Accounting Policies - Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017
	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	$	1,329,212	$	—	$	—	$	—	$	—	$	1,329,212
Debt securities of consolidated trusts held by third parties ⁽¹⁾	1,333,417		—		—		—		—		1,333,417
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽²⁾	—		31,003		—		—		—		31,003
Maximum exposure to loss ⁽³⁾	—		30,688		—		—		—		30,688
Investment securities:
Carrying value ⁽⁴⁾	—		—		—		—		783,665		783,665
Maximum exposure to loss ^{(3) (4)}	—		—		—		—		781,755		781,755
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ^{(3) (5)}	354,823		226,802		—		—		—		581,625


⁽¹⁾	Includes borrower remittances of $4.2 million. The borrower remittances had not been passed through to third party investors as of September 30, 2017.


⁽²⁾	Includes $0.3 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business.


⁽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, 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	$	1,132,966	$	—	$	—	$	—	$	—	$	1,132,966
Debt securities of consolidated trusts held by third parties ⁽¹⁾	1,142,704		—		—		—		—		1,142,704
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽²⁾	—		36,042		—		30,347		—		66,389
Maximum exposure to loss ⁽³⁾	—		35,599		—		30,000		—		65,599
Investment securities:
Carrying value ⁽⁴⁾	—		—		—		—		827,874		827,874
Maximum exposure to loss ^{(3) (4)}	—		—		—		—		825,909		825,909
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ^{(3) (5)}	415,441		103,976		—		970,000		—		1,489,417


⁽¹⁾	Includes borrower remittances of $9.7 million, which have not been passed through to third party investors as of December 31, 2016.


⁽²⁾	Includes $0.4 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 $0.3 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 cash and non-cash transactions for the nine months ended September 30, 2017 and 2016:

Table 1.2



	For the Nine Months Ended
	September 30, 2017	September 30, 2016
	(in thousands)
Non-cash activity:
Real estate owned acquired through loan liquidation	5,261	—
Loans acquired and securitized as Farmer Mac Guaranteed Securities	404,246	457,369
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	277,307	402,841
Purchases of securities - traded not yet settled	9,987	25,000

Earnings Per Common Share

The following schedule reconciles basic and diluted EPS for the three and nine months ended September 30, 2017 and 2016:

Table 1.3



	For the Three Months Ended
	September 30, 2017⁽¹⁾						September 30, 2016
	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	$	18,487	10,605	$	1.74		$	16,364	10,473	$	1.56
Effect of dilutive securities⁽²⁾
Stock options, SARs and restricted stock	—		210	(0.03		)	—		176	(0.02		)
Diluted EPS	$	18,487	10,815	$	1.71		$	16,364	10,649	$	1.54


⁽¹⁾	For the effect of the adoption of the new Accounting Standard Update 2016-09, "Improvements to Employee Share-Based Payment Accounting," on Basic and Diluted EPS, see Note 1(d) "New Accounting Standards."

⁽²⁾

For the three months ended September 30, 2017 and 2016, stock options and SARs of 24,657 and 54,709, 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, 2017 and 2016, contingent shares of non-vested restricted stock of 32,892, and 37,284, 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, 2017(1)						September 30, 2016
	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	$	54,590	10,586	$	5.16		$	38,687	10,464	$	3.70
Effect of dilutive securities⁽²⁾
Stock options, SARs and restricted stock	—		208	(0.10		)	—		291	(0.10		)
Diluted EPS	$	54,590	10,794	$	5.06		$	38,687	10,755	$	3.60


⁽¹⁾	For the effect of the adoption of the new Accounting Standard Update 2016-09, "Improvements to Employee Share-Based Payment Accounting," on Basic and Diluted EPS, see Note 1(d) "New Accounting Standards."

⁽²⁾

For the nine months ended September 30, 2017 and 2016, stock options and SARs of 33,440 and 115,875, 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, 2017 and 2016, contingent shares of non-vested restricted stock of 32,892, and 37,284, 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, 2017 and 2016:

Table 1.4



	As of September 30, 2017												As of September 30, 2016
	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	$	(1,276	)	$	42,104		$	1,600		$	42,428		$	19,704		$	(1,781	)	$	(5,539	)	$	12,384
Other Comprehensive Income Before Reclassifications	2,298			—			(97		)	2,201			2,746			—			527			3,273
Amounts reclassified from AOCI	(2,875		)	(1,221		)	262			(3,834		)	(2,388		)	(47		)	342			(2,093		)
Net Comprehensive (Loss)/Income	(577		)	(1,221		)	165			(1,633		)	358			(47		)	869			1,180
Ending Balance	$	(1,853	)	$	40,883		$	1,765		$	40,795		$	20,062		$	(1,828	)	$	(4,670	)	$	13,564

For the Nine Months Ended:
Beginning Balance	$	(14,387	)	$	45,752		$	2,393		$	33,758		$	(10,035	)	$	(476	)	$	(508	)	$	(11,019	)
Other Comprehensive Income Before Reclassifications	20,711			—			(1,522		)	19,189			37,446			—			(5,136		)	32,310
Amounts reclassified from AOCI	(8,177		)	(4,869		)	894			(12,152		)	(7,349		)	(1,352		)	974			(7,727		)
Net Comprehensive Income/(Loss)	12,534			(4,869		)	(628		)	7,037			30,097			(1,352		)	(4,162		)	24,583
Ending Balance	$	(1,853	)	$	40,883		$	1,765		$	40,795		$	20,062		$	(1,828	)	$	(4,670	)	$	13,564

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, 2017 and 2016:

Table 1.5



	For the Three Months Ended
	September 30, 2017									September 30, 2016
	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	$	3,536		$	1,238		$	2,298		$	4,225		$	1,479		$	2,746
Less reclassification adjustments included in:
Gains/(losses) on financial derivatives and hedging activities⁽¹⁾	(4,326		)	(1,514		)	(2,812		)	(3,652		)	(1,278		)	(2,374		)
Gains/(losses) on sale of available-for-sale investment securities⁽²⁾	(89		)	(31		)	(58		)	—			—			—
Other income⁽²⁾	(7		)	(2		)	(5		)	(21		)	(7		)	(14		)
Total	$	(886	)	$	(309	)	$	(577	)	$	552		$	194		$	358
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income⁽³⁾	$	(1,879	)	$	(658	)	$	(1,221	)	$	(73	)	$	(26	)	$	(47	)
Total	$	(1,879	)	$	(658	)	$	(1,221	)	$	(73	)	$	(26	)	$	(47	)
Cash flow hedges
Unrealized (losses)/gains on cash flow hedges	$	(150	)	$	(53	)	$	(97	)	$	810		$	283		$	527
Less reclassification adjustments included in:
Net interest income⁽⁴⁾	403			141			262			526			184			342
Total	$	253		$	88		$	165		$	1,336		$	467		$	869
Other comprehensive (loss)/income	$	(2,512	)	$	(879	)	$	(1,633	)	$	1,815		$	635		$	1,180


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


⁽²⁾	Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.

⁽³⁾

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.


⁽⁴⁾	Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.



	For the Nine Months Ended
	September 30, 2017									September 30, 2016
	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	$	31,863		$	11,152		$	20,711		$	57,610		$	20,164		$	37,446
Less reclassification adjustments included in:
Gains/(losses) on financial derivatives and hedging activities⁽¹⁾	(12,470		)	(4,365		)	(8,105		)	(11,591		)	(4,056		)	(7,535		)
Gains/(losses) on sale of available-for-sale investment securities⁽²⁾	(89		)	(31		)	(58		)	9			3			6
Other income⁽³⁾	(21		)	(7		)	(14		)	277			97			180
Total	$	19,283		$	6,749		$	12,534		$	46,305		$	16,208		$	30,097
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income⁽⁴⁾	$	(7,491	)	$	(2,622	)	$	(4,869	)	$	(2,081	)	$	(729	)	$	(1,352	)
Total	$	(7,491	)	$	(2,622	)	$	(4,869	)	$	(2,081	)	$	(729	)	$	(1,352	)
Cash flow hedges
Unrealized losses on cash flow hedges	(2,342		)	(820		)	$	(1,522	)	$	(7,901	)	$	(2,765	)	$	(5,136	)
Less reclassification adjustments included in:
Net interest income⁽⁵⁾	1,376			482			894			1,498			524			974
Total	$	(966	)	$	(338	)	$	(628	)	$	(6,403	)	$	(2,241	)	$	(4,162	)
Other comprehensive income	$	10,826		$	3,789		$	7,037		$	37,821		$	13,238		$	24,583


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


⁽²⁾	Represents unrealized 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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