Fannie Mae 2004 Annual Report Download - page 185

Capital Classification Measures
The table below shows our core capital, total capital and other capital classification measures as of
December 31, 2004, 2003 and 2002.
Table 43: Regulatory Capital Surplus/Deficit
2004
(1)
2003
(1)
2002
(1)
(Restated) (Restated)
(Dollars in millions)
As of December 31,
Core capital
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,514 $26,953 $20,431
Required minumum capital
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,121 31,816 27,688
Surplus (deficit) of core capital over/under required minimum capital. . . . . . $ 2,393 $ (4,863) $ (7,257)
Surplus (deficit) of core capital percentage over/under required minimum
capital
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4% (15.3)% (26.2)%
Total capital
(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,196 $27,487 $20,831
Required risk-based capital
(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,039 27,221 17,434
Surplus of total capital over required risk-based capital. . . . . . . . . . . . . . . . $25,157 $ 266 $ 3,397
Surplus of total capital percentage over required risk-based capital
(7)
. . . . . . 250.6% 1.0% 19.5%
Core capital
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,514 $26,953 $20,431
Required critical capital
(8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,435 16,261 14,126
Surplus of core capital over required critical capital . . . . . . . . . . . . . . . . . . $18,078 $10,691 $ 6,305
Surplus of core capital percentage over required critical capital
(9)
. . . . . . . . 110.0% 65.7% 44.6%
(1)
Except for required risk-based capital amounts, all amounts represent estimates which will be resubmitted to OFHEO
for their certification. Required risk-based capital amounts represent previously announced results by OFHEO. OFHEO
may determine that results require restatement in the future based upon analysis provided by us.
(2)
The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated
value of our outstanding non-cumulative perpetual preferred stock; (c) our paid-in capital; and (d) our retained earnings.
Core capital excludes AOCI.
(3)
Generally, the sum of (a) 2.50% of on-balance sheet assets; (b) 0.45% of the unpaid principal balance of outstanding
Fannie Mae MBS held by third parties; and (c) up to 0.45% of other off-balance sheet obligations, which may be
adjusted by the Director of OFHEO under certain circumstances (See 12 CFR 1750.4 for existing adjustments made by
the Director of OFHEO).
(4)
Defined as the surplus (deficit) of core capital over required minimum capital expressed as a percentage of required
minimum capital.
(5)
The sum of (a) core capital and (b) the total allowance for loan losses and reserve for guaranty losses, less (c) the
specific loss allowance (that is, the allowance required on individually-impaired loans). The specific loss allowance
totaled $63 million, $68 million and $40 million at December 31, 2004, 2003 and 2002, respectively.
(6)
Defined as the amount of total capital required to be held to absorb projected losses flowing from future adverse
interest rate and credit risk conditions specified by statute (see 12 CFR 1750.13 for conditions), plus 30% mandated by
statute to cover management and operations risk.
(7)
Defined as the surplus of total capital over required risk-based capital expressed as a percentage of risk-based capital.
(8)
Generally, the sum of (a) 1.25% of on-balance sheet assets; (b) 0.25% of the unpaid principal balance of outstanding
Fannie Mae MBS held by third parties; and (c) up to 0.25% of other off-balance sheet obligations, which may be
adjusted by the Director of OFHEO under certain circumstances.
(9)
Defined as the surplus of core capital over critical capital expressed as a percentage of critical capital.
On May 19, 2005, OFHEO classified us as significantly undercapitalized as of December 31, 2004 and
adequately capitalized as of March 31, 2005. For each subsequent quarter through June 30, 2006 (the most
recent quarter for which OFHEO has published its capital classification), we have been classified by OFHEO
as adequately capitalized. On September 29, 2006, OFHEO announced that we were classified as adequately
capitalized as of June 30, 2006. Our core capital of $42.0 billion as of June 30, 2006 exceeded our statutory
minimum capital requirement by $12.6 billion, or 42.9%, and our OFHEO-directed minimum capital
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