Accounting Policies - Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Variable Interest Entities [Table Text Block]

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

Table 1.1



	Consolidation of Variable Interest Entities
	As of September 30, 2016
	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	$	1,039,770	$	—	$	—	$	—	$	—	$	1,039,770
Debt securities of consolidated trusts held by third parties ⁽¹⁾	1,044,559		—		—		—		—		1,044,559
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽²⁾	—		32,824		—		30,666		—		63,490
Maximum exposure to loss ⁽³⁾	—		32,364		—		30,000		—		62,364
Investment securities:
Carrying value ⁽⁴⁾	—		—		—		—		758,066		758,066
Maximum exposure to loss ^{(3) (4)}	—		—		—		—		756,693		756,693
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ^{(3) (5)}	441,417		61,054		—		970,000		—		1,472,471


⁽¹⁾	Includes borrower remittances of $4.8 million. The borrower remittances have not been passed through to third party investors as of September 30, 2016.


⁽²⁾	Includes $0.5 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 $0.7 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, 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, which 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 the outstanding face amount of investment securities to represent maximum exposure to loss.


⁽⁴⁾	Includes auction-rate certificates, asset-backed securities, and 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.

Schedule of Cash Flow, Supplemental Disclosures

The following table sets forth information regarding certain non-cash transactions for the nine months ended September 30, 2016 and 2015:

Table 1.2



	For the Nine Months Ended
	September 30, 2016		September 30, 2015
	(in thousands)
Non-cash activity:
Loans acquired and securitized as Farmer Mac Guaranteed Securities	$	457,369	$	231,242
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	402,841		231,242
Purchases of securities - traded, not yet settled	25,000		15,000
Issuance costs on the retirement of Farmer Mac II LLC Preferred Stock	—		8,147
Unsettled common stock repurchases	—		796

Earnings Per Common Share

The following schedule reconciles basic and diluted EPS for three and nine months ended September 30, 2016 and 2015:

Table 1.3



	For the Three Months Ended
	September 30, 2016						September 30, 2015
	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	$	16,364	10,473	$	1.56		$	8,359	11,028	$	0.76
Effect of dilutive securities⁽¹⁾
Stock options, SARs and restricted stock	—		176	(0.02		)	—		243	(0.02		)
Diluted EPS	$	16,364	10,649	$	1.54		$	8,359	11,271	$	0.74

⁽¹⁾

For the three months ended September 30, 2016 and 2015, stock options and SARs of 54,709 and 476,699, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the three months ended September 30, 2016 and 2015, contingent shares of non-vested restricted stock of 37,284 and 45,034, 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.



	For the Nine Months Ended
	September 30, 2016						September 30, 2015
	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	$	38,687	10,464	$	3.70		$	32,339	10,992	$	2.94
Effect of dilutive securities(1)
Stock options, SARs and restricted stock	—		291	(0.10		)	—		355	(0.09		)
Diluted EPS	$	38,687	10,755	$	3.60		$	32,339	11,347	$	2.85

⁽¹⁾

For the nine months ended September 30, 2016 and 2015, stock options and SARs of 115,875 and 302,598, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the nine months ended September 30, 2016 and 2015, contingent shares of non-vested restricted stock of 37,284 and 40,194, 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 three and nine months ended September 30, 2016 and 2015:

Table 1.4



	As of September 30, 2016												As of September 30, 2015
	Available-for-Sale Securities			Held-to-Maturity Securities			Cash Flow Hedges			Total			Available-for-Sale Securities			Held-to-Maturity Securities			Cash Flow Hedges			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	19,704		$	(1,781	)	$	(5,539	)	$	12,384		$	20,498		$	1,622		$	613		$	22,733
Other comprehensive income/(loss) before reclassifications	2,746			—			527			3,273			(33,392		)	—			(2,347		)	(35,739		)
Amounts reclassified from AOCI	(2,388		)	(47		)	342			(2,093		)	(3,624		)	(1,454		)	270			(4,808		)
Net other comprehensive income/(loss)	358			(47		)	869			1,180			(37,016		)	(1,454		)	(2,077		)	(40,547		)
Ending Balance	$	20,062		$	(1,828	)	$	(4,670	)	$	13,564		$	(16,518	)	$	168		$	(1,464	)	$	(17,814	)

For the Nine Months Ended
Beginning Balance	$	(10,035	)	$	(476	)	$	(508	)	$	(11,019	)	$	9,716		$	5,973		$	(156	)	$	15,533
Other comprehensive income/(loss) before reclassifications	37,446			—			(5,136		)	32,310			(15,985		)	—			(1,814		)	(17,799		)
Amounts reclassified from AOCI	(7,349		)	(1,352		)	974			(7,727		)	(10,249		)	(5,805		)	506			(15,548		)
Net other comprehensive income/(loss)	30,097			(1,352		)	(4,162		)	24,583			(26,234		)	(5,805		)	(1,308		)	(33,347		)
Ending Balance	$	20,062		$	(1,828	)	$	(4,670	)	$	13,564		$	(16,518	)	$	168		$	(1,464	)	$	(17,814	)

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 three and nine months ended September 30, 2016 and 2015:

Table 1.5



	For the Three Months Ended
	September 30, 2016									September 30, 2015
	Before Tax			Provision (Benefit)			After Tax			Before Tax			Provision (Benefit)			After Tax
	(in thousands)
Other comprehensive income/(loss):
Available-for-sale-securities:
Unrealized holding gains/(losses) on available-for-sale-securities	$	4,225		$	1,479		$	2,746		$	(51,373	)	$	(17,981	)	$	(33,392	)
Less reclassification adjustments included in:
(Losses)/gains on financial derivatives and hedging activities⁽¹⁾	(3,652		)	(1,278		)	(2,374		)	(5,038		)	(1,763		)	(3,275		)
Gains/(losses) on sale of available-for-sale investment securities⁽²⁾	—			—			—			(4		)	(2		)	(2		)
Other income⁽³⁾	(21		)	(7		)	(14		)	(534		)	(187		)	(347		)
Total	$	552		$	194		$	358		$	(56,949	)	$	(19,933	)	$	(37,016	)
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income⁽⁴⁾	$	(73	)	$	(26	)	$	(47	)	$	(2,236	)	$	(782	)	$	(1,454	)
Total	$	(73	)	$	(26	)	$	(47	)	$	(2,236	)	$	(782	)	$	(1,454	)
Cash flow hedges
Unrealized gains/(losses) on cash flow hedges	$	810		$	283		$	527		$	(3,611	)	$	(1,264	)	$	(2,347	)
Less reclassification adjustments included in:
Net interest income⁽⁵⁾	526			184			342			416			146			270
Total	$	1,336		$	467		$	869		$	(3,195	)	$	(1,118	)	$	(2,077	)
Other comprehensive income/(loss)	$	1,815		$	635		$	1,180		$	(62,380	)	$	(21,833	)	$	(40,547	)


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


⁽²⁾	Represents unrealized gains and losses 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.



	For the Nine Months Ended
	September 30, 2016									September 30, 2015
	Before Tax			Provision (Benefit)			After Tax			Before Tax			Provision (Benefit)			After Tax
	(in thousands)
Other comprehensive income:
Available-for-sale-securities:
Unrealized holding gains on available-for-sale-securities	$	57,610		$	20,164		$	37,446		$	(24,594	)	$	(8,609	)	$	(15,985	)
Less reclassification adjustments included in:
(Losses)/gains on financial derivatives and hedging activities⁽¹⁾	(11,591		)	(4,056		)	(7,535		)	(14,852		)	(5,198		)	(9,654		)
Gains/(losses) on sale of available-for-sale investment securities⁽²⁾	9			3			6			(10		)	(5		)	(5		)
Other income⁽³⁾	277			97			180			(907		)	(317		)	(590		)
Total	$	46,305		$	16,208		$	30,097		$	(40,363	)	$	(14,129	)	$	(26,234	)
Held-to-maturity securities:
Net interest income⁽⁴⁾	$	(2,081	)	$	(729	)	$	(1,352	)	$	(8,930	)	$	(3,125	)	$	(5,805	)
Total	$	(2,081	)	$	(729	)	$	(1,352	)	$	(8,930	)	$	(3,125	)	$	(5,805	)
Cash flow hedges
Unrealized (losses)/gains on cash flow hedges	$	(7,901	)	$	(2,765	)	$	(5,136	)	$	(2,791	)	$	(977	)	$	(1,814	)
Less reclassification adjustments included in:
Net interest income⁽⁵⁾	1,498			524			974			779			273			506
Total	$	(6,403	)	$	(2,241	)	$	(4,162	)	$	(2,012	)	$	(704	)	$	(1,308	)
Other comprehensive income	$	37,821		$	13,238		$	24,583		$	(51,305	)	$	(17,958	)	$	(33,347	)


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


⁽²⁾	Represents unrealized gains and losses 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⁾


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

- 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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