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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 05/07/2015
Entire Document
 





FANNIE MAE
(In conservatorship)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED)


Derivative Counterparty Credit Exposure
Our derivative counterparty credit exposure relates principally to interest rate derivative contracts. We are exposed to the risk that a counterparty in a derivative transaction will default on payments due to us, which may require us to seek a replacement derivative from a different counterparty. This replacement may be at a higher cost, or we may be unable to find a suitable replacement. We manage our derivative counterparty credit exposure relating to our risk management derivative transactions mainly through enforceable master netting arrangements, which allow us to net derivative assets and liabilities with the same counterparty or clearing organization and clearing member. For our risk management derivative transactions, we require counterparties to post collateral, which may include cash, U.S. Treasury securities, agency debt and agency mortgage-related securities.
See “Note 14, Netting Arrangements” for information on our rights to offset assets and liabilities.
10. Earnings (Loss) Per Share
The calculation of income available to common stockholders and earnings per share is based on the underlying premise that all income after payment of dividends on preferred shares is available to and will be distributed to common stockholders. However, as a result of our conservatorship status and the terms of the senior preferred stock, no amounts are available to distribute as dividends to common or preferred stockholders (other than to Treasury as holder of the senior preferred stock).
The following table displays the computation of basic and diluted earnings (loss) per share of common stock for the three months ended March 31, 2015 and 2014.
 
For the Three Months Ended March 31,
 
 
2015
 
2014
 
(Dollars and shares in millions, except per share amounts)
Net income attributable to Fannie Mae
 
$
1,888

 
 
 
$
5,325

 
Dividends available for distribution to senior preferred stockholder(1)
 
(1,796
)
 
 
 
(5,692
)
 
Net income (loss) attributable to common stockholders
 
$
92

 
 
 
$
(367
)
 
Weighted-average common shares outstanding—Basic(2)
 
5,762

 
 
 
5,762

 
Convertible preferred stock
 
131

 
 
 

 
Weighted-average common shares outstanding—Diluted(2)
 
5,893

 
 
 
5,762

 
Earnings (loss) per share:
 
 
 
 
 
 
 
Basic
 
$
0.02

 
 
 
$
(0.06
)
 
Diluted
 
0.02

 
 
 
(0.06
)
 
__________
(1) 
Dividends available for distribution for the three months ended March 31, 2015 and 2014 (relating to the dividend period for the three months ended June 30, 2015 and 2014) were calculated based on our net worth as of March 31, 2015 and 2014 less the applicable capital reserve.
(2) 
Includes 4.6 billion for the three months ended March 31, 2015 and 2014 of weighted average shares of common stock that would be issued upon the full exercise of the warrant issued to Treasury from the date the warrant was issued through March 31, 2015 and 2014.
11. Segment Reporting
Our three reportable segments are: Single-Family, Multifamily and Capital Markets. We use these three segments to generate revenue and manage business risk, and each segment is based on the type of business activities it performs. Under our segment reporting, the sum of the results for our three business segments does not equal our condensed consolidated statements of operations and comprehensive income, as we separate the activity related to our consolidated trusts from the results generated by our three segments. Our business segment financial results include directly attributable revenues and expenses. Additionally, we allocate to each of our segments: (1) capital using FHFA minimum capital requirements adjusted

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