FARMER MAC GUARANTEED SECURITIES AND USDA SECURITIES

The following tables set forth information about on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities as of March 31, 2017 and December 31, 2016:

Table 3.1



	As of March 31, 2017
	Unpaid Principal Balance		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Held-to-maturity:
AgVantage	$	1,035,587	$	(2,031	)	$	1,033,556	$	6,290	$	(3,115	)	$	1,036,731
Farmer Mac Guaranteed USDA Securities	40,734		396			41,130		293		(5		)	41,418
Total Farmer Mac Guaranteed Securities	1,076,321		(1,635		)	1,074,686		6,583		(3,120		)	1,078,149
USDA Securities	1,955,868		69,954			2,025,822		1		(66,210		)	1,959,613
Total held-to-maturity	$	3,032,189	$	68,319		$	3,100,508	$	6,584	$	(69,330	)	$	3,037,762
Available-for-sale:
AgVantage	$	5,266,782	$	(258	)	$	5,266,524	$	33,450	$	(56,928	)	$	5,243,046
Trading:
USDA Securities	$	17,760	$	1,274		$	19,034	$	56	$	(488	)	$	18,602



	As of December 31, 2016
	Unpaid Principal Balance		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Held-to-maturity:
AgVantage	$	1,115,465	$	(2,276	)	$	1,113,189	$	7,187	$	(3,175	)	$	1,117,201
Farmer Mac Guaranteed USDA Securities	35,599		443			36,042		5		(239		)	35,808
Total Farmer Mac Guaranteed Securities	1,151,064		(1,833		)	1,149,231		7,192		(3,414		)	1,153,009
USDA Securities	1,935,440		73,785			2,009,225		—		(95,590		)	1,913,635
Total held-to-maturity	$	3,086,504	$	71,952		$	3,158,456	$	7,192	$	(99,004	)	$	3,066,644
Available-for-sale:
AgVantage	$	4,889,007	$	(103	)	$	4,888,904	$	28,715	$	(63,934	)	$	4,853,685
Trading:
USDA Securities	$	19,360	$	1,377		$	20,737	$	41	$	(390	)	$	20,388

On October 1, 2016, Farmer Mac transferred $2.0 billion of USDA Securities and $32.8 million of Farmer Mac Guaranteed USDA Securities from available-for-sale to held-to-maturity to reflect Farmer Mac’s positive intent and ability to hold these securities until maturity or payoff. Farmer Mac transferred these securities at fair value as of the date of the transfer, which included a cost basis adjustment of unrealized appreciation in the amount of $73.1 million for the USDA Securities and $0.7 million for the Farmer Mac Guaranteed USDA Securities. The accumulated unrealized appreciation was retained in accumulated other comprehensive income in the amount of $73.8 million, pre-tax. Farmer Mac accounts for held-to-maturity securities at amortized cost. Both the cost basis adjustment and accumulated unrealized appreciation will be amortized as an adjustment to the yield on the held-to-maturity USDA Securities over the remaining term of the transferred securities.

As of March 31, 2017 and December 31, 2016, unrealized losses on held-to-maturity and available-for-sale on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities were as follows:

Table 3.2



	As of March 31, 2017
	Held-to-Maturity and 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)
Held-to-maturity:
AgVantage	$	358,636	$	(3,115	)	$	—	$	—
Farmer Mac Guaranteed USDA Securities	279		(5		)	—		—
USDA Securities	1,865,182		(66,194		)	93,978		(16		)
Total held-to-maturity	$	2,224,097	$	(69,314	)	$	93,978	$	(16	)

Available-for-sale:
AgVantage	$	1,149,984	$	(26,036	)	$	1,020,572	$	(30,892	)



	As of December 31, 2016
	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)
Held-to-maturity:
AgVantage	$	358,575	$	(3,175	)	$	—	$	—
Farmer Mac Guaranteed USDA Securities	30,575		(239		)	—		—
USDA Securities	1,816,366		(95,582		)	97,270		(8		)
Total held-to-maturity	$	2,205,516	$	(98,996	)	$	97,270	$	(8	)

Available-for-sale:
AgVantage	$	982,538	$	(18,482	)	$	1,131,930	$	(45,452	)

The unrealized losses presented above are principally due to higher interest rates from the date of acquisition to March 31, 2017 and December 31, 2016, as applicable. In addition, the unrealized losses on the held-to-maturity USDA Securities as of December 31, 2016 reflect their increased cost basis resulting from their transfer to held-to-maturity as of October 1, 2016, as described above. The credit exposure related to Farmer Mac's USDA Guarantees line of business is covered by the full faith and credit guarantee of the United States. The unrealized losses from AgVantage securities were on 21 available-for-sale securities as of March 31, 2017. There were 7 held-to-maturity AgVantage securities with an unrealized loss as of March 31, 2017. The unrealized losses from AgVantage securities were on 22 available-for-sale securities as of December 31, 2016. There were 7 unrealized losses from held-to-maturity securities as of December 31, 2016. As of March 31, 2017, 8 available-for-sale AgVantage securities had been in a loss position for more than 12 months with a total unrealized loss of $30.9 million. As of December 31, 2016, 10 available-for-sale AgVantage securities had been in a loss position for more than 12 months with a total unrealized loss of $45.5 million. Farmer Mac has concluded that none of the unrealized losses on its held-to-maturity Farmer Mac Guaranteed Securities and USDA Securities and available-for-sale Farmer Mac Guaranteed Securities are other-than-temporary impairment as of either March 31, 2017 or December 31, 2016. 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.

During the three months ended March 31, 2017 and 2016, Farmer Mac realized no gains or losses from the sale of Farmer Mac Guaranteed Securities and USDA Securities.

The amortized cost, fair value, and weighted-average yield of available-for-sale and held-to-maturity Farmer Mac Guaranteed Securities and USDA Securities by remaining contractual maturity as of March 31, 2017 are set forth below. The balances presented are based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

Table 3.3



	As of March 31, 2017
	Available-for-Sale Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	541,181	$	542,582	1.65	%
Due after one year through five years	2,852,298		2,866,585		1.95	%
Due after five years through ten years	838,374		839,129		2.61	%
Due after ten years	1,034,671		994,750		1.66	%
Total	$	5,266,524	$	5,243,046	1.97	%



	As of March 31, 2017
	Held-to-Maturity Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	275,696	$	276,572	2.21	%
Due after one year through five years	829,335		829,694		2.16	%
Due after five years through ten years	179,240		174,029		2.97	%
Due after ten years	1,816,237		1,757,467		3.29	%
Total	$	3,100,508	$	3,037,762	2.86	%

As of March 31, 2017, Farmer Mac owned trading USDA Securities with an amortized cost of $19.0 million, a fair value of $18.6 million, and a weighted-average yield of 5.40 percent. As of December 31, 2016, Farmer Mac owned trading USDA Securities with an amortized cost of $20.7 million, a fair value of $20.4 million, and a weighted-average yield of 5.44 percent.

In April 2017, Farmer Mac purchased and retained $1.0 billion of AgVantage securities that refinanced an AgVantage security of the same amount that matured in April 2017. Previously, Farmer Mac held $30.0 million of the $1.0 billion AgVantage security that matured in April 2017 in its on-balance sheet portfolio. The remaining $970.0 million of the $1.0 billion AgVantage security that matured in April 2017 had previously been sold to third parties and accounted for as off-balance sheet commitment. Farmer Mac holds the newly purchased $1.0 billion in AgVantage securities entirely within its on-balance sheet portfolio.