Fannie Mae 2004 Annual Report Download - page 336

Single-Family
Credit Guaranty HCD
Capital
Markets Total
For the Year Ended December 31, 2002
(Restated)
(Dollars in millions)
Net interest income (expense)
(1)
. . . . . . . . . . . . . . . . . . . . . $ 487 $(100) $ 18,039 $ 18,426
Guaranty fee income (expense)
(2)
. . . . . . . . . . . . . . . . . . . . 3,264 271 (1,019) 2,516
Investment gains (losses), net . . . . . . . . . . . . . . . . . . . . . . . 41 — (542) (501)
Derivatives fair value losses, net . . . . . . . . . . . . . . . . . . . . — — (12,919) (12,919)
Debt extinguishment losses, net . . . . . . . . . . . . . . . . . . . . . — — (814) (814)
Losses from partnership investments . . . . . . . . . . . . . . . . . . — (509) — (509)
Fee and other income (expense) . . . . . . . . . . . . . . . . . . . . . 206 149 (266) 89
Non-interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . 3,511 (89) (15,560) (12,138)
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . 237 47 — 284
Other expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 754 188 308 1,250
Income (loss) before federal income taxes . . . . . . . . . . . . 3,007 (424) 2,171 4,754
Provision (benefit) for federal income taxes . . . . . . . . . . . . . 1,049 (608) 399 840
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,958 $ 184 $ 1,772 $ 3,914
(1)
Includes cost of capital charge.
(2)
Includes intercompany guaranty fee revenue (expense) of $829 million allocated to Single-Family Credit Guaranty and
HCD from Capital Markets for absorbing the credit risk on mortgage loans and Fannie Mae MBS held in our portfolio.
The following table displays total assets by segment as of December 31, 2004 and 2003.
2004 2003
As of December 31,
(Restated)
(Dollars in millions)
Single-Family Credit Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,543 $ 8,724
HCD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,166 7,853
Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999,225 1,005,698
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,020,934 $1,022,275
We operate our business solely in the United States and accordingly, we do not generate any revenue from or
have assets in geographic locations other than the United States.
16. Regulatory Capital Requirements
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (the “1992 Act”) established
minimum capital, critical capital and risk-based capital requirements for us. Based upon these requirements,
OFHEO classifies us as either adequately capitalized, undercapitalized, significantly undercapitalized or
critically undercapitalized. We are required by federal statute to meet the minimum, critical and risk-based
capital standards to be classified as adequately capitalized.
The minimum capital and critical capital standards are calculated by determining whether our core capital
equals or exceeds the minimum capital requirement or the lower critical capital requirement, respectively. Core
capital is defined by OFHEO and represents the sum of the stated value of our outstanding common stock
(common stock less treasury stock), the stated value of our outstanding non-cumulative perpetual preferred
stock, our paid-in-capital and our retained earnings, as determined in accordance with GAAP. The minimum
capital standard is generally equal to the sum of: (i) 2.50% of on-balance sheet assets; (ii) 0.45% of the unpaid
principal balance of outstanding Fannie Mae MBS held by third parties; and (iii) up to 0.45% of other off-
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FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)