The following tables present core earnings for Farmer Mac's reportable operating segments and a reconciliation to consolidated net income for the three and nine months ended September 30, 2013 and 2012:

Table 9.1



Core Earnings by Business Segment
For the Three Months Ended September 30, 2013
	Farm & Ranch			USDA Guarantees			Rural Utilities			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	30,139		$	13,461		$	14,958		$	5,263		$	(846	)		$	62,975
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(227		)	—			—			—			227				—
Interest expense (2)	(13,738		)	(10,630		)	(11,973		)	(1,472		)	3,026				(34,787		)
Net effective spread	16,174			2,831			2,985			3,791			2,407				28,188
Guarantee and commitment fees	5,953			30			1,063			—			(227		)		6,819
Other income/(expense) (3)	157			241			—			(825		)	3,429				3,002
Non-interest income/(loss)	6,110			271			1,063			(825		)	3,202				9,821

Release of loan losses	499			—			—			—			—				499

Provision of losses	(463		)	—			—			—			—				(463		)
Other non-interest expense	(3,785		)	(769		)	(1,356		)	(2,068		)	—				(7,978		)
Non-interest expense (4)	(4,248		)	(769		)	(1,356		)	(2,068		)	—				(8,441		)
Core earnings before income taxes	18,535			2,333			2,692			898			5,609			(5)	30,067
Income tax (expense)/benefit	(6,487		)	(817		)	(942		)	1,983			(1,963		)		(8,226		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	12,048			1,516			1,750			2,881			3,646			(5)	21,841
Preferred stock dividends	—			—			—			(881		)	—				(881		)
Non-controlling interest - preferred stock dividends	—			—			—			(5,547		)	—				(5,547		)
Segment core earnings/(losses)	$	12,048		$	1,516		$	1,750		$	(3,547	)	$	3,646		(5)	$	15,413

Total assets at carrying value	$	5,630,252		$	1,674,309		$	2,567,828		$	3,212,618		$	—			$	13,085,007
Total on- and off-balance sheet program assets at principal balance	9,545,398			1,676,793			2,564,075			—			—				13,786,266


(1)	Includes reconciling adjustments for the amortization of premiums and discounts 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 not designated as hedges, which are included in "Gains/(losses) on financial derivatives and hedging activities" on the consolidated financial statements.


(3)	Includes reconciling adjustments for the reclassification of expenses related to interest rate swaps not designated as hedges 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 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 income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Three Months Ended September 30, 2012
	Farm & Ranch			USDA Guarantees			Rural Utilities			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	28,887		$	14,299		$	15,401		$	6,437		$	(1,214	)		$	63,810
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(190		)	—			—			—			190				—
Interest expense (2)	(11,858		)	(11,469		)	(12,292		)	(1,959		)	4,130				(33,448		)
Net effective spread	16,839			2,830			3,109			4,478			3,106				30,362
Guarantee and commitment fees	5,551			38			1,002			—			(190		)		6,401
Other income/(expense) (3)	519			251			300			(699		)	1,692				2,063
Non-interest income/(loss)	6,070			289			1,302			(699		)	1,502				8,464

Provision for loan losses	(137		)	—			—			—			—				(137		)

Release of losses	43			—			—			—			—				43
Other non-interest expense	(3,582		)	(757		)	(1,368		)	(2,084		)	—				(7,791		)
Non-interest expense (4)	(3,539		)	(757		)	(1,368		)	(2,084		)	—				(7,748		)
Core earnings before income taxes	19,233			2,362			3,043			1,695			4,608			(5)	30,941
Income tax (expense)/benefit	(6,731		)	(827		)	(1,065		)	1,941			(1,612		)		(8,294		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	12,502			1,535			1,978			3,636			2,996			(5)	22,647
Preferred stock dividends	—			—			—			(719		)	—				(719		)
Non-controlling interest - preferred stock dividends	—			—			—			(5,547		)	—				(5,547		)
Segment core earnings/(losses)	$	12,502		$	1,535		$	1,978		$	(2,630	)	$	2,996		(5)	$	16,381

Total assets at carrying value	$	5,046,716		$	1,640,940		$	2,206,529		$	3,608,296		$	—			$	12,502,481
Total on- and off-balance sheet program assets at principal balance	8,712,157			1,599,226			2,156,676			—			—				12,468,059


(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 "Gains/(losses) on financial derivatives and hedging activities" on the consolidated financial statements.


(3)	Includes reconciling adjustments for the reclassification of yield maintenance income, 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 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 income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Nine Months Ended September 30, 2013
	Farm & Ranch			USDA Guarantees			Rural Utilities			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	88,318		$	39,959		$	44,838		$	16,468		$	(3,365	)		$	186,218
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(602		)	—			—			—			602				—
Interest expense (2)	(39,168		)	(31,457		)	(35,806		)	(4,443		)	9,375				(101,499		)
Net effective spread	48,548			8,502			9,032			12,025			6,612				84,719
Guarantee and commitment fees	17,613			105			3,074			—			(602		)		20,190
Other income (3)	2,051			758			—			1,395			24,355				28,559
Non-interest income	19,664			863			3,074			1,395			23,753				48,749

Release of loan losses	598			—			—			—			—				598

Provision for losses	(1,034		)	—			—			—			—				(1,034		)
Other non-interest expense	(11,756		)	(2,341		)	(4,104		)	(6,251		)	—				(24,452		)
Non-interest expense (4)	(12,790		)	(2,341		)	(4,104		)	(6,251		)	—				(25,486		)
Core earnings before income taxes	56,020			7,024			8,002			7,169			30,365			(5)	108,580
Income tax (expense)/benefit	(19,607		)	(2,459		)	(2,801		)	5,516			(10,627		)		(29,978		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	36,413			4,565			5,201			12,685			19,738			(5)	78,602
Preferred stock dividends	—			—			—			(2,613		)	—				(2,613		)
Non-controlling interest - preferred stock dividends	—			—			—			(16,641		)	—				(16,641		)
Segment core earnings/(losses)	$	36,413		$	4,565		$	5,201		$	(6,569	)	$	19,738		(5)	$	59,348

Total assets at carrying value	$	5,630,252		$	1,674,309		$	2,567,828		$	3,212,618		$	—			$	13,085,007
Total on- and off-balance sheet program assets at principal balance	9,545,398			1,676,793			2,564,075			—			—				13,786,266


(1)	Includes reconciling adjustments for the amortization of premiums and discounts 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 not designated as hedges, which are included in "Gains/(losses) on financial derivatives and hedging activities" on the consolidated financial statements.


(3)	Includes reconciling adjustments for the reclassification of expenses related to interest rate swaps not designated as hedges 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 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 income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.



Core Earnings by Business Segment
For the Nine Months Ended September 30, 2012
	Farm & Ranch			USDA Guarantees			Rural Utilities			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	103,328		$	42,811		$	48,223		$	18,693		$	(4,536	)		$	208,519
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(1,463		)	—			—			—			1,463				—
Interest expense (2)	(53,403		)	(34,425		)	(38,931		)	(4,736		)	22,163				(109,332		)
Net effective spread	48,462			8,386			9,292			13,957			19,090				99,187
Guarantee and commitment fees	16,340			126			3,392			—			(1,463		)		18,395
Other income/(expense) (3)	1,470			525			301			(1,939		)	(23,391		)		(23,034		)
Non-interest income/(loss)	17,810			651			3,693			(1,939		)	(24,854		)		(4,639		)

Release of loan losses	663			—			—			—			—				663

Provision for losses	(1,381		)	—			—			—			—				(1,381		)
Other non-interest expense	(10,650		)	(2,265		)	(4,135		)	(6,368		)	—				(23,418		)
Non-interest expense (4)	(12,031		)	(2,265		)	(4,135		)	(6,368		)	—				(24,799		)
Core earnings before income taxes	54,904			6,772			8,850			5,650			(5,764		)	(5)	70,412
Income tax (expense)/benefit	(19,216		)	(2,371		)	(3,097		)	5,347			2,018				(17,319		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	35,688			4,401			5,753			10,997			(3,746		)	(5)	53,093
Preferred stock dividends	—			—			—			(2,159		)	—				(2,159		)
Non-controlling interest - preferred stock dividends	—			—			—			(16,641		)	—				(16,641		)
Segment core earnings/(losses)	$	35,688		$	4,401		$	5,753		$	(7,803	)	$	(3,746	)	(5)	$	34,293

Total assets at carrying value	$	5,046,716		$	1,640,940		$	2,206,529		$	3,608,296		$	—			$	12,502,481
Total on- and off-balance sheet program assets at principal balance	8,712,157			1,599,226			2,156,676			—			—				12,468,059


(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 "Gains/(losses) on financial derivatives and hedging activities" on the consolidated financial statements.


(3)	Includes reconciling adjustments for the reclassification of yield maintenance income, 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 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 income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.