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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 08/03/2017
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MD&A | Business Segments


Single-Family Business Financial Results
Table 15: Single-Family Business Financial Results
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
 
Variance
 
2017
 
2016
 
Variance
 
(Dollars in millions)
Net interest income(1)
$
4,366

 
$
4,730

 
$
(364
)
 
$
9,122

 
$
8,975

 
$
147

Fee and other income
111

 
78

 
33

 
187

 
145

 
42

Net revenues
4,477

 
4,808

 
(331
)
 
9,309

 
9,120

 
189

Investment gains, net
321

 
280

 
41

 
271

 
336

 
(65
)
Fair value losses, net
(685
)
 
(1,679
)
 
994

 
(697
)
 
(4,529
)
 
3,832

Administrative expenses
(600
)
 
(597
)
 
(3
)
 
(1,201
)
 
(1,206
)
 
5

Credit-related income(2)
1,223

 
1,535

 
(312
)
 
1,407

 
2,363

 
(956
)
TCCA fees(1)
(518
)
 
(453
)
 
(65
)
 
(1,021
)
 
(893
)
 
(128
)
Other expenses, net
(155
)
 
(252
)
 
97

 
(411
)
 
(498
)
 
87

Income before federal income taxes
4,063

 
3,642

 
421

 
7,657

 
4,693

 
2,964

Provision for federal income taxes
(1,401
)
 
(1,254
)
 
(147
)
 
(2,653
)
 
(1,643
)
 
(1,010
)
Net income
$
2,662

 
$
2,388

 
$
274

 
$
5,004

 
$
3,050

 
$
1,954

__________
(1) 
Reflects the impact of a 10 basis point guaranty fee increase implemented in 2012 pursuant to the TCCA, the incremental revenue from which is remitted to Treasury. The resulting revenue is included in net interest income and the expense is recognized as “TCCA fees.”
(2) 
Consists of the benefit for credit losses and foreclosed property expense.
Single-family net income increased in the second quarter and first half of 2017 compared with the second quarter and first half of 2016. The increase in net income in the second quarter of 2017 compared with the second quarter of 2016 was primarily due to lower fair value losses, partially offset by lower net interest income and lower credit-related income. The increase in net income in the first half of 2017 compared with the first half of 2016 was primarily due to lower fair value losses, partially offset by lower credit-related income.
Single-family net interest income decreased in the second quarter of 2017 compared with the second quarter of 2016, primarily due to a decline in the average balance of our retained mortgage portfolio partially offset by a slight increase in single-family guaranty fee income. Single-family net interest income increased in the first half of 2017 compared with the first half of 2016 due to an increase in single-family guaranty fee income, which was partially offset by a decline in the average balance of our retained mortgage portfolio. The drivers of net interest income for the single-family segment are consistent with the drivers of net interest income reported in our condensed consolidated statements of operations and comprehensive income. See “Consolidated Results of OperationsNet Interest Income” for more information on the drivers of our net interest income.
Fair value losses decreased in the second quarter and first half of 2017 compared with the second quarter and first half of 2016. The fair value losses that are reported for the single-family segment are consistent with the fair value losses reported in our condensed consolidated statements of operations and comprehensive income. We discuss our fair value gains and losses in “Consolidated Results of OperationsFair Value Losses, Net.”
We recognized lower single-family credit-related income in the second quarter and first half of 2017 compared with the second quarter and first half of 2016. Credit-related income in the second quarter and first half of 2017 was driven by an increase in actual and forecasted home prices and the redesignation of loans from HFI to HFS. Credit-related income in the second quarter and first half of 2016 was primarily attributable to an increase in home prices and a decline in actual and projected mortgage interest rates. See “Consolidated Results of OperationsCredit-Related Income (Expense)” for more information on the drivers of our credit-related income.
Single-Family Mortgage Credit Risk Management
Our strategy in managing single-family mortgage credit risk consists of five primary components:
our acquisition and servicing policies along with our underwriting and servicing standards;

Fannie Mae Second Quarter 2017 Form 10-Q
29