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Guarantees | 9 Months Ended
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Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract] |
GUARANTEES | GUARANTEES The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of September 30, 2020 and December 31, 2019, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans: Table 6.1
Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
| As of September 30, 2020 |  | As of December 31, 2019
| (in thousands)
Farm & Ranch: |  |  |
Farmer Mac Guaranteed Securities | $ | 85,767 |  |  | $ | 107,322 |
USDA Guarantees: |  |  |
Farmer Mac Guaranteed USDA Securities | 310,682 |  |  | 389,216 |
Institutional Credit: |  |  |
AgVantage Securities | 6,068 |  |  | 7,567 |
Total off-balance sheet Farmer Mac Guaranteed Securities | $ | 402,517 |  |  | $ | 504,105 |
Eligible loans and other eligible assets may be placed into trusts that are used as vehicles for the securitization of the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are sold to investors. The following table summarizes the significant cash flows received from and paid to trusts used for Farmer Mac securitizations: Table 6.2
| For the Nine Months Ended
| September 30, 2020 |  | September 30, 2019
| (in thousands)
Proceeds from new securitizations | $ | 64,612 |  |  | $ | 199,396 |
Guarantee fees received | 1,136 |  |  | 1,122 |
Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and commitment obligation" on the consolidated balance sheets. The following table presents the liability and the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities: Table 6.3
| As of September 30, 2020 |  | As of December 31, 2019
| (dollars in thousands)
Guarantee and commitment obligation | $ | 1,780 |  |  | $ | 2,230 |
Weighted average remaining maturity: |  |  |
Farmer Mac Guaranteed Securities | 9.5 years |  | 9.8 years
AgVantage Securities | 4.2 years |  | 5.0 years
Long-Term Standby Purchase Commitments Farmer Mac has recorded a liability for its obligation to stand ready under the guarantee in the guarantee and commitment obligation on the consolidated balance sheets. The following table presents the liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average remaining maturity of all loans underlying LTSPCs: Table 6.4
| As of September 30, 2020 |  | As of December 31, 2019
| (dollars in thousands)
Guarantee and commitment obligation(1) | $ | 33,360 |  |  | $ | 34,470 |
Maximum principal amount | 2,882,212 |  |  | 3,002,349 |
Weighted-average remaining maturity | 15.1 years |  | 15.2 years
(1) Relates to LTSPCs issued or modified on or after January 1, 2003. Reserve for Losses The following table is a summary, by asset type, of the reserve for losses as of September 30, 2020 and December 31, 2019: Table 6.5
| September 30, 2020(1) |  | December 31, 2019(2)
| Reserve for Losses |  | Reserve for Losses
| (in thousands)
Farm & Ranch: |  |  |
LTSPCs and Farmer Mac Guaranteed Securities | $ | 2,278 |  |  | $ | 2,164 |
Rural Utilities |  |  |
LTSPCs | 1,290 |  |  | — |
Total | $ | 3,568 |  |  | $ | 2,164 |
(1)Reserve for losses reflects the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020. (2)Prior to the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020, Farmer Mac maintained a reserve for losses to cover estimated probable incurred losses on loans underlying LTSPCs and off-balance sheet Farm & Ranch Farmer Mac Guaranteed Securities. The following is a summary of the changes in the reserve for losses for the three and nine month period ended September 30, 2020 and 2019: Table 6.6
| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2020(1) |  | September 30, 2019(2) |  | September 30, 2020(1) |  | September 30, 2019(2)
| Reserve for Losses |  | Reserve for Losses |  | Reserve for Losses |  | Reserve for Losses
| (in thousands) |  |  |  |
Farm & Ranch: |  |  |  |  |  |  |
Beginning Balance | $ | 1,650 |  |  | $ | 1,880 |  |  | $ | 2,164 |  |  | $ | 2,167 |
Cumulative effect adjustment from adoption of current expected credit loss standard | — |  |  | — |  |  | (148) |  |  | — |
Adjusted Beginning Balance | 1,650 |  |  | 1,880 |  |  | 2,016 |  |  | 2,167 |
Provision for/(release of) losses | $ | 628 |  |  | $ | (137) |  |  | $ | 262 |  |  | $ | (424) |
Ending Balance | $ | 2,278 |  |  | $ | 1,743 |  |  | $ | 2,278 |  |  | $ | 1,743 |
Rural Utilities: |  |  |  |  |  |  |
Beginning Balance | $ | 1,370 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cumulative effect adjustment from adoption of current expected credit loss standard | — |  |  | — |  |  | 1,011 |  |  | — |
Adjusted Beginning Balance | 1,370 |  |  | — |  |  | 1,011 |  |  | — |
(Release of)/provision for losses | $ | (80) |  |  | $ | — |  |  | $ | 279 |  |  | $ | — |
Ending Balance | $ | 1,290 |  |  | $ | — |  |  | $ | 1,290 |  |  | $ | — |
(1)Reserve for losses reflects the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020. (2)Prior to the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020, Farmer Mac maintained a reserve for losses to cover estimated probable incurred losses on loans underlying LTSPCs and off-balance sheet Farm & Ranch Farmer Mac Guaranteed Securities. The provision to the reserve for losses recorded during the three and nine months ended September 30, 2020 was primarily due to credit downgrades in the LTSPC portfolio. The release from the reserve for losses recorded during third quarter 2019 was primarily attributable to a net volume decrease in off-balance sheet Farm & Ranch LTSPCs and slight improvements in off-balance sheet portfolio credit quality. The following table presents the unpaid principal balances by delinquency status of Farm & Ranch loans underlying LTSPCs. Farm & Ranch Farmer Mac Guaranteed Securities, Rural Utilities loans underlying LTSPCs, and non-performing assets as of September 30, 2020: Table 6.7
| As of September 30, 2020
| Current(2) |  | 30-59 Days |  | 60-89 Days |  | 90 Days and Greater(1) |  | Total Past Due |  | Total Loans
| (in thousands)
Farm and Ranch: |  |  |  |  |  |  |  |  |  |  |
LTSPCs and Farmer Mac Guaranteed Securities | $ | 2,352,454 |  |  | $ | 2,934 |  |  | $ | 22,690 |  |  | $ | 13,947 |  |  | $ | 39,571 |  |  | $ | 2,392,025 |
Rural Utilities: |  |  |  |  |  |  |  |  |  |  |
LTSPCs | $ | 575,954 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 575,954 |
(1)Includes loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days of 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. (2)Includes $185.4 million of unpaid principal balance related to Farm & Ranch LTSPCs for which the lender has notified Farmer Mac of an executed COVID-19 payment deferment. The following tables present the unpaid principal balances of Farm & Ranch loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and the related reserve for losses by impairment method and commodity type as of December 31, 2019: Table 6.8
| As of December 31, 2019
| Crops |  | Permanent Plantings |  | Livestock |  | Part-time Farm |  | Ag. Storage and Processing |  | Other |  | Total
| (in thousands)
Ending Balance: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment: | $ | 1,151,983 |  |  | $ | 511,991 |  |  | $ | 581,377 |  |  | $ | 167,395 |  |  | $ | 66,106 |  |  | $ | 2,760 |  |  | $ | 2,481,612 |
Individually evaluated for impairment: | 5,698 |  |  | 2,114 |  |  | 10,207 |  |  | 706 |  |  | — |  |  | 56 |  |  | 18,781 |
Total Farm & Ranch | $ | 1,157,681 |  |  | $ | 514,105 |  |  | $ | 591,584 |  |  | $ | 168,101 |  |  | $ | 66,106 |  |  | $ | 2,816 |  |  | $ | 2,500,393 |
Allowance for Losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment: | $ | 599 |  |  | $ | 96 |  |  | $ | 308 |  |  | $ | 50 |  |  | $ | 767 |  |  | $ | 1 |  |  | $ | 1,821 |
Individually evaluated for impairment: | 97 |  |  | 43 |  |  | 189 |  |  | 14 |  |  | — |  |  | — |  |  | 343 |
Total Farm & Ranch | $ | 696 |  |  | $ | 139 |  |  | $ | 497 |  |  | $ | 64 |  |  | $ | 767 |  |  | $ | 1 |  |  | $ | 2,164 |
Net credit losses and 90-day delinquencies as of and for the periods indicated for loans underlying off-balance sheet securities representing interests in pools of eligible Farm & Ranch LTSPCs are presented in the table below. As of December 31, 2019, there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities LTSPCs portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities LTSPCs. Table 6.9
| 90-Day Delinquencies(1) |  | Net Credit Losses/(Recoveries)
| As of |  | For the Nine Months Ended
| December 31, 2019 |  | September 30, 2019
| (in thousands)
Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities | $ | 3,235 |  |  | $ | — |
(1)Includes 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. Credit Quality Indicators The following tables present credit quality indicators related to Farm & Ranch loans underlying LTSPCs, Farm & Ranch Farmer Mac Guaranteed Securities, and Rural Utilities loans underlying LTSPCs as of September 30, 2020, by year of origination: Table 6.10
| As of September 30, 2020
| Year of Origination: |  |  |  |
| 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior |  | Revolving Loans - Amortized Cost Basis |  | Total
| (in thousands)
Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | 118,116 |  |  | $ | 207,202 |  |  | $ | 184,421 |  |  | $ | 245,490 |  |  | $ | 216,983 |  |  | $ | 1,021,400 |  |  | $ | 173,617 |  |  | $ | 2,167,229 |
Special mention(1) | — |  |  | 1,742 |  |  | 1,509 |  |  | 23,200 |  |  | 14,628 |  |  | 47,948 |  |  | 10,040 |  |  | 99,067 |
Substandard(2) | 264 |  |  | 10,821 |  |  | 12,676 |  |  | 15,614 |  |  | 14,401 |  |  | 67,338 |  |  | 4,615 |  |  | 125,729 |
Total | $ | 118,380 |  |  | $ | 219,765 |  |  | $ | 198,606 |  |  | $ | 284,304 |  |  | $ | 246,012 |  |  | $ | 1,136,686 |  |  | $ | 188,272 |  |  | $ | 2,392,025 |
For the Three Months Ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period Farm & Ranch net charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
For the Nine Months Ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period Farm & Ranch net charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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 September 30, 2020
| Year of Origination: |  |  |  |
| 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior |  | Revolving Loans - Amortized Cost Basis |  | Total
| (in thousands)
Rural Utilities LTSPCs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 569,324 |  |  | $ | 6,630 |  |  | $ | 575,954 |
Special mention(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard(2) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 569,324 |  |  | $ | 6,630 |  |  | $ | 575,954 |
For the Three Months Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period Rural Utilities net charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
For the Nine Months Ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period Rural Utilities net charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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. The following table presents credit quality indicators related to Farm & Ranch loans underlying LTSPCs and off-balance sheet Farm & Ranch Farmer Mac Guaranteed Securities as of December 31, 2019: Table 6.11
| As of December 31, 2019
| Crops |  | Permanent Plantings |  | Livestock |  | Part-time Farm |  | Ag. Storage and Processing |  | Other |  | Total
| (in thousands)
Internally Assigned Risk Rating(1) |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | 1,033,002 |  |  | $ | 484,601 |  |  | $ | 521,341 |  |  | $ | 161,361 |  |  | $ | 66,106 |  |  | $ | 2,594 |  |  | $ | 2,269,005 |
Special mention(2) | 68,372 |  |  | 22,909 |  |  | 35,618 |  |  | 1,612 |  |  | — |  |  | — |  |  | 128,511 |
Substandard(3) | 56,307 |  |  | 6,595 |  |  | 34,625 |  |  | 5,128 |  |  | — |  |  | 222 |  |  | 102,877 |
Total | $ | 1,157,681 |  |  | $ | 514,105 |  |  | $ | 591,584 |  |  | $ | 168,101 |  |  | $ | 66,106 |  |  | $ | 2,816 |  |  | $ | 2,500,393 |
Commodity analysis of past due loans(1) | $ | 1,493 |  |  | $ | 196 |  |  | $ | 1,066 |  |  | $ | 480 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,235 |
(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.

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