Business Segment Reporting (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2020 and 2019:

Table 10.1

Core Earnings by Business Segment
For the Three Months Ended September 30, 2020
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	18,093	$	4,747	$	5,709	$	14,171	$	1,941	$	—		$	44,661
Less: reconciling adjustments(1)(2)(3)	(68)		1,118		1,230		4,430		431		(7,141)			—
Net effective spread	18,025		5,865		6,939		18,601		2,372		(7,141)			—
Guarantee and commitment fees(2)	4,111		213		328		7		—		(1,500)			3,159
Other income/(expense)(3)	443		135		—		—		(125)		(681)			(228)
Non-interest income/(loss)	4,554		348		328		7		(125)		(2,181)			2,931
Release of/(provision for) losses	300		—		(1,182)		228		1		—			(653)
(Provision for)/release of reserve for losses	(628)		—		81		—		—		—			(547)
Other non-interest expense	(5,381)		(1,643)		(1,438)		(2,160)		(3,938)		—			(14,560)
Non-interest expense(4)	(6,009)		(1,643)		(1,357)		(2,160)		(3,938)		—			(15,107)
Core earnings before income taxes	16,870		4,570		4,728		16,676		(1,690)		(9,322)		(5)	31,832
Income tax (expense)/benefit	(3,543)		(960)		(993)		(3,502)		701		1,957			(6,340)
Core earnings before preferred stock dividends	13,327		3,610		3,735		13,174		(989)		(7,365)		(5)	25,492
Preferred stock dividends	—		—		—		—		(5,166)		—			(5,166)
Loss on retirement of preferred stock	—		—		—		—		—		(1,667)			(1,667)
Segment core earnings/(losses)	$	13,327	$	3,610	$	3,735	$	13,174	$	(6,155)	$	(9,032)	(5)	$	18,659
Total assets at carrying value	$	5,961,307	$	2,487,687	$	2,256,011	$	8,716,923	$	4,576,909	$	—		$	23,998,837
Total on- and off-balance sheet program assets at principal balance	$	8,249,349	$	2,735,128	$	2,685,309	$	8,319,502	$	—	$	—		$	21,989,288

(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 "(Losses)/gains 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 September 30, 2019
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	15,345	$	4,491	$	2,602	$	14,853	$	2,821	$	—		$	40,112
Less: reconciling adjustments(1)(2)(3)	(2,164)		(177)		1,900		2,954		(164)		(2,349)			—
Net effective spread	13,181		4,314		4,502		17,807		2,657		(2,349)			—
Guarantee and commitment fees(2)	4,523		250		348		87		—		(1,859)			3,349
Other income/(expense)(3)	390		92		17		—		(110)		(7,170)			(6,781)
Non-interest income/(loss)	4,913		342		365		87		(110)		(9,029)			(3,432)
Provision for loan losses	(760)		—		—		—		—		—			(760)
Release of reserve for losses	137		—		—		—		—		—			137
Other non-interest expense	(5,062)		(1,506)		(913)		(2,277)		(3,837)		—			(13,595)
Non-interest expense(4)	(4,925)		(1,506)		(913)		(2,277)		(3,837)		—			(13,458)
Core earnings before income taxes	12,409		3,150		3,954		15,617		(1,290)		(11,378)		(5)	22,462
Income tax (expense)/benefit	(2,606)		(662)		(830)		(3,280)		360		2,389			(4,629)
Core earnings before preferred stock dividends	9,803		2,488		3,124		12,337		(930)		(8,989)		(5)	17,833
Preferred stock dividends	—		—		—		—		(3,427)		—			(3,427)
Segment core earnings/(losses)	$	9,803	$	2,488	$	3,124	$	12,337	$	(4,357)	$	(8,989)	(5)	$	14,406
Total assets at carrying value	$	4,934,887	$	2,238,558	$	1,692,835	$	8,651,264	$	3,797,690	$	—		$	21,315,234
Total on- and off-balance sheet program assets at principal balance	$	7,393,728	$	2,567,763	$	2,232,602	$	8,738,266	$	—	$	—		$	20,932,359

(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 "(Losses)/gains 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 Nine Months Ended September 30, 2020
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	53,768	$	14,691	$	12,778	$	48,059	$	5,025	$	—		$	134,321
Less: reconciling adjustments(1)(2)(3)	(4,072)		488		4,597		7,026		74		(8,113)			—
Net effective spread	49,696		15,179		17,375		55,085		5,099		(8,113)			—
Guarantee and commitment fees(2)	12,822		658		995		23		—		(5,003)			9,495
Other income/(expense)(3)	2,197		864		12		—		(413)		(3,048)			(388)
Non-interest income/(loss)	15,019		1,522		1,007		23		(413)		(8,051)			9,107
(Release of)/provision for losses	412		—		(4,704)		(222)		(28)		—			(4,542)
Provision for reserve for losses	(262)		—		(278)		—		—		—			(540)
Other non-interest expense	(16,632)		(5,045)		(4,428)		(6,606)		(12,171)		—			(44,882)
Non-interest expense(4)	(16,894)		(5,045)		(4,706)		(6,606)		(12,171)		—			(45,422)
Core earnings before income taxes	48,233		11,656		8,972		48,280		(7,513)		(16,164)		(5)	93,464
Income tax (expense)/benefit	(10,129)		(2,448)		(1,884)		(10,139)		1,689		3,395			(19,516)
Core earnings before preferred stock dividends	38,104		9,208		7,088		38,141		(5,824)		(12,769)		(5)	73,948
Preferred stock dividends	—		—		—		—		(12,536)		—			(12,536)
Loss on retirement of preferred stock	—		—		—		—		—		(1,667)			(1,667)
Segment core earnings/(losses)	$	38,104	$	9,208	$	7,088	$	38,141	$	(18,360)	$	(14,436)	(5)	$	59,745
Total assets at carrying value	$	5,961,307	$	2,487,687	$	2,256,011	$	8,716,923	$	4,576,909	$	—		$	23,998,837
Total on- and off-balance sheet program assets at principal balance	$	8,249,349	$	2,735,128	$	2,685,309	$	8,319,502	$	—	$	—		$	21,989,288

(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 "(Losses)/gains 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 Nine Months Ended September 30, 2019
	Farm & Ranch		USDA Guarantees		Rural  Utilities		Institutional Credit		Corporate		Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	46,424	$	13,045	$	6,264	$	49,425	$	8,607	$	—		$	123,765
Less: reconciling adjustments(1)(2)(3)	(7,171)		(670)		5,467		2,126		(900)		1,148			—
Net effective spread	39,253		12,375		11,731		51,551		7,707		1,148			—
Guarantee and commitment fees(2)	13,861		712		1,069		261		—		(5,638)			10,265
Other income/(expense)(3)	1,058		92		31		—		494		1,050			2,725
Non-interest income/(loss)	14,919		804		1,100		261		494		(4,588)			12,990
Provision for loan losses	(1,074)		—		—		—		—		—			(1,074)
Release of reserve for losses	424		—		—		—		—		—			424
Other non-interest expense	(14,448)		(4,279)		(2,595)		(6,470)		(10,903)		—			(38,695)
Non-interest expense(4)	(14,024)		(4,279)		(2,595)		(6,470)		(10,903)		—			(38,271)
Core earnings before income taxes	39,074		8,900		10,236		45,342		(2,702)		(3,440)		(5)	97,410
Income tax (expense)/benefit	(8,206)		(1,870)		(2,149)		(9,522)		663		722			(20,362)
Core earnings before preferred stock dividends	30,868		7,030		8,087		35,820		(2,039)		(2,718)		(5)	77,048
Preferred stock dividends	—		—		—		—		(10,508)		—			(10,508)
Loss on retirement of preferred stock	—		—		—		—		—		(1,956)			(1,956)
Segment core earnings/(losses)	$	30,868	$	7,030	$	8,087	$	35,820	$	(12,547)	$	(4,674)	(5)	$	64,584
Total assets at carrying value	$	4,934,887	$	2,238,558	$	1,692,835	$	8,651,264	$	3,797,690	$	—		$	21,315,234
Total on- and off-balance sheet program assets at principal balance	$	7,393,728	$	2,567,763	$	2,232,602	$	8,738,266	$	—	$	—		$	20,932,359

(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 "(Losses)/gains 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.