FARMER MAC GUARANTEED SECURITIES AND USDA GUARANTEED SECURITIES

The following table sets forth information about on-balance sheet Farmer Mac Guaranteed Securities and USDA Guaranteed Securities as of December 31, 2011 and 2010.



	December 31, 2011
	Available- for-Sale			Trading			Total
	(in thousands)
Farmer Mac I	$	2,807,627		$	—		$	2,807,627
Farmer Mac II	35,599			—			35,599
Rural Utilities	1,446,046			—			1,446,046
Farmer Mac Guaranteed Securities	4,289,272			—			4,289,272
USDA Guaranteed Securities	1,279,546			212,359			1,491,905
Total	$	5,568,818		$	212,359		$	5,781,177

Amortized cost	$	5,431,203		$	213,130		$	5,644,333
Unrealized gains	139,214			1,804			141,018
Unrealized losses	(1,599		)	(2,575		)	(4,174		)
Fair value	$	5,568,818		$	212,359		$	5,781,177



	December 31, 2010
	Available- for-Sale			Trading			Total
	(in thousands)
Farmer Mac I	$	942,809		$	—		$	942,809
Farmer Mac II	37,637			—			37,637
Rural Utilities	1,926,818			—			1,926,818
Farmer Mac Guaranteed Securities	2,907,264			—			2,907,264
USDA Guaranteed Securities	1,005,679			311,765			1,317,444
Total	$	3,912,943		$	311,765		$	4,224,708

Amortized cost	$	3,880,418		$	315,655		$	4,196,073
Unrealized gains	50,583			106			50,689
Unrealized losses	(18,058		)	(3,996		)	(22,054		)
Fair value	$	3,912,943		$	311,765		$	4,224,708

The temporary unrealized losses presented above are principally due to changes in interest rates from the date of acquisition to December 31, 2011 and December 31, 2010, as applicable. As of December 31, 2011 and 2010, the unrealized losses presented above are related to Farmer Mac I, Farmer Mac II Guaranteed Securities, which are USDA-guaranteed portions of loans backed by the full faith and credit of the United States, and USDA Guaranteed Securities. None of the Farmer Mac I Guaranteed Securities has been in an unrealized loss position for greater than 12 months. Farmer Mac has concluded that none of the unrealized losses on its available-for-sale Farmer Mac Guaranteed Securities represents an other-than-temporary impairment as of December 31, 2011 and 2010. 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 2011, 2010 and 2009, Farmer Mac realized no gains or losses from the sale of Farmer Mac Guaranteed Securities and USDA Guaranteed Securities.

As of December 31, 2011, of the total on-balance sheet Farmer Mac Guaranteed Securities and USDA Guaranteed Securities maturing after one year, $4.0 billion are fixed rate or have floating rates that reset after one year. As of December 31, 2010, of the total on-balance sheet Farmer Mac Guaranteed Securities and USDA Guaranteed Securities maturing after one year, $2.7 billion are fixed rate or have floating rates that reset after one year.

Farmer Mac securitizes three types of assets: agricultural real estate mortgage loans, USDA-guaranteed portions of loans and rural utilities loans. Farmer Mac manages the credit risk of its securitized loans, both on- and off-balance sheet, together with its on-balance sheet loans and the loans underlying its off-balance sheet LTSPCs. See Note 8 for more information regarding this credit risk.

When particular criteria are met, such as the default of the borrower, Farmer Mac becomes entitled to purchase the defaulted loans underlying Farmer Mac Guaranteed Securities (commonly referred to as "removal-of-account" provisions). In accordance with the terms of all LTSPCs, Farmer Mac acquires loans that are either 90 days or 120 days (depending on the provisions of the applicable agreement) delinquent upon the request of the counterparty. Farmer Mac records all such defaulted loans at their unpaid principal balance during the period in which Farmer Mac becomes entitled to purchase the loans and therefore regains effective control over the transferred loans. Subsequent to the purchase, such defaulted loans are treated as nonaccrual loans and, therefore, interest is accounted for on the cash basis. Any decreases in expected cash flows are recognized as impairment.

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the years ended December 31, 2011, 2010 and 2009 and the outstanding balances and carrying amounts of all such loans as of December 31, 2011, 2010 and 2009, respectively:



	For the Year Ended December 31,
	2011		2010		2009
	(in thousands)
Unpaid principal balance at acquisition date	$	21,663	$	6,082	$	21,269
Contractually required payments receivable	21,715		6,200		21,278
Impairment recognized subsequent to acquisition	3,845		1,736		8,492
Recovery/release of allowance for defaulted loans	714		3,005		—



	As of December 31,
	2011		2010		2009
	(in thousands)
Outstanding balance	$	35,773	$	34,473	$	50,409
Carrying amount	29,461		30,365		29,994

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying Farmer Mac I Guaranteed Securities and LTSPCs are presented in the table below. Information is not presented for loans underlying AgVantage securities, USDA Guaranteed Securities, Farmer Mac II Guaranteed Securities, or rural utilities loans or underlying Farmer Mac Guaranteed Securities – Rural Utilities. Each AgVantage security is a general obligation of an issuing institution approved by Farmer Mac and is secured by eligible loans in an amount at least equal to the outstanding principal amount of the security. Farmer Mac excludes the loans that secure AgVantage securities from the credit risk metrics it discloses because of the credit quality of the issuing institutions, the collateralization level for the securities, and because delinquent loans are required to be removed from the pool of pledged loans and replaced with current eligible loans. As of December 31, 2011, there were no probable losses inherent in Farmer Mac's AgVantage securities due to the credit quality of the obligors, as well as the underlying collateral. To date, Farmer Mac has not experienced any credit losses on any Farmer Mac I AgVantage securities. The USDA-guaranteed portions presented as USDA Guaranteed Securities, as well as those that collateralize Farmer Mac II Guaranteed Securities, are guaranteed by the USDA. Each USDA guarantee is an obligation backed by the full faith and credit of the United States. As of December 31, 2011, neither Farmer Mac nor Farmer Mac II LLC had experienced any credit losses on any USDA Guaranteed Securities or Farmer Mac II Guaranteed Securities. As of December 31, 2011, there were no delinquencies and no probable losses inherent in the Farmer Mac's rural utilities loans held or in any Farmer Mac Guaranteed Securities – Rural Utilities. As of December 31, 2011, Farmer Mac has not experienced any credit losses on any of those loans or securities.



	90-Day Delinquencies (1)				Net Credit Losses
	As of December 31,				For the Year Ended December 31,
	2011		2010		2011		2010		2009
	(in thousands)
On-balance sheet assets:
Farmer Mac I:
Loans	$	33,243	$	37,665	$	200	$	555	$	7,490
Total on-balance sheet	$	33,243	$	37,665	$	200	$	555	$	7,490
Off-balance sheet assets:
Farmer Mac I:
LTSPCs	$	7,379	$	32,583	$	—	$	—	$	—
Total off-balance sheet	$	7,379	$	32,583	$	—	$	—	$	—
Total	$	40,622	$	70,248	$	200	$	555	$	7,490


(1)	Includes loans and loans underlying Farmer Mac I Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, restructured after delinquency, and in bankruptcy, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

Of the $33.2 million and $37.7 million of on-balance sheet loans reported as 90 days delinquent as of December 31, 2011 and 2010, respectively, $5.6 million and $7.9 million are loans subject to "removal-of-account" provisions.