Fannie Mae 2004 Annual Report Download - page 124

BUSINESS SEGMENT RESULTS
Table 20 provides a summary of the financial results for each of our business segments for the years ended
December 31, 2004, 2003 and 2002.
Table 20: Business Segment Results Summary
2004 2003 2002 $ % $ %
For the Year Ended December 31, 2004 vs. 2003 2003 vs. 2002
Increase (Decrease)
(Restated) (Restated)
(Dollars in millions)
Revenue
(1):
Single-Family Credit Guaranty . . . . . . . . $ 5,153 $ 4,994 $ 3,957 $ 159 3% $ 1,037 26%
Housing and Community Development . . 538 398 305 140 35 93 30
Capital Markets . . . . . . . . . . . . . . . . . . 46,135 47,293 49,267 (1,158) (2) (1,974) (4)
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 51,826 $ 52,685 $53,529 $ (859) (2)% $ (844) (2)%
Net income:
Single-Family Credit Guaranty . . . . . . . . $ 2,514 $ 2,481 $ 1,958 $ 33 1% $ 523 27%
Housing and Community Development . . 337 286 184 51 18 102 55
Capital Markets . . . . . . . . . . . . . . . . . . 2,116 5,314 1,772 (3,198) (60) 3,542 200
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 4,967 $ 8,081 $ 3,914 $(3,114) (39)% $ 4,167 106%
2004 2003
(Restated)
As of December 31,
Total assets:
Single-Family Credit Guaranty business . . $ 11,543 $ 8,724 $ 2,819 32%
Housing and Community Development . . 10,166 7,853 2,313 29
Capital Markets Group . . . . . . . . . . . . . 999,225 1,005,698 (6,473) (1)
Total . . . . . . . . . . . . . . . . . . . . . . . $1,020,934 $1,022,275 $(1,341) —%
(1)
Includes interest income, guaranty fee income, and fee and other income.
We use various methodologies to allocate certain balance sheet and income statement line items to the
responsible operating segment. For a description of our allocation methodologies and more financial detail on
our business segments, see “Notes to Consolidated Financial Statements—Note 15, Segment Reporting.”
Following is an analysis and discussion of the performance of our business segments.
Single-Family Credit Guaranty Business
Our Single-Family Credit Guaranty business generated net income of $2.5 billion, $2.5 billion and $2.0 billion
in 2004, 2003 and 2002, respectively. The significant components of Single-Family net income include
guaranty fees, net interest income, fee and other income, the provision for credit losses and other expenses.
Net income for the Single-Family business segment remained essentially flat in 2004 from 2003, with an
increase in guaranty fee income offset by lower fee and other income, and higher expenses. Guaranty fee
income increased by 6% in 2004 from 2003, primarily due to growth in average outstanding single-family
Fannie Mae MBS in 2004. The average effective guaranty fee rate on single-family Fannie Mae MBS
remained essentially flat in 2004 as compared to 2003. This increase in guaranty fee income was offset
primarily by: (1) an 11% increase in other expenses in 2004, due to the allocation of a portion of the $400
million civil penalty paid to the U.S. Treasury in connection with our settlements with the SEC and OFHEO;
(2) a 21% decline in fee and other income in 2004 due to lower technology-related transactions and associated
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