INVESTMENT SECURITIES

The following tables present the amount outstanding, amortized cost, and fair values of Farmer Mac's investment securities as of June 30, 2013 and December 31, 2012:

Table 2.1



	June 30, 2013
	Amount Outstanding		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	74,100	$	—		$	74,100	$	—	$	(9,012	)	$	65,088
Floating rate asset-backed securities	158,223		(293		)	157,930		690		(328		)	158,292
Floating rate corporate debt securities	104,345		(11		)	104,334		359		(37		)	104,656
Fixed rate corporate debt securities	65,000		144			65,144		54		(133		)	65,065
Floating rate Government/GSE guaranteed mortgage-backed securities	651,590		5,480			657,070		8,033		(996		)	664,107
Fixed rate GSE guaranteed mortgage-backed securities (1)	1,434		4,178			5,612		221		—			5,833
Floating rate GSE subordinated debt	70,000		—			70,000		—		(6,679		)	63,321
Fixed rate GSE preferred stock	78,500		579			79,079		7,810		—			86,889
Fixed rate taxable municipal bonds	18,635		83			18,718		4		(1		)	18,721
Floating rate senior agency debt	50,000		(1		)	49,999		33		—			50,032
Fixed rate senior agency debt	119,000		369			119,369		102		(4		)	119,467
Fixed rate U.S. Treasuries	1,052,000		2,233			1,054,233		214		(66		)	1,054,381
Total available-for-sale	2,442,827		12,761			2,455,588		17,520		(17,256		)	2,455,852
Trading:
Floating rate asset-backed securities	3,826		—			3,826		—		(2,762		)	1,064
Total investment securities	$	2,446,653	$	12,761		$	2,459,414	$	17,520	$	(20,018	)	$	2,456,916


(1)	Fair value includes $4.3 million of an interest-only security with a notional amount of $152.4 million.



	December 31, 2012
	Amount Outstanding		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	74,100	$	—		$	74,100	$	—	$	(10,941	)	$	63,159
Floating rate asset-backed securities	150,519		(372		)	150,147		933		(36		)	151,044
Fixed rate asset-backed securities	6,501		—			6,501		—		—			6,501
Floating rate corporate debt securities	76,345		(32		)	76,313		450		—			76,763
Fixed rate corporate debt securities	51,969		243			52,212		204		—			52,416
Floating rate Government/GSE guaranteed mortgage-backed securities	699,062		5,973			705,035		8,035		(211		)	712,859
Fixed rate GSE guaranteed mortgage-backed securities	1,910		1			1,911		154		—			2,065
Floating rate GSE subordinated debt	70,000		—			70,000		—		(12,569		)	57,431
Fixed rate GSE preferred stock	78,500		784			79,284		7,802		—			87,086
Floating rate senior agency debt	50,000		(6		)	49,994		61		—			50,055
Fixed rate senior agency debt	72,700		287			72,987		128		(1		)	73,114
Fixed rate U.S. Treasuries	1,163,400		2,240			1,165,640		258		(9		)	1,165,889
Total available-for-sale	2,495,006		9,118			2,504,124		18,025		(23,767		)	2,498,382
Trading:
Floating rate asset-backed securities	4,327		—			4,327		—		(3,080		)	1,247
Total investment securities	$	2,499,333	$	9,118		$	2,508,451	$	18,025	$	(26,847	)	$	2,499,629

During the three months ended June 30, 2013, Farmer Mac received proceeds of $155.6 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $3.1 million. During the three months ended June 30, 2012, Farmer Mac did not sell any securities from its available-for-sale investment portfolio. During the six months ended June 30, 2013, Farmer Mac received proceeds of $170.6 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $3.1 million, compared to proceeds of $5.0 million for the six months ended June 30, 2012, resulting in gross realized gains of $28,000.

As of June 30, 2013 and December 31, 2012, unrealized losses on available-for-sale investment securities were as follows:

Table 2.2



	June 30, 2013
	Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—		$	65,088	$	(9,012	)
Floating rate asset-backed securities	38,412		(227		)	9,721		(101		)
Floating rate corporate debt securities	19,973		(37		)	—		—
Fixed rate corporate debt securities	45,050		(133		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	208,198		(996		)	—		—
Floating rate GSE subordinated debt	—		—			63,321		(6,679		)
Fixed rate taxable municipal bonds	10,141		(1		)	—		—
Fixed rate senior agency debt	24,986		(4		)	—		—
Fixed rate U.S. Treasuries	280,954		(66		)	—		—
Total	$	627,714	$	(1,464	)	$	138,130	$	(15,792	)



	December 31, 2012
	Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—		$	63,159	$	(10,941	)
Floating rate asset-backed securities	21,648		(27		)	3,619		(9		)
Floating rate Government/GSE guaranteed mortgage-backed securities	174,352		(209		)	829		(2		)
Floating rate GSE subordinated debt	—		—			57,431		(12,569		)
Fixed rate senior agency debt	50,088		(1		)	—		—
Fixed rate U.S. Treasuries	136,194		(9		)	—		—
Total	$	382,282	$	(246	)	$	125,038	$	(23,521	)

The unrealized losses presented above are principally due to a general widening of credit spreads from the dates of acquisition to June 30, 2013 and December 31, 2012, as applicable. The resulting decrease in fair values reflect an increase in the perceived risk by the financial markets related to those securities. As of June 30, 2013, all of the investment securities in an unrealized loss position had credit ratings of at least "AA+" except three that were rated "A-", one that was rated "A", and one that was rated "BBB*-" (credit watch negative with possible multi-notch downgrade). As of June 30, 2013, the unrealized loss on this last security was $22,000, and the security matures in April 2014. As of December 31, 2012, all of the investment securities in an unrealized loss position had credit ratings of at least "AA+" except one that was rated "A-". The unrealized losses were on 40 and 17 individual investment securities as of June 30, 2013 and December 31, 2012, respectively.

As of June 30, 2013, 8 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $15.8 million. As of December 31, 2012, 9 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $23.5 million. Securities in unrealized loss positions 12 months or more have a fair value as of June 30, 2013 that is, on average, approximately 89.7 percent of their amortized cost basis. Farmer Mac believes that all of these unrealized losses are recoverable within a reasonable period of time by way of changes in credit spreads or maturity. Accordingly, Farmer Mac has concluded that none of the unrealized losses on these available-for-sale investment securities represents other-than-temporary impairment as of June 30, 2013 and December 31, 2012. Farmer Mac does not intend to sell these securities and it is not more likely than not that Farmer Mac will be required to sell the securities before recovery of the amortized cost basis.

Farmer Mac did not own any held-to-maturity investment securities as of June 30, 2013 and December 31, 2012. As of June 30, 2013, Farmer Mac owned trading investment securities with an amortized cost of $3.8 million, a fair value of $1.1 million, and a weighted average yield of 4.28 percent. As of December 31, 2012, Farmer Mac owned trading investment securities with an amortized cost of $4.3 million, a fair value of $1.2 million, and a weighted average yield of 4.29 percent.

The amortized cost, fair value, and weighted average yield of available-for-sale investment securities by remaining contractual maturity as of June 30, 2013 are set forth below. Asset-backed and mortgage-backed securities are included based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

Table 2.3



	June 30, 2013
	Available-for-Sale Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	1,285,008	$	1,285,325	0.53%
Due after one year through five years	168,884		169,169		0.95%
Due after five years through ten years	396,588		392,000		1.03%
Due after ten years	605,108		609,358		2.35%
Total	$	2,455,588	$	2,455,852	1.09%