Guarantees

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

GUARANTEES

GUARANTEES

The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of June 30, 2021 and December 31, 2020, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans:

Table 6.1

Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
	As of June 30, 2021		As of December 31, 2020
	(in thousands)
Farm & Ranch:
Farmer Mac Guaranteed Securities	$	66,008	$	79,312
USDA Guarantees:
Farmer Mac Guaranteed USDA Securities	270,652		299,298
Institutional Credit:
AgVantage Securities	4,412		4,412
Total off-balance sheet Farmer Mac Guaranteed Securities	$	341,072	$	383,022

Eligible loans and other eligible assets may be placed into trusts that are used as vehicles for the securitization of the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are sold to investors.  The following table summarizes the significant cash flows received from and paid to trusts used for Farmer Mac securitizations:

Table 6.2

	For the Six Months Ended
	June 30, 2021		June 30, 2020
	(in thousands)
Proceeds from new securitizations	$	49,133	$	28,050
Guarantee fees received	669		894

Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and commitment obligation" on the consolidated balance sheets.  The following table presents the liability and the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities:

Table 6.3

	As of June 30, 2021		As of December 31, 2020
	(dollars in thousands)
Guarantee and commitment obligation	$	1,411	$	1,625
Weighted average remaining maturity:
Farmer Mac Guaranteed Securities	9.3 years		9.5 years
AgVantage Securities	3.5 years		4.0 years

Long-Term Standby Purchase Commitments

Farmer Mac has recorded a liability for its obligation to stand ready under the guarantee in the guarantee and commitment obligation on the consolidated balance sheets.  The following table presents the liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average remaining maturity of all loans underlying LTSPCs:

Table 6.4

	As of June 30, 2021		As of December 31, 2020
	(dollars in thousands)
Guarantee and commitment obligation(1)	$	34,416	$	33,909
Maximum principal amount	2,922,398		2,881,856
Weighted-average remaining maturity	15.6 years		15.3 years

(1) Relates to LTSPCs issued or modified on or after January 1, 2003.

Reserve for Losses

The following table is a summary, by asset type, of the reserve for losses as of June 30, 2021 and December 31, 2020:

Table 6.5

	June 30, 2021		December 31, 2020
	Reserve for Losses		Reserve for Losses
	(in thousands)
Farm & Ranch:
LTSPCs and Farmer Mac Guaranteed Securities	$	1,194	$	2,097
Rural Utilities
LTSPCs	917		1,180
Total	$	2,111	$	3,277

The following is a summary of the changes in the reserve for losses for the three and six month period ended June 30, 2021 and 2020:

Table 6.6

	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	Reserve for Losses		Reserve for Losses		Reserve for Losses		Reserve for Losses
	(in thousands)
Farm & Ranch:
Beginning Balance	$	1,366	$	2,020	$	2,097	$	2,164
Cumulative effect adjustment from adoption of current expected credit loss standard	—		—		—		(148)
Adjusted Beginning Balance	1,366		2,020		2,097		2,016
Release of losses	(172)		(370)		(903)		(366)
Charge-offs	—		—		—		—
Ending Balance	$	1,194	$	1,650	$	1,194	$	1,650
Rural Utilities:
Beginning Balance	$	967	$	1,400	$	1,180	$	—
Cumulative effect adjustment from adoption of current expected credit loss standard	—		—		—		1,011
Adjusted Beginning Balance	967		1,400		1,180		1,011
(Release of)/provision for losses	(50)		(30)		(263)		359
Charge-offs	—		—		—		—
Ending Balance	$	917	$	1,370	$	917	$	1,370

The release from the reserve for losses in the Rural Utilities LTSPC portfolio recorded during the three and six months ended June 30, 2021 was primarily due to improving economic factor forecasts and ratings upgrades. The release in the Farm & Ranch LTSPC portfolio was primarily due to ratings upgrades and updated loss-given-default assumptions.

The release from the reserve for losses recorded during the three and six months ended June 30, 2020 was

primarily due to the net decreases in LTSPC volume of $58.5 million and $119.3 million, respectively.

The following table presents the unpaid principal balances by delinquency status of Farm & Ranch loans underlying LTSPCs. Farm & Ranch Farmer Mac Guaranteed Securities, Rural Utilities loans underlying LTSPCs, and non-performing assets as of June 30, 2021 and December 31, 2020:

Table 6.7

	As of June 30, 2021
	Current		30-59 Days		60-89 Days		90 Days and Greater(1)		Total Past Due		Total Loans
	(in thousands)
Farm and Ranch:
LTSPCs and Farmer Mac Guaranteed Securities	$	2,440,348	$	3,853	$	4,459	$	6,287	$	14,599	$	2,454,947
Rural Utilities:
LTSPCs	$	533,459	$	—	$	—	$	—	$	—	$	533,459

(1)Includes loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days of 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.

	As of December 31, 2020
	Current		30-59 Days		60-89 Days		90 Days and Greater(1)		Total Past Due		Total Loans
	(in thousands)
Farm and Ranch:
LTSPCs and Farmer Mac Guaranteed Securities	$	2,389,777	$	2,189	$	1,344	$	11,433	$	14,966	$	2,404,743
Rural Utilities:
LTSPCs	$	556,425	$	—	$	—	$	—	$	—	$	556,425

(1)Includes loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days of 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.

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans underlying LTSPCs, Farm & Ranch Farmer Mac Guaranteed Securities, and Rural Utilities loans underlying LTSPCs as of June 30, 2021 and December 31, 2020, by year of origination:

Table 6.8

	As of June 30, 2021
	Year of Origination:
	2021		2020		2019		2018		2017		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities:
Internally Assigned Risk Rating:
Acceptable	$	176,513	$	270,877	$	198,404	$	181,287	$	217,421	$	1,040,596	$	201,691	$	2,286,789
Special mention(1)	—		3,920		343		2,117		433		60,494		7,683		74,990
Substandard(2)	—		242		731		11,568		14,273		62,511		3,843		93,168
Total	$	176,513	$	275,039	$	199,478	$	194,972	$	232,127	$	1,163,601	$	213,217	$	2,454,947
For the Three Months Ended June 30, 2021:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
For the Six Months Ended June 30, 2021:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

(2)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 June 30, 2021
	Year of Origination:
	2021		2020		20	2019		2018		2017		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Utilities LTSPCs:
Internally Assigned Risk Rating:
Acceptable	$	—	$	—		$	—	$	—	$	—	$	520,145	$	13,314	$	533,459
Special mention(1)	—		—			—		—		—		—		—		—
Substandard(2)	—		—			—		—		—		—		—		—
Total	$	—	$	—		$	—	$	—	$	—	$	520,145	$	13,314	$	533,459
For the Three Months Ended June 30, 2021:
Current period charge-offs	$	—	$	—		$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—			—		—		—		—		—		—
Current period Rural Utilities net charge-offs	$	—	$	—		$	—	$	—	$	—	$	—	$	—	$	—
For the Six Months Ended June 30, 2021:
Current period charge-offs	$	—	$	—		$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—			—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—		$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

(2)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, 2020
	Year of Origination:
	2020		2019		2018		2017		2016		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities:
Internally Assigned Risk Rating:
Acceptable	$	178,213	$	213,620	$	183,948	$	237,042	$	207,296	$	969,860	$	211,620	$	2,201,599
Special mention(1)	3,920		1,742		1,502		5,603		19,644		50,004		10,058		92,473
Substandard(2)	264		10,250		12,611		14,578		7,841		60,602		4,525		110,671
Total	$	182,397	$	225,612	$	198,061	$	257,223	$	234,781	$	1,080,466	$	226,203	$	2,404,743
For the Three Months Ended June 30, 2020:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
For the Six Months Ended June 30, 2020:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

(2)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, 2020
	Year of Origination:
	2020		2019		2018		2017		2016		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Utilities LTSPCs:
Internally Assigned Risk Rating:
Acceptable	$	—	$	—	$	—	$	—	$	—	$	549,405	$	7,020	$	556,425
Special mention(1)	—		—		—		—		—		—		—		—
Substandard(2)	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	549,405	$	7,020	$	556,425
For the Three Months Ended June 30, 2020:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Rural Utilities net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
For the Six Months Ended June 30, 2020:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Farm & Ranch net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

(2)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.