Loans and Allowance for Losses and Concentrations of Credit Risk

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans and Allowance for Credit Losses and Concentration Risk Disclosure

LOANS AND ALLOWANCE FOR LOSSES

Loans

Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are recorded at the unpaid principal balance, net of unamortized premium or discount and other cost adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled basis. As of September 30, 2016 and December 31, 2015, Farmer Mac had no loans held for sale. The following table displays the composition of the loan balances as of September 30, 2016 and December 31, 2015:

Table 5.1

	As of September 30, 2016									As of December 31, 2015
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	2,298,714		$	1,039,770		$	3,338,484		$	2,249,864		$	708,111		$	2,957,975
Rural Utilities	993,139			—			993,139			1,008,126			—			1,008,126
Total unpaid principal balance(1)	3,291,853			1,039,770			4,331,623			3,257,990			708,111			3,966,101
Unamortized premiums, discounts and other cost basis adjustments	7,765			—			7,765			423			—			423
Total loans	3,299,618			1,039,770			4,339,388			3,258,413			708,111			3,966,524
Allowance for loan losses	(4,049		)	(905		)	(4,954		)	(3,736		)	(744		)	(4,480		)
Total loans, net of allowance	$	3,295,569		$	1,038,865		$	4,334,434		$	3,254,677		$	707,367		$	3,962,044

⁽¹⁾  Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.

Allowance for Losses

Farmer Mac maintains an allowance for losses presented in two components on its consolidated balance sheets: (1) an allowance for loan losses to account for estimated probable losses on loans held, and (2) a reserve for losses to account for estimated probable losses on loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities).  As of September 30, 2016 and December 31, 2015, Farmer Mac's total allowances for losses were $6.9 million and $6.6 million, respectively. See Note 6 for more information about off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs.  

The following is a summary of the changes in the total allowance for losses for the three and nine months months ended September 30, 2016 and 2015:

Table 5.2

	As of September 30, 2016									As of September 30, 2015
	Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses			Allowance for Loan Losses			Reserve for Losses		Total Allowance for Losses
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,893		$	2,191		$	7,084		$	5,939		$	4,637	$	10,576
Provision for/(release of) losses	191			(222		)	(31		)	(1,164		)	861		(303		)
Charge-offs	(130		)	—			(130		)	—			—		—
Ending Balance	$	4,954		$	1,969		$	6,923		$	4,775		$	5,498	$	10,273
For the Nine Months Ended:
Beginning Balance	$	4,480		$	2,083		$	6,563		$	5,864		$	4,263	$	10,127
Provision for/(release of) losses	604			(114		)	490			(978		)	1,235		257
Charge-offs	(130		)	—			(130		)	(111		)	—		(111		)
Ending Balance	$	4,954		$	1,969		$	6,923		$	4,775		$	5,498	$	10,273

During third quarter2016, Farmer Mac recorded provisions to its allowance for loan losses of $0.2 million and releases to its reserve for losses of $0.2 million. The provisions to the allowance for loan losses recorded during third quarter 2016 were attributable to an increase in the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans and downgrades in risk ratings for a small number of loans. The releases to the reserve for losses recorded during the three months ended September 30, 2016 were attributable to the release of a specific reserve on an impaired livestock loan underlying an LTSPC that was required to be removed from the LTSPC pool by the originator during third quarter 2016. Farmer Mac recorded $0.1 million of charge-offs to its allowance for loan losses during third quarter 2016.

During third quarter 2015, Farmer Mac recorded releases to its allowance for loan losses of $1.2 million and provisions to its reserve for losses of $0.9 million. The releases to the allowance for loan losses recorded during third quarter 2015 were primarily attributable to a reduction in the specific allowance for a permanent planting loan based on the updated appraised value of the collateral underlying such loan. The provisions to the reserve for losses recorded during third quarter 2015 were attributable to an increase in the specific allowance on two impaired canola facility loans underlying an LTSPC with one borrower. Farmer Mac recorded no charge-offs to its allowance for loan losses during third quarter 2015.

The following tables present the changes in the total allowance for losses for the three and nine months ended September 30, 2016 and 2015 by commodity type:

Table 5.3

	September 30, 2016
	Crops		Permanent Plantings		Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	3,111	$	1,144	$	1,906		$	447		$	473		$	3		$	7,084
Provision for/(release of) losses	103		198		(354		)	36			(13		)	(1		)	(31		)
Charge-offs	—		—		—			(130		)	—			—			(130		)
Ending Balance	$	3,214	$	1,342	$	1,552		$	353		$	460		$	2		$	6,923
For the Nine Months Ended:
Beginning Balance	$	2,791	$	931	$	1,781		$	408		$	649		$	3		$	6,563
Provision for/(release of) losses	423		411		(229		)	75			(189		)	(1		)	490
Charge-offs	—		—		—			(130		)	—			—			(130		)
Ending Balance	$	3,214	$	1,342	$	1,552		$	353		$	460		$	2		$	6,923

	September 30, 2015
	Crops		Permanent Plantings			Livestock		Part-time Farm			Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	2,653	$	2,221		$	1,760	$	433		$	3,502	$	7	$	10,576
Provision for/(release of) losses	110		(1,151		)	39		(49		)	748		—		(303		)
Charge-offs	—		—			—		—			—		—		—
Ending Balance	$	2,763	$	1,070		$	1,799	$	384		$	4,250	$	7	$	10,273
For the Nine Months Ended
Beginning Balance	$	2,519	$	2,159		$	1,423	$	467		$	3,552	$	7	$	10,127
Provision for/(release of) losses	244		(1,089		)	376		28			698		—		257
Charge-offs	—		—			—		(111		)	—		—		(111		)
Ending Balance	$	2,763	$	1,070		$	1,799	$	384		$	4,250	$	7	$	10,273

The following tables present the unpaid principal balances of loans held and loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and the related total allowance for losses by impairment method and commodity type as of September 30, 2016 and December 31, 2015:

Table 5.4

	As of September 30, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,051,432	$	544,237	$	501,713	$	162,029	$	11,731	$	8,790	$	3,279,932
Off-balance sheet	1,284,363		453,183		748,908		122,768		32,901		4,813		2,646,936
Total	$	3,335,795	$	997,420	$	1,250,621	$	284,797	$	44,632	$	13,603	$	5,926,868
Individually evaluated for impairment:
On-balance sheet	$	26,788	$	17,783	$	6,976	$	7,005	$	—	$	—	$	58,552
Off-balance sheet	9,999		2,895		5,536		878		—		—		19,308
Total	$	36,787	$	20,678	$	12,512	$	7,883	$	—	$	—	$	77,860
Total Farm & Ranch loans:
On-balance sheet	$	2,078,220	$	562,020	$	508,689	$	169,034	$	11,731	$	8,790	$	3,338,484
Off-balance sheet	1,294,362		456,078		754,444		123,646		32,901		4,813		2,666,244
Total	$	3,372,582	$	1,018,098	$	1,263,133	$	292,680	$	44,632	$	13,603	$	6,004,728
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,947	$	579	$	757	$	146	$	34	$	—	$	3,463
Off-balance sheet	498		259		271		52		426		2		1,508
Total	$	2,445	$	838	$	1,028	$	198	$	460	$	2	$	4,971
Individually evaluated for impairment:
On-balance sheet	$	473	$	479	$	410	$	129	$	—	$	—	$	1,491
Off-balance sheet	296		25		114		26		—		—		461
Total	$	769	$	504	$	524	$	155	$	—	$	—	$	1,952
Total Farm & Ranch loans:
On-balance sheet	$	2,420	$	1,058	$	1,167	$	275	$	34	$	—	$	4,954
Off-balance sheet	794		284		385		78		426		2		1,969
Total	$	3,214	$	1,342	$	1,552	$	353	$	460	$	2	$	6,923

	As of December 31, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	1,911,039	$	433,654	$	444,320	$	92,712	$	15,944	$	3,199	$	2,900,868
Off-balance sheet	1,313,872		483,473		777,663		110,378		56,208		7,142		2,748,736
Total	$	3,224,911	$	917,127	$	1,221,983	$	203,090	$	72,152	$	10,341	$	5,649,604
Individually evaluated for impairment:
On-balance sheet	$	12,803	$	21,247	$	5,958	$	7,261	$	9,838	$	—	$	57,107
Off-balance sheet	5,937		3,037		8,840		774		—		—		18,588
Total	$	18,740	$	24,284	$	14,798	$	8,035	$	9,838	$	—	$	75,695
Total Farm & Ranch loans:
On-balance sheet	$	1,923,842	$	454,901	$	450,278	$	99,973	$	25,782	$	3,199	$	2,957,975
Off-balance sheet	1,319,809		486,510		786,503		111,152		56,208		7,142		2,767,324
Total	$	3,243,651	$	941,411	$	1,236,781	$	211,125	$	81,990	$	10,341	$	5,725,299
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,968	$	434	$	702	$	116	$	167	$	—	$	3,387
Off-balance sheet	347		137		292		65		482		3		1,326
Total	$	2,315	$	571	$	994	$	181	$	649	$	3	$	4,713
Individually evaluated for impairment:
On-balance sheet	$	290	$	218	$	384	$	201	$	—	$	—	$	1,093
Off-balance sheet	186		142		403		26		—		—		757
Total	$	476	$	360	$	787	$	227	$	—	$	—	$	1,850
Total Farm & Ranch loans:
On-balance sheet	$	2,258	$	652	$	1,086	$	317	$	167	$	—	$	4,480
Off-balance sheet	533		279		695		91		482		3		2,083
Total	$	2,791	$	931	$	1,781	$	408	$	649	$	3	$	6,563

The following tables present by commodity type the unpaid principal balances, recorded investment, and specific allowance for losses related to impaired loans and the recorded investment in loans on nonaccrual status as of September 30, 2016 and December 31, 2015:

Table 5.5

	As of September 30, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	6,851	$	9,217	$	2,423	$	1,709	$	—	$	—	$	20,200
Unpaid principal balance	6,838		9,204		2,422		1,706		—		—		20,170
With a specific allowance:
Recorded investment(1)	29,985		11,494		9,993		6,187		—		—		57,659
Unpaid principal balance	29,949		11,474		10,090		6,177		—		—		57,690
Associated allowance	769		504		524		155		—		—		1,952
Total:
Recorded investment	36,836		20,711		12,416		7,896		—		—		77,859
Unpaid principal balance	36,787		20,678		12,512		7,883		—		—		77,860
Associated allowance	769		504		524		155		—		—		1,952
Recorded investment of loans on nonaccrual status(2)	$	7,964	$	9,859	$	3,292	$	5,456	$	—	$	—	$	26,571

⁽¹⁾  Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $55.5 million (71 percent) of impaired loans as of September 30, 2016, which resulted in a specific allowance of $1.3 million.

⁽²⁾  Includes $10.6 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

	As of December 31, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	3,772	$	12,340	$	5,644	$	1,851	$	—	$	—	$	23,607
Unpaid principal balance	3,720		12,346		5,645		1,851		—		—		23,562
With a specific allowance:
Recorded investment(1)	15,103		11,939		9,050		6,185		9,838		—		52,115
Unpaid principal balance	15,020		11,938		9,153		6,184		9,838		—		52,133
Associated allowance	476		360		787		227		—		—		1,850
Total:
Recorded investment	18,875		24,279		14,694		8,036		9,838		—		75,722
Unpaid principal balance	18,740		24,284		14,798		8,035		9,838		—		75,695
Associated allowance	476		360		787		227		—		—		1,850
Recorded investment of loans on nonaccrual status(2)	$	5,105	$	16,546	$	4,313	$	5,870	$	9,838	$	—	$	41,672

⁽¹⁾  Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $46.4 million (61 percent) of impaired loans as of December 31, 2015, which resulted in a specific allowance of $1.0 million.

⁽²⁾  Includes $14.7 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

The following table presents by commodity type the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2016 and 2015:

Table 5.6

	September 30, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	33,032	$	22,980	$	12,120	$	8,172	$	—	$	—	$	76,304
Income recognized on impaired loans	46		236		81		74		—		—		437
For the Nine Months Ended:
Average recorded investment in impaired loans	$	28,293	$	25,277	$	13,704	$	8,654	$	4,668	$	—	$	80,596
Income recognized on impaired loans	108		789		229		251		—		—		1,377

	September 30, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	27,133	$	37,911	$	12,534	$	9,989	$	13,500	$	—	$	101,067
Income recognized on impaired loans	33		234		76		76		—		—		419
For the Nine Months Ended:
Average recorded investment in impaired loans	$	23,176	$	39,337	$	13,923	$	11,248	$	6,750	$	—	$	94,434
Income recognized on impaired loans	373		459		273		226		—		—		1,331

For the three and nine months ended September 30, 2016, there were no troubled debt restructurings ("TDRs"). For the three months ended September 30, 2015, there were no TDRs. For the nine months ended September 30, 2015, the recorded investment of loans determined to be TDRs was $1.1 million both before and after restructuring. As of September 30, 2016 and 2015, there were no TDRs identified during the previous 12 months that were in default under the modified terms. The impact of TDRs on Farmer Mac's allowance for loan losses was immaterial for the three and nine months ended September 30, 2016 and 2015.

When particular criteria are met, such as the default of the borrower, Farmer Mac becomes entitled to purchase the defaulted loans underlying Farmer Mac Guaranteed Securities (commonly referred to as "removal-of-account" provisions).  Farmer Mac records all such defaulted loans at their unpaid principal balance during the period in which Farmer Mac becomes entitled to purchase the loans and therefore regains effective control over the transferred loans. In accordance with the terms of all LTSPCs, Farmer Mac acquires loans that are either 90 days or 120 days delinquent (depending on the provisions of the applicable agreement) upon the request of the counterparty. Subsequent to the purchase, these defaulted loans are treated as nonaccrual loans and, therefore, interest is accounted for on the cash basis.  Any decreases in expected cash flows are recognized as impairment.

During the three months ended September 30, 2016, Farmer Mac purchased three defaulted loans having an unpaid principal balance of $1.1 million from pools underlying LTSPCs and Farm & Ranch Guaranteed Securities. During the nine months ended September 30, 2016, Farmer Mac purchased eight defaulted loans having an unpaid principal balance of $2.5 million from pools underlying LTSPCs and Farm & Ranch Guaranteed Securities. During the three months ended September 30, 2015, Farmer Mac purchased one defaulted loan having an unpaid principal balance of $0.3 million from a pool underlying a Farm & Ranch Guaranteed Security. During the nine months ended September 30, 2015, Farmer Mac purchased three defaulted loans having an unpaid principal balance of $2.2 million from pools underlying Farm & Ranch Guaranteed Securities.

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the three and nine months ended September 30, 2016 and 2015 and the outstanding balances and carrying amounts of all such loans as of September 30, 2016 and December 31, 2015:

Table 5.7

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(in thousands)
Unpaid principal balance at acquisition date:
Loans underlying LTSPCs	$	852	$	—	$	2,118	$	—
Loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities)	250		263		398		2,244
Total unpaid principal balance at acquisition date	1,102		263		2,516		2,244
Contractually required payments receivable	1,109		264		2,544		2,334
Impairment recognized subsequent to acquisition	—		1		208		110
Recovery/release of allowance for all outstanding acquired defaulted loans	21		882		31		1,003

	As of
	September 30, 2016		December 31, 2015
	(in thousands)
Outstanding balance	$	15,447	$	36,195
Carrying amount	13,815		34,015

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities (excluding AgVantage securities) and LTSPCs are presented in the table below.  As of September 30, 2016, there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities loan portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities loans.

Table 5.8

	90-Day Delinquencies(1)				Net Credit Losses
	As of				For the Nine Months Ended
	September 30, 2016		December 31, 2015		September 30, 2016		September 30, 2015
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	16,016	$	26,935	$	154	$	160
Total on-balance sheet	$	16,016	$	26,935	$	154	$	160
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	2,361	$	5,201	$	—	$	—
Total off-balance sheet	$	2,361	$	5,201	$	—	$	—
Total	$	18,377	$	32,136	$	154	$	160

⁽¹⁾  Includes loans and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities (excluding AgVantage securities) and LTSPCs that are 90 days or more past due, in foreclosure, or in bankruptcy, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

Of the $16.0 million of on-balance sheet loans reported as 90-day delinquencies as of September 30, 2016, $0.3 million were loans subject to "removal-of-account" provisions. Of the $26.9 million of on-balance sheet loans reported as 90-day delinquencies as of December 31, 2015, none were loans subject to "removal-of-account" provisions.

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities (excluding AgVantage securities) as of September 30, 2016 and December 31, 2015:  

Table 5.9

	As of September 30, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade(1)
On-balance sheet:
Acceptable	$	2,019,856	$	532,007	$	464,122	$	160,120	$	11,731	$	8,790	$	3,196,626
Special mention(2)	31,576		12,229		37,591		1,909		—		—		83,305
Substandard(3)	26,788		17,784		6,976		7,005		—		—		58,553
Total on-balance sheet	$	2,078,220	$	562,020	$	508,689	$	169,034	$	11,731	$	8,790	$	3,338,484
Off-Balance Sheet:
Acceptable	$	1,203,775	$	418,765	$	710,670	$	117,897	$	30,854	$	4,216	$	2,486,177
Special mention(2)	58,946		17,375		25,260		1,117		2,047		502		105,247
Substandard(3)	31,641		19,938		18,514		4,632		—		95		74,820
Total off-balance sheet	$	1,294,362	$	456,078	$	754,444	$	123,646	$	32,901	$	4,813	$	2,666,244
Total Ending Balance:
Acceptable	$	3,223,631	$	950,772	$	1,174,792	$	278,017	$	42,585	$	13,006	$	5,682,803
Special mention(2)	90,522		29,604		62,851		3,026		2,047		502		188,552
Substandard(3)	58,429		37,722		25,490		11,637		—		95		133,373
Total	$	3,372,582	$	1,018,098	$	1,263,133	$	292,680	$	44,632	$	13,603	$	6,004,728
Commodity analysis of past due loans(1)
On-balance sheet	$	7,021	$	5,423	$	1,382	$	2,190	$	—	$	—	$	16,016
Off-balance sheet	1,577		15		306		463		—		—		2,361
90 days or more past due	$	8,598	$	5,438	$	1,688	$	2,653	$	—	$	—	$	18,377

⁽¹⁾  Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans. 

⁽²⁾  Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

⁽³⁾  Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

	As of December 31, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade(1)
On-balance sheet:
Acceptable	$	1,888,762	$	431,038	$	409,003	$	89,541	$	15,944	$	3,199	$	2,837,487
Special mention(2)	22,255		2,616		35,317		2,918		—		—		63,106
Substandard(3)	12,825		21,247		5,958		7,514		9,838		—		57,382
Total on-balance sheet	$	1,923,842	$	454,901	$	450,278	$	99,973	$	25,782	$	3,199	$	2,957,975
Off-Balance Sheet
Acceptable	$	1,279,454	$	473,335	$	753,472	$	102,990	$	56,208	$	6,517	$	2,671,976
Special mention(2)	24,422		7,226		13,121		2,938		—		523		48,230
Substandard(3)	15,933		5,949		19,910		5,224		—		102		47,118
Total off-balance sheet	$	1,319,809	$	486,510	$	786,503	$	111,152	$	56,208	$	7,142	$	2,767,324
Total Ending Balance:
Acceptable	$	3,168,216	$	904,373	$	1,162,475	$	192,531	$	72,152	$	9,716	$	5,509,463
Special mention(2)	46,677		9,842		48,438		5,856		—		523		111,336
Substandard(3)	28,758		27,196		25,868		12,738		9,838		102		104,500
Total	$	3,243,651	$	941,411	$	1,236,781	$	211,125	$	81,990	$	10,341	$	5,725,299
Commodity analysis of past due loans(1)
On-balance sheet	$	4,656	$	7,405	$	2,517	$	2,519	$	9,838	$	—	$	26,935
Off-balance sheet	511		—		4,542		148		—		—		5,201
90 days or more past due	$	5,167	$	7,405	$	7,059	$	2,667	$	9,838	$	—	$	32,136

⁽¹⁾  Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.  

⁽²⁾  Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

⁽³⁾  Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

Concentrations of Credit Risk

The following table sets forth the geographic and commodity/collateral diversification, as well as the range of original loan-to-value ratios, for all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities (excluding AgVantage securities) and LTSPCs as of September 30, 2016 and December 31, 2015:

Table 5.10

	As of
	September 30, 2016		December 31, 2015
	(in thousands)
By commodity/collateral type:
Crops	$	3,372,582	$	3,243,651
Permanent plantings	1,018,098		941,411
Livestock	1,263,133		1,236,781
Part-time farm	292,680		211,125
Ag. Storage and Processing	44,632		81,990
Other	13,603		10,341
Total	$	6,004,728	$	5,725,299
By geographic region(1):
Northwest	$	616,869	$	582,127
Southwest	1,796,800		1,726,927
Mid-North	2,051,860		2,009,654
Mid-South	824,236		769,831
Northeast	225,068		215,883
Southeast	489,895		420,877
Total	$	6,004,728	$	5,725,299
By original loan-to-value ratio:
0.00% to 40.00%	$	1,687,390	$	1,594,818
40.01% to 50.00%	1,379,453		1,279,321
50.01% to 60.00%	1,662,645		1,593,025
60.01% to 70.00%	1,087,226		1,107,710
70.01% to 80.00%	164,868		126,860
80.01% to 90.00%	23,146		23,565
Total	$	6,004,728	$	5,725,299

⁽¹⁾  Geographic regions:  Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

The original loan-to-value ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when available, the updated appraised value at the time of guarantee, purchase, or commitment.  Current loan-to-value ratios may be higher or lower than the original loan-to-value ratios.