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Accounting Policies | 3 Months Ended
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Mar. 31, 2017
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The interim unaudited consolidated financial statements of the Federal Agricultural Mortgage Corporation ("Farmer Mac") and subsidiaries have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Farmer Mac and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted as permitted by SEC rules and regulations. The December 31, 2016 consolidated balance sheet presented in this report has been derived from Farmer Mac's audited 2016 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 2016 consolidated financial statements of Farmer Mac and subsidiaries included in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 9, 2017. That Form 10-K describes Farmer Mac's significant accounting policies, which include its policies on Principles of Consolidation; Cash and Cash Equivalents and Statements of Cash Flows; Transfers of Financial Assets and Liabilities; Investment Securities, Farmer Mac Guaranteed Securities, and USDA Securities; Loans; Securitization of Loans; Real Estate Owned; Financial Derivatives; Notes Payable; Allowance for Loan Losses and Reserve for Losses; Earnings Per Common Share; Income Taxes; Stock-Based Compensation; Comprehensive Income; Long-Term Standby Purchase Commitments; Fair Value Measurement; and Consolidation of Variable Interest Entities ("VIEs"). Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year. Presented below are Farmer Mac's significant accounting policies that contain updated information for the three months ended March 31, 2017. Principles of Consolidation The consolidated financial statements include the accounts of Farmer Mac and its three subsidiaries: (1) Farmer Mac Mortgage Securities Corporation ("FMMSC"), whose principal activities are to facilitate the purchase and issuance of Farmer Mac Guaranteed Securities; (2) Farmer Mac II LLC, whose principal activity is the operation of substantially all of the business related to the USDA Guarantees line of business – primarily the acquisition of USDA Securities; and (3) Contour Valuation Services, LLC (which began doing business as AgVisory during first quarter 2016), whose principal activity is to appraise agricultural real estate. As of May 1, 2017, Farmer Mac transferred its entire 65% ownership interest in AgVisory back to the limited liability company as a company redemption in exchange for $5,000. Farmer Mac recognized a loss of approximately $0.1 million after-tax upon the transfer, which will be reflected in Farmer Mac's financial results for second quarter 2017. The consolidated financial statements also include the accounts of VIEs in which Farmer Mac determined itself to be the primary beneficiary. The following tables present, by line of business, details about the consolidation of VIEs: Table 1.1
| Consolidation of Variable Interest Entities
| As of March 31, 2017
| Farm & Ranch |  | USDA Guarantees |  | Rural Utilities |  | Institutional Credit |  | Corporate |  | Total
| (in thousands)
On-Balance Sheet: |  |  |  |  |  |  |  |  |  |  |
Consolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Loans held for investment in consolidated trusts, at amortized cost | $ | 1,208,950 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,208,950 |
Debt securities of consolidated trusts held by third parties (1) | 1,212,792 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,212,792 |
Unconsolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Farmer Mac Guaranteed Securities: |  |  |  |  |  |  |  |  |  |  |
Carrying value (2) | — |  |  | 41,130 |  |  | — |  |  | 30,054 |  |  | — |  |  | 71,184 |
Maximum exposure to loss (3) | — |  |  | 40,734 |  |  | — |  |  | 30,000 |  |  | — |  |  | 70,734 |
Investment securities: |  |  |  |  |  |  |  |  |  |  |
Carrying value (4) | — |  |  | — |  |  | — |  |  | — |  |  | 809,988 |  |  | 809,988 |
Maximum exposure to loss (3) (4) | — |  |  | — |  |  | — |  |  | — |  |  | 808,155 |  |  | 808,155 |
Off-Balance Sheet: |  |  |  |  |  |  |  |  |  |  |
Unconsolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Farmer Mac Guaranteed Securities: |  |  |  |  |  |  |  |  |  |  |
Maximum exposure to loss (3) (5) | 387,272 |  |  | 135,334 |  |  | — |  |  | 970,000 |  |  | — |  |  | 1,492,606 |
(1) | Includes borrower remittances of $3.8 million. The borrower remittances had not been passed through to third party investors as of March 31, 2017.
(2) | Includes $0.4 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $0.1 million.
(3) | Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.
(4) | Includes auction-rate certificates, asset-backed securities, and government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities.
(5) | The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.
| Consolidation of Variable Interest Entities
| As of December 31, 2016
| Farm & Ranch |  | USDA Guarantees |  | Rural Utilities |  | Institutional Credit |  | Corporate |  | Total
| (in thousands)
On-Balance Sheet: |  |  |  |  |  |  |  |  |  |  |
Consolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Loans held for investment in consolidated trusts, at amortized cost | $ | 1,132,966 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,132,966 |
Debt securities of consolidated trusts held by third parties (1) | 1,142,704 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,142,704 |
Unconsolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Farmer Mac Guaranteed Securities: |  |  |  |  |  |  |  |  |  |  |
Carrying value (2) | — |  |  | 36,042 |  |  | — |  |  | 30,347 |  |  | — |  |  | 66,389 |
Maximum exposure to loss (3) | — |  |  | 35,599 |  |  | — |  |  | 30,000 |  |  | — |  |  | 65,599 |
Investment securities: |  |  |  |  |  |  |  |  |  |  |
Carrying value (4) | — |  |  | — |  |  | — |  |  | — |  |  | 827,874 |  |  | 827,874 |
Maximum exposure to loss (3) (4) | — |  |  | — |  |  | — |  |  | — |  |  | 825,909 |  |  | 825,909 |
Off-Balance Sheet: |  |  |  |  |  |  |  |  |  |  |
Unconsolidated VIEs: |  |  |  |  |  |  |  |  |  |  |
Farmer Mac Guaranteed Securities: |  |  |  |  |  |  |  |  |  |  |
Maximum exposure to loss (3) (5) | 415,441 |  |  | 103,976 |  |  | — |  |  | 970,000 |  |  | — |  |  | 1,489,417 |
(1) | Includes borrower remittances of $9.7 million, which have not been passed through to third party investors as of December 31, 2016.
(2) | Includes $0.4 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $0.3 million.
(3) | Farmer Mac uses unpaid principal balance and the outstanding face amount of investment securities to represent maximum exposure to loss.
(4) | Includes auction-rate certificates, asset-backed securities, and GSE-guaranteed mortgage-backed securities.
(5) | The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.
Statements of Cash Flows The following table sets forth information regarding certain cash and non-cash transactions for the three months ended March 31, 2017 and 2016: Table 1.2
| For the Three Months Ended
| March 31, 2017 |  | March 31, 2016
| (in thousands)
Non-cash activity: |  |  |
Real estate owned acquired through loan liquidation | 4,630 |  |  | — |
Loans acquired and securitized as Farmer Mac Guaranteed Securities | 149,607 |  |  | 139,561 |
Consolidation of Farm & Ranch Guaranteed Securities from off-balance sheet to loans held for investment in consolidated trusts and to debt securities of consolidated trusts held by third parties | 117,018 |  |  | 135,913 |
Earnings Per Common Share Basic earnings per common share ("EPS") is based on the weighted-average number of shares of common stock outstanding. Diluted earnings per common share is based on the weighted-average number of shares of common stock outstanding adjusted to include all potentially dilutive common stock options, stock appreciation rights ("SARs"), and non-vested restricted stock awards. The following schedule reconciles basic and diluted EPS for the three months ended March 31, 2017 and 2016: Table 1.3
| For the Three Months Ended
| March 31, 2017(1) |  | March 31, 2016
| Net Income |  | Weighted-Average Shares |  | $ per Share |  | Net Income |  | Weighted-Average Shares |  | $ per Share
| (in thousands, except per share amounts)
Basic EPS |  |  |  |  |  |  |  |  |  |  |
Net income attributable to common stockholders | $ | 18,615 |  |  | 10,551 |  |  | $ | 1.76 |  |  | $ | 10,317 |  |  | 10,465 |  |  | $ | 0.99 |
Effect of dilutive securities(2) |  |  |  |  |  |  |  |  |  |  |  |  |
Stock options, SARs and restricted stock | — |  |  | 231 |  |  | (0.03 | ) |  | — |  |  | 538 |  |  | (0.05 | )
Diluted EPS | $ | 18,615 |  |  | 10,782 |  |  | $ | 1.73 |  |  | $ | 10,317 |  |  | 11,003 |  |  | $ | 0.94 |
(1) | For the effect of the adoption of the new Accounting Standard Update 2016-09 "Improvements to Employee Share-Based Payment Accounting" on Basic and Diluted EPS, see Note 1(d) "New Accounting Standards."
(2) | For the three months ended March 31, 2017 and 2016, stock options and SARs of 50,757 and 201,401, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the three months ended March 31, 2017 and 2016, contingent shares of non-vested restricted stock of 32,892, and 37,284, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.
Comprehensive Income Comprehensive income represents all changes in stockholders' equity except those resulting from investments by or distributions to stockholders, and is comprised of net income and unrealized gains and losses on available-for-sale securities, certain held-to-maturity securities transferred from the available-for-sale classification, and cash flow hedges, net of related taxes. The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three months ended March 31, 2017 and 2016: Table 1.4
| For the Three Months Ended
| March 31, 2017 |  | March 31, 2016
| Available-for-Sale Securities |  | Held-to-Maturity Securities |  | Cash Flow Hedges |  | Total |  | Available-for-Sale Securities |  | Held-to-Maturity Securities |  | Cash Flow Hedges |  | Total
| (in thousands)
For the Three Months Ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance | $ | (14,387 | ) |  | $ | 45,752 |  |  | $ | 2,393 |  |  | $ | 33,758 |  |  | $ | (10,035 | ) |  | $ | (476 | ) |  | $ | (508 | ) |  | $ | (11,019 | )
Other Comprehensive Income Before Reclassifications | 12,223 |  |  | — |  |  | 76 |  |  | 12,299 |  |  | (1,769 | ) |  | — |  |  | (3,395 | ) |  | (5,164 | )
Amounts reclassified from AOCI | (2,578 | ) |  | (2,267 | ) |  | 332 |  |  | (4,513 | ) |  | (2,376 | ) |  | (657 | ) |  | 299 |  |  | (2,734 | )
Net Comprehensive Income | 9,645 |  |  | (2,267 | ) |  | 408 |  |  | 7,786 |  |  | (4,145 | ) |  | (657 | ) |  | (3,096 | ) |  | (7,898 | )
Ending Balance | $ | (4,742 | ) |  | $ | 43,485 |  |  | $ | 2,801 |  |  | $ | 41,544 |  |  | $ | (14,180 | ) |  | $ | (1,133 | ) |  | $ | (3,604 | ) |  | $ | (18,917 | )
The following table presents other comprehensive income activity, the impact on net income of amounts reclassified from each component of AOCI, and the related tax impact for the three months ended March 31, 2017 and 2016: Table 1.5
| For the Three Months Ended
| March 31, 2017 |  | March 31, 2016
| Before Tax |  | Provision (Benefit) |  | After Tax |  | Before Tax |  | Provision (Benefit) |  | After Tax
| (in thousands)
Other comprehensive income: |  |  |  |  |  |  |  |  |  |  |
Available-for-sale-securities: |  |  |  |  |  |  |  |  |  |  |
Unrealized holding gains/(losses) on available-for-sale-securities | $ | 18,804 |  |  | $ | 6,581 |  |  | $ | 12,223 |  |  | $ | (2,722 | ) |  | $ | (953 | ) |  | $ | (1,769 | )
Less reclassification adjustments included in: |  |  |  |  |  |  |  |  |  |  |
Gains/(losses) on financial derivatives and hedging activities(1) | (3,959 | ) |  | (1,386 | ) |  | (2,573 | ) |  | (3,923 | ) |  | (1,373 | ) |  | (2,550 | )
Losses on sale of available-for-sale investment securities(2) | — |  |  | — |  |  | — |  |  | 9 |  |  | 3 |  |  | 6 |
Other income(3) | (7 | ) |  | (2 | ) |  | (5 | ) |  | 259 |  |  | 91 |  |  | 168 |
Total | $ | 14,838 |  |  | $ | 5,193 |  |  | $ | 9,645 |  |  | $ | (6,377 | ) |  | $ | (2,232 | ) |  | $ | (4,145 | )
Held-to-maturity securities: |  |  |  |  |  |  |  |  |  |  |
Less reclassification adjustments included in: |  |  |  |  |  |  |  |  |  |  |
Net interest income(4) | $ | (3,487 | ) |  | $ | (1,220 | ) |  | $ | (2,267 | ) |  | $ | (1,011 | ) |  | $ | (354 | ) |  | $ | (657 | )
Total | $ | (3,487 | ) |  | $ | (1,220 | ) |  | $ | (2,267 | ) |  | $ | (1,011 | ) |  | $ | (354 | ) |  | $ | (657 | )
Cash flow hedges |  |  |  |  |  |  |  |  |  |  |
Unrealized gains/(losses) on cash flow hedges | $ | 117 |  |  | $ | 41 |  |  | $ | 76 |  |  | $ | (5,222 | ) |  | $ | (1,827 | ) |  | $ | (3,395 | )
Less reclassification adjustments included in: |  |  |  |  |  |  |  |  |  |  |
Net interest income(5) | 512 |  |  | 180 |  |  | 332 |  |  | 459 |  |  | 160 |  |  | 299 |
Total | $ | 629 |  |  | $ | 221 |  |  | $ | 408 |  |  | $ | (4,763 | ) |  | $ | (1,667 | ) |  | $ | (3,096 | )
Other comprehensive income/(loss) | $ | 11,980 |  |  | $ | 4,194 |  |  | $ | 7,786 |  |  | $ | (12,151 | ) |  | $ | (4,253 | ) |  | $ | (7,898 | )
(1) | Relates to the amortization of unrealized gains on hedged items prior to the application of fair value hedge accounting.
(2) | Represents unrealized losses on sales of available-for-sale investment securities.
(3) | Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.
(4) | Relates to the amortization of unrealized gains or losses prior to the reclassification of these securities from available-for-sale to held-to-maturity. The amortization of unrealized gains or losses reported in AOCI for held-to-maturity securities will be offset by the amortization of the premium or discount created from the transfer into held-to-maturity securities, which occurred at fair value. These unrealized gains or losses will be recorded over the remaining life of the security with no impact on future net income.
(5) | Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.
New Accounting Standards In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which provides new guidance intended to simplify several aspects of accounting and presentation for employee share-based payment transactions. The ASU became effective for Farmer Mac on January 1, 2017. The adoption of the new guidance had the following effect on Farmer Mac's financial position, results of operations, and cash flows:
• | Consolidated Statements of Operations - The ASU requires the recognition of all net tax benefits related to share-based compensation awards in the income tax provision. Previously, these amounts were recognized in additional paid-in capital. Net tax benefits related to share-based compensation awards of $0.7 million were recognized as a reduction to income tax expense in the three months ended March 31, 2017 in the consolidated statement of operations. Net tax benefits result from the excess of the tax deduction over the compensation expense recognized under GAAP for share-based compensation awards. That excess arises because the tax deduction is based upon the value of share-based awards upon their exercise (or vesting, in the case of restricted stock units), whereas the compensation expense under GAAP is based upon the value of the share-based awards upon their grant date.
The ASU also changed the calculation of diluted earnings per share. GAAP requires the "treasury stock method" to determine the number of dilutive securities in calculating diluted earnings per share. The ASU changed the calculation of "assumed proceeds" under the treasury stock method to exclude the amount of net tax benefits that would have been recognized in additional paid-in capital under the previous accounting standard. This change in the calculation reduces the amount of shares assumed to have been repurchased under the treasury stock method, thus increasing the number of dilutive shares. Both of these changes in the guidance were applied prospectively beginning January 1, 2017 and for the three months ended March 31, 2017. The change in the recognition of all net tax benefits related to share-based compensation awards in the income tax provision resulted in an increase of $0.06 in both basic earnings per share and diluted earnings per share for the three months ended March 31, 2017. The change in the guidance for the calculation of diluted earnings per share had an immaterial impact on diluted earnings per share. Additionally, the ASU allows companies to choose to either include an estimate of forfeitures expected to occur in share-based compensation expense or account for them as they occur. Previously, GAAP required companies to include an estimate of forfeitures expected to occur in their share-based compensations expense. Farmer Mac has elected to account for forfeitures in compensation expense as they occur. The cumulative impact of the change in the treatment of forfeitures was not material for the three months ended March 31, 2017.
• | Consolidated Statements of Cash Flows - The ASU requires excess tax benefits from share-based employee awards to be reported within operating activities. Previously, these cash flows were reported within financing activities. Farmer Mac has applied this guidance prospectively, resulting in an increase in net cash provided by operating activities and a corresponding decrease in net cash provided by financing activities of $0.7 million for the three months ended March 31, 2017.
The ASU requires employee taxes paid when an employer withholds shares for tax purposes to be reported within financing activities. Under the previous guidance, these cash flows were included in operating activities. These changes were required to be applied on a retrospective basis. As a result, the consolidated statement of cash flows for prior periods was revised, resulting in an increase in net cash provided by operating activities and a decrease in net cash provided by financing activities of $1.5 million for the three months ended March 31, 2016, compared to previously reported amounts. The amount of employee taxes paid for shares withheld was $1.3 million for the three months ended March 31, 2017. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses," which will require entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will be required to use forward-looking information to form their credit loss estimates. The ASU will also require enhanced disclosures to help users of financial statements better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Farmer Mac is currently evaluating the impact that the new guidance will have on its consolidated financial statements. That impact will primarily be from the new requirement to recognize all expected losses rather than just incurred losses as of the reporting date. In March 2017, the FASB issued ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities," which shortens the amortization period for certain callable debt securities held at a premium by requiring the premium to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. Farmer Mac does not expect that adoption of the new guidance will have a material effect on Farmer Mac's financial position, results of operations, or cash flows. Reclassifications Certain reclassifications of prior period information were made to conform to the current period presentation.

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