Resource Center: 1-800-732-6643 

Contact: Pete Bakel 

202-752-2034 

Number: 5379a 

Date: May 6, 2011

Fannie Mae Reports First-Quarter 2011 Results 

Company Continues to Manage Losses on Legacy Book While Building 

Strong New Book of Business 

WASHINGTON, DC – Fannie Mae (FNMA/OTC) today reported a net loss of $6.5 billion in the first quarter of 2011, 

compared to net income of $73 million in the fourth quarter of 2010 (which reflected a $1.2 billion reduction to credit-related

expenses resulting from the successful resolution of certain outstanding repurchase requests), and a net loss of $11.5 billion in 

the first quarter of 2010. The change to a net loss in the first quarter of 2011 from net income in the fourth quarter was due to an 

increase in credit-related expenses, primarily driven by a decline in home prices during the quarter. The company estimates 

that, although home prices have improved in some geographic regions, home prices on a national basis declined by 1.8 percent 

in the first quarter of 2011, which had a direct and negative impact on its credit-related expenses. Substantially all of the 

company’s credit-related expenses in the first quarter were related to the company’s legacy (pre-2009) book of business. While 

the company continues to work through losses on its legacy book, it expects that the single-family loans it has acquired since 

January 2009 will be profitable over their lifetime. 

“We expect our credit-related expenses to remain elevated in 2011 as we continue to be negatively impacted by the prolonged 

decline in home prices,” said Michael J. Williams, president and chief executive officer. “As we move forward, we are building 

a strong new book of business that now accounts for 45 percent of the company’s overall single-family guaranty book of 

business. We continue to be the leading provider of liquidity for single-family mortgages and affordable multifamily rental 

housing while we remain focused on our responsibility to find solutions for distressed homeowners and their families.” 

Fannie Mae continues to strengthen its book of business. Single-family loans acquired from January 2009 forward have a strong 

credit profile. For more information on the expected lifetime profitability of the company’s new single-family book of 

business, please refer to Table 1 in the company’s quarterly report on Form 10-Q for the quarter ended March 31, 2011. 

The vast majority of the company’s credit losses in the first quarter were attributable to single-family loans that Fannie Mae 

purchased or guaranteed from 2005 through 2008. The company’s single-family book of business had $206 billion in 

nonperforming loans as of March 31, 2011. As Fannie Mae manages losses on its legacy book, the company is maintaining a 

clear focus on its priorities and providing liquidity to the market, setting new standards for sustainable lending, and supporting 

programs to help families stay in their homes. 

First-Quarter 2011 Results 1
First-Quarter 2011 Results 2

The company’s net loss attributable to common stockholders in the first quarter of 2011 was $8.7 billion, or $(1.52) per diluted 

share, including $2.2 billion in dividend payments to the U.S. Treasury. As of March 31, 2011, the company’s net worth deficit 

was $8.4 billion. The Federal Housing Finance Agency (FHFA) has requested $8.5 billion on the company’s behalf from 

Treasury to eliminate the deficit. Upon receipt of those funds, the company’s total obligation to Treasury for its senior preferred 

stock will be $99.7 billion. Since its senior preferred stock was issued, the company has paid a total of $12.4 billion in 

dividends to Treasury. 

PROVIDING LIQUIDITY TO THE MARKET

In the first quarter of 2011, Fannie Mae purchased or guaranteed approximately $189 billion in loans, measured by unpaid 

principal balance, which includes approximately $20 billion in delinquent loans purchased from its single-family mortgagebacked securities (MBS) trusts. Excluding delinquent loans purchased from its MBS trusts, Fannie Mae’s purchases and 

guarantees enabled its lender customers to finance approximately 759,000 single-family conventional loans and multifamily 

loans secured by multifamily properties with approximately 83,000 units. 

Fannie Mae remained the largest single issuer of mortgage-related securities in the secondary market in the first quarter of 2011, 

with an estimated market share of new single-family mortgage-related securities issuances of 48.6 percent, compared to 49.0 

percent in the fourth quarter of 2010. If the Federal Housing Administration continues to be the lower cost option for some 

consumers, the company’s market share could be adversely impacted if the market shifts away from refinance activity, which is 

likely to occur when interest rates rise. Fannie Mae also remains a constant source of liquidity in the multifamily market. 

Currently, the company owns or guarantees approximately one-fifth of the outstanding debt on multifamily properties. 

CREDIT QUALITY

New Single-Family Book of Business: Forty-five percent of Fannie Mae’s single-family guaranty book of business as of 

March 31, 2011 consisted of loans it had purchased or guaranteed since the beginning of 2009. The company continues to 

expect that these loans will be profitable over their lifetime, given their strong credit risk profile and performance to date.

Conventional single-family loans added to Fannie Mae’s book of business since January 1, 2009 have a weighted average loanto-value ratio at origination of 68 percent, and a weighted average credit score at origination of 762. The ultimate performance 

of loans the company has acquired since January 2009 will be affected by macroeconomic trends, including unemployment, the 

economy, and home prices. 

2005 – 2008 Single-Family Book of Business: The single-family credit losses the company realized from January 1, 2009 

through March 31, 2011, combined with the amounts the company has reserved for single-family credit losses as of March 31, 

2011, total approximately $120 billion, which includes a portion of the company’s fair value losses on credit impaired loans that 

the company deems an “effective reserve” for future credit losses. The vast majority of these losses were attributable to singlefamily loans the company acquired from 2005 through 2008. The company expects that future defaults on its legacy book and 

the resulting charge-offs will occur over a period of years. 
First-Quarter 2011 Results 3

Fannie Mae’s single-family serious delinquency rate decreased to 4.27 percent as of March 31, 2011, from 4.48 percent as of 

December 31, 2010, and from 5.47 percent as of March 31, 2010. The decrease in Fannie Mae’s single-family serious 

delinquency rate was primarily the result of home retention solutions, mainly loan modifications, and foreclosure alternatives 

completed, combined with foreclosures when a viable solution was not available. The volume of loans impacted by these 

actions continues to exceed the number of loans becoming seriously delinquent, thereby decreasing the percentage of the 

company’s seriously delinquent loans. The decrease also is attributable to the company’s acquisition of loans with stronger 

credit profiles in 2010 and the first quarter of 2011. 

FORECLOSURE PREVENTION

Loan Workouts: During the first quarter of 2011, Fannie Mae completed more than 78,000 single-family loan workouts, 

including more than 60,000 home-retention solutions (modifications, repayment plans, and forbearances). Details of the 

company’s home-retention solutions and foreclosure alternatives include: 

 Loan modifications, which include permanent modifications under the Treasury Department’s Home Affordable 

Modification Program, decreased in the first quarter of 2011 to 51,043 from 81,692 in the fourth quarter of 2010. These 

figures do not include modifications in trial periods. 

 Repayment plans/forbearances of 9,916, compared with 7,973 in the fourth quarter of 2010. 

 Preforeclosure sales and deeds-in-lieu of foreclosure of 17,120, compared with 15,632 in the fourth quarter of 2010. 

Homeowner Initiatives: In the first quarter of 2011, Fannie Mae continued to develop programs and invest in initiatives that 

are designed to help keep people in homes, assist prospective homeowners, and support the mortgage and housing markets 

overall. Fannie Mae expanded its homeowner outreach initiatives and celebrated the one year anniversary of the Miami 

Mortgage Help Center in March. Since opening a year ago, the center’s staff has reached out to more than 5,000 struggling 

homeowners with loans owned by Fannie Mae. More than 1,000 responded, resulting in nearly two-thirds of those families 

securing a solution to stay in their homes. As of March 31, 2011, Fannie Mae had established six Mortgage Help Centers that 

completed approximately 800 home retention plans in the first quarter of 2011. Since the end of the quarter, the company has 

established three more centers in Tampa, FL; Jacksonville, FL; and Philadelphia, PA. The company also uses direct mail and 

phone calls to encourage homeowners to pursue foreclosure alternatives, and also has established partnerships with counseling 

agencies in other communities to provide similar services. 

FORECLOSURES AND REO 

Fannie Mae acquired 53,549 single-family real-estate owned (REO) properties through foreclosure in the first quarter of 2011, 

compared with 45,962 in the fourth quarter of 2010. As of March 31, 2011, the company’s inventory of single-family REO 

properties was 153,224, compared with 162,489 as of December 31, 2010. The carrying value of the company’s single-family 

REO was $14.1 billion, compared with $15.0 billion as of December 31, 2010. 
The company’s single-family foreclosure rate was 1.19 percent on an annualized basis in the first quarter of 2011, compared 

with 1.03 percent in the fourth quarter of 2010. This reflects the annualized number of single-family properties acquired 

through foreclosure, as a percentage of the total number of loans in Fannie Mae’s conventional single-family guaranty book of 

business. 

SUMMARY OF FIRST-QUARTER 2011 RESULTS

Fannie Mae reported a net loss of $6.5 billion for the first quarter of 2011, compared to net income of $73 million in the fourth 

quarter of 2010. The company’s net loss attributable to common stockholders was $8.7 billion, or $(1.52) per diluted share, 

compared with a loss of $2.1 billion in the fourth quarter of 2010, or $(0.37) per diluted share. The net worth deficit of $8.4

billion as of March 31, 2011 takes into account dividends paid on senior preferred stock held by Treasury. 

(dollars in millions, except per share amounts) (1) 1Q11 4Q10 Variance 1Q11 1Q10 Variance

Net interest income 4,960 $ 4,637$ 323$ 4,960$ 2,789$ 2,171$ 

Fee and other income (1)(2) 253 237 (16) 237 233 4 

Net revenues 5,197 4,890 307 5,197 3,022 2,175 

Investment gains, net 75 75 - 75 166 (91) 

Net other-than-temporary impairments (44) (23) (21) (44) (236) 192 

Fair value gains (losses), net 289 366 (77) 289 (1,705) 1,994 

Administrative expenses (605) (592) (13) (605) (605) - 

Credit-related expenses (3) (4,318) (11,042) (6,724) (11,042) (11,884) 842 

Other non-interest expenses (1)(4) (348) (339) (339) 9 (354) 15

Net losses and expenses (11,666) (4,840) (6,826) (11,666) (14,618) 2,952

Income (loss) before federal income taxes (6,469) 50 (6,519) (6,469) (11,596) 5,127

Benefit (provision) for federal income taxes (2) 15 (17) (2) 67 (69) 

Net income (loss) (6,471) 65 (6,536) (6,471) (11,529) 5,058

Less: Net (income) loss attributable to the noncontrolling interest - 8 (8) - (1) 1 

Net income (loss) attributable to Fannie Mae $ (6,471) $ (6,544) 73 $ (6,471)$ (11,530)$ 5,059$ 

Preferred stock dividends (2,216) (2,154) (62) (2,216) (1,527) (689) 

Net loss attributable to common stockholders $ (8,687) (2,081)$ (6,606)$ (8,687)$ (13,057)$ 4,370$ 

Diluted loss per common share $ (1.52) (0.37)$ $ (1.15) (1.52)$ $ (2.29) $ 0.77

(1) Certain prior period amounts have been reclassified to conform to 

the current period presentation.

(2) Trust management income and guaranty fee income are included in 

fee and other income.

(3) Consists of provision for loan losses, provision for guaranty losses and foreclosed property expense.

(4) Consists of debt extinguishment losses, net, losses from partnership investments and other expenses.

Net revenues were $5.2 billion in the first quarter of 2011, up six percent from $4.9 billion in the fourth quarter of 2010, due to 

an increase in net interest income. 

First-Quarter 2011 Results 4
First-Quarter 2011 Results 5

Credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, were $11.0 billion in 

the first quarter of 2011, up from $4.3 billion in the fourth quarter of 2010. The higher provision for credit losses during the 

period was primarily driven by an increase in total loss reserves due to a decline in home prices and increase in initial charge-off 

severity during the period, the number of loans that entered into a trial modification period during the quarter, a decline in future 

expected home prices, and an extended timeframe of loan delinquencies as a result of delays caused by servicer foreclosure 

process deficiencies and the resulting foreclosure pause. In addition, the fourth quarter of 2010 reflects a $1.2 billion reduction 

to credit-related expenses resulting from the successful resolution of certain outstanding repurchase requests. 

Credit losses, which the company defines generally as net charge-offs plus foreclosed property expense, excluding the effect of 

certain fair-value losses, were $5.7 billion in the first quarter of 2011, compared with $3.2 billion in the fourth quarter of 2010. 

As discussed above, the fourth quarter of 2010 reflected a $1.2 billion reduction to charge-offs and foreclosed property expense 

resulting from the successful resolution of certain outstanding repurchase requests. Additionally, the increase in credit losses in 

the first quarter of 2011 continues to reflect an increase in charge-offs due to higher loss severities arising from a continued 

decline in home prices. 

Total loss reserves and fair value losses previously recognized on acquired credit-impaired loans were $90.6 billion as of 

March 31, 2011, compared with $85.4 billion as of December 31, 2010. The company considers a portion of total fair value 

losses previously recognized on loans purchased out of MBS trusts as an “effective reserve,” apart from its total loss reserves, to 

the extent that the company expects to realize credit losses on the acquired loans in the future. 

Net fair value gains were $289 billion in the first quarter of 2011, compared to $366 million in the fourth quarter of 2010. This 

was primarily due to gains recognized on trading securities. 

NET WORTH AND U.S. TREASURY FUNDING

The Acting Director of FHFA has requested $8.5 billion of funds from Treasury on the company’s behalf under the terms of the 

senior preferred stock purchase agreement between Fannie Mae and Treasury to eliminate the company’s net worth deficit as of 

March 31, 2011. Fannie Mae’s first-quarter dividend of $2.2 billion on its senior preferred stock held by Treasury was declared 

by FHFA and paid by the company on March 31, 2011. 

In March 2011, Treasury provided to the company $2.6 billion to cure its net worth deficit as of December 31, 2010. As a result

of this draw, the aggregate liquidation preference of the senior preferred stock increased from $88.6 billion to $91.2 billion as of 

March 31, 2011. It will increase to $99.7 billion upon the receipt of funds from Treasury to eliminate the company’s firstquarter 2011 net worth deficit, which will require an annualized dividend payment of $10.0 billion. This amount exceeds the 

company’s reported annual net income for each year since its inception. 
First-Quarter 2011 Results 6

FAIR VALUE UPDATE

The fair value of Fannie Mae’s net assets decreased by $10.8 billion from December 31, 2010, resulting in a fair value net 

deficit of $131.1 billion as of March 31, 2011, compared to a fair value net deficit of $120.3 billion as of December 31, 2010.

This decrease was due primarily to credit-related items, principally related to declining actual and expected home prices, as well 

as a decrease in the estimated rate of prepayments. These credit-related items increased the expected life of the guaranty book of 

business and increased expected credit losses. The decrease due to credit-related items was partially offset by an increase in the 

fair value of the net portfolio attributable to the positive impact of the spread between mortgage assets and associated debt and 

derivatives. 

As part of Fannie Mae’s disclosure requirements with FHFA, the company discloses on a quarterly basis supplemental nonGAAP consolidated fair value balance sheets, reflecting the company’s assets and liabilities at estimated fair value. The fair 

value of the company’s net assets is not a measure defined within generally accepted accounting principles and may not be 

comparable to similarly titled measures reported by other companies. The estimated fair value of the company’s net assets is 

calculated as of a particular point in time based on its existing assets and liabilities, and does not incorporate other factors that 

may have a significant impact on its long-term fair value. As a result, the estimated fair value of the company’s net assets 

presented in its non-GAAP consolidated fair value balance sheets does not represent an estimate of its net realizable value, 

liquidation value, or its market value as a whole. In addition, the fair value of the company’s net assets attributable to common 

stockholders presented in its fair value balance sheet does not represent an estimate of the value it expects to realize from 

operating the company, nor what it expects to draw from Treasury under the terms of the senior preferred stock purchase 

agreement. 

For more information on the change in the company’s fair value net deficit, please refer to “Supplemental Non-GAAP 

Information — Fair Value Balance Sheets” in the company’s quarterly report on Form 10-Q for the quarter ended March 31, 

2011. See also “Supplemental Non-GAAP Consolidated Fair Value Balance Sheets” and “Explanation and Reconciliation of 

Non-GAAP Measures to GAAP Measures” later in this release for a reconciliation of the company’s fair value balance sheets to 

its GAAP consolidated balance sheets. 

BUSINESS SEGMENT RESULTS

Fannie Mae conducts its activities through three complementary businesses: its Single-Family business, its Multifamily 

business, and its Capital Markets group. The company’s Single-Family and Multifamily businesses work with Fannie Mae’s 

lender customers, who deliver mortgage loans that the company purchases and securitizes into Fannie Mae MBS. The Capital 

Markets group manages the company’s investment activity in mortgage-related assets, funding investments primarily with 

proceeds received from the issuance of Fannie Mae debt securities in the domestic and international capital markets. The 

Capital Markets group also provides liquidity to the mortgage market through short-term financing and other activities. 
First-Quarter 2011 Results 7

Single-Family guaranty book of business was $2.90 trillion as of March 31, 2011, compared with $2.87 trillion as of December 

31, 2010. Single-Family guaranty fee income for the first quarter of 2011 was $1.9 billion, compared with $1.8 billion for the

fourth quarter of 2010. The Single-Family business lost $10.7 billion in the first quarter of 2011, compared with a loss of $3.6 

billion in the fourth quarter of 2010, due primarily to credit-related expenses of $11.1 billion, the vast majority of which were 

attributable to loans purchased or guaranteed from 2005 through 2008. 

Multifamily guaranty book of business was $190.6 billion as of March 31, 2011, compared with $189.4 billion as of December 

31, 2010. Multifamily recorded credit-related income of $64 million in the first quarter of 2011, compared with credit-related 

expenses of $254 million in the fourth quarter of 2010. Multifamily earned $247 million in the first quarter of 2011, compared 

with a $183 million loss in the fourth quarter of 2010. 

Capital Markets’ net interest income was $3.7 billion in the first quarter of 2011, the same as the fourth quarter of 2010. Fair 

value gains were $218 million, compared with $358 million in the fourth quarter of 2010. Net other-than-temporary 

impairments were $44 million, compared with $24 million in the fourth quarter of 2010. The net mortgage investment portfolio 

balance decreased to $757.6 billion as of March 31, 2011, compared with $788.8 billion as of December 31, 2010, resulting 

from purchases of $43.2 billion, liquidations of $38.9 billion, and sales of $35.4 billion during the quarter. Capital Markets 

earned $4.3 billion in the first quarter of 2011, compared with $4.7 billion in the fourth quarter of 2010. 

The company provides further discussion of its financial results and condition, credit performance, fair value balance sheets, 

and other matters in its quarterly report on Form 10-Q for the quarter ended March 31, 2011, which was filed today with the 

Securities and Exchange Commission. Further information about the company’s credit performance, the characteristics of its 

guaranty book of business, the drivers of its credit losses, its foreclosure-prevention efforts, and other measures is contained in 

the “2011 First-Quarter Credit Supplement” on Fannie Mae’s Web site, www.fanniemae.com. 

# # # 

In this release, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements regarding the company’s future 

financial results; the profitability of its loans; future credit losses, credit-related expenses, defaults, and charge-offs; its draws from and dividends to be paid to 

Treasury; the performance and caliber of loans it has acquired and will acquire; future home prices; future market share; future refinance activity; and future 

prepayment rates. These estimates, forecasts, expectations, and statements are forward-looking statements and are based on the company’s current assumptions 

regarding numerous factors, including assumptions about future home prices and the future performance of its loans. The company’s future estimates of these amounts, 

as well as the actual amounts, may differ materially from its current estimates as a result of home price changes, interest rate changes, unemployment, other 

macroeconomic variables, government policy matters, changes in generally accepted accounting principles, credit availability, social behaviors, the volume of loans it 

modifies, the effectiveness of its loss mitigation strategies, management of its real estate owned inventory and pursuit of contractual remedies, changes in the fair value 

of its assets and liabilities, impairments of its assets, the adequacy of its loss reserves, its ability to maintain a positive net worth, effects from activities the company 

takes to support the mortgage market and help homeowners, the conservatorship and its effect on the company’s business, the investment by Treasury and its effect on 

the company’s business, changes in the structure and regulation of the financial services industry, the company’s ability to access the debt markets, disruptions in the 

housing, credit, and stock markets, government investigations and litigation, the extent of the servicer foreclosure process deficiencies and the duration of the related 

foreclosure pause, and many other factors. Changes in the company’s underlying assumptions and actual outcomes, which could be affected by the economic 

environment, government policy, and many other factors, including those discussed in the “Risk Factors” sections of the company’s annual report on Form 10-K for 

the year ended December 31, 2010 and quarterly report on Form 10-Q for the quarter ended March 31, 2011 and elsewhere in this release, could result in actual 

results being materially different from what is set forth in the forward-looking statements. 

Fannie Mae provides Web site addresses in its news releases solely for readers’ information. Other content or information appearing on these Web sites is not part of 

this release. 

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal 

charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other 

lenders so that they may lend to home buyers. Our job is to help those who house America. 
First-Quarter 2011 Results 8

ANNEX I

FANNIE MAE 

(In conservatorship)

Condensed Consolidated Balance Sheets—(Unaudited) 

(Dollars in millions, except share amounts) 

 As of

 March 31, December 31, 

 2011 2010 

ASSETS

Cash and cash equivalents (includes $717 and $348, respectively, related to consolidated trusts) $ 19,831 $ 17,297 

Restricted cash (includes $33,405 and $59,619, respectively, related to consolidated trusts) 36,730 63,678 

Federal funds sold and securities purchased under agreements to resell or similar arrangements 26,250 11,751 

Investments in securities: 

 Trading, at fair value (includes $21 as of both periods related to consolidated trusts) 57,035 56,856 

 Available-for-sale, at fair value (includes $1,678 and $1,055, respectively, related to consolidated trusts) 89,613 94,392 

 Total investments in securities 146,648 151,248 

Mortgage loans: 

 Loans held for sale, at lower of cost or fair value (includes $1,055 and $661, respectively, related 

 to consolidated trusts) 1,414 915 

 Loans held for investment, at amortized cost: 

 Of Fannie Mae 402,352 407,228 

 Of consolidated trusts (includes $2,969 and $2,962, respectively, at fair value and loans pledged as collateral 

 that may be sold or repledged of $2,241 and $2,522, respectively) 2,613,848 2,577,133 

 Total loans held for investment 3,016,200 2,984,361 

 Allowance for loan losses (67,557) (61,556)

 Total loans held for investment, net of allowance 2,948,643 2,922,805 

 Total mortgage loans 2,950,057 2,923,720 

Accrued interest receivable, net (includes $8,918 and $8,910, respectively, related to consolidated trusts) 11,303 11,279 

Acquired property, net 15,264 16,173 

Other assets (includes $242 and $593, respectively, related to consolidated trusts) 20,959 26,826 

 Total assets $ 3,227,042 $ 3,221,972 

LIABILITIES AND EQUITY (DEFICIT)

Liabilities:

 Accrued interest payable (includes $9,673 and $9,712, respectively, related to consolidated trusts) $ 13,828 $ 13,764 

 Federal funds purchased and securities sold under agreements to repurchase 25 52 

 Debt: 

 Of Fannie Mae (includes $884 and $893, respectively, at fair value) 761,187 780,044 

 Of consolidated trusts (includes $2,193 and $2,271, respectively, at fair value) 2,447,589 2,416,956 

 Other liabilities (includes $713 and $893, respectively, related to consolidated trusts) 12,831 13,673 

 Total liabilities 3,235,460 3,224,489 

Commitments and contingencies (Note 14) - - 

Fannie Mae stockholders' equity (deficit): 

 Senior preferred stock, 1,000,000 shares issued and outstanding 91,200 88,600 

 Preferred stock, 700,000,000 shares are authorized—576,868,039 and 576,868,139 shares issued 

 and outstanding, respectively 20,204 20,204 

 Common stock, no par value, no maximum authorization—1,270,092,862 and 1,270,092,708 shares 

 issued, respectively; 1,119,073,956 and 1,118,504,194 shares outstanding, respectively 667 667 

 Accumulated deficit (111,669) (102,986)

 Accumulated other comprehensive loss (1,501) (1,682)

 Treasury stock, at cost, 151,018,906 and 151,588,514 shares, respectively (7,400) (7,402)

 Total Fannie Mae stockholders’ deficit (8,499) (2,599)

Noncontrolling interest 81 82 

 Total deficit (8,418) (2,517)

Total liabilities and equity (deficit) $ 3,227,042 $ 3,221,972 

See Notes to Condensed Consolidated Financial Statements 
First-Quarter 2011 Results 9

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Operations and Comprehensive Loss—(Unaudited) 

(Dollars and shares in millions, except per share amounts) 

 For the Three

 Months Ended

 March 31, 

 2011 2010 

Interest income: 

Trading securities $ 284 $ 315 

 Available-for-sale securities 1,213 1,473 

 Mortgage loans (includes $31,865 and $34,321, respectively, related to consolidated trusts) 35,590 37,619 

 Other 28 39 

 Total interest income 37,115 39,446 

Interest expense: 

 Short-term debt (includes $3 and $2, respectively, related to consolidated trusts) 107 118 

 Long-term debt (includes $27,852 and $31,458, respectively, related to consolidated trusts) 32,048 36,539 

 Total interest expense 32,155 36,657 

Net interest income 4,960 2,789 

Provision for loan losses (10,587) (11,939)

Net interest loss after provision for loan losses (5,627) (9,150)

Investment gains, net 75 166 

Other-than-temporary impairments (57) (186)

Noncredit portion of other-than-temporary impairments recognized in other comprehensive income 13 (50)

Net other-than-temporary impairments (44) (236)

Fair value gains (losses), net 289 (1,705)

Debt extinguishment gains (losses), net 13 (124)

Fee and other income 237 233 

 Non-interest income (loss) 570 (1,666)

Administrative expenses: 

 Salaries and employee benefits 320 324 

 Professional services 189 194 

 Occupancy expenses 42 41 

 Other administrative expenses 54 46 

 Total administrative expenses 605 605 

Benefit for guaranty losses (33) (36)

Foreclosed property expense (income) 488 (19)

Other expenses 352 230 

 Total expenses 1,412 780 

Loss before federal income taxes (6,469) (11,596)

Provision (benefit) for federal income taxes 2 (67)

Net loss (6,471) (11,529)

Other comprehensive income: 

 Changes in unrealized losses on available-for-sale securities, net of reclassification adjustments and taxes 179 1,370 

 Other 2 2 

 Total other comprehensive income 181 1,372 

Total comprehensive loss (6,290) (10,157)

 Less: Comprehensive income attributable to the noncontrolling interest - (1)

Total comprehensive loss attributable to Fannie Mae $ (6,290) $ (10,158)

 

Net loss $ (6,471) $ (11,529)

 Less: Net income attributable to the noncontrolling interest - (1)

Net loss attributable to Fannie Mae (6,471) (11,530)

Preferred stock dividends (2,216) (1,527)

Net loss attributable to common stockholders $ (8,687) $ (13,057)

 

Loss per share - Basic and Diluted $ (1.52) $ (2.29)

Weighted-average common shares outstanding - Basic and Diluted 5,698 5,692 

See Notes to Condensed Consolidated Financial Statements 
First-Quarter 2011 Results 10

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows—(Unaudited)

(Dollars in millions) 

 For the Three Months 

 Ended March 31, 

 2011 2010 

 

Net cash provided by (used in) operating activities $ 2,566 $ (30,885) 

Cash flows provided by investing activities: 

 Purchases of trading securities held for investment (185) (6,695) 

 Proceeds from maturities of trading securities held for investment 522 805 

 Proceeds from sales of trading securities held for investment 409 15,068 

 Purchases of available-for-sale securities (44) (107) 

 Proceeds from maturities of available-for-sale securities 3,851 4,120 

 Proceeds from sales of available-for-sale securities 498 4,428 

 Purchases of loans held for investment (15,745) (12,725) 

 Proceeds from repayments of loans held for investment of Fannie Mae 5,381 3,920 

 Proceeds from repayments of loans held for investment of consolidated trusts 121,533 108,903 

 Net change in restricted cash 26,948 3,174 

 Advances to lenders (15,646) (10,338) 

 Proceeds from disposition of acquired property and preforeclosure sales 10,979 7,678 

 Net change in federal funds sold and securities purchased under agreements to resell 

 or similar agreements (14,499) (9,135) 

 Other, net (163) (382) 

Net cash provided by investing activities 123,839 108,714 

Cash flows used in financing activities: 

 Proceeds from issuance of debt of Fannie Mae 163,776 293,013 

 Payments to redeem debt of Fannie Mae (183,073) (277,495) 

 Proceeds from issuance of debt of consolidated trusts 72,567 88,750 

 Payments to redeem debt of consolidated trusts (177,551) (172,385) 

 Payments of cash dividends on senior preferred stock to Treasury (2,216) (1,527) 

 Proceeds from senior preferred stock purchase agreement with Treasury 2,600 15,300 

 Net change in federal funds purchased and securities sold under agreements to repurchase 26 180 

Net cash used in financing activities (123,871) (54,164) 

Net increase in cash and cash equivalents 2,534 23,665 

Cash and cash equivalents at beginning of period 17,297 6,812 

Cash and cash equivalents at end of period $ 19,831 $ 30,477 

Cash paid during the period for interest $ 32,689 $ 36,788 

 

 

See Notes to Condensed Consolidated Financial Statements
Supplemental Non-GAAP Consolidated Fair Value Balance Sheets 

 As of March 31, 2011 As of December 31, 2010 

 GAAP GAAP 

 Carrying Fair Value Estimated Carrying Fair Value Estimated 

 Value Adjustment(1) 

 Fair 

Value Value Adjustment(1) Fair Value 

 (Dollars in millions) 

Assets: 

Cash and cash equivalents $ 56,561 $ - $ 56,561 $ 80,975 $ - $ 80,975 

Federal funds sold and securities purchased 

under agreements to resell or similar 

arrangements 26,250 - 26,250 11,751 - 11,751 

Trading securities 57,035 - 57,035 56,856 - 56,856 

Available-for-sale securities 89,613 - 89,613 94,392 - 94,392 

Mortgage loans: 

Mortgage loans held for sale 1,414 44 1,458 915 - 915 

Mortgage loans held for investment, net of 

 allowance for loan losses: 

 Of Fannie Mae 348,644 (35,472) 313,172 358,698 (39,331) 319,367 

 Of consolidated trusts 2,599,999 18,737 (2) 2,618,736 (3) 2,564,107 46,038 (2) 2,610,145 (3) 

Total mortgage loans 2,950,057 (16,691) 2,933,366 (4) 2,923,720 6,707 2,930,427 (4) 

Advances to lenders 3,091 (151) 2,940 (5) (6) 7,215 (225) 6,990 (5) (6) 

Derivative assets at fair value 279 - 279 (5) (6) 1,137 - 1,137 (5) (6) 

Guaranty assets and buy-ups, net 459 440 899 (5) (6) 458 356 814 (5) (6) 

Total financial assets 3,183,345 (16,402) 3,166,943 (7) 3,176,504 6,838 3,183,342 (7) 

Credit enhancements 471 3,406 3,877 (5) (6) 479 3,286 3,765 (5) (6) 

Other assets 43,226 (240) 42,986 (5) (6) 44,989 (261) 44,728 (5) (6) 

Total assets $ 3,227,042 $ (13,236) $ 3,213,806 $ 3,221,972 $ 9,863 $ 3,231,835 

Liabilities: 

Federal funds purchased and securities sold 

under agreements to repurchase $ 25 $ - $ 25 $ 52 $ (1) $ 51 

Short-term debt: 

 Of Fannie Mae 147,092 41 147,133 151,884 90 151,974 

 Of consolidated trusts 5,156 - 5,156 5,359 - 5,359 

Long-term debt: 

 Of Fannie Mae 614,095 (8) 19,055 633,150 628,160 (8) 21,524 649,684 

 Of consolidated trusts 2,442,433 (8) 88,041 (2) 2,530,474 2,411,597 (8) 103,332 (2) 2,514,929 

Derivative liabilities at fair value 941 - 941 (9) (10) 1,715 - 1,715 (9) (10) 

Guaranty obligations 760 2,667 3,427 (9) (10) 769 3,085 3,854 (9) (10) 

Total financial liabilities 3,210,502 109,804 3,320,306 (7) 3,199,536 128,030 3,327,566 (7) 

Other liabilities 24,958 (398) 24,560 (9) (10) 24,953 (472) 24,481 (9) (10) 

Total liabilities 3,235,460 109,406 3,344,866 3,224,489 127,558 3,352,047 

Equity (deficit): 

Fannie Mae stockholders' equity (deficit): 

Senior preferred(11) 91,200 - 91,200 88,600 - 88,600 

Preferred 20,204 (18,987) 1,217 20,204 (19,829) 375 

Common (119,903) (103,655) (223,558) (111,403) (97,866) (209,269) 

Total Fannie Mae stockholders' 

 

deficit/non-GAAP fair value of net 

assets $ (8,499) $ (122,642) $ (131,141) $ (2,599) $ (117,695) $ (120,294) 

Noncontrolling interests 81 - 81 82 - 82 

Total deficit (8,418) (122,642) (131,060) (2,517) (117,695) (120,212) 

Total liabilities and equity (deficit) $ 3,227,042 $ (13,236) $ 3,213,806 $ 3,221,972 $ 9,863 $ 3,231,835 

See Explanation and Reconciliation of Non-GAAP Measures to GAAP Measures

First-Quarter 2011 Results 11
First-Quarter 2011 Results 12

Explanation and Reconciliation of Non-GAAP Measures to GAAP Measures 

(1) Each of the amounts listed as a “fair value adjustment” represents the difference between the carrying value included in our 

GAAP condensed consolidated balance sheets and our best judgment of the estimated fair value of the listed item. 

(2) Fair value exceeds carrying value of consolidated loans and consolidated debt as a significant portion of these were 

consolidated at unpaid principal balance as of January 1, 2010, upon adoption of accounting standards on transfers of 

financial assets and consolidation of VIEs. Also impacting the difference between fair value and carrying value of the 

consolidated loans is the credit component included in consolidated loans, which has no corresponding impact on the 

consolidated debt. 

(3) Includes certain mortgage loans that we elected to report at fair value in our GAAP condensed consolidated balance sheet of 

$3.0 billion as of both March 31, 2011 and December 31, 2010. 

(4) Performing loans had both a fair value and an unpaid principal balance of $2.8 trillion as of March 31, 2011 compared with a 

fair value of $2.8 trillion and an unpaid principal balance of $2.7 trillion as of December 31, 2010. Nonperforming loans, 

which include loans that are delinquent by one or more payments, had a fair value of $143.4 billion and an unpaid principal 

balance of $254.4 billion as of March 31, 2011 compared with a fair value of $168.5 billion and an unpaid principal balance 

of $287.4 billion as of December 31, 2010. See "Note 13, Fair Value" for additional information on valuation techniques for 

performing and nonperforming loans. 

(5) The following line items: (a) Advances to lenders; (b) Derivative assets at fair value; (c) Guaranty assets and buy-ups, net; (d) 

Credit enhancements; and (e) Other assets, together consist of the following assets presented in our GAAP condensed 

consolidated balance sheets: (a) Accrued interest receivable, net; (b) Acquired property, net; and (c) Other assets. 

(6) “Other assets” include the following GAAP condensed consolidated balance sheets line items: (a) Accrued interest 

receivable, net and (b) Acquired property, net. The carrying value of these items in our GAAP condensed consolidated 

balance sheets totaled $26.6 billion and $27.5 billion as of March 31, 2011 and December 31, 2010, respectively. “Other 

assets” in our GAAP condensed consolidated balance sheets include the following: (a) Advances to Lenders; (b) Derivative 

assets at fair value; (c) Guaranty assets and buy-ups, net; and (d) Credit enhancements. The carrying value of these items 

totaled $4.3 billion and $9.3 billion as of March 31, 2011 and December 31, 2010, respectively. 

(7) We determined the estimated fair value of these financial instruments in accordance with the fair value accounting standard 

as described in “Note 13, Fair Value.” 

(8) Includes certain long-term debt instruments that we elected to report at fair value in our GAAP condensed consolidated 

balance sheets of $3.1 billion and $3.2 billion as of March 31, 2011 and December 31, 2010, respectively. 

(9) The following line items: (a) Derivative liabilities at fair value; (b) Guaranty obligations; and (c) Other liabilities, consist of 

the following liabilities presented in our GAAP condensed consolidated balance sheets: (a) Accrued interest payable and 

(b) Other liabilities. 

(10) “Other liabilities” include the Accrued interest payable in our GAAP condensed consolidated balance sheets. The carrying 

value of this item in our GAAP condensed consolidated balance sheets totaled $13.8 billion as of both March 31, 2011 and 

December 31, 2010. We assume that certain other liabilities, such as deferred revenues, have no fair value. Although we 

report the “Reserve for guaranty losses” as part of “Other liabilities” in our GAAP condensed consolidated balance sheets, it 

is incorporated into and reported as part of the fair value of our guaranty obligations in our non-GAAP supplemental 

consolidated fair value balance sheets. “Other liabilities” in our GAAP condensed consolidated balance sheets include the 

following: (a) Derivative liabilities at fair value and (b) Guaranty obligations. The carrying value of these items totaled $1.7 

billion and $2.5 billion as of March 31, 2011 and December 31, 2010, respectively. 

(11) The amount included in “estimated fair value” of the senior preferred stock is the liquidation preference, which is the same as

the GAAP carrying value, and does not reflect fair value.