Business Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following tables present core earnings for Farmer Mac's operating segments and a reconciliation to consolidated net income for the three and six months ended June 30, 2020 and 2019:

Table 10.1

Core Earnings by Business Segment
For the Three Months Ended June 30, 2020
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	19,310	$	5,403	$	2,322	$	20,084	$	1,229	$	—		$	48,348
Less: reconciling adjustments(1)(2)(3)	(2,577)		(714)		3,194		(1,302)		(480)		1,879			—
Net effective spread	16,733		4,689		5,516		18,782		749		1,879			—
Guarantee and commitment fees(2)	4,394		210		332		7		—		(1,803)			3,140
Other income/(expense)(3)	585		617		5		—		(159)		6,683			7,731
Non-interest income/(loss)	4,979		827		337		7		(159)		4,880			10,871
Provision for loan losses	920		—		(1,397)		41		(15)		—			(451)
Provision for reserve for losses	370		—		30		—		—		—			400
Other non-interest expense	(5,254)		(1,584)		(1,386)		(2,083)		(3,800)		—			(14,107)
Non-interest expense(4)	(4,884)		(1,584)		(1,356)		(2,083)		(3,800)		—			(13,707)
Core earnings before income taxes	17,748		3,932		3,100		16,747		(3,225)		6,759		(5)	45,061
Income tax (expense)/benefit	(3,727)		(826)		(651)		(3,517)		705		(1,419)			(9,435)
Core earnings before preferred stock dividends	14,021		3,106		2,449		13,230		(2,520)		5,340		(5)	35,626
Preferred stock dividends	—		—		—		—		(3,939)		—			(3,939)
Segment core earnings/(losses)	$	14,021	$	3,106	$	2,449	$	13,230	$	(6,459)	$	5,340	(5)	$	31,687
Total assets at carrying value	$	5,746,556	$	2,408,713	$	2,281,490	$	9,049,393	$	4,446,504	$	—		$	23,932,656
Total on- and off-balance sheet program assets at principal balance	$	8,017,850	$	2,677,807	$	2,691,621	$	8,654,830	$	—	$	—		$	22,042,108

⁽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⁾Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

⁽⁵⁾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, 2019
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	15,797	$	4,112	$	3,936	$	16,385	$	2,824	$	—		$	43,054
Less: reconciling adjustments(1)(2)(3)	(2,462)		(15)		60		986		(268)		1,699			—
Net effective spread	13,335		4,097		3,996		17,371		2,556		1,699			—
Guarantee and commitment fees(2)	4,594		238		358		86		—		(1,873)			3,403
Other income/(expense)(3)	188		—		7		—		582		8,552			9,329
Non-interest income/(loss)	4,782		238		365		86		582		6,679			12,732
Provision for loan losses	(578)		—		—		—		—		—			(578)
Release of reserve for losses	158		—		—		—		—		—			158
Other non-interest expense	(4,587)		(1,345)		(816)		(2,034)		(3,428)		—			(12,210)
Non-interest expense(4)	(4,429)		(1,345)		(816)		(2,034)		(3,428)		—			(12,052)
Core earnings before income taxes	13,110		2,990		3,545		15,423		(290)		8,378		(5)	43,156
Income tax (expense)/benefit	(2,753)		(628)		(744)		(3,239)		13		(1,760)			(9,111)
Core earnings before preferred stock dividends	10,357		2,362		2,801		12,184		(277)		6,618		(5)	34,045
Preferred stock dividends	—		—		—		—		(3,785)		—			(3,785)
Loss on retirement of preferred stock	—		—		—		—		—		(1,956)			(1,956)
Segment core earnings/(losses)	$	10,357	$	2,362	$	2,801	$	12,184	$	(4,062)	$	4,662	(5)	$	28,304
Total assets at carrying value	$	4,872,766	$	2,198,514	$	1,580,979	$	8,633,059	$	3,452,842	$	—		$	20,738,160
Total on- and off-balance sheet program assets at principal balance	$	7,291,352	$	2,521,394	$	2,155,671	$	8,778,318	$	—	$	—		$	20,746,735

⁽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⁾Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

⁽⁵⁾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, 2020
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	35,675	$	9,944	$	7,069	$	33,888	$	3,084	$	—		$	89,660
Less: reconciling adjustments(1)(2)(3)	(4,004)		(630)		3,367		2,596		(357)		(972)			—
Net effective spread	31,671		9,314		10,436		36,484		2,727		(972)			—
Guarantee and commitment fees(2)	8,711		445		667		16		—		(3,503)			6,336
Other income/(expense)(3)	1,754		729		12		—		(288)		(2,367)			(160)
Non-interest income/(loss)	10,465		1,174		679		16		(288)		(5,870)			6,176
Provision for loan losses	112		—		(3,522)		(450)		(29)		—			(3,889)
Provision for reserve for losses	366		—		(359)		—		—		—			7
Other non-interest expense	(11,251)		(3,402)		(2,990)		(4,446)		(8,233)		—			(30,322)
Non-interest expense(4)	(10,885)		(3,402)		(3,349)		(4,446)		(8,233)		—			(30,315)
Core earnings before income taxes	31,363		7,086		4,244		31,604		(5,823)		(6,842)		(5)	61,632
Income tax (expense)/benefit	(6,586)		(1,488)		(891)		(6,637)		988		1,438			(13,176)
Core earnings before preferred stock dividends	24,777		5,598		3,353		24,967		(4,835)		(5,404)		(5)	48,456
Preferred stock dividends	—		—		—		—		(7,370)		—			(7,370)
Segment core earnings/(losses)	$	24,777	$	5,598	$	3,353	$	24,967	$	(12,205)	$	(5,404)	(5)	$	41,086
Total assets at carrying value	$	5,746,556	$	2,408,713	$	2,281,490	$	9,049,393	$	4,446,504	$	—		$	23,932,656
Total on- and off-balance sheet program assets at principal balance	$	8,017,850	$	2,677,807	$	2,691,621	$	8,654,830	$	—	$	—		$	22,042,108

⁽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⁾Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

⁽⁵⁾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, 2019
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	31,079	$	8,554	$	3,662	$	34,572	$	5,786	$	—		$	83,653
Less: reconciling adjustments(1)(2)(3)	(5,007)		(493)		3,567		(828)		(736)		3,497			—
Net effective spread	26,072		8,061		7,229		33,744		5,050		3,497			—
Guarantee and commitment fees(2)	9,338		462		721		174		—		(3,779)			6,916
Other income/(expense)(3)	668		—		14		—		604		8,220			9,506
Non-interest income/(loss)	10,006		462		735		174		604		4,441			16,422
Provision for loan losses	(314)		—		—		—		—		—			(314)
Release of reserve for losses	287		—		—		—		—		—			287
Other non-interest expense	(9,386)		(2,773)		(1,682)		(4,193)		(7,066)		—			(25,100)
Non-interest expense(4)	(9,099)		(2,773)		(1,682)		(4,193)		(7,066)		—			(24,813)
Core earnings before income taxes	26,665		5,750		6,282		29,725		(1,412)		7,938		(5)	74,948
Income tax (expense)/benefit	(5,600)		(1,208)		(1,319)		(6,242)		303		(1,667)			(15,733)
Core earnings before preferred stock dividends	21,065		4,542		4,963		23,483		(1,109)		6,271		(5)	59,215
Preferred stock dividends	—		—		—		—		(7,081)		—			(7,081)
Loss on retirement of preferred stock	—		—		—		—		—		(1,956)			(1,956)
Segment core earnings/(losses)	$	21,065	$	4,542	$	4,963	$	23,483	$	(8,190)	$	4,315	(5)	$	50,178
Total assets at carrying value	$	4,872,766	$	2,198,514	$	1,580,979	$	8,633,059	$	3,452,842	$	—		$	20,738,160
Total on- and off-balance sheet program assets at principal balance	$	7,291,352	$	2,521,394	$	2,155,671	$	8,778,318	$	—	$	—		$	20,746,735

⁽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⁾Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

⁽⁵⁾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.