of Farmer Mac seek to guide the Corporation. Continuation of these results should allow us further to advance our Congressional mission for the nation’s farmers, ranchers and rural homeowners while enhancing stockholder value in a responsible and efficient manner.”

Non-GAAP Performance Measures

Farmer Mac reports its financial results in accordance with GAAP. In addition to GAAP measures, Farmer Mac presents “core earnings,” a non-GAAP performance measure. Core earnings are net income available to common stockholders less the after-tax effects of unrealized gains and losses on financial derivatives resulting from the application of FAS 133. The GAAP measure most comparable to core earnings is net income available to common stockholders. Unlike core earnings, however, the GAAP measure is influenced by unrealized gains or losses in the value of financial derivatives used to hedge interest rate risk in Farmer Mac’s mortgage portfolio. Farmer Mac uses core earnings to develop financial plans, to measure corporate economic performance and to set incentive compensation because, in management’s view, core earnings more accurately represent Farmer Mac’s economic performance, transaction economics and business trends. Investors and the investment analyst community have previously relied upon similar measures to evaluate Farmer Mac’s historical and future performance. Farmer Mac’s disclosure of this non-GAAP measure is not intended to replace GAAP information but, rather, to supplement it.

The reconciliation of GAAP net income available to common stockholders to core earnings is presented in the following table:

Reconciliation of GAAP Net Income Available to Common Stockholders to Core Earnings
	Three Months Ended								Six Months Ended
	June 30, 2006				June 30, 2005				June 30, 2006				June 30, 2005
	(in thousands, except per share amounts)
			Per				Per				Per				Per
			Diluted				Diluted				Diluted				Diluted
			Share				Share				Share				Share
GAAP net income available
to common stockholders	$	7,619	$	0.67	$	8,211	$	0.72	$	12,656	$	1.11	$	13,123	$	1.13
Less the effects of FAS 133:
Unrealized gains/(losses)
on financial derivatives and
trading assets, net of tax		1,290		0.11		2,251		0.20		157		0.01		898		0.08
Core earnings	$	6,329	$	0.56	$	5,960	$	0.52	$	12,499	$	1.10	$	12,225	$	1.05

Forward-Looking Statements

In addition to historical information, this release includes 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 Farmer Mac’s future necessarily involve a number of assumptions and estimates and the evaluation of risks and uncertainties. Various factors could cause Farmer Mac’s actual results to differ materially from the expectations as expressed or implied by the forward-looking statements, including uncertainties regarding: (1) the general rate of growth in agricultural mortgage indebtedness; (2) the rate and direction of development of the secondary market for agricultural mortgage loans, particularly lender interest in the Farmer Mac secondary market and Farmer Mac credit products; (3) borrower preferences for fixed-rate agricultural mortgage indebtedness; (4) the willingness of investors to invest in Farmer Mac Guaranteed Securities; (5) possible reaction in the financial markets to events involving government-sponsored enterprises other than Farmer Mac; and (6) the possible establishment of additional statutory or regulatory restrictions or constraints on Farmer Mac that could hamper its growth or diminish its profitability. Other risk factors are discussed in Farmer Mac’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 16, 2006 and in Farmer Mac’s Quarterly Report on Form 10-Q, as filed with the SEC today. The forward-looking statements contained in this release represent management’s expectations as of the date of this release. Farmer Mac undertakes no obligation to release publicly the results of revisions to any forward-looking statements included in this release to reflect any future events or circumstances, except as otherwise mandated by law.

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 to facilitate capital market funding for USDA-guaranteed farm program and rural development loans. Farmer Mac’s 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 (as well as the Form 10-K and Form 10-Q referenced above) is available on Farmer Mac’s website at www.farmermac.com. The conference call to discuss Farmer Mac’s second quarter 2006 earnings and the Corporation’s Form 10-Q for second quarter 2006 will be webcast on Farmer Mac’s website beginning at 11:00 a.m. eastern time, Thursday, August 10, 2006, and an audio recording of that call will be available for two weeks on Farmer Mac’s website after the call is concluded.

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