The following tables present core earnings for Farmer Mac's reportable operating segments and a reconciliation to consolidated net income for the years ended December 31, 2015, 2014, and 2013:

Table 14.1



Core Earnings by Business Segment
For the Year Ended December 31, 2015
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income⁽¹⁾	$	90,578		$	59,902		$	26,819		$	76,487		$	13,338		$	(2,301	)		$	264,823
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(3,078		)	—			—			—			—			3,078				—
Interest expense⁽²⁾	(48,696		)	(42,063		)	(15,425		)	(33,032		)	(5,450		)	5,650				(139,016		)
Net effective spread	38,804			17,839			11,394			43,455			7,888			6,427				125,807
Guarantee and commitment fees	15,076			17			397			1,665			—			(3,078		)		14,077
Other income/(expense)⁽³⁾	1,040			100			25			—			(1,972		)	6,871				6,064
Non-interest income/(loss)	16,116			117			422			1,665			(1,972		)	3,793				20,141

Provision for loan losses	(2,388		)	—			—			—			—			—				(2,388		)

Release of Losses	2,180			—			—			—			—			—				2,180
Other non-interest expense	(16,876		)	(3,449		)	(3,364		)	(2,109		)	(11,864		)	—				(37,662		)
Non-interest expense⁽⁴⁾	(14,696		)	(3,449		)	(3,364		)	(2,109		)	(11,864		)	—				(35,482		)
Core earnings before income taxes	37,836			14,507			8,452			43,011			(5,948		)	10,220			⁽⁵⁾	108,078
Income tax (expense)/benefit	(13,188		)	(5,176		)	(2,947		)	(15,054		)	3,803			(1,677		)		(34,239		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest	24,648			9,331			5,505			27,957			(2,145		)	8,543			⁽⁵⁾	73,839
Preferred stock dividends	—			—			—			—			(13,182		)	—				(13,182		)
Non-controlling interest	—			—			—			—			(5,139		)	—				(5,139		)
Loss on retirement of preferred stock	—			—			—			—			—			(8,147		)		(8,147		)
Segment core earnings/(losses)	$	24,648		$	9,331		$	5,505		$	27,957		$	(20,466	)	$	396		⁽⁵⁾	$	47,371

Total assets at carrying value	$	3,041,386		$	1,977,609		$	1,019,279		$	5,420,195		$	4,081,885		$	—			$	15,540,354
Total on- and off-balance sheet program assets at principal balance	5,725,299			1,918,277			1,530,990			6,724,254						—				15,898,820


⁽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 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; 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 Year Ended December 31, 2014
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income⁽¹⁾	$	78,934		$	54,955		$	27,879		$	77,512		$	17,637		$	(15,850	)		$	241,067
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(2,086		)	—			—			—			—			2,086				—
Interest expense⁽²⁾	(45,025		)	(36,689		)	(17,138		)	(38,456		)	(3,830		)	(29,582		)		(170,720		)
Net effective spread	31,823			18,266			10,741			39,056			13,807			(43,346		)		70,347
Guarantee and commitment fees	15,107			134			—			1,539			—			(2,086		)		14,694
Other income/(expense)⁽³⁾	762			63			9			—			(4,913		)	22,675				18,596
Non-interest income/(loss)	15,869			197			9			1,539			(4,913		)	20,589				33,290

Release of allowance for loan losses	961			—			—			—			—			—				961

Release of reserve for losses	2,205			—			—			—			—			—				2,205
Other non-interest expense	(15,180		)	(2,955		)	(3,130		)	(1,891		)	(10,541		)	—				(33,697		)
Non-interest expense⁽⁴⁾	(12,975		)	(2,955		)	(3,130		)	(1,891		)	(10,541		)	—				(31,492		)
Core earnings before income taxes	35,678			15,508			7,620			38,704			(1,647		)	(22,757		)	⁽⁵⁾	73,106
Income tax (expense)/benefit	(12,486		)	(5,430		)	(2,668		)	(13,548		)	23,347			7,961				(2,824		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	23,192			10,078			4,952			25,156			21,700			(14,796		)	⁽⁵⁾	70,282
Preferred stock dividends	—			—			—			—			(9,839		)	—				(9,839		)
Non-controlling interest - preferred stock dividends	—			—			—			—			(22,192		)	—				(22,192		)
Segment core earnings/(losses)	$	23,192		$	10,078		$	4,952		$	25,156		$	(10,331	)	$	(14,796	)	⁽⁵⁾	$	38,251

Total assets at carrying value	$	2,611,401		$	1,825,210		$	995,082		$	5,459,296		$	3,396,832		$	—			$	14,287,821
Total on- and off-balance sheet program assets at principal balance	5,417,174			1,798,034			985,609			6,396,941						—				14,597,758


⁽¹⁾	Includes reconciling adjustments for the amortization of premiums and discounts on assets consolidated at fair value to reflect core earnings amounts and interest income related to securities purchased under agreements to resell.


⁽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. Includes reconciling adjustments for interest expense related to securities sold, not yet purchased.

⁽³⁾

Includes interest income and interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased, respectively; 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; and 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; 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 Year Ended December 31, 2013
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income⁽¹⁾	$	67,429		$	53,384		$	35,194		$	89,199		$	21,940		$	(20,417	)		$	246,729
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(964		)	—			—			—			—			964				—
Interest expense⁽²⁾	(32,062		)	(35,656		)	(23,601		)	(53,613		)	(4,668		)	12,324				(137,276		)
Net effective spread	34,403			17,728			11,593			35,586			17,272			(7,129		)		109,453
Guarantee and commitment fees	14,944			132			—			1,515			—			(964		)		15,627
Other income/(expense)⁽³⁾	2,244			791			—			—			1,622			34,156				38,813
Non-interest income/(loss)	17,188			923			—			1,515			1,622			33,192				54,440

Release of allowance for loan losses	481			—			—			—			—			—				481

Provision for losses	(929		)	—			—			—			—			—				(929		)
Other non-interest expense	(14,649		)	(2,904		)	(3,100		)	(1,774		)	(9,751		)	—				(32,178		)
Non-interest expense⁽⁴⁾	(15,578		)	(2,904		)	(3,100		)	(1,774		)	(9,751		)	—				(33,107		)
Core earnings before income taxes	36,494			15,747			8,493			35,327			9,143			26,063			⁽⁵⁾	131,267
Income tax (expense)/benefit	(12,773		)	(5,511		)	(2,973		)	(12,364		)	8,991			(9,122		)		(33,752		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends	23,721			10,236			5,520			22,963			18,134			16,941			⁽⁵⁾	97,515
Preferred stock dividends	—			—			—			—			(3,495		)	—				(3,495		)
Non-controlling interest - preferred stock dividends	—			—			—			—			(22,187		)	—				(22,187		)
Segment core earnings/(losses)	$	23,721		$	10,236		$	5,520		$	22,963		$	(7,548	)	$	16,941		⁽⁵⁾	$	71,833

Total assets at carrying value	$	2,190,224		$	1,656,688		$	1,076,298		$	5,121,666		$	3,316,904		$	—			$	13,361,780
Total on- and off-balance sheet program assets at principal balance	5,163,080			1,687,117			1,052,251			6,047,864						—				13,950,312


⁽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 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; and segment core earnings to corresponding income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.