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Segment Reporting
9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
Our three reportable segments are: Single-Family, Multifamily and Capital Markets. We use these three segments to generate revenue and manage business risk, and each segment is based on the type of business activities it performs. Under our segment reporting, the sum of the results for our three business segments does not equal our condensed consolidated statements of operations and comprehensive income, as we separate the activity related to our consolidated trusts from the results generated by our three segments. Our business segment financial results include directly attributable revenues and expenses. Additionally, we allocate to each of our segments: (1) capital using FHFA minimum capital requirements adjusted for over- or under-capitalization; (2) indirect administrative costs; and (3) a provision or benefit for federal income taxes. In addition, we allocate intracompany guaranty fee income as a charge from the Single-Family and Multifamily segments to Capital Markets for managing the credit risk on mortgage loans held by the Capital Markets group. We also include an eliminations/adjustments category to reconcile our business segment financial results and the activity related to our consolidated trusts to net income in our condensed consolidated statements of operations and comprehensive income.
The following tables display our business segment financial results for the three and nine months ended September 30, 2014 and 2013.
 
For the Three Months Ended September 30, 2014
 
Business Segments
 
Other Activity/Reconciling Items
 
 
 
Single-Family
 
Multifamily
 
Capital Markets
 
Consolidated Trusts(1)
 
Eliminations/ Adjustments(2)
 
Total Results
 
 
(Dollars in millions)
Net interest income (loss)
$
19

 
 
$
(22
)
 
 
$
1,845

 
 
$
3,088

 
 
$
254

(3) 
 
$
5,184

 
Benefit for credit losses
1,029

 
 
56

 
 

 
 

 
 

 
 
1,085

 
Net interest income after benefit for credit losses
1,048

 
 
34

 
 
1,845

 
 
3,088

 
 
254

 
 
6,269

 
Guaranty fee income (expense)(4)
2,945

 
 
332

 
 
(235
)
 
 
(1,488
)
(5) 
 
(1,502
)
(5) 
 
52

(5) 
Investment gains, net

 
 
8

 
 
1,516

 
 
21

 
 
(1,368
)
(6) 
 
177

 
Net other-than-temporary impairments

 
 

 
 
(6
)
 
 

 
 

 
 
(6
)
 
Fair value (losses) gains, net
(4
)
 
 

 
 
(335
)
 
 
13

 
 
119

(7) 
 
(207
)
 
Debt extinguishment (losses) gains, net

 
 

 
 
(3
)
 
 
14

 
 

 
 
11

 
Gains from partnership investments(8)

 
 
52

 
 

 
 

 
 

 
 
52

 
Fee and other income (expense)
146

 
 
32

 
 
579

 
 
(71
)
 
 
88

 
 
774

 
Administrative expenses
(468
)
 
 
(77
)
 
 
(161
)
 
 

 
 

 
 
(706
)
 
Foreclosed property (expense) income
(281
)
 
 
32

 
 

 
 

 
 

 
 
(249
)
 
TCCA fees(4)
(351
)
 
 

 
 

 
 

 
 

 
 
(351
)
 
Other (expenses) income
(136
)
 
 
8

 
 
(5
)
 
 

 
 
9

 
 
(124
)
 
Income before federal income taxes
2,899

 
 
421

 
 
3,195

 
 
1,577

 
 
(2,400
)
 
 
5,692

 
Provision for federal income taxes
(837
)
 
 
(37
)
 
 
(913
)
 
 

 
 

 
 
(1,787
)
 
Net income attributable to Fannie Mae
$
2,062

 
 
$
384

 
 
$
2,282

 
 
$
1,577

 
 
$
(2,400
)
 
 
$
3,905

 

 
For the Nine Months Ended September 30, 2014
 
Business Segments
 
Other Activity/Reconciling Items
 
 
 
Single-Family
 
Multifamily
 
Capital Markets
 
Consolidated Trusts(1)
 
Eliminations/ Adjustments(2)
 
Total Results
 
 
(Dollars in millions)
Net interest (loss) income
$
(24
)
 
 
$
(65
)
 
 
$
5,592

 
 
$
8,525

 
 
$
798

(3) 
 
$
14,826

 
Benefit for credit losses
3,377

 
 
121

 
 

 
 

 
 

 
 
3,498

 
Net interest income after benefit for credit losses
3,353

 
 
56

 
 
5,592

 
 
8,525

 
 
798

 
 
18,324

 
Guaranty fee income (expense)(4)
8,708

 
 
960

 
 
(722
)
 
 
(4,367
)
(5) 
 
(4,441
)
(5) 
 
138

(5) 
Investment (losses) gains, net
(1
)
 
 
50

 
 
4,500

 
 
(141
)
 
 
(3,579
)
(6) 
 
829

 
Net other-than-temporary impairments

 
 

 
 
(80
)
 
 

 
 

 
 
(80
)
 
Fair value (losses) gains, net
(11
)
 
 

 
 
(2,770
)
 
 
232

 
 
218

(7) 
 
(2,331
)
 
Debt extinguishment gains, net

 
 

 
 
31

 
 
18

 
 

 
 
49

 
Gains from partnership investments(8)

 
 
131

 
 

 
 

 
 
1

 
 
132

 
Fee and other income (expense)
471

 
 
87

 
 
4,848

 
 
(242
)
 
 
262

 
 
5,426

 
Administrative expenses
(1,376
)
 
 
(225
)
 
 
(474
)
 
 

 
 

 
 
(2,075
)
 
Foreclosed property income
154

 
 
73

 
 

 
 

 
 

 
 
227

 
TCCA fees(4)
(1,008
)
 
 

 
 

 
 

 
 

 
 
(1,008
)
 
Other expenses
(528
)
 
 
(5
)
 
 
(70
)
 
 

 
 
(8
)
 
 
(611
)
 
Income before federal income taxes
9,762

 
 
1,127

 
 
10,855

 
 
4,025

 
 
(6,749
)
 
 
19,020

 
Provision for federal income taxes
(2,897
)
 
 
(37
)
 
 
(3,189
)
 
 

 
 

 
 
(6,123
)
 
Net income
6,865

 
 
1,090

 
 
7,666

 
 
4,025

 
 
(6,749
)
 
 
12,897

 
Less: Net income attributable to noncontrolling interest

 
 

 
 

 
 

 
 
(1
)
(9) 
 
(1
)
 
Net income attributable to Fannie Mae
$
6,865

 
 
$
1,090

 
 
$
7,666

 
 
$
4,025

 
 
$
(6,750
)
 
 
$
12,896

 

 
For the Three Months Ended September 30, 2013(10)
 
Business Segments
 
Other Activity/Reconciling Items
 
 
 
Single-Family
 
Multifamily
 
Capital Markets
 
Consolidated Trusts(1)
 
Eliminations/ Adjustments(2)

 
Total Results
 
 
(Dollars in millions)
Net interest (loss) income
$
(152
)
 
 
$
(31
)
 
 
$
2,311

 
 
$
3,085

 
 
$
369

(3) 
 
$
5,582

 
Benefit for credit losses
2,471

 
 
138

 
 

 
 

 
 

 
 
2,609

 
Net interest income after benefit for credit losses
2,319

 
 
107

 
 
2,311

 
 
3,085

 
 
369

 
 
8,191

 
Guaranty fee income (expense)(4)
2,719

 
 
311

 
 
(273
)
 
 
(1,345
)
(5) 
 
(1,361
)
(5) 
 
51

(5) 
Investment gains, net
1

 
 
3

 
 
1,590

 
 
77

 
 
(1,023
)
(6) 
 
648

 
Net other-than-temporary impairments

 
 

 
 
(27
)
 
 

 
 

 
 
(27
)
 
Fair value (losses) gains, net
(2
)
 
 

 
 
371

 
 
(120
)
 
 
86

(7) 
 
335

 
Debt extinguishment gains, net

 
 

 
 
54

 
 
38

 
 

 
 
92

 
Gains from partnership investments(8)

 
 
121

 
 

 
 

 
 
7

 
 
128

 
Fee and other income (expense)
151

 
 
26

 
 
525

 
 
(84
)
 
 
72

 
 
690

 
Administrative expenses
(436
)
 
 
(73
)
 
 
(137
)
 
 

 
 

 
 
(646
)
 
Foreclosed property income (expense)
1,171

 
 
(6
)
 
 

 
 

 
 

 
 
1,165

 
TCCA fees(4)
(276
)
 
 

 
 

 
 

 
 

 
 
(276
)
 
Other expenses
(151
)
 
 
(3
)
 
 
(19
)
 
 

 
 
(79
)
 
 
(252
)
 
Income before federal income taxes
5,496

 
 
486

 
 
4,395

 
 
1,651

 
 
(1,929
)
 
  
10,099

   
Provision for federal income taxes
(751
)
 
 
(8
)
 
 
(596
)
 
 

 
 

 
  
(1,355
)
   
Net income
4,745

 
 
478

 
 
3,799

 
 
1,651

 
 
(1,929
)
 
 
8,744

 
Less: Net income attributable to noncontrolling interest

 
 

 
 

 
 

 
 
(7
)
(9) 
 
(7
)
 
Net income attributable to Fannie Mae
$
4,745

 
 
$
478

 
 
$
3,799

 
 
$
1,651

 
 
$
(1,936
)
 
 
$
8,737

 
 
For the Nine Months Ended September 30, 2013(10)
 
Business Segments
 
Other Activity/Reconciling Items
 
 
 
 
Single-Family
 
Multifamily
 
Capital Markets
 
Consolidated Trusts(1)
 
Eliminations/ Adjustments(2)

 
Total Results
 
 
(Dollars in millions)
Net interest income (loss)
$
318

 
 
$
(59
)
 
 
$
7,733

 
 
$
8,303

 
 
$
1,258

(3) 
 
$
17,553

 
Benefit for credit losses
8,605

 
 
344

 
 

 
 

 
 

 
 
8,949

 
Net interest income after benefit for credit losses
8,923

 
 
285

 
 
7,733

 
 
8,303

 
 
1,258

 
 
26,502

 
Guaranty fee income (expense)(4)
7,638

 
 
902

 
 
(855
)
 
 
(3,832
)
(5) 
 
(3,697
)
(5) 
 
156

(5) 
Investment gains (losses), net
4

 
 
14

 
 
3,837

 
 
(79
)
 
 
(2,720
)
(6) 
 
1,056

 
Net other-than-temporary impairments

 
 

 
 
(42
)
 
 

 
 

 
 
(42
)
 
Fair value (losses) gains, net
(5
)
 
 

 
 
2,087

 
 
(538
)
 
 
454

(7) 
 
1,998

 
Debt extinguishment gains, net

 
 

 
 
17

 
 
79

 
 

 
 
96

 
Gains from partnership investments(8)

 
 
284

 
 

 
 

 
 
18

 
 
302

 
Fee and other income (expense)
502

 
 
115

 
 
1,129

 
 
(254
)
 
 
146

 
 
1,638

 
Administrative expenses
(1,281
)
 
 
(210
)
 
 
(422
)
 
 

 
 

 
 
(1,913
)
 
Foreclosed property income
1,752

 
 
5

 
 

 
 

 
 

 
 
1,757

 
TCCA fees(4)
(695
)
 
 

 
 

 
 

 
 

 
 
(695
)
 
Other (expenses) income
(473
)
 
 
(2
)
 
 
31

 
 

 
 
(118
)
 
 
(562
)
 
Income before federal income taxes
16,365

 
 
1,393

 
 
13,515

 
 
3,679

 
 
(4,659
)
 
 
30,293

 
Benefit for federal income taxes(11)
29,777

 
 
7,970

 
 
9,484

 
 

 
 

 
 
47,231

 
Net income
46,142

 
 
9,363

 
 
22,999

 
 
3,679

 
 
(4,659
)
 
 
77,524

 
Less: Net income attributable to noncontrolling interest

 
 

 
 

 
 

 
 
(18
)
(9) 
 
(18
)
 
Net income attributable to Fannie Mae
$
46,142

 
 
$
9,363

 
 
$
22,999

 
 
$
3,679

 
 
$
(4,677
)
 
 
$
77,506

 
__________
(1) 
Represents activity related to the assets and liabilities of consolidated trusts in our condensed consolidated balance sheets.
(2) 
Represents the elimination of intercompany transactions occurring between the three business segments and our consolidated trusts, as well as other adjustments to reconcile to our consolidated results.
(3) 
Represents the amortization expense of cost basis adjustments on securities in the Capital Markets group’s retained mortgage portfolio that on a GAAP basis are eliminated.
(4) 
Includes the impact of a 10 basis point guaranty fee increase implemented pursuant to the TCCA, the incremental revenue from which must be remitted to Treasury. The resulting revenue is included in guaranty fee income and the expense is recognized as “TCCA fees.”
(5) 
Represents the guaranty fees paid from consolidated trusts to the Single-Family and Multifamily segments. The adjustment to guaranty fee income in the Eliminations/Adjustments column represents the elimination of the amortization of deferred cash fees related to consolidated trusts that were re-established for segment reporting. Total guaranty fee income related to unconsolidated Fannie Mae MBS trusts and other credit enhancement arrangements is included in fee and other income in our condensed consolidated statements of operations and comprehensive income.
(6) 
Primarily represents the removal of realized gains and losses on sales of Fannie Mae MBS classified as available-for-sale securities that are issued by consolidated trusts and in the Capital Markets group’s retained mortgage portfolio. The adjustment also includes the removal of securitization gains (losses) recognized in the Capital Markets segment relating to portfolio securitization transactions that do not qualify for sale accounting under GAAP.
(7) 
Represents the removal of fair value adjustments on consolidated Fannie Mae MBS classified as trading that are in the Capital Markets group’s retained mortgage portfolio.
(8) 
Gains from partnership investments are included in other expenses in our condensed consolidated statements of operations and comprehensive income.
(9) 
Represents the adjustment from equity method of accounting to consolidated accounting for partnership investments that are consolidated in our consolidated balance sheets.
(10) 
Certain prior period amounts have been reclassified to conform to our current period presentation.
(11) 
Primarily represented the release of the valuation allowance for our deferred tax assets that generally is directly attributable to each segment based on the nature of the item.