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Business Segment Reporting - Business Segment Reporting (Tables)
 9 Months Ended
Sep. 30, 2017
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
The following tables present core earnings for Farmer Mac's operating segments and a reconciliation to consolidated net income for the three and nine months ended September 30, 2017 and 2016:

Table 9.1

Core Earnings by Business Segment
For the Three Months Ended September 30, 2017
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
13,609

 
$
5,288

 
$
2,230

 
$
15,431

 
$
3,004

 
$
—

 
$
39,562

Less: reconciling adjustments(1)(2)(3)
(2,131
)
 
(433
)
 
602

 
(1,068
)
 
(305
)
 
3,335

 
—

Net effective spread
11,478

 
4,855

 
2,832

 
14,363

 
2,699

 
3,335

 
—

Guarantee and commitment fees(2)
4,236

 
130

 
476

 
93

 


 
(1,621
)
 
3,314

Other income/(expense)(3)(4)
214

 
9

 
5

 
—

 
233

 
524

 
985

Non-interest income/(loss)
4,450

 
139

 
481

 
93

 
233

 
(1,097
)
 
4,299

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(270
)
 
—

 
—

 
—

 
—

 
—

 
(270
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for reserve for losses
(114
)
 


 


 


 


 
—

 
(114
)
Other non-interest expense
(4,077
)
 
(1,080
)
 
(608
)
 
(1,670
)
 
(3,067
)
 
—

 
(10,502
)
Non-interest expense(5)
(4,191
)
 
(1,080
)
 
(608
)
 
(1,670
)
 
(3,067
)
 
—

 
(10,616
)
Core earnings before income taxes
11,467

 
3,914

 
2,705

 
12,786

 
(135
)
 
2,238

(6) 
32,975

Income tax (expense)/benefit
(4,014
)
 
(1,370
)
 
(947
)
 
(4,475
)
 
396

 
(783
)
 
(11,193
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest
7,453

 
2,544

 
1,758

 
8,311

 
261

 
1,455

(6) 
21,782

Preferred stock dividends
—

 
—

 
—

 
—

 
(3,295
)
 
—

 
(3,295
)
Segment core earnings/(losses)
$
7,453

 
$
2,544

 
$
1,758

 
$
8,311

 
$
(3,034
)
 
$
1,455

(6) 
$
18,487

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,128,778

 
$
2,165,749

 
$
1,073,525

 
$
7,612,572

 
$
2,709,614

 
$
—

 
$
17,690,238

Total on- and off-balance sheet program assets at principal balance
$
6,557,030

 
$
2,298,956

 
$
1,886,445

 
$
7,901,842

 
$
—

 
$
—

 
$
18,644,273

(1) 
Excludes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.
(2) 
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
(3) 
Includes the reclassification of interest expense 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, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for 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. In 2016 and prior periods, fair value adjustments on financial derivatives included variation margin payment amounts because those amounts were considered to be collateral of the related exposure and were accounted for as unrealized gains or losses. However, effective first quarter 2017, CME implemented a change in its rules related to the exchange of variation margin, whereby variation margin payments are considered to be a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 4 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts are now accounted for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change, their economic character will remain the same as they were before the change. This is not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning in 2017, this reconciling adjustment includes realized gains and losses on financial derivatives centrally cleared through CME resulting from the exchange of variation margin. As a result, core earnings subsequent to 2016 will be presented on a consistent basis with core earnings in 2016 and prior periods.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(6) 
Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.

Core Earnings by Business Segment
For the Three Months Ended September 30, 2016
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
12,039

 
$
5,753

 
$
2,963

 
$
12,226

 
$
2,582

 
$
—

 
$
35,563

Less: reconciling adjustments(1)(2)(3)
(1,336
)
 
(564
)
 
(320
)
 
(799
)
 
(345
)
 
3,364

 
—

Net effective spread
10,703

 
5,189

 
2,643

 
11,427

 
2,237

 
3,364

 
—

Guarantee and commitment fees(2)
3,516

 
29

 
529

 
459

 
—

 
(735
)
 
3,798

Other income/(expense)(3)(4)
276

 
95

 
—

 
—

 
(388
)
 
320

 
303

Non-interest income/(loss)
3,792

 
124

 
529

 
459

 
(388
)
 
(415
)
 
4,101

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(191
)
 
—

 
—

 
—

 
—

 
—

 
(191
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for reserve for losses
222

 
—

 
—

 
—

 
—

 
—

 
222

Other non-interest expense
(3,673
)
 
(933
)
 
(553
)
 
(1,253
)
 
(3,113
)
 
—

 
(9,525
)
Non-interest expense(5)
(3,451
)
 
(933
)
 
(553
)
 
(1,253
)
 
(3,113
)
 
—

 
(9,303
)
Core earnings before income taxes
10,853

 
4,380

 
2,619

 
10,633

 
(1,264
)
 
2,949

(6) 
30,170

Income tax (expense)/benefit
(3,799
)
 
(1,533
)
 
(917
)
 
(3,722
)
 
474

 
(1,032
)
 
(10,529
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest
7,054

 
2,847

 
1,702

 
6,911

 
(790
)
 
1,917

(6) 
19,641

Preferred stock dividends
—

 
—

 
—

 
—

 
(3,295
)
 
—

 
(3,295
)
Non-controlling interest
—

 
—

 
—

 
—

 
18

 
—

 
18

Segment core earnings/(losses)
$
7,054

 
$
2,847

 
$
1,702

 
$
6,911

 
$
(4,067
)
 
$
1,917

(6) 
$
16,364

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
3,436,641

 
$
2,062,195

 
$
1,008,903

 
$
6,045,227

 
$
3,447,939

 
$
—

 
$
16,000,905

Total on- and off-balance sheet program assets at principal balance
$
6,004,728

 
$
2,020,834

 
$
1,867,666

 
$
7,354,511

 
$
—

 
$
—

 
$
17,247,739

(1) 
Excludes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.
(2) 
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
(3) 
Includes the reclassification of interest expense 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, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for 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.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(6) 
Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.




Core Earnings by Business Segment
For the Nine Months Ended September 30, 2017
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
39,701

 
$
15,747

 
$
8,181

 
$
44,364

 
$
8,371

 
$
—

 
$
116,364

Less: reconciling adjustments(1)(2)(3)
(6,208
)
 
(1,508
)
 
26

 
(3,025
)
 
(946
)
 
11,661

 
—

Net effective spread
33,493

 
14,239

 
8,207

 
41,339

 
7,425

 
11,661

 
—

Guarantee and commitment fees(2)
12,722

 
303

 
1,455

 
713

 
—

 
(4,563
)
 
10,630

Other income/(expense)(3)(4)
1,402

 
34

 
15

 
—

 
626

 
2,132

 
4,209

Non-interest income/(loss)
14,124

 
337

 
1,470

 
713

 
626

 
(2,431
)
 
14,839

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(1,234
)
 
—

 
—

 
—

 
—

 
—

 
(1,234
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
(60
)
 
—

 
—

 
—

 
—

 
—

 
(60
)
Other non-interest expense
(12,588
)
 
(3,333
)
 
(1,838
)
 
(4,813
)
 
(9,923
)
 
—

 
(32,495
)
Non-interest expense(5)
(12,648
)
 
(3,333
)
 
(1,838
)
 
(4,813
)
 
(9,923
)
 
—

 
(32,555
)
Core earnings before income taxes
33,735

 
11,243

 
7,839

 
37,239

 
(1,872
)
 
9,230

(6) 
97,414

Income tax (expense)/benefit
(11,806
)
 
(3,935
)
 
(2,744
)
 
(13,033
)
 
1,646

 
(3,231
)
 
(33,103
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest
21,929

 
7,308

 
5,095

 
24,206

 
(226
)
 
5,999

(6) 
64,311

Preferred stock dividends
—

 
—

 
—

 
—

 
(9,886
)
 
—

 
(9,886
)
Non-controlling interest
—

 
—

 
—

 
—

 
165

 
—

 
165

Segment core earnings/(losses)
$
21,929

 
$
7,308

 
$
5,095

 
$
24,206

 
$
(9,947
)
 
$
5,999

(6) 
$
54,590

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,128,778

 
$
2,165,749

 
$
1,073,525

 
$
7,612,572

 
$
2,709,614

 
$
—

 
$
17,690,238

Total on- and off-balance sheet program assets at principal balance
$
6,557,030

 
$
2,298,956

 
$
1,886,445

 
$
7,901,842

 
$
—

 
$
—

 
$
18,644,273

(1) 
Excludes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.
(2) 
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
(3) 
Includes the reclassification of interest expense 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, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for 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. In 2016 and prior periods, fair value adjustments on financial derivatives included variation margin payment amounts because those amounts were considered to be collateral of the related exposure and were accounted for as unrealized gains or losses. However, effective first quarter 2017, CME implemented a change in its rules related to the exchange of variation margin, whereby variation margin payments are considered to be a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 4 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts are now accounted for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change, their economic character will remain the same as they were before the change. This is not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning in 2017, this reconciling adjustment includes realized gains and losses on financial derivatives centrally cleared through CME resulting from the exchange of variation margin. As a result, core earnings subsequent to 2016 will be presented on a consistent basis with core earnings in 2016 and prior periods.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(6) 
Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.










Core Earnings by Business Segment
For the Nine Months Ended September 30, 2016
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
34,772

 
$
15,743

 
$
8,682

 
$
36,084

 
$
8,280

 
$
—

 
$
103,561

Less: reconciling adjustments(1)(2)(3)
(4,733
)
 
(1,658
)
 
(939
)
 
(2,160
)
 
(897
)
 
10,387

 
—

Net effective spread
30,039

 
14,085

 
7,743

 
33,924

 
7,383

 
10,387

 
—

Guarantee and commitment fees(2)
11,390

 
50

 
1,197

 
1,375

 
—

 
(2,933
)
 
11,079

Other income/(expense)(3)(4)
451

 
178

 
—

 
—

 
(1,288
)
 
(9,259
)
 
(9,918
)
Non-interest income/(loss)
11,841

 
228

 
1,197

 
1,375

 
(1,288
)
 
(12,192
)
 
1,161

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(604
)
 
—

 
—

 
—

 
—

 
—

 
(604
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for reserve for losses
114

 
—

 
—

 
—

 
—

 
—

 
114

Other non-interest expense
(11,946
)
 
(3,118
)
 
(2,214
)
 
(2,330
)
 
(9,849
)
 
—

 
(29,457
)
Non-interest expense(5)
(11,832
)
 
(3,118
)
 
(2,214
)
 
(2,330
)
 
(9,849
)
 
—

 
(29,343
)
Core earnings before income taxes
29,444

 
11,195

 
6,726

 
32,969

 
(3,754
)
 
(1,805
)
(6) 
74,775

Income tax (expense)/benefit
(10,307
)
 
(3,918
)
 
(2,355
)
 
(11,538
)
 
1,221

 
633

 
(26,264
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest
19,137

 
7,277

 
4,371

 
21,431

 
(2,533
)
 
(1,172
)
(6) 
48,511

Preferred stock dividends
—

 
—

 
—

 
—

 
(9,886
)
 
—

 
(9,886
)
Non-controlling interest
—

 
—

 
—

 
—

 
62

 
—

 
62

Segment core earnings/(losses)
$
19,137

 
$
7,277

 
$
4,371

 
$
21,431

 
$
(12,357
)
 
$
(1,172
)
(6) 
$
38,687

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
3,436,641

 
$
2,062,195

 
$
1,008,903

 
$
6,045,227

 
$
3,447,939

 
$
—

 
$
16,000,905

Total on- and off-balance sheet program assets at principal balance
$
6,004,728

 
$
2,020,834

 
$
1,867,666

 
$
7,354,511

 
$
—

 
$
—

 
$
17,247,739

(1) 
Excludes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.
(2) 
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
(3) 
Includes the reclassification of interest expense 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, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for 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.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(6) 
Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.