Business Segment Reporting

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

BUSINESS SEGMENT REPORTING

BUSINESS SEGMENT REPORTING

The following table presents the alignment of the Farmer Mac's seven segments:

Agricultural Finance		Rural Infrastructure Finance		Treasury
Farm & Ranch	Corporate AgFinance	Rural Utilities	Renewable Energy	Funding	Investments	Corporate

The financial information presented below reflects the accounts of Farmer Mac and its subsidiaries on a

consolidated basis. Accordingly, the core earnings for Farmer Mac's segments would differ from any stand-alone financial statements of Farmer Mac's subsidiaries. These differences would be due to various factors, including the exclusion of unrealized gains and losses related to fair value changes of trading assets and financial derivatives, as well as the allocation of certain expenses such as operating expenses, dividends and interest expense related to the issuance of capital and the issuance of indebtedness managed at the corporate level.

The following tables present core earnings for Farmer Mac's segments and a reconciliation to consolidated net income for the three months ended March 31, 2022 and 2021. The amounts for the three months ended March 31, 2021 have been revised to conform to the current year's segment alignment.

Table 10.1

Core Earnings by Business Segment
For the Three Months Ended March 31, 2022
	Agricultural Finance				Rural Infrastructure				Treasury				Corporate
	Farm & Ranch		Corporate AgFinance		Rural  Utilities		Renewable Energy		Funding		Investments				Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	31,354	$	7,209	$	3,193	$	375	$	19,740	$	4	$	—	$	—		$	61,875
Less: reconciling adjustments(1)(2)(3)	(1,000)		—		(34)		—		(3,002)		—		—		4,036			—
Net effective spread	30,354		7,209		3,159		375		16,738		4		—		4,036			—
Guarantee and commitment fees	4,216		19		286		36		—		—		—		(862)			3,695
Other income/(expense)(3)	400		114		—		—		—		—		—		16,172			16,686
Total revenues	34,970		7,342		3,445		411		16,738		4		—		19,346			82,256
(Provision for)/release of losses	(510)		(515)		1,169		(202)		—		2		—		—			(56)
Release of reserve for losses	75		—		35		—		—		—		—		—			110
Operating expenses	—		—		—		—		—		—		(21,388)		—			(21,388)
Total non-interest expense	75		—		35		—		—		—		(21,388)		—			(21,278)
Core earnings before income taxes	34,535		6,827		4,649		209		16,738		6		(21,388)		19,346		(4)	60,922
Income tax (expense)/benefit	(7,252)		(1,434)		(976)		(44)		(3,515)		(1)		4,198		(4,061)			(13,085)
Core earnings before preferred stock dividends	27,283		5,393		3,673		165		13,223		5		(17,190)		15,285		(4)	47,837
Preferred stock dividends	—		—		—		—		—		—		(6,791)		—			(6,791)
Segment core earnings/(losses)	$	27,283	$	5,393	$	3,673	$	165	$	13,223	$	5	$	(23,981)	$	15,285	(4)	$	41,046
Total Assets	$	13,610,138	$	1,491,127	$	5,480,668	$	92,132	$	—	$	4,995,154	$	120,195	$	—		25,789,414
Total on- and off-balance sheet program assets at principal balance	$	16,575,595	$	1,540,760	$	6,006,446	$	120,609	$	—	$	—	$	—	$	—		24,243,410

(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 "Gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.

(4)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, 2021
	Agricultural Finance				Rural Infrastructure				Treasury				Corporate
	Farm & Ranch		Corporate AgFinance		Rural  Utilities		Renewable Energy		Funding		Investments				Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	27,646	$	6,921	$	1,754	$	248	$	16,568	$	114	$	—	$	—		$	53,251
Less: reconciling adjustments(1)(2)(3)	(1,184)		—		(34)		—		1,826		—		—		(608)			—
Net effective spread	26,462		6,921		1,720		248		18,394		114		—		(608)			—
Guarantee and commitment fees	3,908		8		319		5		—		—		—		(1,210)			3,030
Other income/(expense)(3)	572		—		1		—		—		—		(122)		4,412			4,863
Total revenues	30,942		6,929		2,040		253		18,394		114		(122)		2,594			61,144
(Provision for)/release of losses	—		(61)		(633)		(195)		—		(24)		—		—			(913)
Provision for reserve for losses	731		—		213		—		—		—		—		—			944
Operating expenses	—		—		—		—		—		—		(18,881)		—			(18,881)
Total non-interest expense	731		—		213		—		—		—		(18,881)		—			(17,937)
Core earnings before income taxes	31,673		6,868		1,620		58		18,394		90		(19,003)		2,594		(4)	42,294
Income tax (expense)/benefit	(6,650)		(1,441)		(341)		(12)		(3,863)		(19)		3,806		(547)			(9,067)
Core earnings before preferred stock dividends	25,023		5,427		1,279		46		14,531		71		(15,197)		2,047		(4)	33,227
Preferred stock dividends	—		—		—		—		—		—		(5,269)		—			(5,269)
Loss on retirement of preferred stock	—		—		—		—		—		—		—		—			—
Segment core earnings/(losses)	$	25,023	$	5,427	$	1,279	$	46	$	14,531	$	71	$	(20,466)	$	2,047	(4)	$	27,958
Total Assets	$	12,289,354	$	1,644,837	$	4,836,306	$	83,352	$	—	$	5,128,901	$	31,161	$	—		$	24,013,911
Total on- and off-balance sheet program assets at principal balance	$	14,738,052	$	1,647,796	$	5,382,835	$	93,848	$	—	$	—	$	—	$	—		$	21,862,531

(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 "Gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.

(4)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.