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 2006	FY 2005
Direct Loans Obligated Prior to FY 1992	$ 36,812	$ 44,619
Direct Loans Obligated After FY 1991	417,202	345,218
Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees	4	23
Defaulted Guaranteed Loans from Post-FY 1991 Guarantees	13,967	27,649
Total	$467,985	$417,509

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Direct Loans Obligated Prior to FY 1992 consist of:

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

Direct Loans Obligated Prior to FY 1992
FY 2005
(In Thousands)

Direct Loan Program	Loans Receivable, Gross	Interest Receivable	Allowance for Loan Losses	Value of Assets Related to Direct Loans, Net
CEIP	$22,145	$7,686	$(24,093)	$ 5,738
Drought Loan Portfolio	26,504	453	(270)	26,687
Economic Development Revolving Fund	12,204	113	(123)	12,194
Fisheries Loan Fund	912	91	(1,003)	-
Total	$61,765	$8,343	$(25,489)	$44,619

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Direct Loans Obligated After FY 1991 consist of:

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

Direct Loans Obligated After FY 1991
FY 2005
(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	$ 61,980	$   48	$ 6,336	$ 68,364
Crab Buyback Loans	97,399	3,578	18,064	119,041
Fisheries Finance IFQ Loans	15,891	172	2,577	18,640
Fisheries Finance Traditional Loans	76,928	737	9,056	86,721
Fisheries Finance Tuna Fleet Loans	13,889	118	1,617	15,624
Pacific Groundfish Buyback Loans	35,663	1,226	(61)	36,828
Total	$301,750	$5,879	$37,589	$345,218

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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 2006	FY 2005
Crab Buyback Loans	$     -	$ 97,399
Fisheries Finance IFQ Loans	3,155	3,058
Fisheries Finance Traditional Loans	67,816	31,176
Total	$70,971	$131,633

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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 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)

Subsidy Expense for New Disbursements of Direct Loans
FY 2005
(In Thousands)

Direct Loan Program	Interest Rate Differential	Defaults	Fees and Other Collections	Other	Total
Crab Buyback Loans	$(22,665)	$18,185	$   -	$    -	$(4,480)
Fisheries Finance IFQ Loans	(696)	54	(21)	157	(506)
Fisheries Finance Traditional Loans	(4,605)	384	(216)	1,974	(2,463)
Total	$(27,966)	$18,623	$(237)	$2,131	$(7,449)

Modifications and Reestimates:

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)

Modifications and Reestimates
FY 2005
(In Thousands)

Direct Loan Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Bering Sea Pollock Fishery Buyback	$    -	$     -	$ 1,396	$  1,396
Crab Buyback Loans		(7,110)	(7,275)	(14,385)
Fisheries Finance IFQ Loans	-	(144)	333	189
Fisheries Finance Traditional Loans	-	(24)	252	228
Fisheries Finance Tuna Fleet Loans	-	-	1,677	1,677
Pacific Groundfish Buyback Loans	-	-	(616)	(616)
Total	$    -	$(7,278)	$(4,233)	$(11,511)

Total Direct Loan Subsidy Expense:

Total Direct Loan Subsidy Expense
(In Thousands)

Direct Loan Program	FY 2006	FY 2005
Bering Sea Pollock Fishery Buyback	$    228	$  1,396
Crab Buyback Loans	(6,437)	(18,865)
Fisheries Finance IFQ Loans	(492)	(317)
Fisheries Finance Traditional Loans	(13,786)	(2,235)
Fisheries Finance Tuna Fleet Loans	(28)	1,677
Pacific Groundfish Buyback Loans	(1,683)	(616)
Total	$(22,198)	$(18,960)

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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 2006	FY 2005
Beginning Balance of the Allowance for Subsidy Cost	$37,589	$19,668
Add Subsidy Expense for Direct Loans Disbursed During the Reporting Years by Component:
Interest Rate Differential Costs	10,402	27,966
Default Costs (Net of Recoveries)	(634)	(18,623)
Fees and Other Collections	488	237
Other Subsidy Costs	(3,793)	(2,131)
Total of the above Subsidy Expense Components	6,463	7,449
Adjustments:
Fees Received	(359)	(256)
Subsidy Allowance Amortization	(3,075)	(783)
Other	3,050	-
Ending Balance of the Allowance for Subsidy Cost Before Reestimates	43,668	26,078
Add or Subtract Subsidy Reestimates by Component:
Interest Rate Reestimates	460	7,278
Technical/Default Reestimates	15,275	4,233
Total of the above Reestimate Components	15,735	11,511
Ending Balance of the Allowance for Subsidy Cost	$59,403	$37,589

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Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees:

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

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

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees
FY 2005
(In Thousands)

Loan Guarantee Program	Defaulted Guaranteed Loans Receivable, Gross	Interest Receivable	Foreclosed Property	Allowance for Loan Losses	Value of Assets Related to Defaulted Guaranteed Loans Receivable, Net
FVOG Program	$17,211	$ 14	$ 14	$(17,216)	$   23

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Defaulted Guaranteed Loans from Post-FY 1991 Guarantees:

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

Defaulted Guaranteed Loans from Post-FY 1991 Guarantees
FY 2005
(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	$18,896	$  547	$    -	$ 1,339	$20,782
FVOG Program	11,599	1,254	2,970	(8,956)	6,867
Total	$30,495	$1,801	$2,970	$(7,617)	$27,649

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Loan Guarantees:

Guaranteed Loans Outstanding:

Outstanding non-acquired guaranteed loans as of September 30, 2006 and 2005, 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, 2006 and 2005
(In Thousands)

Loan Guarantee Program	FY 2006		FY 2005
	Outstanding Principal of Guaranteed Loans Disbursed, Face Value	Amount of Outstanding Principal Guaranteed	Outstanding Principal of Guaranteed Loans Disbursed, Face Value	Amount of Outstanding Principal Guaranteed
Emergency Steel Loan Guarantee Program	$199,900	$175,912	$242,435	$212,817
FVOG Program	17,106	17,106	32,366	32,366
Total	$217,006	$193,018	$274,801	$245,183

New Guaranteed Loans Disbursed:

New Guaranteed Loans Disbursed
(In Thousands)

Loan Guarantee Program	FY 2006		FY 2005
	Outstanding Principal of Guaranteed Loans Disbursed, Face Value	Amount of Outstanding Principal Guaranteed	Outstanding Principal of Guaranteed Loans Disbursed, Face Value	Amount of Outstanding Principal Guaranteed
Emergency Steel Loan Guarantee Program	$-	$-	$24,536	$21,591

Loan Guarantee Liabilities:

Loan Guarantee Liabilities
(In Thousands)

Loan Guarantee Program	FY 2006	FY 2005
	Loan Guarantee Liabilities for Post- FY 1991 Guarantees Disbursed, Present Value	Loan Guarantee Liabilities for Post- FY 1991 Guarantees Disbursed, Present Value
Emergency Oil and Gas Loan Guarantee Program	$   245	$   294
Emergency Steel Loan Guarantee Program	67,652	78,347
FVOG Program	5,778	3,171
Total	$73,675	$81,812

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Subsidy Expense for Loan Guarantees by Program and Component:

Subsidy Expense for New Loan Guarantees Disbursed:

Subsidy Expense for New Loan Guarantees Disbursed:
FY 2005
(In Thousands)

Loan Guarantee Program	Interest Supplements	Defaults	Fees and Other Collections	Total
Emergency Steel Loan Guarantee Program	$    -	$ 7,368	$(123)	$ 7,245

Modifications and Reestimates:

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)

Modifications and Reestimates
FY 2005
(In Thousands)

Loan Guarantee Program	Total Modifications	Interest Rate Reestimates	Technical Reestimates	Total Reestimates
Emergency Oil and Gas Loan Guarantee Program	$    -	$    -	$   (814)	$   (814)
Emergency Steel Loan Guarantee Program	1,348	-	(87,264)	(87,264)
FVOG Program	-	-	523	523
Total	$1,348	$    -	$(87,555) 1	$(87,555)
1 Of this amount, $(84.8) million represents downward subsidy reestimates for defaulted guaranteed loan receivables, and $(2.8) million is the total downward subsidy reestimates for loan guarantee liabilities. (back)

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Total Loan Guarantee Subsidy Expense:

Total Loan Guarantee Subsidy Expense
(In Thousands)

Loan Guarantee Program	FY 2006	FY 2005
Emergency Oil and Gas Loan Guarantee Program	$    (64)	$   (814)
Emergency Steel Loan Guarantee Program	(13,610)	(78,671)
FVOG Program	2,332	523
Total	$(11,342)	$(78,962)

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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 2006 and FY 2005.

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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 2006	FY 2005
Beginning Balance of Loan Guarantee Liabilities	$81,812	$73,645
Add Subsidy Expense for Guaranteed Loans Disbursed During the Reporting Years by Component:
Default Costs (Net of Recoveries)	-	7,368
Fees and Other Collections	-	(123)
Total of the above Subsidy Expense Components	-	7,245
Adjustments:
Loan Guarantee Modifications	(12)	1,348
Fees Received	204	198
Interest Accumulation on the Liabilities Balance	3,103	1,004
Other	1	1,127
Ending Balance of Loan Guarantee Liabilities Before Reestimates	85,108	84,567
Add or Subtract Subsidy Reestimates by Component:
Technical/Default Reestimates	(11,433)	(2,755)
Total of the above Reestimate Components	(11,433)	(2,755)
Ending Balance of Loan Guarantee Liabilities	$73,675	$81,812

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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 2006	FY 2005
Drought Loan Portfolio and Economic Development Revolving Fund	$1,248	$  892
NOAA Direct Loan Programs	3,159	2,863
Total	$4,407	$3,755

Loan Guarantee Program Administrative Expenses
(In Thousands)

Loan Guarantee Program	FY 2006	FY 2005
Emergency Oil and Gas Loan Guarantee Program	$(13)	$ 23
Emergency Steel Loan Guarantee Program	119	253
FVOG Program	389	318
Total	$495	$594

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