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Segment Reporting
9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
We have two reportable business segments: Single-Family and Multifamily. Results of our two business segments are intended to reflect each segment as if it were a stand-alone business. The sum of the results for our two business segments equals our condensed consolidated results of operations.
Segment Allocations and Results
The majority of our revenues and expenses are directly associated with either our single-family or our multifamily business segment and are included in determining that segment’s operating results. Other revenues and expenses, including administrative expenses, that are not directly attributable to a particular business segment are allocated based on the size of each segment’s guaranty book of business. The substantial majority of the gains and losses associated with our risk management derivatives are allocated to our single-family business segment.
The following table displays our segment results.
 
 
For the Three Months Ended September 30,
 
 
2019
 
2018
 
 
Single-Family
 
Multifamily
 
Total
 
Single-Family
 
Multifamily
 
Total
 
 
(Dollars in millions)
Net interest income(1)
 
$
4,484

 
$
745

 
$
5,229

 
$
4,670

 
$
699

 
$
5,369

Fee and other income(2)
 
156

 
246

 
402

 
79

 
192

 
271

Net revenues
 
4,640

 
991

 
5,631

 
4,749

 
891

 
5,640

Investment gains, net(3)
 
198

 
55

 
253

 
146

 
20

 
166

Fair value gains (losses), net(4)
 
(719
)
 
6

 
(713
)
 
417

 
(31
)
 
386

Administrative expenses
 
(634
)
 
(115
)
 
(749
)
 
(636
)
 
(104
)
 
(740
)
Credit-related income (expense)(5)
 
 
 
 
 
 
 
 
 
 
 
 
Benefit (provision) for credit losses
 
1,840

 
17

 
1,857

 
732

 
(16
)
 
716

Foreclosed property expense
 
(93
)
 
(3
)
 
(96
)
 
(150
)
 
(9
)
 
(159
)
Total credit-related income (expense)
 
1,747

 
14

 
1,761

 
582

 
(25
)
 
557

TCCA fees(6)
 
(613
)
 

 
(613
)
 
(576
)
 

 
(576
)
Other expenses, net
 
(424
)
 
(147
)
 
(571
)
 
(282
)
 
(95
)
 
(377
)
Income before federal income taxes
 
4,195

 
804

 
4,999

 
4,400

 
656

 
5,056

Provision for federal income taxes
 
(872
)
 
(164
)
 
(1,036
)
 
(938
)
 
(107
)
 
(1,045
)
Net income
 
$
3,323

 
$
640

 
$
3,963

 
$
3,462

 
$
549

 
$
4,011

 
 
For the Nine Months Ended September 30,
 
 
2019
 
2018
 
 
Single-Family
 
Multifamily
 
Total
 
Single-Family
 
Multifamily
 
Total
 
 
(Dollars in millions)
Net interest income(1)
 
$
12,942

 
$
2,170

 
$
15,112

 
$
13,954

 
$
2,024

 
$
15,978

Fee and other income(2)
 
350

 
525

 
875

 
306

 
524

 
830

Net revenues
 
13,292

 
2,695

 
15,987

 
14,260

 
2,548

 
16,808

Investment gains, net(3)
 
709

 
138

 
847

 
640

 
53

 
693

Fair value gains (losses), net(4)
 
(2,364
)
 
66

 
(2,298
)
 
1,729

 
(69
)
 
1,660

Administrative expenses
 
(1,899
)
 
(338
)
 
(2,237
)
 
(1,928
)
 
(317
)
 
(2,245
)
Credit-related income (expense)(5)
 
 
 
 
 
 
 
 
 
 
 
 
Benefit (provision) for credit losses
 
3,753

 
(21
)
 
3,732

 
2,223

 
6

 
2,229

Foreclosed property expense
 
(362
)
 
(2
)
 
(364
)
 
(448
)
 
(12
)
 
(460
)
Total credit-related income (expense)
 
3,391

 
(23
)
 
3,368

 
1,775

 
(6
)
 
1,769

TCCA fees(6)
 
(1,806
)
 

 
(1,806
)
 
(1,698
)
 

 
(1,698
)
Other expenses, net
 
(1,179
)
 
(335
)
 
(1,514
)
 
(684
)
 
(262
)
 
(946
)
Income before federal income taxes
 
10,144

 
2,203

 
12,347

 
14,094

 
1,947

 
16,041

Provision for federal income taxes
 
(2,125
)
 
(427
)
 
(2,552
)
 
(2,998
)
 
(314
)
 
(3,312
)
Net income
 
$
8,019

 
$
1,776

 
$
9,795

 
$
11,096

 
$
1,633

 
$
12,729


(1) 
Net interest income primarily consists of guaranty fees received as compensation for assuming and managing the credit risk on loans underlying Fannie Mae MBS held by third parties for the respective business segment, and the difference between the interest income earned on the respective business segment’s mortgage assets in our retained mortgage portfolio and the interest expense associated with the debt funding those assets. Revenues from single-family guaranty fees include revenues generated by the 10 basis point increase in guaranty fees pursuant to the TCCA, the incremental revenue from which is remitted to Treasury and not retained by us.
(2) 
Single-Family fee and other income primarily consists of compensation for engaging in structured transactions and providing other lender services, and income resulting from settlement agreements resolving certain claims relating to private-label securities we purchased or that we have guaranteed. Multifamily fee and other income consists of fees associated with Multifamily business activities, including yield maintenance income.
(3) 
Investment gains and losses primarily consist of gains and losses on the sale of mortgage assets for the respective business segment.
(4) 
Single-Family fair value gains and losses primarily consist of fair value gains and losses on risk management and mortgage commitment derivatives, trading securities and other financial instruments associated with our single-family guaranty book of business. Multifamily fair value gains and losses primarily consist of fair value gains and losses on MBS commitment derivatives, trading securities and other financial instruments associated with our multifamily guaranty book of business.
(5) 
Credit-related income or expense is based on the guaranty book of business of the respective business segment and consists of the applicable segment’s benefit or provision for credit losses and foreclosed property income or expense on loans underlying the segment’s guaranty book of business.
(6) 
Consists of the portion of our single-family guaranty fees that is remitted to Treasury pursuant to the TCCA.