Fannie Mae 2005 Annual Report Download - page 309

Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
2005 2004
As of December 31,
(Dollars in millions)
Assets:
Cash and cash equivalents
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,575 $ 3,575 $ 3,701 $ 3,701
Federal funds sold and securities purchased under agreements to
resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,900 8,900 3,930 3,930
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,110 15,110 35,287 35,287
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . 390,964 390,964 532,095 532,095
Mortgage loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . 5,064 5,100 11,721 11,852
Mortgage loans held for investment, net of allowance for loan
losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362,479 362,129 389,651 397,603
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,803 5,803 6,589 6,589
Guaranty assets and buy-ups. . . . . . . . . . . . . . . . . . . . . . . . . . 7,629 10,706 6,616 9,263
Total financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $799,524 $802,287 $989,590 $1,000,320
Liabilities:
Federal funds purchased and securities sold under agreements to
repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 705 $ 705 $ 2,400 $ 2,399
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,186 172,977 320,280 319,713
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590,824 596,802 632,831 648,276
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,429 1,429 1,145 1,145
Guaranty obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,016 5,168 8,784 5,272
Total financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . $776,160 $777,081 $965,440 $ 976,805
(1)
Includes restricted cash of $755 million and $1.0 billion as of December 31, 2005 and 2004, respectively.
Notes to Fair Value of Financial Instruments
The following discussion summarizes the significant methodologies and assumptions we use to estimate the
fair values of our financial instruments in the preceding table.
Cash and Cash Equivalents—The carrying value of cash and cash equivalents is a reasonable estimate of their
approximate fair value.
Federal Funds Sold and Securities Purchased Under Agreements to Resell —The carrying value of our federal
funds sold and securities purchased under agreements to resell approximates the fair value of these instruments
due to their short-term nature.
Trading Securities and Available- for-Sale Securities—Our investments in securities are recognized at fair
value in the consolidated financial statements. Fair values of securities are based on observable market prices
or prices obtained from third parties. Details of these estimated fair values by type are displayed in “Note 5,
Investments in Securities.”
Mortgage Loans Held for Sale—HFS loans are reported at LOCOM in the consolidated balance sheets. We
determine the fair value of our mortgage loans based on comparisons to Fannie Mae MBS with similar
characteristics. Specifically, we use the observable market value of our Fannie Mae MBS as a base value, from
which we subtract or add the fair value of the associated guaranty asset, guaranty obligation and master
servicing arrangements.
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FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)