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Business Segment Reporting
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Business Segment Reporting Disclosure
BUSINESS SEGMENT REPORTING

Farmer Mac's operations consist of four operating segments – Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit. The Institutional Credit segment comprises Farmer Mac's purchases and guarantees of AgVantage securities related to general obligations of lenders that are secured by pools of eligible loans.

Farmer Mac uses these four segments to manage business risk, and each segment is based on distinct products and distinct business activities.  In addition to these four operating segments, a corporate segment is presented.  That segment represents activity in Farmer Mac's investment portfolio and other corporate activities.   Each operating segment's financial results include directly attributable revenues and expenses.  Corporate charges for administrative expenses that are not directly attributable to an operating segment are allocated to each segment based on headcount.

Farmer Mac uses core earnings to measure corporate economic performance and develop financial plans because, in management's view, core earnings is a useful alternative measure in understanding Farmer Mac's economic performance, transaction economics, and business trends.  Core earnings principally differs from net income attributable to common stockholders by excluding the effects of fair value fluctuations, which are not expected to have a cumulative net impact on financial condition or results of operations reported in accordance with generally accepted accounting principles ("GAAP") if the related financial instruments are held to maturity, as is generally expected. Core earnings also differs from net income attributable to common stockholders by excluding specified infrequent or unusual transactions that Farmer Mac believes are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business. This corporate economic performance measure may not be comparable to similarly labeled measures disclosed by other companies.

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 reportable operating segments will differ from the stand-alone financial statements of Farmer Mac's subsidiaries.  These differences will 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 dividends and interest expense related to the issuance of capital and the incurrence of indebtedness managed at the corporate level.  The allocation of general and administrative expenses that are not directly attributable to an operating segment may also result in differences.  

The following tables present core earnings for Farmer Mac's operating segments and a reconciliation to consolidated net income for the years ended December 31, 2016, 2015, and 2014:

Table 14.1

Core Earnings by Business Segment
For the Year Ended December 31, 2016
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
47,219

 
$
21,865

 
$
11,739

 
$
48,756

 
$
10,695

 
$
—

 
$
140,274

Less: reconciling adjustments(1)(2)(3)
(6,831
)
 
(2,446
)
 
(1,373
)
 
(3,205
)
 
(1,317
)
 
15,172

 
—

Net effective spread
40,388

 
19,419

 
10,366

 
45,551

 
9,378

 
15,172

 
—

Guarantee and commitment fees(2)
15,542

 
101

 
1,694

 
1,833

 
—

 
(4,302
)
 
14,868

Other income/(expense)(3)(4)
539

 
222

 
2

 
—

 
(231
)
 
5,068

 
5,600

Non-interest income/(loss)
16,081

 
323

 
1,696

 
1,833

 
(231
)
 
766

 
20,468

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(1,065
)
 
—

 
—

 
—

 
—

 
—

 
(1,065
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
63

 
—

 
—

 
—

 
—

 
—

 
63

Other non-interest expense
(16,206
)
 
(4,200
)
 
(2,856
)
 
(3,786
)
 
(13,335
)
 
—

 
(40,383
)
Non-interest expense(5)
(16,143
)
 
(4,200
)
 
(2,856
)
 
(3,786
)
 
(13,335
)
 
—

 
(40,320
)
Core earnings before income taxes
39,261

 
15,542

 
9,206

 
43,598

 
(4,188
)
 
15,938

(6) 
119,357

Income tax (expense)/benefit
(13,743
)
 
(5,439
)
 
(3,223
)
 
(15,258
)
 
1,185

 
(5,579
)
 
(42,057
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends
25,518

 
10,103

 
5,983

 
28,340

 
(3,003
)
 
10,359

(6) 
77,300

Preferred stock dividends
—

 
—

 
—

 
—

 
(13,182
)
 
—

 
(13,182
)
Non-controlling interest - preferred stock dividends
—

 
—

 
—

 
—

 
34

 
—

 
34

Segment core earnings/(losses)
$
25,518

 
$
10,103

 
$
5,983

 
$
28,340

 
$
(16,151
)
 
$
10,359

(6) 
$
64,152

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
3,582,098

 
$
2,096,503

 
$
1,012,014

 
$
6,008,574

 
$
2,906,831

 
$
—

 
$
15,606,020

Total on- and off-balance sheet program assets at principal balance
$
6,139,304

 
$
2,094,375

 
$
1,878,110

 
$
7,287,686

 


 
—

 
$
17,399,475

(1) 
Excludes 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 and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities. In 2016 and prior periods, fair value adjustments on financial derivatives included variation margin payment amounts because those amounts were considered to be collateral of the related exposure and were accounted for as unrealized gains or losses. However, effective first quarter 2017, CME implemented a change in its rules related to the exchange of variation margin, whereby variation margin payments will be considered a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 6 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts will be accounted for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change, their economic character will remain the same as they were before the change. The fair value fluctuations related to the exchange of variation margin, whether considered a partial settlement of or the pledge of collateral under a derivatives contract, are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning in 2017, this reconciling adjustment will include realized gains and losses on financial derivatives centrally cleared through CME resulting from the exchange of variation margin. As a result, core earnings subsequent to 2016 will be presented on a consistent basis with core earnings in 2016 and prior periods.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.
(6) 
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 and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.

Core Earnings by Business Segment
For the Year Ended December 31, 2015
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
43,270

 
$
17,751

 
$
11,729

 
$
44,970

 
$
8,087

 
$
—

 
$
125,807

Less: reconciling adjustments(1)(2)(3)
(4,466
)
 
88

 
(335
)
 
(1,515
)
 
(199
)
 
6,427

 
—

Net effective spread
38,804

 
17,839

 
11,394

 
43,455

 
7,888

 
6,427

 
—

Guarantee and commitment fees(2)
15,076

 
17

 
397

 
1,665

 
—

 
(3,078
)
 
14,077

Other income/(expense)(3)(4)
1,040

 
100

 
25

 
—

 
(1,972
)
 
6,871

 
6,064

Non-interest income/(loss)
16,116

 
117

 
422

 
1,665

 
(1,972
)
 
3,793

 
20,141

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
(2,388
)
 
—

 
—

 
—

 
—

 
—

 
(2,388
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
2,180

 
—

 
—

 
—

 
—

 
—

 
2,180

Other non-interest expense
(16,876
)
 
(3,449
)
 
(3,364
)
 
(2,109
)
 
(11,864
)
 
—

 
(37,662
)
Non-interest expense(5)
(14,696
)
 
(3,449
)
 
(3,364
)
 
(2,109
)
 
(11,864
)
 
—

 
(35,482
)
Core earnings before income taxes
37,836

 
14,507

 
8,452

 
43,011

 
(5,948
)
 
10,220

(6) 
108,078

Income tax (expense)/benefit
(13,188
)
 
(5,176
)
 
(2,947
)
 
(15,054
)
 
3,803

 
(1,677
)
 
(34,239
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends
24,648

 
9,331

 
5,505

 
27,957

 
(2,145
)
 
8,543

(6) 
73,839

Preferred stock dividends
—

 
—

 
—

 
—

 
(13,182
)
 
—

 
(13,182
)
Non-controlling interest - preferred stock dividends
—

 
—

 
—

 
—

 
(5,139
)
 
—

 
(5,139
)
Loss on retirement of preferred stock
—

 
—

 
—

 
—

 
—

 
(8,147
)
 
(8,147
)
Segment core earnings/(losses)
$
24,648

 
$
9,331

 
$
5,505

 
$
27,957

 
$
(20,466
)
 
$
396

(6) 
$
47,371

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
3,041,386

 
$
1,977,609

 
$
1,019,279

 
$
5,420,195

 
$
4,081,885

 
$
—

 
$
15,540,354

Total on- and off-balance sheet program assets at principal balance
$
5,725,299

 
$
1,918,277

 
$
1,530,990

 
$
6,724,254

 
 
 
—

 
$
15,898,820

(1) 
Excludes 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 and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.
(5) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.
(6) 
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 and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.


Core Earnings by Business Segment
For the Year Ended December 31, 2014
 
Farm & Ranch
 
USDA Guarantees
 
Rural 
Utilities
 
Institutional Credit
 
Corporate
 
Reconciling
Adjustments
 
Consolidated Net Income
 
(in thousands)
Net interest income
$
36,373

 
$
17,362

 
$
45

 
$
41,870

 
$
(25,303
)
 
$
—

 
$
70,347

Less: reconciling adjustments(1)(2)(3)(4)
(4,550
)
 
904

 
10,696

 
(2,814
)
 
39,110

 
(43,346
)
 
—

Net effective spread
31,823

 
18,266

 
10,741

 
39,056

 
13,807

 
(43,346
)
 
—

Guarantee and commitment fees(2)
15,107

 
134

 
—

 
1,539

 
—

 
(2,086
)
 
14,694

Other income/(expense)(3)(4(5)
762

 
63

 
9

 
—

 
(4,913
)
 
22,675

 
18,596

Non-interest income/(loss)
15,869

 
197

 
9

 
1,539

 
(4,913
)
 
20,589

 
33,290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of loan losses
961

 
—

 
—

 
—

 
—

 
—

 
961

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Release of reserve for losses
2,205

 
—

 
—

 
—

 
—

 
—

 
2,205

Other non-interest expense
(15,180
)
 
(2,955
)
 
(3,130
)
 
(1,891
)
 
(10,541
)
 
—

 
(33,697
)
Non-interest expense(6)
(12,975
)
 
(2,955
)
 
(3,130
)
 
(1,891
)
 
(10,541
)
 
—

 
(31,492
)
Core earnings before income taxes
35,678

 
15,508

 
7,620

 
38,704

 
(1,647
)
 
(22,757
)
(7) 
73,106

Income tax (expense)/benefit
(12,486
)
 
(5,430
)
 
(2,668
)
 
(13,548
)
 
23,347

 
7,961

 
(2,824
)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest - preferred stock dividends
23,192

 
10,078

 
4,952

 
25,156

 
21,700

 
(14,796
)
(7) 
70,282

Preferred stock dividends
—

 
—

 
—

 
—

 
(9,839
)
 
—

 
(9,839
)
Non-controlling interest - preferred stock dividends
—

 
—

 
—

 
—

 
(22,192
)
 
—

 
(22,192
)
Segment core earnings/(losses)
$
23,192

 
$
10,078

 
$
4,952

 
$
25,156

 
$
(10,331
)
 
$
(14,796
)
(7) 
$
38,251

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets at carrying value
$
2,611,401

 
$
1,825,210

 
$
995,082

 
$
5,459,296

 
$
3,396,832

 
$
—

 
$
14,287,821

Total on- and off-balance sheet program assets at principal balance
$
5,417,174

 
$
1,798,034

 
$
985,609

 
$
6,396,941

 
 
 
—

 
$
14,597,758

(1) 
Excludes 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 and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) 
Includes the reclassification of interest income and interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased, respectively to other income/(expense).
(5) 
Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.
(6) 
Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.
(7) 
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 and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.