The following tables present core earnings for Farmer Mac's reportable operating segments and a reconciliation to consolidated net income for the years ended March 31, 2014 and 2013:

Table 9.1



Core Earnings by Business Segment
For the Three Months Ended March 31, 2014
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	18,339		$	12,959		$	7,744		$	17,646		$	5,235		$	(12,205	)		$	49,718
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(531		)	—			—			—			—			531				—
Interest expense (2)	(10,230		)	(9,603		)	(5,543		)	(11,315		)	(999		)	2,964				(34,726		)
Net effective spread	7,578			3,356			2,201			6,331			4,236			(8,710		)		14,992
Guarantee and commitment fees	3,909			26			877			2,237			—			(531		)		6,518
Other income/(expense) (3)	130			28			—			—			(571		)	(6,406		)		(6,819		)
Non-interest income/(loss)	4,039			54			877			2,237			(571		)	(6,937		)		(301		)

Provision for loan losses	(573		)	—			—			—			—			—				(573		)

Provision for losses	(101		)	—			—			—			—			—				(101		)
Other non-interest expense	(3,552		)	(731		)	(777		)	(445		)	(2,341		)	—				(7,846		)
Non-interest expense (4)	(3,653		)	(731		)	(777		)	(445		)	(2,341		)	—				(7,947		)
Core earnings before income taxes	7,391			2,679			2,301			8,123			1,324			(15,647		)	(5)	6,171
Income tax (expense)/benefit	(2,587		)	(938		)	(805		)	(2,843		)	2,839			5,475				1,141
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	4,804			1,741			1,496			5,280			4,163			(10,172		)	(5)	7,312
Preferred stock dividends	—			—			—			—			(952		)	—				(952		)
Non-controlling interest - preferred stock dividends	—			—			—			—			(5,547		)	—				(5,547		)
Segment core earnings/(losses)	$	4,804		$	1,741		$	1,496		$	5,280		$	(2,336	)	$	(10,172	)	(5)	$	813

Total assets at carrying value	$	2,272,643		$	1,691,056		$	1,030,422		$	5,157,887		$	3,402,345		$	—			$	13,554,353
Total on- and off-balance sheet program assets at principal balance	5,293,975			1,686,696			1,027,246			6,100,286						—				14,108,203


(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 "(Losses)/gains 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 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 March 31, 2013
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income (1)	$	15,416		$	13,341		$	8,989		$	19,298		$	5,734		$	(1,280	)		$	61,498
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(180		)	—			—			—			—			180				—
Interest expense (2)	(7,153		)	(8,647		)	(5,806		)	(13,435		)	(1,294		)	3,207				(33,128		)
Net effective spread	8,083			4,694			3,183			5,863			4,440			2,107				28,370
Guarantee and commitment fees	3,671			33			948			2,140			—			(180		)		6,612
Other income/(expense) (3)	595			200			—			—			(562		)	5,600				5,833
Non-interest income/(loss)	4,266			233			948			2,140			(562		)	5,420				12,445

Provision for loan losses	(430		)	—			—			—			—			—				(430		)

Release of losses	(746		)	—			—			—			—			—				(746		)
Other non-interest expense	(3,804		)	(749		)	(802		)	(459		)	(2,521		)	—				(8,335		)
Non-interest expense (4)	(4,550		)	(749		)	(802		)	(459		)	(2,521		)	—				(9,081		)
Core earnings before income taxes	7,369			4,178			3,329			7,544			1,357			7,527			(5)	31,304
Income tax (expense)/benefit	(2,579		)	(1,462		)	(1,165		)	(2,640		)	1,765			(2,635		)		(8,716		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	4,790			2,716			2,164			4,904			3,122			4,892			(5)	22,588
Preferred stock dividends	—			—			—			—			(851		)	—				(851		)
Non-controlling interest - preferred stock dividends	—			—			—			—			(5,547		)	—				(5,547		)
Segment core earnings	$	4,790		$	2,716		$	2,164		$	4,904		$	(3,276	)	$	4,892		(5)	$	16,190

Total assets at carrying value	$	1,762,977		$	1,701,413		$	1,072,494		$	5,093,825		$	3,261,963		$	—			$	12,892,672
Total on- and off-balance sheet program assets at principal balance	4,782,609			1,648,105			1,039,698			5,967,450						—				13,437,862


(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 "(Losses)/gains 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 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.