Accounting Policies - Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Cash Flow, Supplemental Disclosures

The following table sets forth information regarding certain cash and non-cash transactions for the years ended December 31, 2015, 2014, and 2013:

Table 2.1



	For the Year Ended December 31,
	2015		2014		2013
	(in thousands)
Cash paid during the period for:
Interest	$	108,254	$	171,644	$	114,609
Income taxes	31,000		12,750		23,000
Non-cash activity:
Real estate owned acquired through loan liquidation	—		—		1,443
Loans acquired and securitized as Farmer Mac Guaranteed Securities	336,913		175,754		150,417
Consolidation of Farm & Ranch Guaranteed Securities from off-balance sheet to loans held for investment in consolidated trusts and to debt securities of consolidated trusts held by third parties	336,913		199,906		150,417
Purchases of securities - traded, not yet settled	20,000		70,178		—
Issuance costs on the retirement of Farmer Mac II LLC Preferred Stock	8,147		—		—
Unsettled common stock repurchases	197		—		—
Transfers of loans held for sale to loans held for investment	—		—		673,991
Transfers of available-for-sale Farmer Mac Guaranteed Securities to held-to-maturity	—		1,632,786		—

Earnings Per Common Share

The following schedule reconciles basic and diluted EPS for the years ended December 31, 2015, 2014, and 2013:

Table 2.2



	For the Year Ended December 31,
	2015						2014						2013
	Net Income		Weighted-Average Shares	$ per Share			Net Income		Weighted-Average Shares	$ per Share			Net Income		Weighted-Average Shares	$ per Share
	(in thousands, except per share amounts)
Basic EPS
Net income attributable to common stockholders	$	47,371	10,949	$	4.33		$	38,251	10,920	$	3.50		$	71,833	10,816	$	6.64
Effect of dilutive securities⁽¹⁾
Stock options, SARs and restricted stock	—		360	(0.14		)	—		447	(0.13		)	—		393	(0.23		)
Diluted EPS	$	47,371	11,309	$	4.19		$	38,251	11,367	$	3.37		$	71,833	11,209	$	6.41

⁽¹⁾

For the years ended December 31, 2015, 2014, and 2013, stock options and SARs of 304,132, 109,143, and 33,730, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the years ended December 31, 2015, 2014, and 2013, contingent shares of non-vested restricted stock of 46,303, 36,784, and 26,696, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the years ended December 31, 2015, 2014, and 2013:

Table 2.3



	Available-for-Sale Securities			Held-to-Maturity Securities			Cash Flow Hedges			Total
	(in thousands)
Balance as of January 1, 2013	$	73,969		$	—		$	—		$	73,969
Other comprehensive (loss)/income before reclassifications	(75,465		)	—			63			(75,402		)
Amounts reclassified from AOCI	(14,776		)	—			7			(14,769		)
Net other comprehensive (loss)/income	(90,241		)	—			70			(90,171		)
Balance as of December 31, 2013	$	(16,272	)	$	—		$	70		$	(16,202	)
Other comprehensive income/(loss) before reclassifications	38,927			14,502			(364		)	53,065
Amounts reclassified from AOCI	(12,939		)	(8,529		)	138			(21,330		)
Net other comprehensive income/(loss)	25,988			5,973			(226		)	31,735
Balance as of December 31, 2014	$	9,716		$	5,973		$	(156	)	$	15,533
Other comprehensive (loss)/income before reclassifications	(6,026		)	—			(1,155		)	(7,181		)
Amounts reclassified from AOCI	(13,725		)	(6,449		)	803			(19,371		)
Net other comprehensive (loss)/income	(19,751		)	(6,449		)	(352		)	(26,552		)
Balance as of December 31, 2015	$	(10,035	)	$	(476	)	$	(508	)	$	(11,019	)

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

The following table presents other comprehensive income activity, the impact on net income of amounts reclassified from each component of AOCI, and the related tax impact for the years ended December 31, 2015, 2014, and 2013:

Table 2.4



	For the Year Ended December 31,
	2015									2014									2013
	Before Tax			Provision (Benefit)			After Tax			Before Tax			Provision (Benefit)			After Tax			Before Tax			Provision (Benefit)			After Tax
	(in thousands)
Other comprehensive income/(loss):
Available-for-sale-securities:
Unrealized holding (losses)/gains on available-for-sale-securities	$	(9,270	)	$	(3,244	)	$	(6,026	)	$	59,887		$	20,960		$	38,927		$	(116,099	)	$	(40,634	)	$	(75,465	)
Less reclassification adjustments included in:
Gains/(losses) on financial derivatives and hedging activities⁽¹⁾	(20,125		)	(7,044		)	(13,081		)	(19,213		)	(6,725		)	(12,488		)	(19,381		)	(6,783		)	(12,598		)
Gains on sale of available-for-sale investment securities⁽²⁾	(10		)	(4		)	(6		)	239			84			155			(2,114		)	(740		)	(1,374		)
Other income⁽³⁾	(982		)	(344		)	(638		)	(933		)	(327		)	(606		)	(1,237		)	(433		)	(804		)
Total	$	(30,387	)	$	(10,636	)	$	(19,751	)	$	39,980		$	13,992		$	25,988		$	(138,831	)	$	(48,590	)	$	(90,241	)
Held-to-maturity securities:
Change in fair value	$	—		$	—		$	—		$	22,311		$	7,809		$	14,502		$	—		$	—		$	—
Less reclassification adjustments included in:
Net interest income⁽⁴⁾	(9,922		)	(3,473		)	(6,449		)	(13,121		)	(4,592		)	(8,529		)	—			—			—
Total	$	(9,922	)	$	(3,473	)	$	(6,449	)	$	9,190		$	3,217		$	5,973		$	—		$	—		$	—
Cash flow hedges
Unrealized gains/(losses) on cash flow hedges	$	(1,776	)	$	(621	)	$	(1,155	)	$	(559	)	$	(195	)	$	(364	)	$	96		$	33		$	63
Less reclassification adjustments included in:
Net interest income⁽⁵⁾	1,235			432			803			212			74			138			11			4			7
Total	$	(541	)	$	(189	)	$	(352	)	$	(347	)	$	(121	)	$	(226	)	$	107		$	37		$	70
Other comprehensive (loss)/income	$	(40,850	)	$	(14,298	)	$	(26,552	)	$	48,823		$	17,088		$	31,735		$	(138,724	)	$	(48,553	)	$	(90,171	)


⁽¹⁾	Relates to the amortization of unrealized gains on hedged items prior to the application of fair value hedge accounting.


⁽²⁾	Represents unrealized gains on sales of available-for-sale investment securities.


⁽³⁾	Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.

⁽⁴⁾

Relates to the amortization of unrealized gains or losses prior to the reclassification of these securities from available-for-sale to held-to-maturity. The amortization of unrealized gains or losses reported in AOCI for held-to-maturity securities will be offset by the amortization of the premium or discount created from the transfer into held-to-maturity securities, which occurred at fair value. These unrealized gains or losses will be recorded over the remaining life of the security with no impact on future net income.


⁽⁵⁾	Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.

Schedule of Variable Interest Entities

The following tables present, by line of business, details about the consolidation of VIEs:

Table 2.5



	Consolidation of Variable Interest Entities
	As of December 31, 2015
	Farm & Ranch		USDA Guarantees		Rural Utilities		Institutional Credit		Corporate		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	708,111	$	—	$	—	$	—	$	—	$	708,111
Debt securities of consolidated trusts held by third parties ⁽¹⁾	713,536		—		—		—		—		713,536
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽²⁾	—		31,360		—		31,400		—		62,760
Maximum exposure to loss ⁽³⁾	—		31,553		—		30,000		—		61,553
Investment securities:
Carrying value ⁽⁴⁾	—		—		—		—		917,292		917,292
Maximum exposure to loss ^{(3) (4)}	—		—		—		—		918,121		918,121
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ^{(3) (5)}	514,051		10,272		—		970,000		—		1,494,323


⁽¹⁾	Includes borrower remittances of $5.4 million. The borrower remittances have not been passed through to third party investors as of December 31, 2015.


⁽²⁾	Includes $0.2 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $1.4 million.


⁽³⁾	Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.


⁽⁴⁾	Includes auction-rate certificates, asset-backed securities, and government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities.


⁽⁵⁾	The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.



	Consolidation of Variable Interest Entities
	As of December 31, 2014
	Farm & Ranch		USDA Guarantees		Rural Utilities		Institutional Credit		Corporate		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost ⁽¹⁾	$	421,355	$	—	$	271,123	$	—	$	—	$	692,478
Debt securities of consolidated trusts held by third parties ⁽²⁾	424,214		—		—		—		—		424,214
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽³⁾	—		27,620		—		32,415		—		60,035
Maximum exposure to loss ⁽⁴⁾	—		27,832		—		30,000		—		57,832
Investment securities:
Carrying value ⁽⁵⁾	—		—		—		—		409,657		409,657
Maximum exposure to loss ^{(4) (5)}	—		—		—		—		412,690		412,690
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ^{(4) (6)}	636,086		13,978		—		970,000		—		1,620,064


⁽¹⁾	Includes unamortized premiums related to the Rural Utilities line of business of $3.7 million.


⁽²⁾	Includes borrower remittances of $2.9 million, which have not been passed through to third party investors as of December 31, 2014.


⁽³⁾	Includes $0.2 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $2.4 million.


⁽⁴⁾	Farmer Mac uses unpaid principal balance and the outstanding face amount of investment securities to represent maximum exposure to loss.


⁽⁵⁾	Includes auction-rate certificates, asset-backed securities, and GSE-guaranteed mortgage-backed securities.


⁽⁶⁾	The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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