Fannie Mae 2010 Annual Report Download - page 30

Business
Segment Primary Business Activities Primary Revenues Primary Expenses
Capital Markets • Mortgage and other
investments: Purchases
mortgage assets and makes
investments in other non-
mortgage interest-earning
assets
•Mortgage securitizations:
Purchases loans from a large
group of lenders, securitizes
them, and may sell the
securities to dealers and
investors
•Structured mortgage
securitizations and other
customer services: Issues
structured Fannie Mae MBS
for customers in exchange
for a transaction fee and
provides other fee-related
services to our lender
customers
•Interest rate risk
management: Manages the
interest rate risk on our
portfolio by issuing a variety
of debt securities in a wide
range of maturities and by
using derivatives
•Net interest income:
Generated from the
difference between the
interest income earned on
our interest-earning assets
and the interest expense
associated with the debt
funding those assets
•Fee and other income:
Compensation received for
providing structured
transactions and other lender
services
•Fair value gains and losses:
Primarily consists of fair
value gains and losses on
derivatives and trading
securities
•Investment gains and losses:
Primarily consists of gains
and losses on the sale or
securitization of mortgage
assets
•Other-than-temporary
impairment: Consists of
impairment recognized on
our investments
•Administrative expenses:
Consists of salaries and
benefits, occupancy costs,
professional services, and
other expenses associated
with our Capital Markets
business operations
Revenues from our Business Segments
The following table shows the percentage of our total net revenues accounted for by our business segments for
each of the last three years. Our prospective adoption of the new accounting standards had a significant impact
on our financial statements. Also, effective in 2010 we changed the presentation of segment financial
information that is currently evaluated by management. As a result of the new accounting standards and
changes to our segment presentation, our 2010 segment results are not comparable to prior years’ segment
results. We have not restated prior years’ results, nor have we presented 2010 results under the old
presentation, because we determined that it was impracticable to do so. For more information about changes in
our segment reporting and the financial results and performance of each of our segments, please see
“MD&A—Business Segment Results” and “Note 15, Segment Reporting.”
Business Segment Revenues
(1)
2010
(2)
2009 2008
For the Year Ended
December 31,
Single-Family Credit Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12% 39% 54%
Multifamily
(3)
............................................................ 5 3 3
Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 58 43
(1)
Amounts presented represent the percentage of our total net revenues accounted for by each of our business
segments.
(2)
Segment results for 2010 are not comparable with prior years’ results. In addition, under our current segment reporting
structure, the sum of net revenues for our three business segments does not equal our consolidated total net revenues
because we separate the activity related to our consolidated trusts from the results generated by our three segments.
(3)
These amounts do not include the net interest income we earn on our multifamily investments in our mortgage
portfolio, which is reflected in the revenues of our Capital Markets segment.
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