INVESTMENT SECURITIES

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

Table 2.1



	September 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	162,905		(231		)	162,674		1,070		(48		)	163,696
Floating rate corporate debt securities	114,345		(7		)	114,338		477		(42		)	114,773
Fixed rate corporate debt securities	65,000		106			65,106		122		(40		)	65,188
Floating rate Government/GSE guaranteed mortgage-backed securities	742,471		4,948			747,419		5,808		(1,520		)	751,707
Fixed rate GSE guaranteed mortgage-backed securities (1)	1,320		4,071			5,391		3,750		—			9,141
Floating rate GSE subordinated debt	70,000		—			70,000		—		(6,615		)	63,385
Fixed rate GSE preferred stock	78,500		473			78,973		4,482		—			83,455
Fixed rate taxable municipal bonds	26,635		117			26,752		2		(10		)	26,744
Floating rate senior agency debt	25,000		—			25,000		11		—			25,011
Fixed rate senior agency debt	326,000		617			326,617		153		(3		)	326,767
Fixed rate U.S. Treasuries	805,000		1,874			806,874		307		(1		)	807,180
Total available-for-sale	2,491,276		11,968			2,503,244		16,182		(17,291		)	2,502,135
Trading:
Floating rate asset-backed securities	3,671		—			3,671		—		(2,694		)	977
Total investment securities	$	2,494,947	$	11,968		$	2,506,915	$	16,182	$	(19,985	)	$	2,503,112


(1)	Fair value includes $7.7 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 September 30, 2013 and 2012, Farmer Mac did not sell any securities from its available-for-sale investment portfolio. During the nine months ended September 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 nine months ended September 30, 2012, resulting in gross realized gains of $28,000.

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

Table 2.2



	September 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	37,696		(48		)	—		—
Floating rate corporate debt securities	14,958		(42		)	—		—
Fixed rate corporate debt securities	35,109		(40		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	231,733		(1,520		)	—		—
Floating rate GSE subordinated debt	—		—			63,385		(6,615		)
Fixed rate taxable municipal bonds	8,052		(10		)	—		—
Fixed rate senior agency debt	31,985		(3		)	—		—
Fixed rate U.S. Treasuries	18,024		(1		)	—		—
Total	$	377,557	$	(1,664	)	$	128,473	$	(15,627	)



	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 September 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 September 30, 2013, all of the investment securities in an unrealized loss position had credit ratings of at least "AA+" except two that were rated "A-", one that was rated "BBB+", and one that was rated "B+". As of September 30, 2013, the aggregate unrealized loss on the security rated "BBB+" was $23,000, and the security matures in 2014. The security rated "B+" has been called at par by the issuer effective November 29, 2013. 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 46 and 17 individual investment securities as of September 30, 2013 and December 31, 2012, respectively.

As of September 30, 2013, 7 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $15.6 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 September 30, 2013 that is, on average, approximately 89.2 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 September 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 September 30, 2013 and December 31, 2012. As of September 30, 2013, Farmer Mac owned trading investment securities with an amortized cost of $3.7 million, a fair value of $1.0 million, and a weighted average yield of 4.27 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 September 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



	September 30, 2013
	Available-for-Sale Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	1,212,628	$	1,213,131	0.63%
Due after one year through five years	222,499		223,092		0.82%
Due after five years through ten years	377,526		377,293		1.01%
Due after ten years	690,591		688,619		2.18%
Total	$	2,503,244	$	2,502,135	1.13%