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Business Segment Reporting
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
BUSINESS SEGMENT REPORTING
BUSINESS SEGMENT REPORTING

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, 2019 and 2018:

Table 9.1
Core Earnings by Business Segment
For the Three Months Ended September 30, 2019
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
15,345

 
$
4,491

 
$
2,602

 
$
14,853

 
$
2,821

 
$
—

 
$
40,112

Less: reconciling adjustments(1)(2)(3)
(2,164
)
 
(177
)
 
1,900

 
2,954

 
(164
)
 
(2,349
)
 
—

Net effective spread
13,181

 
4,314

 
4,502

 
17,807

 
2,657

 
(2,349
)
 
—

Guarantee and commitment fees(2)
4,523

 
250

 
348

 
87

 
—

 
(1,859
)
 
3,349

Other income/(expense)(3)
390

 
92

 
17

 
—

 
(110
)
 
(7,170
)
 
(6,781
)
Non-interest income/(loss)
4,913

 
342

 
365

 
87

 
(110
)
 
(9,029
)
 
(3,432
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(760
)
 
—

 
—

 
—

 
—

 
—

 
(760
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
137

 
—

 
—

 
—

 
—

 
—

 
137

Other non-interest expense
(5,062
)
 
(1,506
)
 
(913
)
 
(2,277
)
 
(3,837
)
 
—

 
(13,595
)
Non-interest expense(4)
(4,925
)
 
(1,506
)
 
(913
)
 
(2,277
)
 
(3,837
)
 
—

 
(13,458
)
Core earnings before income taxes
12,409

 
3,150

 
3,954

 
15,617

 
(1,290
)
 
(11,378
)
(5) 
22,462

Income tax (expense)/benefit
(2,606
)
 
(662
)
 
(830
)
 
(3,280
)
 
360

 
2,389

 
(4,629
)
Core earnings before preferred stock dividends
9,803

 
2,488

 
3,124

 
12,337

 
(930
)
 
(8,989
)
(5) 
17,833

Preferred stock dividends
—

 
—

 
—

 
—

 
(3,427
)
 
—

 
(3,427
)
Segment core earnings/(losses)
$
9,803

 
$
2,488

 
$
3,124

 
$
12,337

 
$
(4,357
)
 
$
(8,989
)
(5) 
$
14,406

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,934,887

 
$
2,238,558

 
$
1,692,835

 
$
8,651,264

 
$
3,797,690

 
$
—

 
$
21,315,234

Total on- and off-balance sheet program assets at principal balance
$
7,393,728

 
$
2,567,763

 
$
2,232,602

 
$
8,738,266

 
$
—

 
$
—

 
$
20,932,359

(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 "(Losses)/gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.
(5) 
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 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, 2018
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
16,425

 
$
5,304

 
$
3,081

 
$
17,600

 
$
2,648

 
$
—

 
$
45,058

Less: reconciling adjustments(1)(2)(3)
(2,538
)
 
(677
)
 
(204
)
 
(1,958
)
 
(604
)
 
5,981

 
—

Net effective spread
13,887

 
4,627

 
2,877

 
15,642

 
2,044

 
5,981

 
—

Guarantee and commitment fees(2)
4,489

 
214

 
376

 
91

 
—

 
(1,680
)
 
3,490

Other income/(expense)(3)
294

 
5

 
15

 
—

 
(245
)
 
880

 
949

Non-interest income/(loss)
4,783

 
219

 
391

 
91

 
(245
)
 
(800
)
 
4,439

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(99
)
 
—

 
—

 
—

 
—

 
—

 
(99
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
102

 
—

 
—

 
—

 
—

 
—

 
102

Other non-interest expense
(4,456
)
 
(1,288
)
 
(732
)
 
(1,844
)
 
(3,432
)
 
—

 
(11,752
)
Non-interest expense(4)
(4,354
)
 
(1,288
)
 
(732
)
 
(1,844
)
 
(3,432
)
 
—

 
(11,650
)
Core earnings before income taxes
14,217

 
3,558

 
2,536

 
13,889

 
(1,633
)
 
5,181

(5) 
37,748

Income tax (expense)/benefit
(2,986
)
 
(747
)
 
(533
)
 
(2,917
)
 
292

 
(1,088
)
 
(7,979
)
Core earnings before preferred stock dividends
11,231

 
2,811

 
2,003

 
10,972

 
(1,341
)
 
4,093

(5) 
29,769

Preferred stock dividends
—

 
—

 
—

 
—

 
(3,295
)
 
—

 
(3,295
)
Segment core earnings/(losses)
$
11,231

 
$
2,811

 
$
2,003

 
$
10,972

 
$
(4,636
)
 
$
4,093

(5) 
$
26,474

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,438,128

 
$
2,212,515

 
$
956,204

 
$
8,103,181

 
$
2,764,006

 
$
—

 
$
18,474,034

Total on- and off-balance sheet program assets at principal balance
$
7,072,018

 
$
2,471,251

 
$
1,632,037

 
$
8,365,280

 
$
—

 
$
—

 
$
19,540,586

(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 "(Losses)/gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.
(5) 
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 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, 2019
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
46,424

 
$
13,045

 
$
6,264

 
$
49,425

 
$
8,607

 
$
—

 
$
123,765

Less: reconciling adjustments(1)(2)(3)
(7,171
)
 
(670
)
 
5,467

 
2,126

 
(900
)
 
1,148

 
—

Net effective spread
39,253

 
12,375

 
11,731

 
51,551

 
7,707

 
1,148

 
—

Guarantee and commitment fees(2)
13,861

 
712

 
1,069

 
261

 
—

 
(5,638
)
 
10,265

Other income/(expense)(3)
1,058

 
92

 
31

 
—

 
494

 
1,050

 
2,725

Non-interest income/(loss)
14,919

 
804

 
1,100

 
261

 
494

 
(4,588
)
 
12,990

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(1,074
)
 
—

 
—

 
—

 
—

 
—

 
(1,074
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
424

 
—

 
—

 
—

 
—

 
—

 
424

Other non-interest expense
(14,448
)
 
(4,279
)
 
(2,595
)
 
(6,470
)
 
(10,903
)
 
—

 
(38,695
)
Non-interest expense(4)
(14,024
)
 
(4,279
)
 
(2,595
)
 
(6,470
)
 
(10,903
)
 
—

 
(38,271
)
Core earnings before income taxes
39,074

 
8,900

 
10,236

 
45,342

 
(2,702
)
 
(3,440
)
(5) 
97,410

Income tax (expense)/benefit
(8,206
)
 
(1,870
)
 
(2,149
)
 
(9,522
)
 
663

 
722

 
(20,362
)
Core earnings before preferred stock dividends
30,868

 
7,030

 
8,087

 
35,820

 
(2,039
)
 
(2,718
)
(5) 
77,048

Preferred stock dividends
—

 
—

 
—

 
—

 
(10,508
)
 
—

 
(10,508
)
Loss on retirement of preferred stock
—

 
—

 
—

 
—

 
—

 
(1,956
)
 
(1,956
)
Segment core earnings/(losses)
$
30,868

 
$
7,030

 
$
8,087

 
$
35,820

 
$
(12,547
)
 
$
(4,674
)
(5) 
$
64,584

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,934,887

 
$
2,238,558

 
$
1,692,835

 
$
8,651,264

 
$
3,797,690

 
$
—

 
$
21,315,234

Total on- and off-balance sheet program assets at principal balance
$
7,393,728

 
$
2,567,763

 
$
2,232,602

 
$
8,738,266

 
$
—

 
$
—

 
$
20,932,359


(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 "(Losses)/gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.
(5) 
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 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, 2018
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
47,255

 
$
15,446

 
$
8,931

 
$
54,237

 
$
6,351

 
$
—

 
$
132,220

Less: reconciling adjustments(1)(2)(3)
(7,481
)
 
(2,021
)
 
(181
)
 
(8,551
)
 
(1,646
)
 
19,880

 
—

Net effective spread
39,774

 
13,425

 
8,750

 
45,686

 
4,705

 
19,880

 
—

Guarantee and commitment fees(2)
13,356

 
570

 
1,227

 
271

 
—

 
(4,954
)
 
10,470

Other income/(expense)(3)
1,193

 
18

 
25

 
—

 
(594
)
 
(54
)
 
588

Non-interest income/(loss)
14,549

 
588

 
1,252

 
271

 
(594
)
 
(5,008
)
 
11,058

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(92
)
 
—

 
—

 
—

 
—

 
—

 
(92
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for reserve for losses
(77
)
 
—

 
—

 
—

 
—

 
—

 
(77
)
Other non-interest expense
(13,930
)
 
(3,793
)
 
(2,144
)
 
(5,720
)
 
(10,549
)
 
—

 
(36,136
)
Non-interest expense(4)
(14,007
)
 
(3,793
)
 
(2,144
)
 
(5,720
)
 
(10,549
)
 
—

 
(36,213
)
Core earnings before income taxes
40,224

 
10,220

 
7,858

 
40,237

 
(6,438
)
 
14,872

(5) 
106,973

Income tax (expense)/benefit
(8,447
)
 
(2,146
)
 
(1,651
)
 
(8,450
)
 
2,067

 
(3,122
)
 
(21,749
)
Core earnings before preferred stock dividends
31,777

 
8,074

 
6,207

 
31,787

 
(4,371
)
 
11,750

(5) 
85,224

Preferred stock dividends
—

 
—

 
—

 
—

 
(9,886
)
 
—

 
(9,886
)
Segment core earnings/(losses)
$
31,777

 
$
8,074

 
$
6,207

 
$
31,787

 
$
(14,257
)
 
$
11,750

(5) 
$
75,338

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
4,438,128

 
$
2,212,515

 
$
956,204

 
$
8,103,181

 
$
2,764,006

 
$
—

 
$
18,474,034

Total on- and off-balance sheet program assets at principal balance
$
7,072,018

 
$
2,471,251

 
$
1,632,037

 
$
8,365,280

 
$
—

 
$
—

 
$
19,540,586

(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 "(Losses)/gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.
(5) 
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 reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.