Note 5. Loans Receivable and Related Foreclosed Property, Net

Note 5 is broken down into the following sections:

• Direct Loan and Loan Guarantee Programs
• Net Assets for the Department's Loan Programs
• Direct Loans Obligated Prior to FY 1992
• Direct Loans Obligated After FY 1991
• New Disbursements of Direct Loans (Post-FY 1991)
• Subsidy Expense for Direct Loans by Program and Component
• Subsidy Rates for Direct Loans by Program and Component
• Schedule for Reconciling Allowance for Subsidy Cost (Post-FY 1991 Direct Loans)
• Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees
• Defaulted Guaranteed Loans from Post-FY 1991 Guarantees
• Loan Guarantees
• Subsidy Expense for Loan Guarantees by Program and Component
• Total Loan Guarantee Subsidy Expense
• Subsidy Rates for Loan Guarantees by Program and Component
• Schedule for Reconciling Loan Guarantee Liabilities (Post-FY 1991 Loan Guarantees)
• Administrative Expenses

The Department operates the following direct loan and loan guarantee programs:

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The net assets for the Department’s loan programs consist of:

Net Assets for Department Loan Programs
(In Thousands)

	FY 2007	FY 2006
Direct Loans Obligated Prior to FY 1992	$ 34,961	$ 36,812
Direct Loans Obligated After FY 1991	479,967	417,202
Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees	4	4
Defaulted Guaranteed Loans from Post-FY 1991 Guarantees	4,922	13,967
Total	$519,854	$467,985

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Direct Loans Obligated Prior to FY 1992 consist of:

Direct Loans Obligated Prior to FY 1992
FY 2007
(In Thousands)

Direct Loan Program	Loans Receivable, Gross	Interest Receivable	Allowance for Loan Losses	Value of Assets Related to Direct Loans, Net
CEIP	$21,240	$4,892	$(17,401)	$ 8,731
Drought Loan Portfolio	17,389	220	(177)	17,432
Economic Development Revolving Fund	8,807	77	(86)	8,798
Fisheries Loan Fund	354	39	(393)	-
Total	$47,790	$5,228	$(18,057)	$34,961

Direct Loans Obligated Prior to FY 1992
FY 2006
(In Thousands)

Direct Loan Program	Loans Receivable, Gross	Interest Receivable	Allowance for Loan Losses	Value of Assets Related to Direct Loans, Net
CEIP	$21,752	$4,734	$(21,060)	$ 5,426
Drought Loan Portfolio	20,883	257	(211)	20,929
Economic Development Revolving Fund	10,469	93	(105)	10,457
Fisheries Loan Fund	474	40	(514)	-
Total	$53,578	$5,124	$(21,890)	$36,812

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Direct Loans Obligated After FY 1991 consist of:

Direct Loans Obligated After FY 1991
FY 2007
(In Thousands)

Direct Loan Program	Loans Receivable, Gross	Interest Receivable	Allowance for Subsidy Cost (Present Value)	Value of Assets Related to Direct Loans, Net
Bering Sea and Aleutian Islands Non-Pollock Buyback Loans	$ 35,000	$  712	$ 8,734	$ 44,446
Bering Sea Pollock Fishery Buyback	53,935	-	4,142	58,077
Crab Buyback Loans	97,163	3,134	13,506	113,803
Fisheries Finance IFQ Loans	16,851	131	3,317	20,299
Fisheries Finance Traditional Loans	155,931	1,515	32,192	189,638
Fisheries Finance Tuna Fleet Loans	7,005	56	900	7,961
Pacific Groundfish Buyback Loans	35,354	1,152	9,237	45,743
Total	$401,239	$6,700	$72,028	$479,967

Direct Loans Obligated After FY 1991
FY 2006
(In Thousands)

Direct Loan Program	Loans Receivable, Gross	Interest Receivable	Allowance for Subsidy Cost (Present Value)	Value of Assets Related to Direct Loans, Net
Bering Sea Pollock Fishery Buyback	$ 57,969	$   11	$ 5,632	$ 63,612
Crab Buyback Loans	97,162	3,136	27,936	128,234
Fisheries Finance IFQ Loans	16,954	158	2,798	19,910
Fisheries Finance Traditional Loans	133,498	841	21,017	155,356
Fisheries Finance Tuna Fleet Loans	11,204	99	1,443	12,746
Pacific Groundfish Buyback Loans	35,609	1,158	577	37,344
Total	$352,396	$5,403	$59,403	$417,202

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New Disbursements of Direct Loans (Post-FY 1991):

New Disbursements of Direct Loans (Post-FY 1991)
(In Thousands)

Direct Loan Program	FY 2007	FY 2006
Bering Sea and Aleutian Islands Non-Pollock Buyback Loans	$35,000	$     -
Fisheries Finance IFQ Loans	1,564	3,155
Fisheries Finance Traditional Loans	47,441	67,816
Total	$84,005	$70,971

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Subsidy Expense for Direct Loans by Program and Component:

Subsidy Expense for New Disbursements of Direct Loans:

Subsidy Expense for New Disbursements of Direct Loans
FY 2007
(In Thousands)

Direct Loan Program	Interest Rate Differential	Defaults	Fees and Other Collections	Other	Total
Bering Sea and Aleutian Islands Non-Pollock Buyback Loans	$      -	$  -	$   -	$  350	$   350
Fisheries Finance IFQ Loans	(299)	9	(11)	119	(182)
Fisheries Finance Traditional Loans	(6,206)	114	(329)	2,219	(4,202)
Total	$ (6,505)	$123	$(340)	$2,688	$(4,034)

Subsidy Expense for New Disbursements of Direct Loans
FY 2006
(In Thousands)

Direct Loan Program	Interest Rate Differential	Defaults	Fees and Other Collections	Other	Total
Fisheries Finance IFQ Loans	$   (641)	$ 21	$ (21)	$  216	$  (426)
Fisheries Finance Traditional Loans	(9,761)	613	(466)	3,577	(6,037)
Total	$(10,402)	$634	$(488)	$3,793	$(6,463)

Modifications and Reestimates:

Modifications and Reestimates
FY 2007
(In Thousands)

Direct Loan Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Bering Sea and Aleutian Islands Non-Pollock Buyback Loans	$    -	$   -	$  8,119	$  8,119
Bering Sea Pollock Fishery Buyback	-	-	(968)	(968)
Crab Buyback Loans			(15,974)	(15,974)
Fisheries Finance IFQ Loans	-	-	523	523
Fisheries Finance Traditional Loans	-	-	9,555	9,555
Fisheries Finance Tuna Fleet Loans	-	-	(343)	(343)
Pacific Groundfish Buyback Loans	-	-	9,304	9,304
Total	$    -	$   -	$ 10,216	$ 10,216

Modifications and Reestimates
FY 2006
(In Thousands)

Direct Loan Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Bering Sea Pollock Fishery Buyback	$    -	$   -	$    228	$    228
Crab Buyback Loans			(6,437)	(6,437)
Fisheries Finance IFQ Loans	-	-	(66)	(66)
Fisheries Finance Traditional Loans	-	(460)	(7,289)	(7,749)
Fisheries Finance Tuna Fleet Loans	-	-	(28)	(28)
Pacific Groundfish Buyback Loans	-	-	(1,683)	(1,683)
Total	$    -	$(460)	$(15,275)	$(15,735)

Total Direct Loan Subsidy Expense:

Total Direct Loan Subsidy Expense
(In Thousands)

Direct Loan Program	FY 2007	FY 2006
Bering Sea and Aleutian Islands Non-Pollock Buyback Loans	$ 8,470	$      -
Bering Sea Pollock Fishery Buyback	(968)	228
Crab Buyback Loans	(15,974)	(6,437)
Fisheries Finance IFQ Loans	340	(492)
Fisheries Finance Traditional Loans	5,353	(13,786)
Fisheries Finance Tuna Fleet Loans	(343)	(28)
Pacific Groundfish Buyback Loans	9,304	(1,683)
Total	$ 6,182	$(22,198)

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Subsidy Rates for Direct Loans by Program and Component:

Budget Subsidy Rates for Direct Loans for the Current Fiscal-year's Cohorts:

The budget subsidy rates disclosed pertain only to the reporting period’s cohorts. These rates cannot be applied to the new disbursements of direct loans during the reporting period to yield the subsidy expense. The subsidy expense for new disbursements of direct loans for the reporting period could result from disbursements of loans from both the reporting period’s cohorts and prior fiscal-year(s) cohorts. The subsidy expense for the reporting period may also include modifications and reestimates.

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Schedule for Reconciling Allowance for Subsidy Cost (Post-FY 1991 Direct Loans):

Schedule for Reconciling Allowance for Subsidy Cost (Post-FY 1991 Direct Loans)
(In Thousands)

	FY 2007	FY 2006
Beginning Balance of the Allowance for Subsidy Cost	$59,403	$37,589
Add Subsidy Expense for Direct Loans Disbursed During the Reporting Years by Component:
Interest Rate Differential Costs	6,505	10,402
Default Costs (Net of Recoveries)	(123)	(634)
Fees and Other Collections	340	488
Other Subsidy Costs	(2,688)	(3,793)
Total of the above Subsidy Expense Components	4,034	6,463
Adjustments:
Fees Received	(358)	(359)
Subsidy Allowance Amortization	4	(3,075)
Other	(1,271)	3,050
Ending Balance of the Allowance for Subsidy Cost Before Reestimates	61,812	43,668
Add or Subtract Subsidy Reestimates by Component:
Interest Rate Reestimates	-	460
Technical/Default Reestimates	10,216	15,275
Total of the above Reestimate Components	10,216	15,735
Ending Balance of the Allowance for Subsidy Cost	$72,028	$59,403

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Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees:

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees
FY 2007
(In Thousands)

Loan Guarantee Program	Defaulted Guaranteed Loans Receivable, Gross	Interest Receivable	Allowance for Loan Losses	Value of Assets Related to Defaulted Guaranteed Loans Receivable, Net
FVOG Program	$12,209	$  5	$(12,210)	$    4

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees
FY 2006
(In Thousands)

Loan Guarantee Program	Defaulted Guaranteed Loans Receivable, Gross	Interest Receivable	Allowance for Loan Losses	Value of Assets Related to Defaulted Guaranteed Loans Receivable, Net
FVOG Program	$12,537	$  5	$(12,538)	$    4

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Defaulted Guaranteed Loans from Post-FY 1991 Guarantees:

Defaulted Guaranteed Loans from Post-FY 1991 Guarantees
FY 2007
(In Thousands)

Loan Guarantee Program	Defaulted Guaranteed Loans Receivable, Gross	Interest Receivable	Foreclosed Property	Allowance for Subsidy Cost (Present Value)	Value of Assets Related to Defaulted Guaranteed Loans Receivable, Net
FVOG Program	$17,661	$1,254	$  526	$(14,519)	$ 4,922

Defaulted Guaranteed Loans from Post-FY 1991 Guarantees
FY 2006
(In Thousands)

Loan Guarantee Program	Defaulted Guaranteed Loans Receivable, Gross	Interest Receivable	Foreclosed Property	Allowance for Subsidy Cost (Present Value)	Value of Assets Related to Defaulted Guaranteed Loans Receivable, Net
Emergency Steel Loan Guarantee Program	$   500	$   38	$    -	$ 2,218	$ 2,756
FVOG Program	15,446	1,254	3,031	(8,520)	11,211
Total	$15,946	$1,292	$3,031	$(6,302)	$13,967

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Loan Guarantees:

Guaranteed Loans Outstanding:

Outstanding non-acquired guaranteed loans as of September 30, 2007 and 2006, which are not reflected in the financial statements, are as follows:

Outstanding Non-acquired Guaranteed Disbursed Loans Not Reflected in the Financial Statements
As of September 30, 2007 and 2006
(In Thousands)

Loan Guarantee Program	FY 2007		FY 2006
	Outstanding Principal of Guaranteed Loans, Face Value	Amount of Outstanding Principal Guaranteed	Outstanding Principal of Guaranteed Loans, Face Value	Amount of Outstanding Principal Guaranteed
Emergency Steel Loan Guarantee Program	$149,900	$131,912	$199,900	$175,912
FVOG Program	12,673	12,673	17,106	17,106
Total	$162,573	$144,585	$217,006	$193,018

New Guaranteed Loans Disbursed:

Loan Guarantee Liabilities:

Loan Guarantee Liabilities
(In Thousands)

Loan Guarantee Program	FY 2007	FY 2006
	Loan Guarantee Liabilities for Post- FY 1991 Guarantees, Present Value	Loan Guarantee Liabilities for Post- FY 1991 Guarantees, Present Value
Emergency Oil and Gas Loan Guarantee Program	$     -	$   245
Emergency Steel Loan Guarantee Program	54,734	67,652
FVOG Program	998	5,778
Total	$55,732	$73,675

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Subsidy Expense for Loan Guarantees by Program and Component:

Subsidy Expense for New Loan Guarantees Disbursed:

Modifications and Reestimates:

Modifications and Reestimates
FY 2007
(In Thousands)

Loan Guarantee Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Emergency Oil and Gas Loan Guarantee Program	$      -	$    -	$   (253)	$   (253)
Emergency Steel Loan Guarantee Program	(18,910)	-	2,739	2,739
FVOG Program	-	-	(1,322)	(1,322)
Total	$(18,910)	$    -	$  1,164	$  1,164

Modifications and Reestimates
FY 2006
(In Thousands)

Loan Guarantee Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Emergency Oil and Gas Loan Guarantee Program	$      -	$    -	$    (64)	$    (64)
Emergency Steel Loan Guarantee Program	(12)	-	(13,598)	(13,598)
FVOG Program	-	-	2,332	2,332
Total	$    (12)	$    -	$(11,330)	$(11,330)

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Total Loan Guarantee Subsidy Expense:

Total Loan Guarantee Subsidy Expense
(In Thousands)

Loan Guarantee Program	FY 2007	FY 2006
Emergency Oil and Gas Loan Guarantee Program	$   (253)	$    (64)
Emergency Steel Loan Guarantee Program	(16,171)	(13,610)
FVOG Program	(1,322)	2,332
Total	$(17,746)	$(11,342)

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Subsidy Rates for Loan Guarantees by Program and Component:

Budget Subsidy Rates for Loan Guarantees for the Current Fiscal-year’s Cohorts:

There were no new cohorts of guaranteed loans during FY 2007 and FY 2006.

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Schedule for Reconciling Loan Guarantee Liabilities (Post-FY 1991 Loan Guarantees):

Schedule for Reconciling Loan Guarantee Liabilities (Post-FY 1991 Loan Guarantees)
(In Thousands)

	FY 2007	FY 2006
Beginning Balance of Loan Guarantee Liabilities	$73,675	$81,812
Adjustments:
Loan Guarantee Modifications	(18,910)	(12)
Fees Received	63	204
Interest Accumulation on the Liabilities Balance	(710)	3,103
Other	4,934	1
Ending Balance of Loan Guarantee Liabilities Before Reestimates	59,052	85,108
Add or Subtract Subsidy Reestimates by Component:
Technical/Default Reestimates	(662)	(11,433)
Total of the above Reestimate Components	(662)	(11,433)
Transfer of Subsidy Cost for Defaulted Guaranteed Loans to Loans Receivable and Related Foreclosed Property, Net	(2,658)	-
Ending Balance of Loan Guarantee Liabilities	$55,732	$73,675

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Administrative Expenses:

 Administrative expenses in support of the Department’s direct loan and loan guarantee programs consist of:

Direct Loan Program Administrative Expenses
(In Thousands)

Direct Loan Program	FY 2007	FY 2006
Drought Loan Portfolio and Economic Development Revolving Fund	$  925	$1,248
NOAA Direct Loan Programs	1,037	3,159
Total	$1,962	$4,407

Loan Guarantee Program Administrative Expenses
(In Thousands)

Loan Guarantee Program	FY 2007	FY 2006
Emergency Oil and Gas Loan Guarantee Program	$    4	$(13)
Emergency Steel Loan Guarantee Program	857	119
FVOG Program	88	389
Total	$  949	$495

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