Loans and Allowance for Losses and Concentrations of Credit Risk - Loans and Allowance for Losses and Concentrations (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans

Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are recorded at the unpaid principal balance, net of unamortized premium or discount and other cost adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled basis. As of March 31, 2017 and December 31, 2016, Farmer Mac had no loans held for sale. The following table displays the composition of the loan balances as of March 31, 2017 and December 31, 2016:

Table 5.1



	As of March 31, 2017									As of December 31, 2016
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	2,434,436		$	1,208,950		$	3,643,386		$	2,381,488		$	1,132,966		$	3,514,454
Rural Utilities	999,130			—			999,130			999,512			—			999,512
Total unpaid principal balance⁽¹⁾	3,433,566			1,208,950			4,642,516			3,381,000			1,132,966			4,513,966
Unamortized premiums, discounts and other cost basis adjustments	(1,475		)	—			(1,475		)	(1,116		)	—			(1,116		)
Total loans	3,432,091			1,208,950			4,641,041			3,379,884			1,132,966			4,512,850
Allowance for loan losses	(4,710		)	(1,101		)	(5,811		)	(4,437		)	(978		)	(5,415		)
Total loans, net of allowance	$	3,427,381		$	1,207,849		$	4,635,230		$	3,375,447		$	1,131,988		$	4,507,435


⁽¹⁾	Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Allowance for Losses

Farmer Mac maintains an allowance for losses presented in two components on its consolidated balance sheets: (1) an allowance for loan losses to account for estimated probable losses on loans held, and (2) a reserve for losses to account for estimated probable losses on loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities). Farmer Mac's total allowance for losses was $7.6 million as of March 31, 2017 and $7.4 million as of December 31, 2016. See Note 6 for more information about off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs.

The following is a summary of the changes in the total allowance for losses for the three months ended March 31, 2017 and 2016:

Table 5.2



	For the Three Months Ended
	March 31, 2017									March 31, 2016
	Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses			Allowance for Loan Losses		Reserve for Losses		Total Allowance for Losses
	(in thousands)
Beginning Balance	$	5,415		$	2,020		$	7,435		$	4,480	$	2,083	$	6,563
Provision for/(release of) losses	637			(193		)	444			49		14		63
Charge-offs	(241		)	—			(241		)	—		—		—
Ending Balance	$	5,811		$	1,827		$	7,638		$	4,529	$	2,097	$	6,626

During first quarter 2017, Farmer Mac recorded provisions to its allowance for loan losses of $0.6 million and releases to its reserve for losses of $0.2 million. The provisions to the allowance for loan losses recorded during first quarter 2017 were primarily attributable to an increase in the specific allowance for certain impaired on-balance sheet crop and permanent planting loans resulting from both an increase in the volume of such loans and downgrades in risk ratings on certain loans. The releases to the reserve for losses recorded during the three months ended March 31, 2017 were primarily attributable to (1) a decrease in the general reserve due to improvement in credit quality of certain Agricultural Storage and Processing loans and (2) a net decrease in the balance of loans underlying off-balance sheet Farmer Mac Guaranteed Securities. Farmer Mac recorded $0.2 million of charge-offs to its allowance for loan losses during first quarter 2017. The charge-offs recorded during the first quarter 2017 were primarily related to two impaired crop loans, with one borrower, that were foreclosed and transitioned to REO during first quarter 2017. Farmer Mac had previously recorded a specific allowance of $0.2 million on these impaired crop loans as of December 31, 2016. Subsequent to March 31, 2017, Farmer Mac sold the related properties for $5.7 million and recognized $0.5 million gain on sale of REO.

During first quarter 2016, Farmer Mac recorded provisions to its allowance for loan losses of $49,000 and releases to its reserve for losses of $14,000. The provisions to the allowance for loan losses recorded during first quarter 2016 were attributable to an increase in the specific allowance for on-balance sheet impaired loans due to a modest increase in the balance of such loans. The provisions were partially offset by releases from the general allowance due to repayments of on-balance sheet Agricultural Storage and Processing loans. Farmer Mac recorded no charge-offs to its allowance for loan losses during first quarter 2016.

The following tables present the changes in the total allowance for losses for the three months ended March 31, 2017 and 2016 by commodity type:

Table 5.3



	March 31, 2017
	Crops			Permanent Plantings		Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	3,365		$	1,723	$	1,375		$	405		$	533		$	34		$	7,435
Provision for/(release of) losses	425			147		17			(81		)	(61		)	(3		)	444
Charge-offs	(228		)	—		(13		)	—			—			—			(241		)
Ending Balance	$	3,562		$	1,870	$	1,379		$	324		$	472		$	31		$	7,638



	March 31, 2016
	Crops		Permanent Plantings		Livestock			Part-time Farm		Ag. Storage and Processing			Other		Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	2,791	$	931	$	1,781		$	408	$	649		$	3	$	6,563
Provision for/(release of) losses	101		6		(18		)	36		(62		)	—		63
Ending Balance	$	2,892	$	937	$	1,763		$	444	$	587		$	3	$	6,626

Schedule of Allowance for Losses by Impairment Method and Commodity [Table Text Block]

The following tables present the unpaid principal balances of loans held and loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and the related total allowance for losses by impairment method and commodity type as of March 31, 2017 and December 31, 2016:

Table 5.4



	As of March 31, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,144,328	$	594,950	$	573,922	$	208,401	$	13,640	$	8,901	$	3,544,142
Off-balance sheet	1,253,209		428,436		712,498		142,997		37,841		4,381		2,579,362
Total	$	3,397,537	$	1,023,386	$	1,286,420	$	351,398	$	51,481	$	13,282	$	6,123,504
Individually evaluated for impairment:
On-balance sheet	$	53,568	$	30,980	$	7,396	$	7,300	$	—	$	—	$	99,244
Off-balance sheet	10,078		2,268		4,666		707		—		—		17,719
Total	$	63,646	$	33,248	$	12,062	$	8,007	$	—	$	—	$	116,963
Total Farm & Ranch loans:
On-balance sheet	$	2,197,896	$	625,930	$	581,318	$	215,701	$	13,640	$	8,901	$	3,643,386
Off-balance sheet	1,263,287		430,704		717,164		143,704		37,841		4,381		2,597,081
Total	$	3,461,183	$	1,056,634	$	1,298,482	$	359,405	$	51,481	$	13,282	$	6,240,467
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,876	$	667	$	765	$	155	$	21	$	26	$	3,510
Off-balance sheet	446		260		217		33		451		5		1,412
Total	$	2,322	$	927	$	982	$	188	$	472	$	31	$	4,922
Individually evaluated for impairment:
On-balance sheet	$	962	$	936	$	275	$	128	$	—	$	—	$	2,301
Off-balance sheet	278		7		122		8		—		—		415
Total	$	1,240	$	943	$	397	$	136	$	—	$	—	$	2,716
Total Farm & Ranch loans:
On-balance sheet	$	2,838	$	1,603	$	1,040	$	283	$	21	$	26	$	5,811
Off-balance sheet	724		267		339		41		451		5		1,827
Total	$	3,562	$	1,870	$	1,379	$	324	$	472	$	31	$	7,638



	As of December 31, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,115,450	$	569,360	$	537,859	$	183,660	$	11,545	$	8,894	$	3,426,768
Off-balance sheet	1,241,851		437,575		752,473		131,889		36,506		4,503		2,604,797
Total	$	3,357,301	$	1,006,935	$	1,290,332	$	315,549	$	48,051	$	13,397	$	6,031,565
Individually evaluated for impairment:
On-balance sheet	$	41,648	$	27,770	$	10,658	$	7,610	$	—	$	—	$	87,686
Off-balance sheet	11,549		2,735		4,854		915		—		—		20,053
Total	$	53,197	$	30,505	$	15,512	$	8,525	$	—	$	—	$	107,739
Total Farm & Ranch loans:
On-balance sheet	$	2,157,098	$	597,130	$	548,517	$	191,270	$	11,545	$	8,894	$	3,514,454
Off-balance sheet	1,253,400		440,310		757,327		132,804		36,506		4,503		2,624,850
Total	$	3,410,498	$	1,037,440	$	1,305,844	$	324,074	$	48,051	$	13,397	$	6,139,304
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	2,000	$	652	$	735	$	193	$	22	$	28	$	3,630
Off-balance sheet	420		281		241		54		511		6		1,513
Total	$	2,420	$	933	$	976	$	247	$	533	$	34	$	5,143
Individually evaluated for impairment:
On-balance sheet	$	613	$	770	$	270	$	132	$	—	$	—	$	1,785
Off-balance sheet	332		20		129		26		—		—		507
Total	$	945	$	790	$	399	$	158	$	—	$	—	$	2,292
Total Farm & Ranch loans:
On-balance sheet	$	2,613	$	1,422	$	1,005	$	325	$	22	$	28	$	5,415
Off-balance sheet	752		301		370		80		511		6		2,020
Total	$	3,365	$	1,723	$	1,375	$	405	$	533	$	34	$	7,435

Impaired Financing Receivables [Table Text Block]

The following tables present by commodity type the unpaid principal balances, recorded investment, and specific allowance for losses related to impaired loans and the recorded investment in loans on nonaccrual status as of March 31, 2017 and December 31, 2016:

Table 5.5



	As of March 31, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	7,603	$	3,665	$	791	$	1,965	$	—	$	—	$	14,024
Unpaid principal balance	7,619		3,669		791		1,970		—		—		14,049
With a specific allowance:
Recorded investment⁽¹⁾	55,927		29,515		11,149		6,026		—		—		102,617
Unpaid principal balance	56,027		29,579		11,271		6,037		—		—		102,914
Associated allowance	1,240		943		397		136		—		—		2,716
Total:
Recorded investment	63,530		33,180		11,940		7,991		—		—		116,641
Unpaid principal balance	63,646		33,248		12,062		8,007		—		—		116,963
Associated allowance	1,240		943		397		136		—		—		2,716

Recorded investment of loans on nonaccrual status⁽²⁾	$	17,801	$	25,974	$	1,941	$	4,797	$	—	$	—	$	50,513


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $101.0 million (87 percent) of impaired loans as of March 31, 2017, which resulted in a specific allowance of $2.3 million.


⁽²⁾	Includes $1.0 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.



	As of December 31, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	20,761	$	3,683	$	1,054	$	1,970	$	—	$	—	$	27,468
Unpaid principal balance	20,816		3,688		1,055		1,975		—		—		27,534
With a specific allowance:
Recorded investment⁽¹⁾	32,326		26,748		14,322		6,535		—		—		79,931
Unpaid principal balance	32,381		26,817		14,457		6,550		—		—		80,205
Associated allowance	945		790		399		158		—		—		2,292
Total:
Recorded investment	53,087		30,431		15,376		8,505		—		—		107,399
Unpaid principal balance	53,197		30,505		15,512		8,525		—		—		107,739
Associated allowance	945		790		399		158		—		—		2,292

Recorded investment of loans on nonaccrual status⁽²⁾	$	13,405	$	10,785	$	2,696	$	5,256	$	—	$	—	$	32,142


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $76.5 million (71 percent) of impaired loans as of December 31, 2016, which resulted in a specific allowance of $1.6 million.


⁽²⁾	Includes $12.4 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

The following table presents by commodity type the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2017 and 2016:

Table 5.6



	March 31, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	58,309	$	31,806	$	13,658	$	8,248	$	—	$	—	$	112,021
Income recognized on impaired loans	302		152		177		103		—		—		734



	March 31, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	23,555	$	23,648	$	16,318	$	8,567	$	4,919	$	—	$	77,007
Income recognized on impaired loans	2		44		15		72		—		—		133

Schedule of Certain Loans Acquired in Transfer Acquired During Period [Table Text Block]

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the three months ended March 31, 2017 and 2016 and the outstanding balances and carrying amounts of all such loans as of March 31, 2017 and December 31, 2016:

Table 5.7



	For the Three Months Ended
	March 31, 2017		March 31, 2016
	(in thousands)
Unpaid principal balance at acquisition date:
Loans underlying LTSPCs	$	311	$	1,267
Loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities)	—		148
Total unpaid principal balance at acquisition date	311		1,415
Contractually required payments receivable	311		1,435
Impairment recognized subsequent to acquisition	—		—
Recovery/release of allowance for all outstanding acquired defaulted loans	14		4



	As of
	March 31, 2017		December 31, 2016
	(in thousands)
Outstanding balance	$	14,083	$	14,669
Carrying amount	12,765		13,069

Past Due Financing Receivables [Table Text Block]

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs are presented in the table below. As of March 31, 2017, there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities loan portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities loans.

Table 5.8



	90-Day Delinquencies⁽¹⁾				Net Credit Losses
	As of				For the Three Months Ended
	March 31, 2017		December 31, 2016		March 31, 2017		March 31, 2016
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	49,534	$	19,757	$	246	$	39
Total on-balance sheet	$	49,534	$	19,757	$	246	$	39
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	1,273	$	1,281	$	—	$	—
Total off-balance sheet	$	1,273	$	1,281	$	—	$	—
Total	$	50,807	$	21,038	$	246	$	39


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

Of the $49.5 million of on-balance sheet loans reported as 90-day delinquencies as of March 31, 2017, $0.2 million were loans subject to "removal-of-account" provisions.

Financing Receivable Credit Quality Indicators [Table Text Block]

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities as of March 31, 2017 and December 31, 2016:

Table 5.9



	As of March 31, 2017
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade⁽¹⁾
On-balance sheet:
Acceptable	$	2,104,716	$	593,926	$	542,790	$	206,233	$	13,640	$	8,901	$	3,470,206
Special mention⁽²⁾	39,725		1,024		31,132		2,168		—		—		74,049
Substandard⁽³⁾	53,455		30,980		7,396		7,300		—		—		99,131
Total on-balance sheet	$	2,197,896	$	625,930	$	581,318	$	215,701	$	13,640	$	8,901	$	3,643,386
Off-Balance Sheet:
Acceptable	$	1,204,807	$	395,331	$	687,070	$	138,332	$	35,950	$	3,805	$	2,465,295
Special mention⁽²⁾	26,201		16,475		12,702		4,000		—		14		59,392
Substandard⁽³⁾	32,279		18,898		17,392		1,372		1,891		562		72,394
Total off-balance sheet	$	1,263,287	$	430,704	$	717,164	$	143,704	$	37,841	$	4,381	$	2,597,081
Total Ending Balance:
Acceptable	$	3,309,523	$	989,257	$	1,229,860	$	344,565	$	49,590	$	12,706	$	5,935,501
Special mention⁽²⁾	65,926		17,499		43,834		6,168		—		14		133,441
Substandard⁽³⁾	85,734		49,878		24,788		8,672		1,891		562		171,525
Total	$	3,461,183	$	1,056,634	$	1,298,482	$	359,405	$	51,481	$	13,282	$	6,240,467

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	23,484	$	20,690	$	2,612	$	2,748	$	—	$	—	$	49,534
Off-balance sheet	880		—		—		393		—		—		1,273
90 days or more past due	$	24,364	$	20,690	$	2,612	$	3,141	$	—	$	—	$	50,807


⁽¹⁾	Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.


⁽²⁾	Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.


⁽³⁾	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, 2016
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade⁽¹⁾
On-balance sheet:
Acceptable	$	2,080,227	$	568,221	$	504,784	$	179,288	$	11,545	$	8,894	$	3,352,959
Special mention⁽²⁾	35,223		1,139		33,075		4,372		—		—		73,809
Substandard⁽³⁾	41,648		27,770		10,658		7,610		—		—		87,686
Total on-balance sheet	$	2,157,098	$	597,130	$	548,517	$	191,270	$	11,545	$	8,894	$	3,514,454
Off-Balance Sheet
Acceptable	$	1,201,144	$	403,256	$	724,056	$	125,440	$	34,537	$	3,916	$	2,492,349
Special mention⁽²⁾	20,422		16,881		15,341		2,344		—		6		54,994
Substandard⁽³⁾	31,834		20,173		17,930		5,020		1,969		581		77,507
Total off-balance sheet	$	1,253,400	$	440,310	$	757,327	$	132,804	$	36,506	$	4,503	$	2,624,850
Total Ending Balance:
Acceptable	$	3,281,371	$	971,477	$	1,228,840	$	304,728	$	46,082	$	12,810	$	5,845,308
Special mention⁽²⁾	55,645		18,020		48,416		6,716		—		6		128,803
Substandard⁽³⁾	73,482		47,943		28,588		12,630		1,969		581		165,193
Total	$	3,410,498	$	1,037,440	$	1,305,844	$	324,074	$	48,051	$	13,397	$	6,139,304

Commodity analysis of past due loans⁽¹⁾
On-balance sheet	$	13,449	$	3,245	$	669	$	2,394	$	—	$	—	$	19,757
Off-balance sheet	373		407		38		463		—		—		1,281
90 days or more past due	$	13,822	$	3,652	$	707	$	2,857	$	—	$	—	$	21,038


⁽¹⁾	Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.


⁽²⁾	Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.


⁽³⁾	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.

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

Concentrations of Credit Risk

The following table sets forth the geographic and commodity/collateral diversification, as well as the range of original loan-to-value ratios, for all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs as of March 31, 2017 and December 31 2016:

Table 5.10



	As of
	March 31, 2017		December 31, 2016
	(in thousands)
By commodity/collateral type:
Crops	$	3,461,183	$	3,410,498
Permanent plantings	1,056,634		1,037,440
Livestock	1,298,482		1,305,844
Part-time farm	359,405		324,074
Ag. Storage and Processing	51,481		48,051
Other	13,282		13,397
Total	$	6,240,467	$	6,139,304
By geographic region⁽¹⁾:
Northwest	$	688,304	$	657,403
Southwest	1,796,177		1,791,745
Mid-North	2,151,503		2,104,867
Mid-South	858,319		837,121
Northeast	237,968		229,679
Southeast	508,196		518,489
Total	$	6,240,467	$	6,139,304
By original loan-to-value ratio:
0.00% to 40.00%	$	1,783,420	$	1,740,792
40.01% to 50.00%	1,431,980		1,401,630
50.01% to 60.00%	1,719,971		1,706,099
60.01% to 70.00%	1,064,391		1,086,295
70.01% to 80.00%	204,639		180,142
80.01% to 90.00%	36,066		24,346
Total	$	6,240,467	$	6,139,304


⁽¹⁾	Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

The original loan-to-value ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when available, the updated appraised value at the time of guarantee, purchase, or commitment. Current loan-to-value ratios may be higher or lower than the original loan-to-value ratios.