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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
 


Table 5: Rate/Volume Analysis of Changes in Net Interest Income
  
For the Three Months Ended
  
March 31, 2015 vs. 2014
  
Total
 
Variance Due to:(1)
  
Variance
 
Volume
 
Rate
 
(Dollars in millions) 
Interest income:
 
 
 
 
 
Mortgage loans of Fannie Mae
$
(212
)
 
$
(222
)
 
$
10

Mortgage loans of consolidated trusts
(1,332
)
 
112

 
(1,444
)
Total mortgage loans
(1,544
)
 
(110
)
 
(1,434
)
Total mortgage-related securities, net
(82
)
 
(145
)
 
63

Non-mortgage securities(2)
6

 
2

 
4

Federal funds sold and securities purchased under agreements to resell or similar arrangements
7

 

 
7

Advances to lenders
2

 
4

 
(2
)
Total interest income
$
(1,611
)
 
$
(249
)
 
$
(1,362
)
Interest expense:
 
 
 
 
 
Short-term debt
9

 
10

 
(1
)
Long-term debt
(388
)
 
(458
)
 
70

Total short-term and long-term funding debt
(379
)
 
(448
)
 
69

Total debt securities of consolidated trusts held by third parties
(1,561
)
 
497

 
(2,058
)
Total interest expense
$
(1,940
)
 
$
49

 
$
(1,989
)
Net interest income
$
329

 
$
(298
)
 
$
627

__________
(1) 
Combined rate/volume variances are allocated to both rate and volume based on the relative size of each variance.
(2) 
Includes cash equivalents.
Net interest income and net interest yield increased in the first quarter of 2015 compared with the first quarter of 2014, primarily due to an increase in net amortization income as a result of an increase in prepayments on mortgage loans held by consolidated trusts. Higher guaranty fee income also contributed to an increase in net interest income as loans with higher guaranty fees have become a larger part of our guaranty book of business. We recognize almost all of our guaranty fee revenue in net interest income due to the consolidation of the substantial majority of loans underlying our MBS trusts on our balance sheet. The increase in net interest income was partially offset by a decline in the average balance of our retained mortgage portfolio, as we continued to reduce this portfolio pursuant to the requirements of our senior preferred stock purchase agreement with Treasury and FHFA’s additional portfolio cap. The average balance of our retained mortgage portfolio was 13% lower in the first quarter of 2015 than in the first quarter of 2014. See “Business Segment Results—The Capital Markets Group’s Mortgage Portfolio” for more information about our retained mortgage portfolio.
Fee and Other Income
Fee and other income includes transaction fees, technology fees, multifamily fees and other miscellaneous income. Fee and other income decreased in the first quarter of 2015 compared with the first quarter of 2014 due to revenue of $4.1 billion recognized in the first quarter of 2014 as a result of settlement agreements resolving certain lawsuits relating to PLS sold to us.
Investment Gains, Net
Investment gains, net include gains and losses recognized from the sale of available-for-sale (“AFS”) securities, gains and losses recognized on the securitization of loans and securities from our retained mortgage portfolio and net other-than-temporary impairments recognized on our investments. Investment gains increased in the first quarter of 2015 compared with the first quarter of 2014 primarily due to an increase in the amount of non-agency mortgage-related securities sold in the first quarter of 2015 compared with the amount of such securities that were sold in the first quarter of 2014.

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