The following tables present core earnings for Farmer Mac's reportable operating segments and a reconciliation to GAAP net (loss)/income for the three and six months ended June 30, 2012 and 2011:



Core Earnings by Business Segment
For the Three Months Ended June 30, 2012
	Farmer Mac I			Farmer Mac II			Rural Utilities			Corporate			Reconciling Adjustments				GAAP Amounts
	(in thousands)
Interest income (1)	$	36,897		$	14,197		$	16,124		$	6,024		$	(1,664	)		$	71,578
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(543		)	—			—			—			543				—
Interest expense (2)	(19,605		)	(11,407		)	(13,118		)	(1,361		)	8,530				(36,961		)
Net effective spread	16,749			2,790			3,006			4,663			7,409				34,617
Guarantee and commitment fees	5,466			41			1,100			—			(543		)		6,064
Other income/(expense) (3)	514			172			—			(717		)	(33,314		)		(33,345		)
Non-interest income/(loss)	5,980			213			1,100			(717		)	(33,857		)		(27,281		)

Release of loan losses	1,220			—			—			—			—				1,220

Provision for losses	(1,394		)	—			—			—			—				(1,394		)
Other non-interest expense	(3,576		)	(744		)	(1,385		)	(2,110		)	—				(7,815		)
Non-interest expense (4)	(4,970		)	(744		)	(1,385		)	(2,110		)	—				(9,209		)
Core earnings before income taxes	18,979			2,259			2,721			1,836			(26,448		)	(5)	(653		)
Income tax (expense)/benefit	(6,643		)	(791		)	(952		)	1,759			9,256				2,629
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	12,336			1,468			1,769			3,595			(17,192		)	(5)	1,976
Preferred stock dividends	—			—			—			(720		)	—				(720		)
Non-controlling interest - preferred stock dividends	—			—			—			(5,547		)	—				(5,547		)
Segment core earnings	$	12,336		$	1,468		$	1,769		$	(2,672	)	$	(17,192	)	(5)	$	(4,291	)

Total assets at carrying value	$	4,842,598		$	1,612,384		$	2,226,318		$	3,369,114		$	—			$	12,050,414
Total on- and off-balance sheet program assets at principal balance	8,513,212			1,579,187			2,158,021			—			—				12,250,420


(1)	Includes reconciling adjustments for yield maintenance income and amortization of premiums on assets consolidated at fair value to reflect core earnings amounts.


(2)	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps, which are included in Losses on financial derivatives on the GAAP financial statements.


(3)	Includes reconciling adjustments for the reclassification of yield maintenance income and expenses related to interest rate swaps and fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac II Guaranteed Securities and USDA Guaranteed Securities.


(4)	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


(5)	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends; and segment core earnings to corresponding GAAP measures: (loss)/income before income taxes, net income, and net (loss)/income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Three Months Ended June 30, 2011
	Farmer Mac I			Farmer Mac II			Rural Utilities			Corporate			Reconciling Adjustments				GAAP Amounts
	(in thousands)
Interest income (1)	$	34,555		$	14,045		$	13,131		$	7,033		$	(1,912	)		$	66,852
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(839		)	—			—			—			839				—
Interest expense (2)	(22,398		)	(11,321		)	(10,044		)	(3,174		)	9,297				(37,640		)
Net effective spread	11,318			2,724			3,087			3,859			8,224				29,212
Guarantee and commitment fees	5,824			50			1,285			—			(839		)		6,320
Other income/(expense) (3)	1,261			59			—			(646		)	(14,879		)		(14,205		)
Non-interest income/(loss)	7,085			109			1,285			(646		)	(15,718		)		(7,885		)

Provision for loan losses	(160		)	—			—			—			—				(160		)

Release of losses	935			—			—			—			—				935
Other non-interest expense	(3,992		)	(712		)	(1,247		)	(2,175		)	—				(8,126		)
Non-interest expense (4)	(3,057		)	(712		)	(1,247		)	(2,175		)	—				(7,191		)
Core earnings before income taxes	15,186			2,121			3,125			1,038			(7,494		)	(5)	13,976
Income tax (expense)/benefit	(5,315		)	(742		)	(1,094		)	1,989			2,623				(2,539		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	9,871			1,379			2,031			3,027			(4,871		)	(5)	11,437
Preferred stock dividends	—			—			—			(720		)	—				(720		)
Non-controlling interest - preferred stock dividends	—			—			—			(5,547		)	—				(5,547		)
Segment core earnings	$	9,871		$	1,379		$	2,031		$	(3,240	)	$	(4,871	)	(5)	$	5,170

Total assets at carrying value	$	3,743,934		$	1,422,554		$	2,353,748		$	2,924,592		$	—			$	10,444,828
Total on- and off-balance sheet program assets at principal balance	8,498,421			1,425,883			2,274,193			—			—				12,198,497


(1)	Includes reconciling adjustments for yield maintenance income and amortization of premiums on assets consolidated at fair value to reflect core earnings amounts.


(2)	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps, which are included in Losses on financial derivatives on the GAAP financial statements.

(3)

Includes reconciling adjustments for the reclassification of yield maintenance income, expenses related to interest rate swaps and fair value adjustments on loans held for sale, financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac II Guaranteed Securities and USDA Guaranteed Securities.


(4)	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


(5)	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends; and segment core earnings to corresponding GAAP measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Six Months Ended June 30, 2012
	Farmer Mac I			Farmer Mac II			Rural Utilities			Corporate			Reconciling Adjustments				GAAP Amounts
	(in thousands)
Interest income (1)	$	74,441		$	28,512		$	32,822		$	12,256		$	(3,322	)		$	144,709
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(1,273		)	—			—			—			1,273				—
Interest expense (2)	(41,545		)	(22,956		)	(26,639		)	(2,777		)	18,033				(75,884		)
Net effective spread	31,623			5,556			6,183			9,479			15,984				68,825
Guarantee and commitment fees	10,789			88			2,390			—			(1,273		)		11,994
Other income/(expense) (3)	951			274			1			(1,240		)	(25,083		)		(25,097		)
Non-interest income/(loss)	11,740			362			2,391			(1,240		)	(26,356		)		(13,103		)

Release of loan losses	800			—			—			—			—				800

Provision for losses	(1,424		)	—			—			—			—				(1,424		)
Other non-interest expense	(7,068		)	(1,508		)	(2,767		)	(4,284		)	—				(15,627		)
Non-interest expense (4)	(8,492		)	(1,508		)	(2,767		)	(4,284		)	—				(17,051		)
Core earnings before income taxes	35,671			4,410			5,807			3,955			(10,372		)	(5)	39,471
Income tax (expense)/benefit	(12,485		)	(1,544		)	(2,032		)	3,406			3,630				(9,025		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	23,186			2,866			3,775			7,361			(6,742		)	(5)	30,446
Preferred stock dividends	—			—			—			(1,440		)	—				(1,440		)
Non-controlling interest - preferred stock dividends	—			—			—			(11,094		)	—				(11,094		)
Segment core earnings	$	23,186		$	2,866		$	3,775		$	(5,173	)	$	(6,742	)	(5)	$	17,912

Total assets at carrying value	$	4,842,598		$	1,612,384		$	2,226,318		$	3,369,114		$	—			$	12,050,414
Total on- and off-balance sheet program assets at principal balance	8,513,212			1,579,187			2,158,021			—			—				12,250,420


(1)	Includes reconciling adjustments for yield maintenance income and amortization of premiums on assets consolidated at fair value to reflect core earnings amounts.


(2)	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps, which are included in Losses on financial derivatives on the GAAP financial statements.


(3)	Includes reconciling adjustments for the reclassification of yield maintenance income and expenses related to interest rate swaps and fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac II Guaranteed Securities and USDA Guaranteed Securities.


(4)	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


(5)	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends; and segment core earnings to corresponding GAAP measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Six Months Ended June 30, 2011
	Farmer Mac I			Farmer Mac II			Rural Utilities			Corporate			Reconciling Adjustments				GAAP Amounts
	(in thousands)
Interest income (1)	$	66,634		$	27,710		$	26,793		$	14,220		$	(4,433	)		$	130,924
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(1,713		)	—			—			—			1,713				—
Interest expense (2)	(42,676		)	(22,319		)	(20,704		)	(7,314		)	18,320				(74,693		)
Net effective spread	22,245			5,391			6,089			6,906			15,600				56,231
Guarantee and commitment fees	11,589			103			2,728			—			(1,713		)		12,707
Other income/(expense) (3)	2,223			105			—			(740		)	(7,133		)		(5,545		)
Non-interest income/(loss)	13,812			208			2,728			(740		)	(8,846		)		7,162

Provision for loan losses	(1,441		)	—			—			—			—				(1,441		)

Release of losses	2,869			—			—			—			—				2,869
Other non-interest expense	(8,760		)	(1,375		)	(2,379		)	(4,224		)	—				(16,738		)
Non-interest expense (4)	(5,891		)	(1,375		)	(2,379		)	(4,224		)	—				(13,869		)
Core earnings before income taxes	28,725			4,224			6,438			1,942			6,754			(5)	48,083
Income tax (expense)/benefit	(10,054		)	(1,478		)	(2,254		)	4,094			(2,364		)		(12,056		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	18,671			2,746			4,184			6,036			4,390			(5)	36,027
Preferred stock dividends	—			—			—			(1,440		)	—				(1,440		)
Non-controlling interest - preferred stock dividends	—			—			—			(11,094		)	—				(11,094		)
Segment core earnings	$	18,671		$	2,746		$	4,184		$	(6,498	)	$	4,390		(5)	$	23,493

Total assets at carrying value	$	3,743,934		$	1,422,554		$	2,353,748		$	2,924,592		$	—			$	10,444,828
Total on- and off-balance sheet program assets at principal balance	8,498,421			1,425,883			2,274,193			—			—				12,198,497


(1)	Includes reconciling adjustments for yield maintenance income and amortization of premiums on assets consolidated at fair value to reflect core earnings amounts.


(2)	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps, which are included in Losses on financial derivatives on the GAAP financial statements.

(3)


(4)	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


(5)	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends; and segment core earnings to corresponding GAAP measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.