<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 33-79328
_________________
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
36-7051620
(I.R.S. Employer Identification Number)
2201 Cooperative Way, Herndon, VA 20171-3025
(Address of principal executive offices)
(Registrant's telephone number, including area code, is 703-709-6700)
___________________
Securities Registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The Registrant has no common or voting stock.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Form of Trust Agreement
2. Loan Agreement
3. Loan Guarantee and Servicing Agreement
Exhibit Index located on page 13.
<PAGE> 2
Part I
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE> 3
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
a) There is no established trading market for the
certificates representing ownership of the beneficial
interest in the Trust.
b) As of March 28, 1997 there was one holder of
certificates representing ownership of the beneficial
interest in the Trust.
Item 8. Financial Statements and Supplementary Data
See attached audited financial statements.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
Part III
Item 13. Certain Relationships and Related Transactions
None.
<PAGE> 4
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
a) The following documents are filed as part of this report:
1. Financial Statements
Report of Independent Public Accountants
Statements of Assets and Liabilities as of
December 31, 1996 and 1995
Statements of Income and Expenses, for the
Years Ended December 31, 1996, 1995, and 1994
Statements of Cash Flows, for the Years Ended
December 31, 1996, 1995, and 1994
Notes to Financial Statements
2. Financial Statement Schedules are omitted
because they are inapplicable.
3. Exhibits
Exhibit
Number Description of Exhibit
4.1 Form of Trust Agreement,
including the form of Rural
Electric Cooperative Grantor
Trust Certificate
(incorporated by reference
to Exhibit 4.1 to
Registration Statement on
form S-1 [No. 33-79328].)
10.1 Loan Agreement (incorporated
by reference to Exhibit 10.1
to Registration Statement on
Form S-1 [No. 33-79328].)
10.2 Loan Guarantee and Servicing
Agreement (incorporated by
reference to Exhibit 10.2 to
Registration Statement on
Form S-1 [No. 33-79328].)
b) Form 8-K dated September 15, 1996.
Semi-annual Report to Certificateholders dated
September 15, 1996.
Supplemental information to be furnished with reports filed pursuant to
Section 15(d) of the Act by Registrants which have not registered securities
pursuant to Section 12 of the Act.
No annual report, proxy statement, form of proxy or other proxy
soliciting material has been sent to Certificateholders, and the
Registrant does not presently contemplate sending any such material
subsequent to the filing of this report.
<PAGE> 5
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Fairfax,
Commonwealth of Virginia on the 28 day of March, 1997.
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993 B-2
By: NATIONAL RURAL UTILITIES COOPERATIVE
FINANCE CORPORATION as Servicer
By: /S/ Sheldon C. Petersen
Sheldon C. Petersen, Governor and
Chief Executive Officer
<PAGE> 6
RURAL ELECTRIC COOPERATIVE GRANTOR
TRUST (SOYLAND) 1993-B2
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995,
AND FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
TOGETHER WITH AUDITORS' REPORT
<PAGE> 7
Report of Independent Public Accountants
To the Trustee of
Rural Electric Cooperative Grantor Trust
(Soyland) 1993-B2, and
To the Board of Directors of
National Rural Utilities Cooperative
Finance Corporation:
We have audited the accompanying statement of assets and liabilities of
Rural Electric Cooperative Grantor Trust (Soyland) 1993-B2 as of December
31, 1996 and 1995, and the related statements of income and expenses and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Trust's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rural Electric
Cooperative Grantor Trust (Soyland) 1993-B2 as of December 31, 1996 and 1995,
and the results of its operations and its cash flows for the years ended
December 31, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
March 24, 1997
Washington, D. C.
<PAGE> 8
<TABLE>
<CAPTION>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 1996 AND 1995
_____________________________________________________________________
1996 1995
<S> <C> <C>
ASSETS
Interest Receivable $1,225,439 $1,225,439
Note Receivable 44,000,000 44,000,000
Total Assets $45,225,439 $45,225,439
LIABILITIES
Interest Payable-
Grantor Trust Certificates $1,194,050 $1,194,050
Servicer Fees Payable 31,389 31,389
Rural Electric Cooperative
Grantor Trust Certificates 44,000,000 44,000,000
Total Liabilities $45,225,439 $45,225,439
</TABLE>
The accompanying notes are an integral part
of these financial statements
<PAGE> 9
<TABLE>
<CAPTION>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF INCOME AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
_____________________________________________________________________
1996 1995 1994
<S> <C> <C> <C>
INCOME:
Interest on note receivable $3,770,580 $3,770,580 $888,411
EXPENSES:
Interest on
grantor trust certificates 3,674,000 3,674,000 865,655
Servicer fees 96,580 96,580 22,756
Total Expenses 3,770,580 3,770,580 888,411
Net Income $ - $ - $ -
</TABLE>
The accompanying notes are an integral part
of these financial statements
<PAGE> 10
<TABLE>
<CAPTION>
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
_____________________________________________________________________
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Interest received on
note receivable $3,770,580 $3,770,580 $ 0
Interest paid to
Certificateholders (3,674,000) (3,674,000) 0
Fees paid to Servicer ( 96,580) (96,580) 0
Net cash provided by
operating activities - - -
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from principal
payment on note - - -
Net cash provided from
investing activities - - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment to
Certificateholders - - -
Net cash used in
financing activities - - -
NET CHANGE IN CASH - - -
CASH, beginning of year - - -
CASH, end of year $ - $ - $ -
ACCRUAL TO CASH BASIS RECONCILIATION:
Accrual basis income $ - $ (337,028) $ (888,411)
Change in accrual accounts:
Decrease in interest
receivable - 328,395 865,655
Decrease in interest
payable - 8,633 22,756
Decrease in servicer
fees payable - - -
Total change in
accrual accounts - - -
Net cash provided by
operating activities $ - $ - $ -
</TABLE>
The accompanying notes are an integral part
of these financial statements
<PAGE> 11
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993-B2
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996, 1995 AND 1994
1. ORGANIZATION AND OPERATIONS
Rural Electric Cooperative Grantor Trust (Soyland) 1993-B2 (the
"Trust") was formed under a Trust Agreement dated October 1, 1993
among National Rural Utilities Cooperative Finance Corporation
("CFC"), Soyland Power Cooperative, Inc. (the "Cooperative") and The
First National Bank of Chicago (the "Trustee"). On that date,
CFC made a loan to the Cooperative which issued a note (the "Note"),
evidencing the borrowing, to the Trust. The Trust issued to CFC
Rural Electric Cooperative Grantor Trust (Soyland) 8.35% Certificates
Due 2009 (the "Certificates") in the amount of $44,000,000. The
Certificates are solely the obligations of the Trust and are not
insured or guaranteed by CFC, the Cooperative, the Trustee, the
Rural Utilities Service ("RUS") of the United States Department of
Agriculture ("USDA") nor any other governmental agency. Each
Certificate represents an undivided fractional interest in the Trust.
CFC is the depositor of the Trust and acts as Servicer of the Note.
CFC filed, on behalf of the Trust, a Registration Statement on Form
S-1 (Registration No. 33-79328) which became effective on May 24,
1994, and CFC resold the Certificates thereunder. The offering of
the certificates occurred on October 6, 1994.
The assets of the Trust consist primarily of the Note, bearing
interest at 8.57% and maturing 2009, which is guaranteed (the
"Guarantee") as to timely payment of principal and interest by the
United States of America, acting through the Administrator of RUS.
The amounts of principal and interest payments on the Note held by
the Trust are sufficient to cover the scheduled principal and
interest payments on the Certificates issued by the Trust and the
scheduled amounts of servicer fees. The General Counsel of the USDA
has issued an opinion that the Guarantee is supported by the full
faith and credit of the United States of America.
Debt service and servicer fee payments on the Note are made to the
Trustee semi-annually (March 4 and September 4) by the Cooperative.
The Trustee deposits all such receipts in the Trust account. The
Trustee is authorized by the Trust Agreement to invest all funds in
the Trust account at the direction of CFC in certain eligible
investments that mature no later than the business day next preceding
the day (March 15 and September 15) such amounts are to be
distributed to the Certificateholders and the Servicer. The interest
earned on the investments is distributed to the Cooperative. Any
funds that are not so invested must be held by the Trustee in the
Trust account. The Trustee may not reinvest any returns of principal
or investment earnings on eligible investments and the Trustee may
not sell any eligible investment prior to its maturity except, at
the direction of CFC, to preserve the value of the corpus of the
Trust.
On or before five business days after each date on which payments
are made on the Certificates, the Trustee is obligated to supply the
holders of such Certificates a report provided by the Servicer,
which includes certain pertinent information as to how the payment
is to be allocated to principal, interest, servicer fees and premium,
if any, as well as the principal balance outstanding after such
payment.
The fiscal year of the Trust is the calendar year. Within the
prescribed period of time for tax reporting purposes, after the end
of each calendar year during the term of the Trust Agreement, the
Trustee is obligated to prepare and mail to each Certificateholder
of record for the Trust, at any time during such year, a report
setting forth the information as is reasonably necessary for the
preparation of such Certificateholder's Federal income tax return.
<PAGE> 12
Payments of principal on the Certificates are scheduled to be repaid
over a period of eleven years, beginning in 1999. The principal
payment over the next five years and thereafter are as follows:
1997 $ 0
1998 0
1999 2,450,000
2000 2,680,000
2001 2,930,000
Thereafter 35,940,000
Total $ 44,000,000
The Certificates are not subject to redemption prior to September 15,
2003. Thereafter, such Certificates are subject to optional
redemption, in whole and without premium, upon redemption or
purchase of the related Note. The Trust Agreement will terminate
after payment in full has been made on the Certificates issued
thereunder.
2. TAX STATUS OF THE TRUST
Milbank, Tweed, Hadley & McCloy, counsel to CFC, has advised CFC
with respect to the Trust that, in its opinion, (i) the Trust will
not be classified as an association taxable as a corporation, but
will be classified as a grantor trust and (ii) each Certificateholder
will be treated for Federal income tax purposes as the owner of an
undivided fractional interest in each of the assets held by the
Trust.
It is expected that the Trust will not have any liability for
Federal or state income taxes for the current or future years.
3. INTEREST AND SERVICER FEE ACCOUNTING
The Trust records interest income as it is earned and accrues
interest expense and servicer fees as they are incurred. Servicer
fees represent eight basis points of the outstanding principal
balance of the Certificates and the Note and recognition of
conversion fees over the life of the loan.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
Use Of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of expenses during the reported period. The estimates
involve judgments with respect to, among other things, various future
factors which are difficult to predict and are beyond the control
of the Trust. With regards to the fair values below, actual amounts
could differ from these estimates.
The following disclosure of the estimated fair value of financial
instruments is made in accordance with FASB Statement No. 107,
"Disclosure about Fair Value of Financial Instruments." Whenever
possible, the estimated fair value amounts have been determined
using quoted market information as of December 31, 1996 and 1995,
along with other valuation methodologies which are summarized below.
Below is a summary of significant methodologies used in estimating
fair value amounts and a schedule of fair values at December 31,
1996 and 1995.
The carrying amounts reported for Interest Receivable, Interest Payable -
Grantor Trust Certificates, and Servicer Fees Payable approximate fair
values due to the short term maturity of these instruments.
<PAGE> 13
Note Receivable
Fair value is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.
Rural Electric Cooperative Grantor Trust Certificates
The fair value of the Certificates is estimated using quoted market prices
for similar notes over the same remaining maturities.
The carrying and estimated fair values of the Trust's financial instruments
as of December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
1996 1995
Carrying Fair Carrying Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Assets:
Interest Receivable 1,225,439 1,225,439 1,225,439 1,225,439
Note Receivable 44,000,000 50,258,150 44,000,000 53,460,273
Liabilities:
Interest Payable - Grantor
Trust Certificates 1,194,050 1,194,050 1,194,050 1,194,050
Servicer Fees Payable 31,389 31,389 31,389 31,389
Rural Electric Cooperative
Grantor Trust Certificates 44,000,000 50,335,389 44,000,000 53,586,185
</TABLE>
<PAGE> 14
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (SOYLAND) 1993 B-2
Exhibit Index
Exhibit
Number Description of Exhibit
4.1 Form of Trust Agreement, including the form of Rural Electric
Cooperative Grantor Trust Certificate (incorporated by
reference to Exhibit 4.1 to Registration Statement on Form
S-1 [No. 33-79328].)
10.1 Loan Agreement (incorporated by reference to Exhibit 10.1
to Registration Statement on Form S-1 [No. 33-79328].)
10.2 Loan Guarantee and Servicing Agreement (incorporated by
reference to Exhibit 10.2 to Registration Statement on Form
S-1 [No. 33-79328].)
<END>
