XML 35 R21.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Business Segment Reporting | 12 Months Ended
--- | ---
Dec. 31, 2017
Segment Reporting [Abstract] |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | 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 issuance 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, 2017, 2016 and 2015: Table 14.1
Core Earnings by Business Segment
For the Year Ended December 31, 2017
| Farm & Ranch |  | USDA Guarantees |  | Rural Utilities |  | Institutional Credit |  | Corporate |  | Reconciling Adjustments |  | Consolidated Net Income
| (in thousands)
Net interest income | $ | 54,290 |  |  | $ | 21,106 |  |  | $ | 11,598 |  |  | $ | 59,842 |  |  | $ | 10,811 |  |  | $ | — |  |  | $ | 157,647 |
Less: reconciling adjustments(1)(2)(3)(4) | (8,922 | ) |  | (2,287 | ) |  | (539 | ) |  | (3,505 | ) |  | (1,091 | ) |  | 16,344 |  |  | — |
Net effective spread | 45,368 |  |  | 18,819 |  |  | 11,059 |  |  | 56,337 |  |  | 9,720 |  |  | 16,344 |  |  | — |
Guarantee and commitment fees(2) | 17,175 |  |  | 456 |  |  | 1,914 |  |  | 805 |  |  | — |  |  | (6,236 | ) |  | 14,114 |
Other income/(expense)(3)(5) | 2,449 |  |  | 43 |  |  | 20 |  |  | — |  |  | 171 |  |  | 715 |  |  | 3,398 |
Non-interest income/(loss) | 19,624 |  |  | 499 |  |  | 1,934 |  |  | 805 |  |  | 171 |  |  | (5,521 | ) |  | 17,512 |
Provision for loan losses | (1,708 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,708 | )
Provision for reserve for losses | (50 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (50 | )
Other non-interest expense | (16,554 | ) |  | (4,384 | ) |  | (2,430 | ) |  | (6,439 | ) |  | (12,908 | ) |  | — |  |  | (42,715 | )
Non-interest expense(6) | (16,604 | ) |  | (4,384 | ) |  | (2,430 | ) |  | (6,439 | ) |  | (12,908 | ) |  | — |  |  | (42,765 | )
Core earnings before income taxes | 46,680 |  |  | 14,934 |  |  | 10,563 |  |  | 50,703 |  |  | (3,017 | ) |  | 10,823 |  | (7) | 130,686 |
Income tax (expense)/benefit | (16,338 | ) |  | (5,227 | ) |  | (3,696 | ) |  | (17,746 | ) |  | 1,792 |  |  | (5,154 | ) | (8) | (46,369 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 30,342 |  |  | 9,707 |  |  | 6,867 |  |  | 32,957 |  |  | (1,225 | ) |  | 5,669 |  | (7) | 84,317 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | 165 |  |  | — |  |  | 165 |
Segment core earnings/(losses) | $ | 30,342 |  |  | $ | 9,707 |  |  | $ | 6,867 |  |  | $ | 32,957 |  |  | $ | (14,242 | ) |  | $ | 5,669 |  | (7) | $ | 71,300 |
Total assets at carrying value | $ | 4,274,693 |  |  | $ | 2,195,189 |  |  | $ | 1,088,986 |  |  | $ | 7,627,749 |  |  | $ | 2,605,657 |  |  | $ | — |  |  | $ | 17,792,274 |
Total on- and off-balance sheet program assets at principal balance | $ | 6,867,586 |  |  | $ | 2,352,214 |  |  | $ | 1,882,633 |  |  | $ | 7,904,878 |  |  | $ | — |  |  | $ | — |  |  | $ | 19,007,311 |
(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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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. 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 are considered to be a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 4 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts are now 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. This is 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 includes 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.
(6) | Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(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.
(8) | Includes the non-recurring, non-cash charge to income tax expense resulting from the re-measurement of the net deferred tax asset at a reduced corporate federal income tax rate due to the enactment of new tax legislation on December 22, 2017. See "Notes to Consolidated Financial Statements—Income Taxes."
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)(4) | (7,729 | ) |  | (3,210 | ) |  | (1,771 | ) |  | (3,184 | ) |  | (1,308 | ) |  | 17,202 |  |  | — |
Net effective spread | 39,490 |  |  | 18,655 |  |  | 9,968 |  |  | 45,572 |  |  | 9,387 |  |  | 17,202 |  |  | — |
Guarantee and commitment fees(2) | 15,542 |  |  | 101 |  |  | 1,694 |  |  | 1,833 |  |  | — |  |  | (4,302 | ) |  | 14,868 |
Other income/(expense)(3)(5) | 539 |  |  | 222 |  |  | 2 |  |  | — |  |  | 1,322 |  |  | 3,515 |  |  | 5,600 |
Non-interest income/(loss) | 16,081 |  |  | 323 |  |  | 1,696 |  |  | 1,833 |  |  | 1,322 |  |  | (787 | ) |  | 20,468 |
Provision for loan losses | (1,065 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,065 | )
Provision for reserve for losses | 63 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 63 |
Other non-interest expense | (16,206 | ) |  | (4,200 | ) |  | (2,856 | ) |  | (3,786 | ) |  | (13,335 | ) |  | — |  |  | (40,383 | )
Non-interest expense(6) | (16,143 | ) |  | (4,200 | ) |  | (2,856 | ) |  | (3,786 | ) |  | (13,335 | ) |  | — |  |  | (40,320 | )
Core earnings before income taxes | 38,363 |  |  | 14,778 |  |  | 8,808 |  |  | 43,619 |  |  | (2,626 | ) |  | 16,415 |  | (7) | 119,357 |
Income tax (expense)/benefit | (13,428 | ) |  | (5,173 | ) |  | (3,083 | ) |  | (15,265 | ) |  | 636 |  |  | (5,744 | ) |  | (42,057 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 24,935 |  |  | 9,605 |  |  | 5,725 |  |  | 28,354 |  |  | (1,990 | ) |  | 10,671 |  | (7) | 77,300 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | 34 |  |  | — |  |  | 34 |
Segment core earnings/(losses) | $ | 24,935 |  |  | $ | 9,605 |  |  | $ | 5,725 |  |  | $ | 28,354 |  |  | $ | (15,138 | ) |  | $ | 10,671 |  | (7) | $ | 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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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 staffing.
(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.
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 | $ | 43,271 |  |  | $ | 17,750 |  |  | $ | 11,728 |  |  | $ | 44,971 |  |  | $ | 8,087 |  |  | $ | — |  |  | $ | 125,807 |
Less: reconciling adjustments(1)(2)(3)(4) | (5,308 | ) |  | (638 | ) |  | (723 | ) |  | (1,512 | ) |  | (198 | ) |  | 8,379 |  |  | — |
Net effective spread | 37,963 |  |  | 17,112 |  |  | 11,005 |  |  | 43,459 |  |  | 7,889 |  |  | 8,379 |  |  | — |
Guarantee and commitment fees(2) | 15,076 |  |  | 17 |  |  | 397 |  |  | 1,665 |  |  | — |  |  | (3,078 | ) |  | 14,077 |
Other income/(expense)(3)(5) | 1,039 |  |  | 100 |  |  | 25 |  |  | — |  |  | 74 |  |  | 4,826 |  |  | 6,064 |
Non-interest income/(loss) | 16,115 |  |  | 117 |  |  | 422 |  |  | 1,665 |  |  | 74 |  |  | 1,748 |  |  | 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(6) | (14,696 | ) |  | (3,449 | ) |  | (3,364 | ) |  | (2,109 | ) |  | (11,864 | ) |  | — |  |  | (35,482 | )
Core earnings before income taxes | 36,994 |  |  | 13,780 |  |  | 8,063 |  |  | 43,015 |  |  | (3,901 | ) |  | 10,127 |  | (7) | 108,078 |
Income tax (expense)/benefit | (12,956 | ) |  | (4,826 | ) |  | (2,828 | ) |  | (15,038 | ) |  | 3,053 |  |  | (1,644 | ) |  | (34,239 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 24,038 |  |  | 8,954 |  |  | 5,235 |  |  | 27,977 |  |  | (848 | ) |  | 8,483 |  | (7) | 73,839 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | (5,139 | ) |  | — |  |  | (5,139 | )
Loss on retirement of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (8,147 | ) |  | (8,147 | )
Segment core earnings/(losses) | $ | 24,038 |  |  | $ | 8,954 |  | $ | — |  | $ | 5,235 |  | $ | — |  | $ | 27,977 |  | $ | — |  | $ | (19,169 | ) | $ | — |  | $ | 336 |  | (7) | $ | 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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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 staffing.
(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.
Table 14.1
Core Earnings by Business Segment
For the Year Ended December 31, 2017
| Farm & Ranch |  | USDA Guarantees |  | Rural Utilities |  | Institutional Credit |  | Corporate |  | Reconciling Adjustments |  | Consolidated Net Income
| (in thousands)
Net interest income | $ | 54,290 |  |  | $ | 21,106 |  |  | $ | 11,598 |  |  | $ | 59,842 |  |  | $ | 10,811 |  |  | $ | — |  |  | $ | 157,647 |
Less: reconciling adjustments(1)(2)(3)(4) | (8,922 | ) |  | (2,287 | ) |  | (539 | ) |  | (3,505 | ) |  | (1,091 | ) |  | 16,344 |  |  | — |
Net effective spread | 45,368 |  |  | 18,819 |  |  | 11,059 |  |  | 56,337 |  |  | 9,720 |  |  | 16,344 |  |  | — |
Guarantee and commitment fees(2) | 17,175 |  |  | 456 |  |  | 1,914 |  |  | 805 |  |  | — |  |  | (6,236 | ) |  | 14,114 |
Other income/(expense)(3)(5) | 2,449 |  |  | 43 |  |  | 20 |  |  | — |  |  | 171 |  |  | 715 |  |  | 3,398 |
Non-interest income/(loss) | 19,624 |  |  | 499 |  |  | 1,934 |  |  | 805 |  |  | 171 |  |  | (5,521 | ) |  | 17,512 |
Provision for loan losses | (1,708 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,708 | )
Provision for reserve for losses | (50 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (50 | )
Other non-interest expense | (16,554 | ) |  | (4,384 | ) |  | (2,430 | ) |  | (6,439 | ) |  | (12,908 | ) |  | — |  |  | (42,715 | )
Non-interest expense(6) | (16,604 | ) |  | (4,384 | ) |  | (2,430 | ) |  | (6,439 | ) |  | (12,908 | ) |  | — |  |  | (42,765 | )
Core earnings before income taxes | 46,680 |  |  | 14,934 |  |  | 10,563 |  |  | 50,703 |  |  | (3,017 | ) |  | 10,823 |  | (7) | 130,686 |
Income tax (expense)/benefit | (16,338 | ) |  | (5,227 | ) |  | (3,696 | ) |  | (17,746 | ) |  | 1,792 |  |  | (5,154 | ) | (8) | (46,369 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 30,342 |  |  | 9,707 |  |  | 6,867 |  |  | 32,957 |  |  | (1,225 | ) |  | 5,669 |  | (7) | 84,317 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | 165 |  |  | — |  |  | 165 |
Segment core earnings/(losses) | $ | 30,342 |  |  | $ | 9,707 |  |  | $ | 6,867 |  |  | $ | 32,957 |  |  | $ | (14,242 | ) |  | $ | 5,669 |  | (7) | $ | 71,300 |
Total assets at carrying value | $ | 4,274,693 |  |  | $ | 2,195,189 |  |  | $ | 1,088,986 |  |  | $ | 7,627,749 |  |  | $ | 2,605,657 |  |  | $ | — |  |  | $ | 17,792,274 |
Total on- and off-balance sheet program assets at principal balance | $ | 6,867,586 |  |  | $ | 2,352,214 |  |  | $ | 1,882,633 |  |  | $ | 7,904,878 |  |  | $ | — |  |  | $ | — |  |  | $ | 19,007,311 |
(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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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. 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 are considered to be a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 4 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts are now 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. This is 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 includes 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.
(6) | Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.
(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.
(8) | Includes the non-recurring, non-cash charge to income tax expense resulting from the re-measurement of the net deferred tax asset at a reduced corporate federal income tax rate due to the enactment of new tax legislation on December 22, 2017. See "Notes to Consolidated Financial Statements—Income Taxes."
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)(4) | (7,729 | ) |  | (3,210 | ) |  | (1,771 | ) |  | (3,184 | ) |  | (1,308 | ) |  | 17,202 |  |  | — |
Net effective spread | 39,490 |  |  | 18,655 |  |  | 9,968 |  |  | 45,572 |  |  | 9,387 |  |  | 17,202 |  |  | — |
Guarantee and commitment fees(2) | 15,542 |  |  | 101 |  |  | 1,694 |  |  | 1,833 |  |  | — |  |  | (4,302 | ) |  | 14,868 |
Other income/(expense)(3)(5) | 539 |  |  | 222 |  |  | 2 |  |  | — |  |  | 1,322 |  |  | 3,515 |  |  | 5,600 |
Non-interest income/(loss) | 16,081 |  |  | 323 |  |  | 1,696 |  |  | 1,833 |  |  | 1,322 |  |  | (787 | ) |  | 20,468 |
Provision for loan losses | (1,065 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,065 | )
Provision for reserve for losses | 63 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 63 |
Other non-interest expense | (16,206 | ) |  | (4,200 | ) |  | (2,856 | ) |  | (3,786 | ) |  | (13,335 | ) |  | — |  |  | (40,383 | )
Non-interest expense(6) | (16,143 | ) |  | (4,200 | ) |  | (2,856 | ) |  | (3,786 | ) |  | (13,335 | ) |  | — |  |  | (40,320 | )
Core earnings before income taxes | 38,363 |  |  | 14,778 |  |  | 8,808 |  |  | 43,619 |  |  | (2,626 | ) |  | 16,415 |  | (7) | 119,357 |
Income tax (expense)/benefit | (13,428 | ) |  | (5,173 | ) |  | (3,083 | ) |  | (15,265 | ) |  | 636 |  |  | (5,744 | ) |  | (42,057 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 24,935 |  |  | 9,605 |  |  | 5,725 |  |  | 28,354 |  |  | (1,990 | ) |  | 10,671 |  | (7) | 77,300 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | 34 |  |  | — |  |  | 34 |
Segment core earnings/(losses) | $ | 24,935 |  |  | $ | 9,605 |  |  | $ | 5,725 |  |  | $ | 28,354 |  |  | $ | (15,138 | ) |  | $ | 10,671 |  | (7) | $ | 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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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 staffing.
(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.
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 | $ | 43,271 |  |  | $ | 17,750 |  |  | $ | 11,728 |  |  | $ | 44,971 |  |  | $ | 8,087 |  |  | $ | — |  |  | $ | 125,807 |
Less: reconciling adjustments(1)(2)(3)(4) | (5,308 | ) |  | (638 | ) |  | (723 | ) |  | (1,512 | ) |  | (198 | ) |  | 8,379 |  |  | — |
Net effective spread | 37,963 |  |  | 17,112 |  |  | 11,005 |  |  | 43,459 |  |  | 7,889 |  |  | 8,379 |  |  | — |
Guarantee and commitment fees(2) | 15,076 |  |  | 17 |  |  | 397 |  |  | 1,665 |  |  | — |  |  | (3,078 | ) |  | 14,077 |
Other income/(expense)(3)(5) | 1,039 |  |  | 100 |  |  | 25 |  |  | — |  |  | 74 |  |  | 4,826 |  |  | 6,064 |
Non-interest income/(loss) | 16,115 |  |  | 117 |  |  | 422 |  |  | 1,665 |  |  | 74 |  |  | 1,748 |  |  | 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(6) | (14,696 | ) |  | (3,449 | ) |  | (3,364 | ) |  | (2,109 | ) |  | (11,864 | ) |  | — |  |  | (35,482 | )
Core earnings before income taxes | 36,994 |  |  | 13,780 |  |  | 8,063 |  |  | 43,015 |  |  | (3,901 | ) |  | 10,127 |  | (7) | 108,078 |
Income tax (expense)/benefit | (12,956 | ) |  | (4,826 | ) |  | (2,828 | ) |  | (15,038 | ) |  | 3,053 |  |  | (1,644 | ) |  | (34,239 | )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest | 24,038 |  |  | 8,954 |  |  | 5,235 |  |  | 27,977 |  |  | (848 | ) |  | 8,483 |  | (7) | 73,839 |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | (13,182 | ) |  | — |  |  | (13,182 | )
Non-controlling interest | — |  |  | — |  |  | — |  |  | — |  |  | (5,139 | ) |  | — |  |  | (5,139 | )
Loss on retirement of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (8,147 | ) |  | (8,147 | )
Segment core earnings/(losses) | $ | 24,038 |  |  | $ | 8,954 |  | $ | — |  | $ | 5,235 |  | $ | — |  | $ | 27,977 |  | $ | — |  | $ | (19,169 | ) | $ | — |  | $ | 336 |  | (7) | $ | 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 on financial derivatives and hedging activities" on the consolidated financial statements, to determine the effective funding cost for each operating segment.
(4) | Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."
(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 staffing.
(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.

X
- Definition Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 25 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8813-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8736-108599 + Details
Name: | us-gaap_ScheduleOfSegmentReportingInformationBySegmentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration