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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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MD&A | Consolidated Results of Operations


Consolidated Results of Operations
This section provides a discussion of our condensed consolidated results of operations and should be read together with our condensed consolidated financial statements, including the accompanying notes.
Summary of Condensed Consolidated Results of Operations
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2018
 
2017
 
Variance
 
2018
 
2017
 
Variance
 
(Dollars in millions)
Net interest income
$
5,369

 
$
5,274

 
$
95

 
$
15,978

 
$
15,622

 
$
356

Fee and other income
271

 
1,194

 
(923
)
 
830

 
1,796

 
(966
)
Net revenues
5,640

 
6,468

 
(828
)
 
16,808

 
17,418

 
(610
)
Investment gains, net
166

 
313

 
(147
)
 
693

 
689

 
4

Fair value gains (losses), net
386

 
(289
)
 
675

 
1,660

 
(1,020
)
 
2,680

Administrative expenses
(740
)
 
(664
)
 
(76
)
 
(2,245
)
 
(2,034
)
 
(211
)
Credit-related income (expense):
 
 
 
 
 
 
 
 
 
 
 
Benefit (provision) for credit losses
716

 
(182
)
 
898

 
2,229

 
1,481

 
748

Foreclosed property expense
(159
)
 
(140
)
 
(19
)
 
(460
)
 
(391
)
 
(69
)
Total credit-related income (expense)
557

 
(322
)
 
879

 
1,769

 
1,090

 
679

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees
(576
)
 
(531
)
 
(45
)
 
(1,698
)
 
(1,552
)
 
(146
)
Other expenses, net
(377
)
 
(427
)
 
50

 
(946
)
 
(1,100
)
 
154

Income before federal income taxes
5,056

 
4,548

 
508

 
16,041

 
13,491

 
2,550

Provision for federal income taxes
(1,045
)
 
(1,525
)
 
480

 
(3,312
)
 
(4,495
)
 
1,183

Net income
$
4,011

 
$
3,023

 
$
988

 
$
12,729

 
$
8,996

 
$
3,733

Total comprehensive income
$
3,975

 
$
3,048

 
$
927

 
$
12,372

 
$
8,944

 
$
3,428

Net Interest Income
We have two primary sources of net interest income:
guaranty fees we receive for managing the credit risk on loans underlying Fannie Mae MBS held by third parties; and
the difference between interest income earned on the assets in our retained mortgage portfolio and our other investments portfolio (collectively, our “portfolios”) and the interest expense associated with the debt that funds those assets.
Guaranty fees consist of two primary components:
base guaranty fees that we receive over the life of the loan; and
upfront fees that we receive at the time of loan acquisition primarily related to single-family loan level pricing adjustments and other fees we receive from lenders, which are amortized over the contractual life of the loan. We refer to this as amortization income.


Fannie Mae Third Quarter 2018 Form 10-Q
7