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Equity | 12 Months Ended
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Dec. 31, 2020
Equity [Abstract] |
EQUITY | EQUITY Common Stock Farmer Mac has three classes of common stock outstanding: •Class A voting common stock, which may be held only by banks, insurance companies, and other financial institutions or similar entities that are not institutions of the Farm Credit System. By federal statute, no holder of Class A voting common stock may directly or indirectly be a beneficial owner of more than 33% of the outstanding shares of Class A voting common stock. •Class B voting common stock, which may be held only by institutions of the Farm Credit System. There are no restrictions on the maximum holdings of Class B voting common stock. •Class C non-voting common stock, which has no ownership restrictions. During 2020, 2019, and 2018, Farmer Mac paid a quarterly dividend of $0.80, $0.70, and $0.58 per share on all classes of its common stock. Farmer Mac's ability to declare and pay dividends on its common stock could be restricted if it fails to comply with applicable capital requirements. Farmer Mac's board of directors approved a share repurchase program during third quarter 2015 authorizing Farmer Mac to repurchase up to $25.0 million of its outstanding Class C non-voting common stock. The share repurchase program, last modified on March 14, 2019, authorized Farmer Mac to repurchase up to $10.0 million of Farmer Mac's outstanding Class C non-voting common stock. During first quarter 2020, Farmer Mac repurchased approximately 4,000 shares of Class C non-voting common stock at a cost of approximately $0.2 million. Shortly after these repurchases were completed, Farmer Mac indefinitely suspended its share repurchase program in an effort to preserve capital and liquidity in view of market volatility and uncertainty caused by the COVID-19 pandemic. As of December 31, 2020, Farmer Mac had repurchased approximately 673,000 shares of Class C non-voting common stock at a cost of approximately $19.8 million under the share repurchase program since 2015. The program expires at the end of March 2021. Preferred Stock On August 20, 2020, Farmer Mac issued 4.8 million shares of 5.250% Non-Cumulative Preferred Stock, Series F ("Series F Preferred Stock"), which has a par value and liquidation preference of $25.00 per share, or $120.0 million aggregate outstanding. Farmer Mac incurred direct costs of $3.8 million related to the issuance of the Series F Preferred Stock. The dividend rate on the Series F Preferred Stock will remain at a non-cumulative, fixed rate of 5.250% per year, when, as, and if a dividend is declared by the Board of Directors of Farmer Mac, for so long as the Series F Preferred Stock remains outstanding. The Series F Preferred Stock has no maturity date, but Farmer Mac has the option to redeem the Series F Preferred Stock at any time on any dividend payment date on and after October 17, 2025. On September 19, 2020, Farmer Mac used part of the net proceeds from the sale of the Series F Preferred Stock to redeem and repurchase all $60.0 million aggregate outstanding of Farmer Mac's 5.875% Non-Cumulative Preferred Stock, Series A ("Series A Preferred Stock"), plus any declared and unpaid dividends through and including the redemption date. As a result of the retirement of the Series A Preferred Stock, Farmer Mac recognized $1.7 million of deferred issuance costs, which is presented as "Loss on retirement of preferred stock" on the consolidated statements of operations. In May 2020, Farmer Mac issued 3.18 million shares of 5.750% Non-Cumulative Preferred Stock, Series E ("Series E Preferred Stock"), which has a par value and liquidation preference of $25.00 per share, or $79.5 million aggregate outstanding. Farmer Mac incurred direct costs of $2.5 million related to the issuance of the Series E Preferred Stock. The dividend rate on the Series E Preferred Stock will remain at a non-cumulative, fixed rate of 5.750% per year, when, as, and if a dividend is declared by the Board of Directors of Farmer Mac, for so long as the Series E Preferred Stock remains outstanding. The Series E Preferred Stock has no maturity date, but Farmer Mac has the option to redeem the preferred stock at any time on any dividend payment date on and after July 17, 2025. The following table presents the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, and the Series F Preferred Stock (collectively referred to as the "Outstanding Preferred Stock") as of December 31, 2020: Table 9.1
Name |  | Issuance Date |  | Issuance Cost |  | Shares Issued |  | Annual Dividend Rate(3) |  | Liquidation Value |  | Redemption Date(4)
Series C(1) |  | June 20, 2014 |  | $ | 1,618,583 |  |  | 3,000,000 |  | 6.000 | % |  | $ | 25.00 |  |  | July 18, 2024
Series D(2) |  | May 13, 2019 |  | $ | 3,340,456 |  |  | 4,000,000 |  | 5.700 | % |  | $ | 25.00 |  |  | July 17, 2024
Series E |  | May 20, 2020 |  | $ | 2,496,750 |  |  | 3,180,000 |  | 5.750 | % |  | $ | 25.00 |  |  | July 17, 2025
Series F |  | August 20, 2020 |  | $ | 3,839,902 |  |  | 4,800,000 |  | 5.250 | % |  | $ | 25.00 |  |  | October 17, 2025
(1)The Series C Preferred Stock pays an annual dividend rate of 6.000% from the date of issuance to and including the quarterly payment date occurring on July 17, 2024, and thereafter, at a floating rate equal to three-month LIBOR plus 3.26%. (2)Farmer Mac has the option to redeem the preferred stock on any quarterly dividend payment date on and after July 17, 2024. (3)Dividends on all series of Outstanding Preferred Stock are non-cumulative, which means that if Farmer Mac's board of directors has not declared a dividend before the applicable dividend payment date for any dividend period, such dividend will not be paid or cumulate, and Farmer Mac will have no obligation to pay dividends for such dividend period, whether or not dividends on any series of Outstanding Preferred Stock are declared for any future dividend period. (4)Farmer Mac has the right but not the obligation to redeem. The following tables present the quarterly dividends paid by Farmer Mac on its outstanding preferred during 2020, 2019, and 2018: Table 9.2
| 2020
| 1st Quarter |  | 2nd Quarter(1) |  | 3rd Quarter(2)(3) |  | 4th Quarter
5.875% Non-Cumulative Preferred Stock, Series A | $ | 0.3672 |  |  | $ | 0.3672 |  |  | $ | 0.2530 |  |  | $ | — |
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C | 0.3750 |  | 0.3750 |  | 0.3750 |  | 0.3750
5.700% Non-Cumulative Preferred Stock, Series D | 0.3563 |  | 0.3563 |  | 0.3563 |  | 0.3563
5.750% Non-Cumulative Preferred Stock, Series E | — |  | 0.2276 |  | 0.3594 |  | 0.3594
5.250% Non-Cumulative Preferred Stock, Series F | — |  | — |  | 0.2078 |  | 0.3281
(1)For second quarter 2020, dividend payment includes $0.2276 per share on the Series E Preferred Stock for the period from but not including May 20, 2020 (issuance date) to and including the July 17, 2020. (2)For third quarter 2020 dividend payment includes $0.2530 per share on the Series A Preferred Stock for the period from but not including July 17, 2020 to and including the September 19, 2020 redemption date. (3)For third quarter 2020, dividend payment includes $0.2078 per share on the Series F Preferred Stock for the period from but not including August 20, 2020 (issuance date) to and including the October 17, 2020.
| 2019
| 1st Quarter |  | 2nd Quarter(1)(2) |  | 3rd Quarter |  | 4th Quarter
5.875% Non-Cumulative Preferred Stock, Series A | $ | 0.3672 |  |  | $ | 0.3672 |  |  | $ | 0.3672 |  |  | $ | 0.3672 |
6.875% Non-Cumulative Preferred Stock, Series B | 0.4297 |  | 0.2626 |  | — |  | —
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C | 0.3750 |  | 0.3750 |  | 0.3750 |  | 0.3750
5.700% Non-Cumulative Preferred Stock, Series D | — |  | 0.2533 |  | 0.3563 |  | 0.3563
(1)For second quarter 2019, dividend payment includes $0.2626 per share on the Series B Preferred Stock for the period from but not including April 17, 2019 to and including the June 12, 2019 redemption date. (2)For second quarter 2019, dividend payment includes $0.2533 per share on the Series D Preferred Stock for the period from but not including May 13, 2019 (issuance date) to and including July 17, 2019.
| 2018
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter
5.875% Non-Cumulative Preferred Stock, Series A | $ | 0.3672 |  |  | $ | 0.3672 |  |  | $ | 0.3672 |  |  | $ | 0.3672 |
6.875% Non-Cumulative Preferred Stock, Series B | 0.4297 |  |  | 0.4297 |  |  | 0.4297 |  |  | 0.4297 |
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C | 0.3750 |  |  | 0.3750 |  |  | 0.3750 |  |  | 0.3750 |
Equity-Based Incentive Compensation Plans Farmer Mac's Amended and Restated 2008 Omnibus Incentive Compensation Plan authorizes the grant of restricted stock and SARs, among other alternative forms of equity-based compensation, to Farmer Mac's directors, officers, and employees. SARs awarded to officers and employees vest annually in thirds. Farmer Mac has not granted SARs to directors since 2008. If not exercised or cancelled earlier due to the termination of employment, SARs granted to officers or employees expire after 10 years from the grant date. For all SARs granted, the exercise price is equal to the closing price of Farmer Mac's Class C non-voting common stock on the date of grant. SARs granted during 2020 have an exercise price ranging from $72.26 to $75.16 per share, SARs granted during 2019 have an exercise price of $82.76 per share, and SARs granted during 2018 have an exercise price of $86.15 per share. During 2020, 2019, and 2018, restricted stock awards were granted to employees, officers, and directors with vesting periods of one to three years. The following tables summarize SARs and non-vested restricted stock activity for the years ended December 31, 2020, 2019, and 2018: Table 9.3
| For the Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| SARs |  | Weighted- Average Exercise Price |  | SARs |  | Weighted- Average Exercise Price |  | SARs |  | Weighted- Average Exercise Price
Outstanding, beginning of year | 98,836 |  |  | $ | 46.47 |  |  | 124,960 |  |  | $ | 38.38 |  |  | 163,272 |  |  | $ | 32.95 |
Granted | 34,881 |  |  | 74.80 |  |  | 24,582 |  |  | 82.76 |  |  | 10,122 |  |  | 86.15 |
Exercised | (15,912) |  |  | 26.93 |  |  | (40,851) |  |  | 35.61 |  |  | (48,434) |  |  | 30.06 |
Canceled | (1,388) |  |  | 86.15 |  |  | (9,855) |  |  | 79.45 |  |  | — |  |  | — |
Outstanding, end of year | 116,417 |  |  | 57.16 |  |  | 98,836 |  |  | 46.47 |  |  | 124,960 |  |  | 38.38 |
Exercisable at end of year | 66,602 |  |  | 42.08 |  |  | 72,696 |  |  | 34.07 |  |  | 95,675 |  |  | 31.41 |
| For the Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| Non-vested Restricted Stock |  | Weighted- Average Grant Date Fair Value |  | Non-vested Restricted Stock |  | Weighted- Average Grant Date Fair Value |  | Non-vested Restricted Stock |  | Weighted- Average Grant Date Fair Value
Outstanding, beginning of year | 62,597 |  |  | $ | 75.81 |  |  | 80,153 |  |  | $ | 60.98 |  |  | 95,015 |  |  | $ | 44.39 |
Granted | 53,471 |  |  | 66.02 |  |  | 41,735 |  |  | 80.51 |  |  | 32,070 |  |  | 84.03 |
Canceled | (4,042) |  |  | 69.66 |  |  | (17,054) |  |  | 74.97 |  |  | (1,098) |  |  | 86.15 |
Vested and issued | (28,070) |  |  | 70.13 |  |  | (42,237) |  |  | 52.65 |  |  | (45,834) |  |  | 42.12 |
Outstanding, end of year | 83,956 |  |  | 71.76 |  |  | 62,597 |  |  | 75.81 |  |  | 80,153 |  |  | 60.98 |
The cancellations of SARs and non-vested restricted stock during 2020, 2019, and 2018 were due to unvested awards terminating in accordance with the provisions of the applicable equity compensation plans or award agreements upon directors' or employees' departures from Farmer Mac. Cash is not received from exercises of SARs or the vesting and issuance of restricted stock. During 2020, 2019, and 2018, the reduction of income taxes payable as a result of the deduction for the exercise of SARs and the vesting or accelerated tax elections of restricted stock was $0.5 million, $1.0 million, and $1.5 million, respectively. During 2020 and 2019, Farmer Mac recognized $8,900 and $0.4 million, respectively, of tax benefits recognized in income tax expense associated with stock compensation activity. During 2020, 2019, and 2018, Farmer Mac recorded a net decrease to additional paid-in capital of $0.6 million, $1.8 million, and $2.7 million, respectively, related to stock-based compensation awards. As of December 31, 2020, Farmer Mac had no stock options outstanding. The following tables summarize information regarding SARs and non-vested restricted stock outstanding as of December 31, 2020: Table 9.4
SARs: |  |  |  |  |  |  |  |  |  |  |  |
|  | Outstanding |  | Exercisable |  | Vested or Expected to Vest
Range of Exercise Prices |  | SARs |  | Weighted- Average Remaining Contractual Life |  | SARs |  | Weighted- Average Remaining Contractual Life |  | SARs |  | Weighted- Average Remaining Contractual Life
$10.00 - $24.99 |  | 9,000 |  |  | 1.1 years |  | 9,000 |  |  | 1.1 years |  | 9,000 |  |  | 1.1 years
25.00 - 39.99 |  | 40,537 |  |  | 3.7 years |  | 40,537 |  |  | 3.7 years |  | 40,537 |  |  | 3.7 years
40.00 - 54.99 |  | — |  |  | 0.0 years |  | — |  |  | 0.0 years |  | — |  |  | 0.0 years
55.00 - 69.99 |  | 6,619 |  |  | 6.3 years |  | 6,619 |  |  | 6.3 years |  | 6,619 |  |  | 6.3 years
70.00 - 84.99 |  | 54,303 |  |  | 8.9 years |  | 6,474 |  |  | 8.3 years |  | 54,303 |  |  | 8.9 years
85.00 - 99.99 |  | 5,958 |  |  | 7.3 years |  | 3,972 |  |  | 7.3 years |  | 5,958 |  |  | 7.3 years
|  | 116,417 |  |  |  |  | 66,602 |  |  |  |  | 116,417 |  |  |
Non-vested Restricted Stock: |  |  |  |  |  |  |  |  |  |
|  | Outstanding |  | Expected to Vest |  |  |  |
Weighted- Average Grant-Date Fair Value |  | Non-vested Restricted Stock |  | Weighted-Average Remaining Contractual Life |  | Non-vested Restricted Stock |  | Weighted-Average Remaining Contractual Life |  |  |  |
$35.00 - $49.99 |  | — |  |  | 0.0 years |  | — |  |  | 0.0 years |  |  |  |
50.00 - 64.99 |  | 19,622 |  |  | 2.2 years |  | 19,622 |  |  | 2.2 years |  |  |  |
65.00 - 79.99 |  | 43,804 |  |  | 1.4 years |  | 43,804 |  |  | 1.4 years |  |  |  |
80.00 - 94.99 |  | 20,530 |  |  | 0.8 years |  | 20,530 |  |  | 0.8 years |  |  |  |
|  | 83,956 |  |  |  |  | 83,956 |  |  |  |  |  |  |
As of December 31, 2020 and 2019, the intrinsic value of SARs, and non-vested restricted stock outstanding, exercisable, and vested or expected to vest was $8.5 million and $8.9 million, respectively. During 2020, 2019, and 2018, the total intrinsic value of SARs exercised was $0.7 million, $1.9 million, and $3.0 million, respectively. As of December 31, 2020, there was $2.4 million of total unrecognized compensation cost related to non-vested SARs and restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.8 years. The weighted-average grant date fair values of SARs and restricted stock awards granted in 2020, 2019, and 2018 were $45.91, $58.27, and $69.38 per share, respectively. Under the fair value-based method of accounting for stock-based compensation cost, Farmer Mac recognized compensation expense of $4.1 million, $2.3 million, and $2.5 million during 2020, 2019, and 2018, respectively. The fair value of SARs was estimated using the Black-Scholes option pricing model based on the following assumptions: Table 9.5
| For the Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Risk-free interest rate | 0.9% |  | 2.5% |  | 2.7%
Expected years until exercise | 6 years |  | 6 years |  | 6 years
Expected stock volatility | 34.3% |  | 33.8% |  | 33.0%
Dividend yield | 4.2% |  | 3.4% |  | 2.7%
The risk-free interest rates used in the model were based on the U.S. Treasury yield curve in effect at the grant date. Farmer Mac used historical data to estimate the timing of option exercises and stock option cancellation rates used in the model. Expected volatilities were based on historical volatility of Farmer Mac's Class C non-voting common stock. The dividend yields were based on the expected dividends as a percentage of the value of Farmer Mac's Class C non-voting common stock on the grant date. Because restricted stock awards will be issued upon vesting regardless of the stock price, expected stock volatility is not considered in determining grant date fair value. Restricted stock awards also accrue dividends which are paid at vesting. The weighted-average grant date fair value of the restricted stock awarded in 2020, 2019, and 2018 was $66.02, $80.51, and $84.03 per share, respectively, which is based on the closing price of the stock on the date granted. Capital Requirements Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement. As of both December 31, 2020 and December 31, 2019, the minimum capital requirement was greater than the risk-based capital requirement. Farmer Mac's ability to declare and pay dividends could be restricted if it fails to comply with applicable capital requirements. As of December 31, 2020, Farmer Mac's minimum capital requirement was $680.9 million and its core capital level was $1.0 billion, which was $325.5 million above the minimum capital requirement as of that date. As of December 31, 2019, Farmer Mac's minimum capital requirement was $618.8 million and its core capital level was $815.4 million, which was $196.6 million above the minimum capital requirement as of that date. In accordance with the Farm Credit Administration's rule on Farmer Mac's capital planning, and as part of Farmer Mac's capital plan, Farmer Mac has adopted a policy for maintaining a sufficient level of Tier 1 capital (consisting of retained earnings, paid-in-capital, common stock, and qualifying preferred stock) and imposing restrictions on Tier 1-eligible dividends and any discretionary bonus payments in the event that this capital falls below specified thresholds.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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