INVESTMENT SECURITIES

The following tables present the amortized cost and fair values of Farmer Mac's investment securities as of June 30, 2012 and December 31, 2011:



	June 30, 2012
	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	$	—	$	(14,393	)	$	59,707
Floating rate asset-backed securities	173,101		265		(67		)	173,299
Floating rate corporate debt securities	86,293		360		(26		)	86,627
Fixed rate corporate debt securities	57,723		64		(30		)	57,757
Floating rate Government/GSE guaranteed mortgage-backed securities	755,343		7,212		(188		)	762,367
Fixed rate GSE guaranteed mortgage-backed securities	2,483		203		—			2,686
Floating rate GSE subordinated debt	70,000		—		(14,161		)	55,839
Fixed rate GSE preferred stock	79,478		7,314		—			86,792
Floating rate senior agency debt	25,000		66		—			25,066
Fixed rate senior agency debt	178,853		122		—			178,975
Fixed rate U.S. Treasuries	1,005,995		33		(122		)	1,005,906
Total available-for-sale	2,508,369		15,639		(28,987		)	2,495,021
Trading:
Floating rate asset-backed securities	4,611		—		(3,181		)	1,430
Total investment securities	$	2,512,980	$	15,639	$	(32,168	)	$	2,496,451



	December 31, 2011
	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	$	—	$	(13,887	)	$	60,213
Floating rate asset-backed securities	178,443		219		(102		)	178,560
Floating rate corporate debt securities	74,152		69		(388		)	73,833
Fixed rate corporate debt securities	38,678		27		(6		)	38,699
Floating rate Government/GSE guaranteed mortgage-backed securities	759,567		4,852		(381		)	764,038
Fixed rate GSE guaranteed mortgage-backed securities	3,106		254		—			3,360
Floating rate GSE subordinated debt	70,000		—		(17,438		)	52,562
Fixed rate commercial paper	9,999		1		—			10,000
Fixed rate GSE preferred stock	79,662		5,216		—			84,878
Floating rate senior agency debt	38,000		32		—			38,032
Fixed rate senior agency debt	79,255		19		(21		)	79,253
Fixed rate U.S. Treasuries	798,966		304		(4		)	799,266
Total available-for-sale	2,203,928		10,993		(32,227		)	2,182,694
Trading:
Floating rate asset-backed securities	5,138		—		(3,342		)	1,796
Total investment securities	$	2,209,066	$	10,993	$	(35,569	)	$	2,184,490

During the three months ended June 30, 2012, Farmer Mac did not sell any securities from its available-for-sale investment portfolio, compared to the same period in 2011, when Farmer Mac received proceeds of $75.1 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $38,000. During the six months ended June 30, 2012, Farmer Mac received proceeds of $5.0 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $28,000, compared to proceeds of $153.6 million, for the same period in 2011, resulting in gross realized gains of $0.2 million.

As of June 30, 2012 and December 31, 2011, unrealized losses on available-for-sale investment securities were as follows:



	June 30, 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	$	—	$	—		$	59,707	$	(14,393	)
Floating rate asset-backed securities	24,304		(51		)	5,910		(16		)
Floating rate corporate debt securities	16,975		(26		)	—		—
Fixed rate corporate debt securities	25,287		(30		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	91,149		(177		)	846		(11		)
Floating rate GSE subordinated debt	—		—			55,839		(14,161		)
Fixed rate U.S. Treasuries	721,627		(122		)	—		—
Total	$	879,342	$	(406	)	$	122,302	$	(28,581	)



	December 31, 2011
	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	$	—	$	—		$	60,213	$	(13,887	)
Floating rate asset-backed securities	63,496		(102		)	—		—
Floating rate corporate debt securities	41,061		(388		)	—		—
Fixed rate corporate debt securities	18,189		(6		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	235,454		(359		)	17,409		(22		)
Floating rate GSE subordinated debt	—		—			52,562		(17,438		)
Fixed rate senior agency debt	44,976		(21		)	—		—
Fixed rate U.S. Treasuries	50,160		(4		)	—		—
Total	$	453,336	$	(880	)	$	130,184	$	(31,347	)

The unrealized losses presented above are principally due to a general widening of credit spreads from the dates of acquisition to June 30, 2012 and December 31, 2011, 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, 2012, all of the investment securities in an unrealized loss position had credit ratings of at least "A" except one that was rated "BBB+". As of December 31, 2011, all of the investment securities in an unrealized loss position had credit ratings of at least "A" except one that was rated "A- " and one that was rated "BBB+". The unrealized losses were on 36 and 44 individual investment securities, respectively, as of June 30, 2012 and December 31, 2011.

As of June 30, 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 $28.6 million. As of December 31, 2011, 10 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $31.3 million. The unrealized losses on those securities are principally due to a general widening of credit spreads from the dates of acquisition. Securities in unrealized loss positions 12 months or more have a fair value as of June 30, 2012 that is, on average, approximately 81.1 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 represent other-than-temporary impairment as of June 30, 2012 and December 31, 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 investment securities as of June 30, 2012 and December 31, 2011. As of June 30, 2012, Farmer Mac owned trading investment securities with an amortized cost of $4.6 million, a fair value of $1.4 million and a weighted average yield of 4.33 percent. As of December 31, 2011, Farmer Mac owned trading investment securities with an amortized cost of $5.1 million, a fair value of $1.8 million and a weighted average yield of 4.36 percent.

The amortized cost, fair value and weighted average yield of available-for-sale investment securities by remaining contractual maturity as of June 30, 2012 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, 2012
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	1,147,970	$	1,147,937	0.75%
Due after one year through five years	224,333		224,849		0.78%
Due after five years through ten years	445,894		433,913		1.14%
Due after ten years	690,172		688,322		2.44%
Total	$	2,508,369	$	2,495,021	1.29%