Business Segment Reporting

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2022 and 2021. The amounts for the three and six months ended June 30, 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 June 30, 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	$	33,670	$	6,929	$	3,772	$	468	$	25,845	$	(1,282)	$	—	$	—		$	69,402
Less: reconciling adjustments(1)(2)(3)	(1,080)		—		(39)		—		(7,337)		—		—		8,456			—
Net effective spread	32,590		6,929		3,733		468		18,508		(1,282)		—		8,456			—
Guarantee and commitment fees	4,338		43		308		20		—		—		—		(1,496)			3,213
Other income/(expense)(3)	161		143		—		—		—		—		3		3,619			3,926
Total revenues	37,089		7,115		4,041		488		18,508		(1,282)		3		10,579			76,541
Release of/(provision for) losses	857		(650)		1,172		(8)		—		1		—		—			1,372
Release of reserve for losses	111		—		52		—		—		—		—		—			163
Operating expenses	—		—		—		—		—		—		(20,048)		—			(20,048)
Total non-interest expense	111		—		52		—		—		—		(20,048)		—			(19,885)
Core earnings before income taxes	38,057		6,465		5,265		480		18,508		(1,281)		(20,045)		10,579		(4)	58,028
Income tax (expense)/benefit	(7,991)		(1,357)		(1,105)		(101)		(3,887)		269		4,263		(2,223)			(12,132)
Core earnings before preferred stock dividends	30,066		5,108		4,160		379		14,621		(1,012)		(15,782)		8,356		(4)	45,896
Preferred stock dividends	—		—		—		—		—		—		(6,792)		—			(6,792)
Segment core earnings/(losses)	$	30,066	$	5,108	$	4,160	$	379	$	14,621	$	(1,012)	$	(22,574)	$	8,356	(4)	$	39,104
Total Assets	$	13,686,589	$	1,521,102	$	5,632,551	$	126,513	$	—	$	4,802,159	$	147,489	$	—		25,916,403
Total on- and off-balance sheet program assets at principal balance	$	16,591,999	$	1,567,311	$	6,172,063	$	148,018	$	—	$	—	$	—	$	—		24,479,391

(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/(losses) 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 June 30, 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	$	30,478	$	6,676	$	1,793	$	378	$	15,678	$	126	$	—	$	—		$	55,129
Less: reconciling adjustments(1)(2)(3)	(1,315)		—		(34)		—		2,771		—		—		(1,422)			—
Net effective spread	29,163		6,676		1,759		378		18,449		126		—		(1,422)			—
Guarantee and commitment fees	4,010		2		313		9		—		—		—		(1,337)			2,997
Other income/(expense)(3)	430		—		1		—		—		—		(130)		(2,994)			(2,693)
Total revenues	33,603		6,678		2,073		387		18,449		126		(130)		(5,753)			55,433
Release of/(provision for) losses	575		97		101		(15)		—		3		—		—			761
Provision for reserve for losses	181		—		41		—		—		—		—		—			222
Operating expenses	—		—		—		—		—		—		(16,878)		—			(16,878)
Total non-interest expense	181		—		41		—		—		—		(16,878)		—			(16,656)
Core earnings before income taxes	34,359		6,775		2,215		372		18,449		129		(17,008)		(5,753)		(4)	39,538
Income tax (expense)/benefit	(7,216)		(1,424)		(465)		(78)		(3,874)		(27)		3,621		1,211			(8,252)
Core earnings before preferred stock dividends	27,143		5,351		1,750		294		14,575		102		(13,387)		(4,542)		(4)	31,286
Preferred stock dividends	—		—		—		—		—		—		(5,842)		—			(5,842)
Loss on retirement of preferred stock	—		—		—		—		—		—		—		—			—
Segment core earnings/(losses)	$	27,143	$	5,351	$	1,750	$	294	$	14,575	$	102	$	(19,229)	$	(4,542)	(4)	$	25,444
Total Assets	$	12,327,696	$	1,661,734	$	5,043,265	$	85,486	$	—	$	5,032,632	$	30,432	$	—		$	24,181,245
Total on- and off-balance sheet program assets at principal balance	$	14,873,926	$	1,664,059	$	5,566,591	$	92,585	$	—	$	—	$	—	$	—		$	22,197,161

(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/(losses) 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 Six Months Ended June 30, 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	$	65,024	$	14,138	$	6,965	$	843	$	45,585	$	(1,278)	$	—	$	—		$	131,277
Less: reconciling adjustments(1)(2)(3)	(2,080)		—		(73)		—		(10,339)		—		—		12,492			—
Net effective spread	62,944		14,138		6,892		843		35,246		(1,278)		—		12,492			—
Guarantee and commitment fees	8,554		62		620		30		—		—		—		(2,358)			6,908
Other income/(expense)(3)	561		257		—		—		—		—		3		19,791			20,612
Total revenues	72,059		14,457		7,512		873		35,246		(1,278)		3		29,925			158,797
Release of/(provision for) losses	347		(1,165)		2,341		(210)		—		3		—		—			1,316
Release of reserve for losses	185		—		88		—		—		—		—		—			273
Operating expenses	—		—		—		—		—		—		(41,436)		—			(41,436)
Total non-interest expense	185		—		88		—		—		—		(41,436)		—			(41,163)
Core earnings before income taxes	72,591		13,292		9,941		663		35,246		(1,275)		(41,433)		29,925		(4)	118,950
Income tax (expense)/benefit	(15,243)		(2,791)		(2,087)		(139)		(7,402)		268		8,461		(6,284)			(25,217)
Core earnings before preferred stock dividends	57,348		10,501		7,854		524		27,844		(1,007)		(32,972)		23,641		(4)	93,733
Preferred stock dividends	—		—		—		—		—		—		(13,583)		—			(13,583)
Segment core earnings/(losses)	$	57,348	$	10,501	$	7,854	$	524	$	27,844	$	(1,007)	$	(46,555)	$	23,641	(4)	$	80,150
Total Assets	$	13,686,589	$	1,521,102	$	5,632,551	$	126,513	$	—	$	4,802,159	$	147,489	$	—		25,916,403
Total on- and off-balance sheet program assets at principal balance	$	16,591,999	$	1,567,311	$	6,172,063	$	148,018	$	—	$	—	$	—	$	—		24,479,391

(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/(losses) 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 Six Months Ended June 30, 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	$	58,124	$	13,597	$	3,547	$	626	$	32,246	$	240	$	—	$	—		$	108,380
Less: reconciling adjustments(1)(2)(3)	(2,500)		—		(67)		—		4,597		—		—		(2,030)			—
Net effective spread	55,624		13,597		3,480		626		36,843		240		—		(2,030)			—
Guarantee and commitment fees	7,918		10		632		14		—		—		—		(2,547)			6,027
Other income/(expense)(3)	1,002		—		2		—		—		—		(252)		1,418			2,170
Total revenues	64,544		13,607		4,114		640		36,843		240		(252)		(3,159)			116,577
Release of/(provision for) losses	575		36		(532)		(210)		—		(21)		—		—			(152)
Provision for reserve for losses	912		—		254		—		—		—		—		—			1,166
Operating expenses	—		—		—		—		—		—		(35,759)		—			(35,759)
Total non-interest expense	912		—		254		—		—		—		(35,759)		—			(34,593)
Core earnings before income taxes	66,031		13,643		3,836		430		36,843		219		(36,011)		(3,159)		(4)	81,832
Income tax (expense)/benefit	(13,866)		(2,865)		(806)		(90)		(7,737)		(46)		7,427		664			(17,319)
Core earnings before preferred stock dividends	52,165		10,778		3,030		340		29,106		173		(28,584)		(2,495)		(4)	64,513
Preferred stock dividends	—		—		—		—		—		—		(11,111)		—			(11,111)
Segment core earnings/(losses)	$	52,165	$	10,778	$	3,030	$	340	$	29,106	$	173	$	(39,695)	$	(2,495)	(4)	$	53,402
Total Assets	$	12,327,696	$	1,661,734	$	5,043,265	$	85,486	$	—	$	5,032,632	$	30,432	$	—		$	24,181,245
Total on- and off-balance sheet program assets at principal balance	$	14,873,926	$	1,664,059	$	5,566,591	$	92,585	$	—	$	—	$	—	$	—		$	22,197,161

(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/(losses) 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.