Note 2.

Investment Securities

The following tables present the amortized cost and estimated fair values of Farmer Mac’s investments as of June 30, 2011 and December 31, 2010.

	June 30, 2011
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed
by Government guaranteed student loans	$	74,100	$	-	$	(9,418	)	$	64,682
Floating rate asset-backed securities		162,347		224		(37	)		162,534
Floating rate corporate debt securities		112,999		300		(9	)		113,290
Fixed rate corporate debt securities		34,322		60		-			34,382
Floating rate Government/GSE
guaranteed mortgage-backed securities		629,773		4,417		(218	)		633,972
Fixed rate GSE guaranteed mortgage-backed
securities		3,852		315		-			4,167
Floating rate GSE subordinated debt		70,000		-		(7,435	)		62,565
Fixed rate GSE preferred stock		79,838		2,539		-			82,377
Fixed rate senior agency debt		13,000		1		-			13,001
Fixed rate U.S. Treasuries		834,128		619		(3	)		834,744
Total available-for-sale		2,014,359		8,475		(17,120	)		2,005,714

Trading:
Floating rate asset-backed securities		5,411		-		(3,202	)		2,209
Fixed rate GSE preferred stock		83,406		2,536		-			85,942
Total trading		88,817		2,536		(3,202	)		88,151
Total investment securities	$	2,103,176	$	11,011	$	(20,322	)	$	2,093,865

	December 31, 2010
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed
by Government guaranteed student loans	$	74,100	$	-	$	(9,765	)	$	64,335
Floating rate asset-backed securities		29,437		24		(3	)		29,458
Floating rate corporate debt securities		162,891		422		(125	)		163,188
Floating rate Government/GSE
guaranteed mortgage-backed securities		573,288		4,173		(681	)		576,780
Fixed rate GSE guaranteed mortgage-backed
securities		4,525		296		-			4,821
Floating rate GSE subordinated debt		70,000		-		(14,671	)		55,329
Fixed rate GSE preferred stock		80,001		4,827		-			84,828
Fixed rate senior agency debt		5,500		-		-			5,500
Fixed rate U.S. Treasuries		692,808		232		(46	)		692,994
Total available-for-sale		1,692,550		9,974		(25,291	)		1,677,233

Trading:
Floating rate asset-backed securities		5,961		-		(4,561	)		1,400
Fixed rate GSE preferred stock		83,813		883		-			84,696
Total trading		89,774		883		(4,561	)		86,096
Total investment securities	$	1,782,324	$	10,857	$	(29,852	)	$	1,763,329

During the three and six months ended June 30, 2011 and 2010, Farmer Mac did not recognize in earnings any other-than-temporary impairment charges.

During the three and six months ended June 30, 2011, Farmer Mac received proceeds of $75.1 million and $153.6 million, respectively, from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $38,000 and $0.2 million, respectively. During the three months ended June 30, 2010, Farmer Mac did not receive any proceeds from the sale of securities from its available-for-sale investment portfolio. During the six months ended June 30, 2010, Farmer Mac received proceeds of $69.2 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $0.4 million and gross realized losses of $0.2 million.

As of June 30, 2011 and December 31, 2010, unrealized losses on available-for-sale investment securities were as follows:

	June 30, 2011
	Available-for-Sale Securities
	Unrealized loss position for					Unrealized loss position for
	less than 12 months					more than 12 months
			Unrealized					Unrealized
	Fair Value		Loss			Fair Value		Loss
	(in thousands)

Floating rate corporate debt securities	$	-	$	-		$	49,992	$	(9	)
Floating rate asset-backed securities		9,970		(37	)		-		-
Floating rate auction-rate certificates backed
by Government guaranteed student loans		-		-			64,682		(9,418	)
Floating rate Government/GSE
guaranteed mortgage-backed securities		64,058		(216	)		518		(2	)
Floating rate GSE subordinated debt		-		-			62,565		(7,435	)
Fixed rate U.S. Treasuries		65,603		(3	)		-		-
Total	$	139,631	$	(256	)	$	177,757	$	(16,864	)

	December 31, 2010
	Available-for-Sale Securities
	Unrealized loss position for					Unrealized loss position for
	less than 12 months					more than 12 months
			Unrealized					Unrealized
	Fair Value		Loss			Fair Value		Loss
	(in thousands)

Floating rate corporate debt securities	$	-	$	-		$	99,874	$	(125	)
Floating rate asset-backed securities		-		-			2,779		(3	)
Floating rate auction-rate certificates backed
by Government guaranteed student loans		-		-			64,335		(9,765	)
Floating rate Government/GSE
guaranteed mortgage-backed securities		159,294		(587	)		4,138		(94	)
Floating rate GSE subordinated debt		-		-			55,329		(14,671	)
Fixed rate U.S. Treasuries		163,026		(46	)		-		-
Total	$	322,320	$	(633	)	$	226,455	$	(24,658	)

The temporary unrealized losses presented above are principally due to a general widening of credit spreads from the dates of acquisition to June 30, 2011 and December 31, 2010, as applicable. The resulting decreases in fair values reflect an increase in the perceived risk by the financial markets related to those securities. As of June 30, 2011 and December 31, 2010, all of the investment securities in an unrealized loss position were rated at least “A” by a nationally recognized statistical rating organization. The unrealized losses were on 30 and 47 individual investment securities as of June 30, 2011 and December 31, 2010, respectively.

As of June 30, 2011, 12 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $16.9 million. As of December 31, 2010, 29 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $24.7 million. Securities in unrealized loss positions 12 months or more have a fair value as of June 30, 2011 that is, on average, approximately 91 percent of their amortized cost basis. Farmer Mac believes that all these unrealized losses are recoverable within a reasonable period of time through changes in credit spreads or maturity and expects to recover the amortized cost basis of these securities. Accordingly, Farmer Mac has concluded that none of the unrealized losses on these available-for-sale investment securities represent other-than-temporary impairment as of June 30, 2011. 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 investments as of June 30, 2011 and December 31, 2010. As of June 30, 2011, Farmer Mac owned trading investments with an amortized cost of $88.8 million, a fair value of $88.2 million, and a weighted-average yield of 8.14 percent. As of December 31, 2010, Farmer Mac owned trading investments with an amortized cost of $89.8 million, a fair value of $86.1 million and a weighted-average yield of 8.12 percent.

The amortized cost, fair value and weighted-average yield of investments by remaining contractual maturity for available-for-sale investment securities as of June 30, 2011 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 or mortgages.

	Investment Securities Available-for-Sale
	as of June 30, 2011
	Amortized				Weighted-
	Cost		Fair Value		Average Yield
	(dollars in thousands)

Due within one year	$	920,611	$	921,252	1.01%
Due after one year through five years		80,217		80,558	1.77%
Due after five years through ten years		418,586		420,553	1.13%
Due after ten years		594,945		583,351	2.52%
Total	$	2,014,359	$	2,005,714	1.51%