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, 2018 and December 31, 2017, Farmer Mac had no loans held for sale. The following table displays the composition of the loan balances as of September 30, 2018 and December 31, 2017:

Table 5.1



	As of September 30, 2018									As of December 31, 2017
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	2,937,484		$	1,483,135		$	4,420,619		$	2,798,906		$	1,399,827		$	4,198,733
Rural Utilities	962,702			—			962,702			1,076,291			—			1,076,291
Total unpaid principal balance⁽¹⁾	3,900,186			1,483,135			5,383,321			3,875,197			1,399,827			5,275,024
Unamortized premiums, discounts, and other cost basis adjustments	(15,550		)	—			(15,550		)	(1,442		)	—			(1,442		)
Total loans	3,884,636			1,483,135			5,367,771			3,873,755			1,399,827			5,273,582
Allowance for loan losses	(5,378		)	(1,493		)	(6,871		)	(5,493		)	(1,303		)	(6,796		)
Total loans, net of allowance	$	3,879,258		$	1,481,642		$	5,360,900		$	3,868,262		$	1,398,524		$	5,266,786


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

Allowance for Losses

Farm & Ranch

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). Farmer Mac's total allowance for losses was $9.0 million as of September 30, 2018 and $8.9 million as of December 31, 2017. 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 ended September 30, 2018 and 2017:

Table 5.2



	As of September 30, 2018									As of September 30, 2017
	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	$	6,789		$	2,249		$	9,038		$	6,138		$	1,966	$	8,104
Provision for/(release of) losses	99			(102		)	(3		)	270			114		384
Charge-offs	(17		)	—			(17		)	—			—		—
Ending Balance	$	6,871		$	2,147		$	9,018		$	6,408		$	2,080	$	8,488

For the Nine Months Ended:
Beginning Balance	6,796			2,070			8,866			5,415			2,020		7,435
Provision for losses	92			77			169			1,234			60		1,294
Charge-offs	$	(17	)	$	—		$	(17	)	$	(241	)	$	—	$	(241	)
Ending Balance	$	6,871		$	2,147		$	9,018		$	6,408		$	2,080	$	8,488

During the three and nine months ended September 30, 2018, Farmer Mac recorded a provision to its allowance for loan losses of $0.1 million and $0.1 million respectively. During those same periods, Farmer Mac also recorded a release of reserve for losses of $0.1 million and a provision to the reserve for losses of $0.1 million, respectively. The provisions for the allowance for loan losses recorded during the three and nine months ended September 30, 2018 were attributable to an increase in the balance of on-balance sheet Farm & Ranch loans, which was partially offset by a slight improvement in overall portfolio credit quality. The release of the reserve for losses recorded during third quarter 2018 was attributable to a decrease in the balance of loans underlying LTSPCs since second quarter 2018. The provision for the reserve for losses recorded during the nine months ended September 30, 2018 was attributable to an increase in the balance of loans underlying LTSPCs since December 31, 2017. The charge-off that Farmer Mac recorded during the three and nine months ended September 30, 2018 related to one loan that was foreclosed and transitioned to REO during third quarter 2018.

During third quarter 2017, Farmer Mac recorded net provisions to its allowance for loan losses and reserve for losses of $0.3 million and $0.1 million, respectively. The net provisions to the allowance for loan losses recorded during third quarter 2017 were primarily attributable to (1) an increase in the specific allowance for certain impaired on-balance sheet crop and permanent planting loans resulting from both an increase in the outstanding loan balance of such loans and downgrades in risk ratings on certain of those loans, and (2) an increase in the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans. The net provision to the reserve for losses recorded during third quarter 2017 was primarily attributable to an increase in the general reserve due to downgrades in risk ratings on certain unimpaired Agricultural Storage and Processing loans underlying LTSPCs. Farmer Mac recorded no charge-offs to its allowance for loan losses during third quarter 2017.

The following tables present the changes in the total allowance for losses for the three and nine months ended September 30, 2018 and 2017 by commodity type:

Table 5.3



	September 30, 2018
	Crops			Permanent Plantings			Livestock		Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,125		$	2,368		$	1,322	$	448		$	720		$	55		$	9,038
Provision for/(release of) losses	(99		)	40			148		50			(97		)	(45		)	(3		)
Charge-offs	—			—			—		(17		)	—			—			(17		)
Ending Balance	$	4,026		$	2,408		$	1,470	$	481		$	623		$	10		$	9,018

For the Nine Months Ended:
Beginning Balance	$	4,081		$	2,469		$	1,211	$	481		$	606		$	18		$	8,866
Provision for/(release of) losses	(55		)	(61		)	259		17			17			(8		)	169
Charge-offs	—			—			—		(17		)	—			—			(17		)
Ending Balance	$	4,026		$	2,408		$	1,470	$	481		$	623		$	10		$	9,018



	September 30, 2017
	Crops			Permanent Plantings		Livestock			Part-time Farm			Ag. Storage and Processing		Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	3,735		$	2,164	$	1,234		$	397		$	558	$	16		$	8,104
Provision for/(release of) losses	115			162		35			4			72		(4		)	384
Ending Balance	$	3,850		$	2,326	$	1,269		$	401		$	630	$	12		$	8,488

For the Nine Months Ended:
Beginning Balance	$	3,365		$	1,723	$	1,375		$	405		$	533	$	34		$	7,435
Provision for/(release of) losses	713			603		(93		)	(4		)	97		(22		)	1,294
Charge-offs	(228		)	—		(13		)	—			—		—			(241		)
Ending Balance	$	3,850		$	2,326	$	1,269		$	401		$	630	$	12		$	8,488

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, 2018 and December 31, 2017:

Table 5.4



	As of September 30, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,428,763	$	860,870	$	678,456	$	309,235	$	10,824	$	4,542	$	4,292,690
Off-balance sheet	1,242,091		503,784		648,648		166,570		68,651		3,509		2,633,253
Total	$	3,670,854	$	1,364,654	$	1,327,104	$	475,805	$	79,475	$	8,051	$	6,925,943
Individually evaluated for impairment:
On-balance sheet	$	63,726	$	33,948	$	22,729	$	7,526	$	—	$	—	$	127,929
Off-balance sheet	11,497		2,374		3,308		896		—		71		18,146
Total	$	75,223	$	36,322	$	26,037	$	8,422	$	—	$	71	$	146,075
Total Farm & Ranch loans:
On-balance sheet	$	2,492,489	$	894,818	$	701,185	$	316,761	$	10,824	$	4,542	$	4,420,619
Off-balance sheet	1,253,588		506,158		651,956		167,466		68,651		3,580		2,651,399
Total	$	3,746,077	$	1,400,976	$	1,353,141	$	484,227	$	79,475	$	8,122	$	7,072,018
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	2,047	$	955	$	765	$	300	$	9	$	4	$	4,080
Off-balance sheet	612		191		211		49		614		5		1,682
Total	$	2,659	$	1,146	$	976	$	349	$	623	$	9	$	5,762
Individually evaluated for impairment:
On-balance sheet	$	1,112	$	1,207	$	361	$	111	$	—	$	—	$	2,791
Off-balance sheet	255		55		133		21		—		1		465
Total	$	1,367	$	1,262	$	494	$	132	$	—	$	1	$	3,256
Total Farm & Ranch loans:
On-balance sheet	$	3,159	$	2,162	$	1,126	$	411	$	9	$	4	$	6,871
Off-balance sheet	867		246		344		70		614		6		2,147
Total	$	4,026	$	2,408	$	1,470	$	481	$	623	$	10	$	9,018



	As of December 31, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,344,821	$	794,478	$	635,768	$	269,337	$	13,023	$	9,030	$	4,066,457
Off-balance sheet	1,236,392		532,666		678,642		155,627		45,738		4,981		2,654,046
Total	$	3,581,213	$	1,327,144	$	1,314,410	$	424,964	$	58,761	$	14,011	$	6,720,503
Individually evaluated for impairment:
On-balance sheet	$	67,828	$	38,180	$	17,766	$	7,858	$	—	$	644	$	132,276
Off-balance sheet	8,904		2,239		2,782		806		—		76		14,807
Total	$	76,732	$	40,419	$	20,548	$	8,664	$	—	$	720	$	147,083
Total Farm & Ranch loans:
On-balance sheet	$	2,412,649	$	832,658	$	653,534	$	277,195	$	13,023	$	9,674	$	4,198,733
Off-balance sheet	1,245,296		534,905		681,424		156,433		45,738		5,057		2,668,853
Total	$	3,657,945	$	1,367,563	$	1,334,958	$	433,628	$	58,761	$	14,731	$	6,867,586
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	2,104	$	1,101	$	738	$	287	$	44	$	11	$	4,285
Off-balance sheet	546		305		231		48		562		5		1,697
Total	$	2,650	$	1,406	$	969	$	335	$	606	$	16	$	5,982
Individually evaluated for impairment:
On-balance sheet	$	1,207	$	1,006	$	172	$	126	$	—	$	—	$	2,511
Off-balance sheet	224		57		70		20		—		2		373
Total	$	1,431	$	1,063	$	242	$	146	$	—	$	2	$	2,884
Total Farm & Ranch loans:
On-balance sheet	$	3,311	$	2,107	$	910	$	413	$	44	$	11	$	6,796
Off-balance sheet	770		362		301		68		562		7		2,070
Total	$	4,081	$	2,469	$	1,211	$	481	$	606	$	18	$	8,866

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, 2018 and December 31, 2017:

Table 5.5



	As of September 30, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	14,815	$	848	$	10,431	$	2,036	$	—	$	—	$	28,130
Unpaid principal balance	14,851		851		10,456		2,041		—		—		28,199
With a specific allowance:
Recorded investment⁽¹⁾	60,250		35,389		15,550		6,368		—		71		117,628
Unpaid principal balance	60,372		35,471		15,581		6,381		—		71		117,876
Associated allowance	1,367		1,262		494		132		—		1		3,256
Total:
Recorded investment	75,065		36,237		25,981		8,404		—		71		145,758
Unpaid principal balance	75,223		36,322		26,037		8,422		—		71		146,075
Associated allowance	1,367		1,262		494		132		—		1		3,256

Recorded investment of loans on nonaccrual status⁽²⁾	$	28,098	$	23,090	$	7,859	$	4,291	$	—	$	—	$	63,338


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $115.2 million (79 percent) of impaired loans as of September 30, 2018, which resulted in a specific allowance of $2.7 million.


⁽²⁾	Includes $30.6 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, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	14,417	$	3,272	$	11,171	$	1,953	$	—	$	644	$	31,457
Unpaid principal balance	14,418		3,273		11,172		1,953		—		644		31,460
With a specific allowance:
Recorded investment⁽¹⁾	62,309		37,143		9,376		6,710		—		76		115,614
Unpaid principal balance	62,314		37,146		9,376		6,711		—		76		115,623
Associated allowance	1,431		1,063		242		146		—		2		2,884
Total:
Recorded investment	76,726		40,415		20,547		8,663		—		720		147,071
Unpaid principal balance	76,732		40,419		20,548		8,664		—		720		147,083
Associated allowance	1,431		1,063		242		146		—		2		2,884

Recorded investment of loans on nonaccrual status⁽²⁾	$	27,630	$	25,701	$	5,333	$	4,929	$	—	$	—	$	63,593


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $113.2 million (77 percent) of impaired loans as of December 31, 2017, which resulted in a specific allowance of $2.7 million.


⁽²⁾	Includes $15.7 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, 2018 and 2017:

Table 5.6



	September 30, 2018
	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	$	75,920	$	44,818	$	24,443	$	8,898	$	—	$	72	$	154,151
Income recognized on impaired loans	223		933		122		56		—		—		1,334

For the Nine Months Ended:
Average recorded investment in impaired loans	$	73,968	$	44,122	$	23,358	$	8,874	$	—	$	394	$	150,716
Income recognized on impaired loans	942		1,597		261		173		—		—		2,973



	September 30, 2017
	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	$	72,180	$	38,396	$	15,582	$	7,944	$	—	$	401	$	134,503
Income recognized on impaired loans	101		244		13		61		—		—		419

For the Nine Months Ended:
Average recorded investment in impaired loans	$	65,244	$	35,101	$	14,620	$	8,096	$	—	$	201	$	123,262
Income recognized on impaired loans	563		464		212		235		—		—		1,474

For the three and nine months ended September 30, 2018, there were two Farm & Ranch loans to the same borrower that were restructured in a troubled debt restructuring ("TDR"). The recorded investment of these TDR loans was $10.9 million before and after the restructuring. As a result of the restructuring, $0.8 million of unpaid interest, late fees and other fees were capitalized. For the three months ended September 30, 2017, there were no TDRs. For the nine months ended September 30, 2017, the recorded investment of loans determined to be TDRs was $0.2 million both before and after restructuring. As of September 30, 2018 and 2017, 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, 2018 and 2017.

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.

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the three and nine months ended September 30, 2018 and 2017 and the outstanding balances and carrying amounts of all such loans as of September 30, 2018 and December 31, 2017:

Table 5.7



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
	($ in thousands)
Unpaid principal balance at acquisition date:
Loans underlying LTSPCs	$	1,483	$	—	$	1,483	$	311
Loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities)	5,552		3,043		6,273		3,147
Total unpaid principal balance at acquisition date	7,035		3,043		7,756		3,458
Contractually required payments receivable	7,115		3,073		7,845		3,490
Impairment recognized subsequent to acquisition	26		—		26		—
Release of allowance for all outstanding acquired defaulted loans	—		29		—		171

Number of defaulted loans purchased	7		6		11		10



	As of
	September 30, 2018		December 31, 2017
	(in thousands)
Outstanding balance	$	22,242	$	18,866
Carrying amount	21,481		17,691

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet securities representing interests in pools of eligible Farm & Ranch loans ("Farm & Ranch Guaranteed Securities") and LTSPCs are presented in the table below. As of September 30, 2018, 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 (Recoveries)/Losses
	As of				For the Nine Months Ended
	September 30, 2018		December 31, 2017		September 30, 2018		September 30, 2017
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	32,756	$	47,881	$	40	$	(520	)
Total on-balance sheet	$	32,756	$	47,881	$	40	$	(520	)
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	4,789	$	563	$	—	$	—
Total off-balance sheet	$	4,789	$	563	$	—	$	—
Total	$	37,545	$	48,444	$	40	$	(520	)


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

Of the $32.8 million of on-balance sheet loans reported as 90-day delinquencies as of September 30, 2018, $0.2 million were loans subject to "removal-of-account" provisions. Of the $47.9 million of on-balance sheet loans reported as 90-day delinquencies as of December 31, 2017, $0.3 million 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 as of September 30, 2018 and December 31, 2017:

Table 5.9



	As of September 30, 2018
	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	$	2,355,938	$	847,666	$	652,715	$	302,243	$	10,824	$	4,542	$	4,173,928
Special mention⁽²⁾	72,974		13,204		25,729		6,992		—		—		118,899
Substandard⁽³⁾	63,577		33,948		22,741		7,526		—		—		127,792
Total on-balance sheet	$	2,492,489	$	894,818	$	701,185	$	316,761	$	10,824	$	4,542	$	4,420,619
Off-Balance Sheet:
Acceptable	$	1,131,413	$	455,135	$	600,128	$	161,671	$	67,287	$	2,870	$	2,418,504
Special mention⁽²⁾	70,511		36,062		37,305		786		—		—		144,664
Substandard⁽³⁾	51,664		14,961		14,523		5,009		1,364		710		88,231
Total off-balance sheet	$	1,253,588	$	506,158	$	651,956	$	167,466	$	68,651	$	3,580	$	2,651,399
Total Ending Balance:
Acceptable	$	3,487,351	$	1,302,801	$	1,252,843	$	463,914	$	78,111	$	7,412	$	6,592,432
Special mention⁽²⁾	143,485		49,266		63,034		7,778		—		—		263,563
Substandard⁽³⁾	115,241		48,909		37,264		12,535		1,364		710		216,023
Total	$	3,746,077	$	1,400,976	$	1,353,141	$	484,227	$	79,475	$	8,122	$	7,072,018

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	15,843	$	7,822	$	5,274	$	3,817	$	—	$	—	$	32,756
Off-balance sheet	1,146		1,518		1,489		636		—		—		4,789
90 days or more past due	$	16,989	$	9,340	$	6,763	$	4,453	$	—	$	—	$	37,545


⁽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, 2017
	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	$	2,274,912	$	771,600	$	617,527	$	260,854	$	13,023	$	9,030	$	3,946,946
Special mention⁽²⁾	70,063		22,878		18,405		8,483		—		—		119,829
Substandard⁽³⁾	67,674		38,180		17,602		7,858		—		644		131,958
Total on-balance sheet	$	2,412,649	$	832,658	$	653,534	$	277,195	$	13,023	$	9,674	$	4,198,733
Off-Balance Sheet
Acceptable	$	1,132,196	$	478,573	$	634,633	$	150,906	$	42,723	$	4,294	$	2,443,325
Special mention⁽²⁾	76,778		26,134		31,451		1,647		—		169		136,179
Substandard⁽³⁾	36,322		30,198		15,340		3,880		3,015		594		89,349
Total off-balance sheet	$	1,245,296	$	534,905	$	681,424	$	156,433	$	45,738	$	5,057	$	2,668,853
Total Ending Balance:
Acceptable	$	3,407,108	$	1,250,173	$	1,252,160	$	411,760	$	55,746	$	13,324	$	6,390,271
Special mention⁽²⁾	146,841		49,012		49,856		10,130		—		169		256,008
Substandard⁽³⁾	103,996		68,378		32,942		11,738		3,015		1,238		221,307
Total	$	3,657,945	$	1,367,563	$	1,334,958	$	433,628	$	58,761	$	14,731	$	6,867,586

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	21,702	$	18,833	$	3,835	$	3,511	$	—	$	—	$	47,881
Off-balance sheet	151		—		—		412		—		—		563
90 days or more past due	$	21,853	$	18,833	$	3,835	$	3,923	$	—	$	—	$	48,444


⁽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, the range of original loan-to-value ratios, and the range in the size of borrower exposure for all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs as of September 30, 2018 and December 31, 2017:

Table 5.10



	As of
	September 30, 2018		December 31, 2017
	(in thousands)
By commodity/collateral type:
Crops	$	3,746,077	$	3,657,945
Permanent plantings	1,400,976		1,367,563
Livestock	1,353,141		1,334,958
Part-time farm	484,227		433,628
Ag. Storage and Processing	79,475		58,761
Other	8,122		14,731
Total	$	7,072,018	$	6,867,586
By geographic region⁽¹⁾:
Northwest	$	815,346	$	740,991
Southwest	2,198,744		2,093,213
Mid-North	2,276,100		2,244,094
Mid-South	876,960		908,603
Northeast	315,685		296,264
Southeast	589,183		584,421
Total	$	7,072,018	$	6,867,586
By original loan-to-value ratio⁽²⁾:
0.00% to 40.00%	$	1,317,118	$	1,322,422
40.01% to 50.00%	1,769,124		1,733,671
50.01% to 60.00%	2,456,766		2,385,605
60.01% to 70.00%	1,227,092		1,150,914
70.01% to 80.00%⁽³⁾	277,204		248,799
80.01% to 90.00%⁽³⁾	24,714		26,175
Total	$	7,072,018	$	6,867,586
By size of borrower exposure⁽⁴⁾:
Less than $1,000,000	$	2,423,394	$	2,379,596
$1,000,000 to $4,999,999	2,696,431		2,627,617
$5,000,000 to $9,999,999	917,198		867,574
$10,000,000 to $24,999,999	587,618		584,896
$25,000,000 to $50,000,000	447,377		407,903
Total	$	7,072,018	$	6,867,586


⁽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).

⁽²⁾

As of second quarter 2017, Farmer Mac revised its calculation of the original loan-to-value ratio of a loan to combine for any cross-collateralized loans: (i) the original loan principal balance amounts in the numerator and (ii) the original appraised property values in the denominator. In previous periods, the ratio was calculated on a loan-by-loan basis without considering the effects of any cross-collateralization. Prior period information has been reclassified to conform to the current period calculation and presentation.


⁽³⁾	Primarily part-time farm loans. Loans with original loan-to-value ratios of greater than 80% are required to have private mortgage insurance.


⁽⁴⁾	Includes multiple loans to the same borrower or borrower-related entities.

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.