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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 11/02/2018
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Notes to Condensed Consolidated Financial Statements | Summary of Significant Accounting Policies


2018 and 2017, respectively, and $57 million and $46 million for the nine months ended September 30, 2018 and 2017, respectively, of which $57 million had not been remitted as of September 30, 2018.
In addition to the transactions with Treasury mentioned above, we purchase and sell Treasury securities in the normal course of business. As of September 30, 2018 and December 31, 2017, we held Treasury securities with a fair value of $37.6 billion and $29.2 billion, respectively, and accrued interest receivable of $124 million and $77 million, respectively. We recognized interest income on these securities held by us of $192 million and $95 million for the three months ended September 30, 2018 and 2017, respectively, and $485 million and $244 million for the nine months ended September 30, 2018 and 2017, respectively.
Transactions with Freddie Mac
As of September 30, 2018 and December 31, 2017, we held Freddie Mac mortgage-related securities with a fair value of $497 million and $613 million, respectively, and accrued interest receivable of $2 million and $2 million, respectively. We recognized interest income on these securities held by us of $6 million and $8 million for the three months ended September 30, 2018 and 2017, respectively, and $19 million and $31 million for the nine months ended September 30, 2018 and 2017, respectively. In addition, Freddie Mac may be an investor in variable interest entities (“VIEs”) that we have consolidated, and we may be an investor in VIEs that Freddie Mac has consolidated. Freddie Mac may also be an investor in our debt securities.
Transactions with FHFA
The GSE Act authorizes FHFA to establish an annual assessment for regulated entities, including Fannie Mae, which is payable on a semi-annual basis (April and October), for FHFA’s costs and expenses, as well as to maintain FHFA’s working capital. We recognized FHFA assessment fees, which are recorded in “Administrative expenses” in our condensed consolidated statements of operations and comprehensive income, of $26 million for the three months ended September 30, 2018 and 2017, and $81 million and $82 million for the nine months ended September 30, 2018 and 2017, respectively.
Transactions with CSS
We contributed capital to CSS, the company we jointly own with Freddie Mac, of $33 million and $25 million for the three months ended September 30, 2018 and 2017, respectively, and $109 million and $78 million for the nine months ended September 30, 2018 and 2017, respectively. No other transactions outside of normal business activities have occurred between us and CSS during the three and nine months ended September 30, 2018 and 2017.
Income Taxes
The decrease in our provision for federal income taxes for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017 was the result of the Tax Cuts and Jobs Act of 2017, which reduced the federal statutory corporate income tax rate from 35% to 21% effective January 1, 2018. This decline was the primary driver of the reduction in our effective tax rate to 20.7% for the three months ended September 30, 2018 and 20.6% for the nine months ended September 30, 2018, compared with 33.5% for the three months ended September 30, 2017 and 33.3% for the nine months ended September 30, 2017. Our effective tax rates for all the periods presented were different from the prevailing federal statutory rate primarily due to the benefits of our investments in housing projects eligible for low-income housing tax credits.
Earnings (Loss) per Share
Earnings (loss) per share (“EPS”) is presented for basic and diluted EPS. We compute basic EPS by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. 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). Weighted average common shares includes 4.6 billion shares for the periods ended September 30, 2018 and 2017 that would be issued upon the full exercise of the warrant issued to Treasury from the date the warrant was issued.
The calculation of diluted EPS includes all the components of basic earnings per share, plus the dilutive effect of common stock equivalents such as convertible securities and stock options. Weighted average shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. For the three and nine months ended September 30, 2018

Fannie Mae (In conservatorship) Third Quarter 2018 Form 10-Q
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