Loans and Allowance for Losses (Tables)

3 Months Ended

Mar. 31, 2019

Schedule of Composition of Loan Balances

The following table displays the composition of the loan balances as of March 31, 2019 and December 31, 2018:

Table 5.1



	As of March 31, 2019									As of December 31, 2018
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	3,044,567		$	1,566,330		$	4,610,897		$	3,071,222		$	1,517,101		$	4,588,323
Rural Utilities	1,429,101			—			1,429,101			938,843			—			938,843
Total unpaid principal balance⁽¹⁾	4,473,668			1,566,330			6,039,998			4,010,065			1,517,101			5,527,166
Unamortized premiums, discounts, and other cost basis adjustments	6,843			—			6,843			(5,097		)	—			(5,097		)
Total loans	4,480,511			1,566,330			6,046,841			4,004,968			1,517,101			5,522,069
Allowance for loan losses	(5,270		)	(1,483		)	(6,753		)	(5,565		)	(1,452		)	(7,017		)
Total loans, net of allowance	$	4,475,241		$	1,564,847		$	6,040,088		$	3,999,403		$	1,515,649		$	5,515,052


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

Schedule of Allowance for Credit Losses

The following is a summary of the changes in the total allowance for losses for the three months ended March 31, 2019 and 2018:

Table 5.2



	For the Three Months Ended
	March 31, 2019								March 31, 2018
	Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses		Allowance for Loan Losses			Reserve for Losses		Total Allowance for Losses
	(in thousands)
Beginning Balance	$	7,017		$	2,167		9,184		$	6,796		$	2,070	8,866
Provision for/(release of) losses	(264		)	(129		)	(393	)	(431		)	21		(410	)
Charge-offs	—			—			—		—			—		—
Ending Balance	6,753			2,038			8,791		6,365			2,091		8,456

The following tables present the changes in the total allowance for losses for the three months ended March 31, 2019 and 2018 by commodity type:

Table 5.3



	March 31, 2019
	Crops			Permanent Plantings			Livestock			Part-time Farm			Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,394		$	2,126		$	1,460		$	474		$	720	$	10	$	9,184
(Release of)/provision for losses	(161		)	(192		)	(8		)	(61		)	17		12		(393		)
Charge-offs	—			—			—			—			—		—		—
Ending Balance	$	4,233		$	1,934		$	1,452		$	413		$	737	$	22	$	8,791



	March 31, 2018
	Crops			Permanent Plantings		Livestock		Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,081		$	2,469	$	1,211	$	481		$	606		$	18		$	8,866
(Release of)/provision for losses	(288		)	10		25		(68		)	(84		)	(5		)	(410		)
Charge-offs	—			—		—		—			—			—			—
Ending Balance	$	3,793		$	2,479	$	1,236	$	413		$	522		$	13		$	8,456

Schedule of Allowance for Losses by Impairment Method and Commodity

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 March 31, 2019 and December 31, 2018:

Table 5.4



	As of March 31, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,450,803	$	946,435	$	699,333	$	341,177	$	12,036	$	4,586	$	4,454,370
Off-balance sheet	1,215,602		506,782		620,297		168,685		72,285		3,083		2,586,734
Total	$	3,666,405	$	1,453,217	$	1,319,630	$	509,862	$	84,321	$	7,669	$	7,041,104
Individually evaluated for impairment:
On-balance sheet	$	86,299	$	36,785	$	27,064	$	6,379	$	—	$	—	$	156,527
Off-balance sheet	10,752		2,357		3,916		869		—		60		17,954
Total	$	97,051	$	39,142	$	30,980	$	7,248	$	—	$	60	$	174,481
Total Farm & Ranch loans:
On-balance sheet	$	2,537,102	$	983,220	$	726,397	$	347,556	$	12,036	$	4,586	$	4,610,897
Off-balance sheet	1,226,354		509,139		624,213		169,554		72,285		3,143		2,604,688
Total	$	3,763,456	$	1,492,359	$	1,350,610	$	517,110	$	84,321	$	7,729	$	7,215,585
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,818	$	958	$	631	$	265	$	84	$	16	$	3,772
Off-balance sheet	665		108		236		26		653		5		1,693
Total	$	2,483	$	1,066	$	867	$	291	$	737	$	21	$	5,465
Individually evaluated for impairment:
On-balance sheet	$	1,551	$	816	$	511	$	103	$	—	$	—	$	2,981
Off-balance sheet	199		52		74		19		—		1		345
Total	$	1,750	$	868	$	585	$	122	$	—	$	1	$	3,326
Total Farm & Ranch loans:
On-balance sheet	$	3,369	$	1,774	$	1,142	$	368	$	84	$	16	$	6,753
Off-balance sheet	864		160		310		45		653		6		2,038
Total	$	4,233	$	1,934	$	1,452	$	413	$	737	$	22	$	8,791



	As of December 31, 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	$	2,452,803	$	952,719	$	705,752	$	329,070	$	12,097	$	4,477	$	4,456,918
Off-balance sheet	1,239,094		515,520		624,522		166,907		73,084		3,286		2,622,413
Total	$	3,691,897	$	1,468,239	$	1,330,274	$	495,977	$	85,181	$	7,763	$	7,079,331
Individually evaluated for impairment:
On-balance sheet	$	66,432	$	36,333	$	21,361	$	7,278	$	—	$	—	$	131,404
Off-balance sheet	13,298		5,249		3,737		883		—		69		23,236
Total	$	79,730	$	41,582	$	25,098	$	8,161	$	—	$	69	$	154,640
Total Farm & Ranch loans:
On-balance sheet	$	2,519,235	$	989,052	$	727,113	$	336,348	$	12,097	$	4,477	$	4,588,322
Off-balance sheet	1,252,392		520,769		628,259		167,790		73,084		3,355		2,645,649
Total	$	3,771,627	$	1,509,821	$	1,355,372	$	504,138	$	85,181	$	7,832	$	7,233,971
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	2,120	$	822	$	731	$	303	$	84	$	4	$	4,064
Off-balance sheet	668		170		207		29		636		5		1,715
Total	$	2,788	$	992	$	938	$	332	$	720	$	9	$	5,779
Individually evaluated for impairment:
On-balance sheet	$	1,329	$	1,065	$	437	$	122	$	—	$	—	$	2,953
Off-balance sheet	277		69		85		20		—		1		452
Total	$	1,606	$	1,134	$	522	$	142	$	—	$	1	$	3,405
Total Farm & Ranch loans:
On-balance sheet	$	3,449	$	1,887	$	1,168	$	425	$	84	$	4	$	7,017
Off-balance sheet	945		239		292		49		636		6		2,167
Total	$	4,394	$	2,126	$	1,460	$	474	$	720	$	10	$	9,184

Schedule of Impaired Financing Receivables

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 March 31, 2019 and December 31, 2018:

Table 5.5



	As of March 31, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	32,570	$	15,531	$	7,708	$	1,605	$	—	$	—	$	57,414
Unpaid principal balance	32,501		15,498		7,691		1,602		—		—		57,292
With a specific allowance:
Recorded investment⁽¹⁾	64,666		23,690		23,331		5,657		—		60		117,404
Unpaid principal balance	64,550		23,644		23,289		5,646		—		60		117,189
Associated allowance	1,750		868		585		122		—		1		3,326
Total:
Recorded investment	97,236		39,221		31,039		7,262		—		60		174,818
Unpaid principal balance	97,051		39,142		30,980		7,248		—		60		174,481
Associated allowance	1,750		868		585		122		—		1		3,326

Recorded investment of loans on nonaccrual status⁽²⁾	$	35,879	$	12,843	$	10,490	$	3,760	$	—	$	—	$	62,972


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $115.0 million (66%) of impaired loans as of March 31, 2019, which resulted in a specific allowance of $2.5 million.


⁽²⁾	Includes $15.8 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, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	20,734	$	3,592	$	5,764	$	1,922	$	—	$	—	$	32,012
Unpaid principal balance	20,632		3,573		5,737		1,912		—		—		31,854
With a specific allowance:
Recorded investment⁽¹⁾	59,335		38,176		19,443		6,276		—		70		123,300
Unpaid principal balance	59,098		38,009		19,361		6,249		—		69		122,786
Associated allowance	1,606		1,134		522		142		—		1		3,405
Total:
Recorded investment	80,069		41,768		25,207		8,198		—		70		155,312
Unpaid principal balance	79,730		41,582		25,098		8,161		—		69		154,640
Associated allowance	1,606		1,134		522		142		—		1		3,405

Recorded investment of loans on nonaccrual status⁽²⁾	$	26,611	$	21,349	$	8,803	$	4,645	$	—	$	—	$	61,408


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $120.9 million (78%) of impaired loans as of December 31, 2018, which resulted in a specific allowance of $2.7 million.


⁽²⁾	Includes $41.8 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 months ended March 31, 2019 and 2018:

Table 5.6



	March 31, 2019
	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	$	88,653	$	40,495	$	28,123	$	7,730	$	—	$	65	$	165,066
Income recognized on impaired loans	322		299		113		67		—		—		801



	March 31, 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	$	72,017	$	43,427	$	22,274	$	8,850	$	—	$	716	$	147,284
Income recognized on impaired loans	392		172		79		55		—		—		698

Schedule of Past Due Financing Receivables

As of March 31, 2019, 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 5.7



	90-Day Delinquencies⁽¹⁾				Net Credit (Recoveries)/Losses
	As of				For the Three Months Ended
	March 31, 2019		December 31, 2018		March 31, 2019		March 31, 2018
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	47,219	$	19,577	$	—	$	16
Total on-balance sheet	$	47,219	$	19,577	$	—	$	16
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	5,147	$	7,304	$	—	$	—
Total off-balance sheet	$	5,147	$	7,304	$	—	$	—
Total	$	52,366	$	26,881	$	—	$	16


⁽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.

Schedule of Financing Receivable 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 March 31, 2019 and December 31, 2018:

Table 5.8



	As of March 31, 2019
	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	$	2,391,354	$	901,684	$	682,548	$	331,910	$	10,539	$	4,586	$	4,322,621
Special mention⁽²⁾	59,594		44,751		16,786		9,267		1,497		—		131,895
Substandard⁽³⁾	86,154		36,785		27,063		6,379		—		—		156,381
Total on-balance sheet	$	2,537,102	$	983,220	$	726,397	$	347,556	$	12,036	$	4,586	$	4,610,897
Off-Balance Sheet:
Acceptable	$	1,088,307	$	476,644	$	558,864	$	165,020	$	71,160	$	2,477	$	2,362,472
Special mention⁽²⁾	80,802		24,960		45,249		870		—		—		151,881
Substandard⁽³⁾	57,245		7,535		20,100		3,664		1,125		666		90,335
Total off-balance sheet	$	1,226,354	$	509,139	$	624,213	$	169,554	$	72,285	$	3,143	$	2,604,688
Total Ending Balance:
Acceptable	$	3,479,661	$	1,378,328	$	1,241,412	$	496,930	$	81,699	$	7,063	$	6,685,093
Special mention⁽²⁾	140,396		69,711		62,035		10,137		1,497		—		283,776
Substandard⁽³⁾	143,399		44,320		47,163		10,043		1,125		666		246,716
Total	$	3,763,456	$	1,492,359	$	1,350,610	$	517,110	$	84,321	$	7,729	$	7,215,585

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	30,149	$	7,929	$	6,745	$	2,396	$	—	$	—	$	47,219
Off-balance sheet	4,360		196		100		491		—		—		5,147
90 days or more past due	$	34,509	$	8,125	$	6,845	$	2,887	$	—	$	—	$	52,366


⁽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, 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	$	2,381,853	$	937,793	$	679,253	$	321,345	$	10,604	$	4,477	$	4,335,325
Special mention⁽²⁾	71,096		14,926		26,499		7,725		1,493		—		121,739
Substandard⁽³⁾	66,286		36,333		21,361		7,278		—		—		131,258
Total on-balance sheet	$	2,519,235	$	989,052	$	727,113	$	336,348	$	12,097	$	4,477	$	4,588,322
Off-Balance Sheet
Acceptable	$	1,128,787	$	469,479	$	577,708	$	162,730	$	71,959	$	2,656	$	2,413,319
Special mention⁽²⁾	62,430		36,778		30,703		1,023		—		—		130,934
Substandard⁽³⁾	61,175		14,512		19,848		4,037		1,125		699		101,396
Total off-balance sheet	$	1,252,392	$	520,769	$	628,259	$	167,790	$	73,084	$	3,355	$	2,645,649
Total Ending Balance:
Acceptable	$	3,510,640	$	1,407,272	$	1,256,961	$	484,075	$	82,563	$	7,133	$	6,748,644
Special mention⁽²⁾	133,526		51,704		57,202		8,748		1,493		—		252,673
Substandard⁽³⁾	127,461		50,845		41,209		11,315		1,125		699		232,654
Total	$	3,771,627	$	1,509,821	$	1,355,372	$	504,138	$	85,181	$	7,832	$	7,233,971

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	8,345	$	2,997	$	4,059	$	4,176	$	—	$	—	$	19,577
Off-balance sheet	6,476		197		—		631		—		—		7,304
90 days or more past due	$	14,821	$	3,194	$	4,059	$	4,807	$	—	$	—	$	26,881


⁽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.

Schedule of Concentration of Risk, by Risk Factor

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 March 31, 2019 and December 31, 2018:

Table 5.9



	As of
	March 31, 2019		December 31, 2018
	(in thousands)
By commodity/collateral type:
Crops	$	3,763,456	$	3,771,627
Permanent plantings	1,492,359		1,509,821
Livestock	1,350,610		1,355,372
Part-time farm	517,110		504,138
Ag. Storage and Processing	84,321		85,181
Other	7,729		7,832
Total	$	7,215,585	$	7,233,971
By geographic region⁽¹⁾:
Northwest	$	847,896	$	855,596
Southwest	2,282,664		2,273,184
Mid-North	2,287,199		2,296,073
Mid-South	893,639		883,279
Northeast	337,019		332,370
Southeast	567,168		593,469
Total	$	7,215,585	$	7,233,971
By original loan-to-value ratio:
0.00% to 40.00%	$	1,304,411	$	1,333,790
40.01% to 50.00%	1,831,552		1,811,166
50.01% to 60.00%	2,506,962		2,530,484
60.01% to 70.00%	1,250,982		1,244,823
70.01% to 80.00%⁽²⁾	298,001		289,427
80.01% to 90.00%⁽²⁾	23,677		24,281
Total	$	7,215,585	$	7,233,971
By size of borrower exposure⁽³⁾:
Less than $1,000,000	$	2,446,989	$	2,431,296
$1,000,000 to $4,999,999	2,736,397		2,755,996
$5,000,000 to $9,999,999	881,847		916,422
$10,000,000 to $24,999,999	604,712		601,349
$25,000,000 and greater	545,640		528,908
Total	$	7,215,585	$	7,233,971


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


⁽³⁾	Includes multiple loans to the same borrower or borrower-related entities.