Business Segment Reporting

3 Months Ended

Mar. 31, 2020

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 months ended March 31, 2020 and 2019:

Table 10.1

Core Earnings by Business Segment
For the Three Months Ended March 31, 2020
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	16,365	$	4,541	$	4,747	$	13,804	$	1,855	$	—		$	41,312
Less: reconciling adjustments(1)(2)(3)	(1,427)		84		173		3,898		123		(2,851)			—
Net effective spread	14,938		4,625		4,920		17,702		1,978		(2,851)			—
Guarantee and commitment fees(2)	4,317		235		335		9		—		(1,700)			3,196
Other income/(expense)(3)	1,169		112		7		—		(129)		(9,050)			(7,891)
Non-interest income/(loss)	5,486		347		342		9		(129)		(10,750)			(4,695)
Provision for loan losses	(808)		—		(2,125)		(491)		(14)		—			(3,438)
Provision for reserve for losses	(4)		—		(389)		—		—		—			(393)
Other non-interest expense	(5,997)		(1,818)		(1,604)		(2,363)		(4,433)		—			(16,215)
Non-interest expense(4)	(6,001)		(1,818)		(1,993)		(2,363)		(4,433)		—			(16,608)
Core earnings before income taxes	13,615		3,154		1,144		14,857		(2,598)		(13,601)		(5)	16,571
Income tax (expense)/benefit	(2,859)		(662)		(240)		(3,120)		283		2,857			(3,741)
Core earnings before preferred stock dividends	10,756		2,492		904		11,737		(2,315)		(10,744)		(5)	12,830
Preferred stock dividends	—		—		—		—		(3,431)		—			(3,431)
Segment core earnings/(losses)	$	10,756	$	2,492	$	904	$	11,737	$	(5,746)	$	(10,744)	(5)	$	9,399
Total assets at carrying value	$	5,457,134	$	2,341,698	$	1,964,901	$	9,049,154	$	4,367,223	$	—		$	23,180,110
Total on- and off-balance sheet program assets at principal balance	$	7,811,594	$	2,646,206	$	2,385,411	$	8,696,101	$	—	$	—		$	21,539,312

⁽¹⁾Includes 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 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 March 31, 2019
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	15,282	$	4,442	$	(274)	$	18,187	$	2,962	$	—		$	40,599
Less: reconciling adjustments(1)(2)(3)	(2,545)		(478)		3,507		(1,814)		(468)		1,798			—
Net effective spread	12,737		3,964		3,233		16,373		2,494		1,798			—
Guarantee and commitment fees(2)	4,744		224		363		88		—		(1,906)			3,513
Other income/(expense)(3)	480		—		7		—		22		(332)			177
Non-interest income/(loss)	5,224		224		370		88		22		(2,238)			3,690
Release of losses	264		—		—		—		—		—			264
Release of reserve for losses	129		—		—		—		—		—			129
Other non-interest expense	(4,799)		(1,428)		(866)		(2,159)		(3,638)		—			(12,890)
Non-interest expense(4)	(4,670)		(1,428)		(866)		(2,159)		(3,638)		—			(12,761)
Core earnings before income taxes	13,555		2,760		2,737		14,302		(1,122)		(440)		(5)	31,792
Income tax (expense)/benefit	(2,847)		(580)		(575)		(3,003)		290		93			(6,622)
Core earnings before preferred stock dividends	10,708		2,180		2,162		11,299		(832)		(347)		(5)	25,170
Preferred stock dividends	—		—		—		—		(3,296)		—			(3,296)
Segment core earnings/(losses)	$	10,708	$	2,180	$	2,162	$	11,299	$	(4,128)	$	(347)	(5)	$	21,874
Total assets at carrying value	$	4,698,250	$	2,191,896	$	1,443,393	$	8,502,084	$	2,962,154	$	—		$	19,797,777
Total on- and off-balance sheet program assets at principal balance	$	7,215,585	$	2,484,779	$	2,074,714	$	8,731,835	$	—	$	—		$	20,506,913

⁽¹⁾Includes 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 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.