Fannie Mae 2003 Annual Report Download - page 16

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SHAREHOLDER VALUE
14 FANNIE MAE 2003 ANNUAL REPORT
Our strong capital position is a function of our core capital,
allowance for losses, and outstanding subordinated debt.
Core capital, which excludes the accumulated other compre-
hensive income component of stockholders’ equity, rose to
$34.4 billion at December 31, 2003. Core capital is the basis for
the company’s statutory minimum capital requirement. In 2003,
Fannie Mae fulfilled its Voluntary Initiative to strengthen the
company’s capital adequacy and further assure investors that
Fannie Mae is one of the best-capitalized financial institutions
in the world relative to the risks we take, by completing the
issuance of $12.5 billion of subordinated debt. Subordinated
debt serves as an important supplement to Fannie Mae’s
equity capital, although it is not a component of core capital.
Our Strengthened Capital Position
Fostering Shareholder Returns
Continuing our record of annual dividend increases, Fannie Mae
increased the dividend on its common stock by 27.3 percent,
from $1.32 in 2002 to $1.68 in 2003. This marks the 19th
consecutive year in which we have increased our dividend
and reflects the Board of Directors’ confidence in the
strength and sustainability of Fannie Mae’s business
performance.
Fannie Mae’s Board of Directors authorized the repurchase
of up to 5 percent of the total shares of common stock
outstanding as of December 31, 2002. In 2003, we repurchased
21.3 million shares of common stock and expect to complete
the balance of the repurchase authorization within the
next two years.
*Includes net unamortized outstanding subordinated debt associated with October 2000
Voluntary Initiative. Issuances prior to 2001 have been excluded.
Our first priority is to reinvest earnings so we can fulfill our mission
to provide liquidity to the residential mortgage market. We also maintain
a healthy cushion of capital above our minimum and risk-based capital
requirements. Once those priorities are met we return capital to our
shareholders through a combination of dividends and share repurchases.