Business Segment Reporting

3 Months Ended

Mar. 31, 2023

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, 2023 and 2022.

Table 10.1

Core Earnings by Business Segment
For the Three Months Ended March 31, 2023
	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	$	33,511	$	7,148	$	5,540	$	858	$	32,544	$	(543)	$	—	$	—		$	79,058
Less: reconciling adjustments(1)(2)(3)	(1,046)		—		(33)		—		(806)		—		—		1,885			—
Net effective spread	32,465		7,148		5,507		858		31,738		(543)		—		1,885			—
Guarantee and commitment fees	4,292		53		281		28		—		—		—		(721)			3,933
Other income/(expense)(3)	1,067		—		—		—		—		—		—		558			1,625
Total revenues	37,824		7,201		5,788		886		31,738		(543)		—		1,722			84,616
Release of/(provision for) losses	128		(4,301)		3,484		138		—		4		—		—			(547)
(Provision for)/release of reserve for losses	(577)		—		374		—		—		—		—		—			(203)
Operating expenses	—		—		—		—		—		—		(23,713)		—			(23,713)
Total non-interest expense	(577)		—		374		—		—		—		(23,713)		—			(23,916)
Core earnings before income taxes	37,375		2,900		9,646		1,024		31,738		(539)		(23,713)		1,722		(4)	60,153
Income tax (expense)/benefit	(7,849)		(609)		(2,026)		(215)		(6,665)		113		4,495		(362)			(13,118)
Core earnings before preferred stock dividends	29,526		2,291		7,620		809		25,073		(426)		(19,218)		1,360		(4)	47,035
Preferred stock dividends	—		—		—		—		—		—		(6,791)		—			(6,791)
Segment core earnings/(losses)	$	29,526	$	2,291	$	7,620	$	809	$	25,073	$	(426)	$	(26,009)	$	1,360	(4)	$	40,244
Total Assets	$	14,549,275	$	1,515,976	$	6,444,264	$	286,824	$	—	$	4,998,854	$	144,754	$	—		27,939,947
Total on- and off-balance sheet program assets at principal balance	$	17,685,961	$	1,599,982	$	6,889,682	$	308,493	$	—	$	—	$	—	$	—		26,484,118

(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, 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	$	23,403	$	4	$	—	$	—		$	65,538
Less: reconciling adjustments(1)(2)(3)	(1,000)		—		(34)		—		(6,665)		—		—		7,699			—
Net effective spread	30,354		7,209		3,159		375		16,738		4		—		7,699			—
Guarantee and commitment fees	4,216		19		286		36		—		—		—		(862)			3,695
Other income/(expense)(3)	400		114		—		—		—		—		—		17,086			17,600
Total revenues	34,970		7,342		3,445		411		16,738		4		—		23,923			86,833
(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)		23,923		(4)	65,499
Income tax (expense)/benefit	(7,252)		(1,434)		(976)		(44)		(3,515)		(1)		4,198		(5,022)			(14,046)
Core earnings before preferred stock dividends	27,283		5,393		3,673		165		13,223		5		(17,190)		18,901		(4)	51,453
Preferred stock dividends	—		—		—		—		—		—		(6,791)		—			(6,791)
Segment core earnings/(losses)	$	27,283	$	5,393	$	3,673	$	165	$	13,223	$	5	$	(23,981)	$	18,901	(4)	$	44,662
Total Assets	$	13,610,138	$	1,491,127	$	5,480,668	$	92,132	$	—	$	4,970,030	$	123,033	$	—		$	25,767,128
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.