FannieMae 2013 8K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 21, 2014
 
Federal National Mortgage Association
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Federally chartered corporation
 
000-50231
 
52-0883107
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
 
 
 
 
 
 
 
3900 Wisconsin Avenue, NW
Washington, DC
 
20016
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 202-752-7000
(Former Name or Former Address, if Changed Since Last Report): ______________
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





The information in this report, including information in the exhibits submitted herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to Fannie Mae (formally known as the Federal National Mortgage Association), except to the extent, if any, expressly incorporated by specific reference in that document.

Item 2.02 Results of Operations and Financial Condition.
On February 21, 2014, Fannie Mae filed its annual report on Form 10-K for the year ended December 31, 2013 and issued a news release reporting its financial results for the periods covered by the Form 10-K. The news release, a copy of which is furnished as Exhibit 99.1 to this report, is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On February 21, 2014, Fannie Mae posted to its Web site a 2013 Credit Supplement presentation consisting primarily of information about Fannie Mae’s guaranty book of business. The presentation, a copy of which is furnished as Exhibit 99.2 to this report, is incorporated herein by reference. Fannie Mae’s Web site address is www.fanniemae.com. Information appearing on the company’s Web site is not incorporated into this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The exhibit index filed herewith is incorporated herein by reference.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
FEDERAL NATIONAL MORTGAGE ASSOCIATION
 
 
 
 
By
/s/ David C. Benson
 
 
David C. Benson
 
 
Executive Vice President and
Chief Financial Officer
Date: February 21, 2014





EXHIBIT INDEX
The following exhibits are submitted herewith:
 
 
 
 
Exhibit Number
  
Description of Exhibit
99.1

  
News release, dated February 21, 2014
99.2

  
2013 Credit Supplement presentation, dated February 21, 2014



FannieMae 2013 10K Press Release


Resource Center: 1-800-732-6643
Exhibit 99.1
Contact:     Pete Bakel
202-752-2034
Date:    February 21, 2014

Fannie Mae Reports Comprehensive Income of $84.8 Billion for 2013 and $6.6 Billion for Fourth Quarter 2013

Fannie Mae Paid Treasury $82.5 Billion in Dividends in 2013


Fannie Mae reported annual net income for 2013 of $84.0 billion, which includes the release of the company’s valuation allowance against its deferred tax assets, and annual pre-tax income for 2013 of $38.6 billion.
Fannie Mae reported net income of $6.5 billion for the fourth quarter of 2013, the company’s eighth consecutive quarterly profit, and pre-tax income of $8.3 billion for the fourth quarter of 2013.
Fannie Mae will pay Treasury $7.2 billion in dividends in March 2014. With the March dividend payment, Fannie Mae will have paid a total of $121.1 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
Fannie Mae has funded the mortgage market with approximately $4.1 trillion in liquidity since 2009, enabling families to buy, refinance, or rent a home.
Fannie Mae is supporting the housing recovery by providing access to affordable mortgages and by helping to build a safer, transparent, and sustainable housing finance system.
While Fannie Mae expects to be profitable for the foreseeable future, the company does not expect to repeat its 2013 financial results, as those results were positively affected by the release of the company’s valuation allowance against its deferred tax assets, a significant increase in home prices during the year, and the large number of resolutions the company reached relating to representation and warranty matters and servicing matters.

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $84.0 billion and annual pre-tax income of $38.6 billion in 2013. This compares to net income of $17.2 billion and pre-tax income of $17.2 billion in 2012. Fannie Mae reported net income of $6.5 billion for the fourth quarter of 2013, the company’s eighth consecutive quarterly profit, and pre-tax income of $8.3 billion for the fourth quarter of 2013. The company’s comprehensive income of $6.6 billion for the fourth quarter of 2013 contributed to Fannie Mae’s positive net worth of $9.6 billion as of December 31, 2013.
Fannie Mae will pay Treasury $7.2 billion in March 2014 as a dividend on the senior preferred stock, marking the first time in which the company’s cumulative dividend payments to Treasury will exceed its total draws. Under the senior preferred stock purchase agreement, the payment of dividends does not offset prior draws.
Fannie Mae’s strong 2013 pre-tax results were driven by continued stable revenues, credit-related income, and fair value gains. Credit-related income was positively affected by an increase in home prices, a decline

Fourth Quarter and Full Year 2013 Results
1



in serious delinquency rates, and updated assumptions and data used to estimate the company’s allowance for loan losses in 2013. Fannie Mae’s 2013 financial results also were positively affected by the release of the company’s valuation allowance against its deferred tax assets and the large number of resolutions the company entered into during the year relating to representation and warranty matters and servicing matters.
While Fannie Mae remains under conservatorship and subject to the restrictions of the senior preferred stock purchase agreement with Treasury, the company has undergone significant changes over the past several years resulting in improved financial performance and a stronger book of business. Fannie Mae expects to remain profitable for the foreseeable future. While the company expects its annual earnings to remain strong over the next few years, it expects its net income in future years will be substantially lower than its net income for 2013. For more information about Fannie Mae’s expectations for its future financial performance, see the company’s annual report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 21, 2014.
ABOUT FANNIE MAE’S CONSERVATORSHIP
Fannie Mae has operated under the conservatorship of the Federal Housing Finance Agency (“FHFA”) since September 6, 2008. Fannie Mae has not received funds from Treasury since the first quarter of 2012. The funding the company has received under its senior preferred stock purchase agreement with the U.S. Treasury has provided the company with the capital and liquidity needed to fulfill its mission of providing liquidity and support to the nation’s housing finance markets and to avoid a trigger of mandatory receivership under the Federal Housing Finance Regulatory Reform Act of 2008. For periods through December 31, 2013, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $113.9 billion in dividends to Treasury. Following the company’s March 2014 dividend payment of $7.2 billion to Treasury, Fannie Mae’s cumulative dividend payments to Treasury will exceed total draws from Treasury. Under the senior preferred stock purchase agreement, the payment of dividends does not offset prior draws. As a result, Treasury maintains a liquidation preference of $117.1 billion on the company’s senior preferred stock.
Treasury Draws and Dividend Payments

Fourth Quarter and Full Year 2013 Results
2



(1)
Treasury draw requests are shown in the period for which requested and do not include the initial $1.0 billion liquidation preference of Fannie Mae’s senior preferred stock, for which Fannie Mae did not receive any cash proceeds. The payment of dividends does not offset prior Treasury draws.
(2)
The company’s dividend for the first quarter of 2014 is calculated based on the company’s net worth of $9.6 billion as of December 31, 2013 less the applicable capital reserve amount of $2.4 billion.
(3)
Amounts may not sum due to rounding.
In August 2012, the terms governing the company’s dividend obligations on the senior preferred stock were amended. The amended senior preferred stock purchase agreement does not allow the company to build a capital reserve. Beginning in 2013, the required senior preferred stock dividends each quarter equal the amount, if any, by which the company’s net worth as of the end of the immediately preceding fiscal quarter exceeds an applicable capital reserve amount. The capital reserve amount was $3.0 billion for each quarterly dividend period in 2013, decreased to $2.4 billion for dividend periods in 2014 and will continue to be reduced by $600 million each year until it reaches zero on January 1, 2018.
The amount of remaining funding available to Fannie Mae under the senior preferred stock purchase agreement with Treasury is currently $117.6 billion.
Fannie Mae is not permitted to redeem the senior preferred stock prior to the termination of Treasury’s funding commitment under the senior preferred stock purchase agreement. The limited circumstances under which Treasury’s funding commitment will terminate are described in “Business—Conservatorship and Treasury Agreements” in the company’s annual report on Form 10-K for the year ended    December 31, 2013.
PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET
Fannie Mae provided approximately $4.1 trillion in liquidity to the mortgage market from January 1, 2009 through December 31, 2013 through its purchases and guarantees of loans, which enabled borrowers to complete 12.3 million mortgage refinancings and 3.7 million home purchases, and provided financing for 2.2 million units of multifamily housing.

Fourth Quarter and Full Year 2013 Results
3



Fannie Mae’s market share remained high in 2013 as the company has continued to meet the needs of the single-family mortgage market in the absence of substantial issuances of mortgage-related securities by private institutions during the year. The company remained the largest single issuer of single-family mortgage-related securities in the secondary market during the fourth quarter of 2013, with an estimated market share of new single-family mortgage-related securities issuances of 46 percent, compared with 48 percent in the fourth quarter of 2012 and 47 percent for all of 2013.

Fannie Mae also remained a continuous source of liquidity in the multifamily market in 2013. As of September 30, 2013 (the latest date for which information is available), the company owned or guaranteed approximately 21 percent of the outstanding debt on multifamily properties.
HELPING TO BUILD A SUSTAINABLE HOUSING FINANCE SYSTEM
In addition to continuing to provide liquidity and support to the mortgage market, Fannie Mae has devoted significant resources toward helping to build a sustainable housing finance system for the future, primarily through pursuing the strategic goals identified by its conservator, FHFA. These strategic goals are: build a new infrastructure for the secondary mortgage market; gradually contract the company’s dominant presence in the marketplace while simplifying and shrinking its operations; and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.
CREDIT QUALITY
New Single-Family Book of Business: While continuing to make it possible for families to purchase, refinance, or rent a home, Fannie Mae has established responsible credit standards. Since 2009, Fannie Mae has seen the effect of actions it took, beginning in 2008, to significantly strengthen its underwriting and eligibility standards and change its pricing to promote sustainable homeownership and stability in the housing market. As of December 31, 2013, 77 percent of Fannie Mae’s single-family guaranty book of business consisted of loans it had purchased or guaranteed since the beginning of 2009. Given their strong credit risk profile and based on their performance so far, the company expects that in the aggregate these loans will be profitable over their lifetime, meaning the company’s fee income on these loans will exceed the company’s credit losses and administrative costs for them.


Fourth Quarter and Full Year 2013 Results
4



Single-family conventional loans acquired by Fannie Mae in 2013 had a weighted average borrower FICO credit score at origination of 753 and an average original loan-to-value (“LTV”) ratio of 76 percent.
Loss Reserves: The company’s total loss reserves decreased to $47.3 billion as of December 31, 2013 from $62.6 billion as of December 31, 2012. The company’s total loss reserves peaked at $76.9 billion as of December 31, 2011.
Fannie Mae’s single-family serious delinquency rate has declined each quarter since the first quarter of 2010, and was 2.38 percent as of December 31, 2013, compared with 5.47 percent as of March 31, 2010. This decrease is primarily the result of home retention solutions, foreclosure alternatives, and completed foreclosures, as well as the company’s acquisition of loans with stronger credit profiles since the beginning of 2009.

Fourth Quarter and Full Year 2013 Results
5



HOME RETENTION SOLUTIONS AND FORECLOSURE ALTERNATIVES
To reduce the credit losses Fannie Mae ultimately incurs on its legacy book of business, the company has been focusing its efforts on several strategies, including reducing defaults by offering home retention solutions, such as loan modifications. Fannie Mae completed approximately 39,000 loan modifications during the fourth quarter of 2013 and approximately 160,000 for the full year of 2013.
Fannie Mae views foreclosure as a last resort. For homeowners and communities in need, the company offers alternatives to foreclosure. We provided approximately 234,000 loan workouts in 2013 to help homeowners stay in their homes or otherwise avoid foreclosure. These efforts helped to stabilize neighborhoods, home prices and the housing market. In dealing with homeowners in distress, the company first seeks home retention solutions, which enable borrowers to stay in their homes, before turning to foreclosure alternatives. When there is no viable home retention solution or foreclosure alternative that can be applied, the company seeks to move to foreclosure expeditiously in an effort to minimize prolonged delinquencies that can hurt local home values and destabilize communities.
 
For the Year Ended December 31,
 
2013
 
2012
 
2011
 
2010
 
Unpaid Principal Balance
 
Number of Loans
 
Unpaid Principal Balance
 
Number of Loans
 
Unpaid Principal Balance
 
Number of Loans
 
Unpaid Principal Balance
 
Number of Loans
 
(Dollars in millions)
Home retention strategies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Modifications
$
28,801

 
160,007

 
$
30,640

 
163,412

 
$
42,793

 
213,340

 
$
82,826

 
403,506

Repayment plans and forbearances completed
1,594

 
12,022

 
3,298

 
23,329

 
5,042

 
35,318

 
4,385

 
31,579

HomeSaver Advance first-lien loans

 

 

 

 

 

 
688

 
5,191

Total home retention strategies
30,395

 
172,029

 
33,938

 
186,741

 
47,835


248,658

 
87,899

440,276

Foreclosure alternatives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short sales
9,786

 
46,570

 
15,916

 
73,528

 
15,412

 
70,275

 
15,899

 
69,634

Deeds-in-lieu of foreclosure
2,504

 
15,379

 
2,590

 
15,204

 
1,679

 
9,558

 
1,053

 
5,757

Total foreclosure alternatives
12,290

 
61,949

 
18,506

 
88,732

 
17,091

 
79,833

 
16,952

 
75,391

Total loan workouts
$
42,685

 
233,978

 
$
52,444

 
275,473

 
$
64,926

 
328,491

 
$
104,851


515,667

Loan workouts as a percentage of single-family guaranty book of business
1.48
%
 
1.33
%
 
1.85
%
 
1.57
%
 
2.29
%
 
1.85
%
 
3.66
%
 
2.87
%

Fourth Quarter and Full Year 2013 Results
6



REFINANCING INITIATIVES
Through the company’s Refi Plus™ initiative, which offers refinancing flexibility to eligible Fannie Mae borrowers and includes HARP, the company acquired approximately 139,000 loans in the fourth quarter of 2013 and approximately 1 million loans for the full year of 2013. Some borrowers’ monthly payments increased as they took advantage of the ability to refinance through Refi Plus to reduce the term of their loan, to switch from an adjustable-rate mortgage to a fixed-rate mortgage, or to switch from an interest-only mortgage to a fully amortizing mortgage. Even taking these into account, refinancings delivered to Fannie Mae through Refi Plus in 2013 reduced borrowers’ monthly mortgage payments by an average of $223.

FORECLOSURES AND REO
Fannie Mae acquired 32,208 single-family REO properties, primarily through foreclosure, in the fourth quarter of 2013, compared with 37,353 in the third quarter of 2013. As of December 31, 2013, the company’s inventory of single-family REO properties was 103,229, compared with 100,941 as of September 30, 2013. The carrying value of the company’s single-family REO was $10.3 billion as of December 31, 2013.
The company’s single-family foreclosure rate was 0.82 percent for the full year of 2013. This reflects the number of single-family properties acquired through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of loans in Fannie Mae’s single-family guaranty book of business.

Fourth Quarter and Full Year 2013 Results
7



  
For the Year Ended December 31,
 
 
2013
 
2012
 
2011
 
Single-family foreclosed properties (number of properties):
 
 
 
 
 
 
Beginning of period inventory of single-family foreclosed properties (REO)
105,666

 
118,528

 
162,489

 
Total properties acquired through foreclosure
144,384

 
174,479

 
199,696

 
Dispositions of REO
(146,821
)
 
(187,341
)
 
(243,657
)
 
End of period inventory of single-family foreclosed properties (REO)
103,229

 
105,666

 
118,528

 
Carrying value of single-family foreclosed properties (dollars in millions)
$
10,334

 
$
9,505

 
$
9,692

 
Single-family foreclosure rate
0.82

%
0.99

%
1.13

%
The company provides further discussion of its financial results and condition, credit performance, fair value balance sheets, and other matters in its annual report on Form 10-K for the year ended December 31, 2013, which was filed today with the Securities and Exchange Commission. Additional information about the company’s credit performance, the characteristics of its guaranty book of business, its foreclosure-prevention efforts, and other measures is contained in the “2013 Credit Supplement” at www.fanniemae.com.
# # #
In this release and the accompanying Appendix, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements regarding the company’s future earnings and financial results, including its profitability; the company’s future loss reserves; the profitability of its loans; its future dividend payments to Treasury; and the impact of the company’s actions to reduce credit losses. These estimates, forecasts, expectations, and statements are forward looking statements based on the company’s current assumptions regarding numerous factors, including future home prices and the future performance of its loans. Actual results, and future projections, could be materially different from what is set forth in the forward-looking statements as a result of home price changes, interest rate changes, unemployment rates, other macroeconomic and housing market variables, the company’s future serious delinquency rates, government policy, credit availability, borrower behavior, including increases in the number of underwater borrowers who strategically default on their mortgage loan, the volume of loans it modifies, the nature, volume and effectiveness of its loss mitigation strategies and activities, significant changes in modification and foreclosure activity, 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, future legislative or regulatory requirements that have a significant impact on the company’s business such as a requirement that the company implement a principal forgiveness program, future updates to the company’s models relating to loss reserves, including the assumptions used by these models, changes in generally accepted accounting principles, changes to the company’s accounting policies, failures by its mortgage seller-servicers to fulfill their repurchase obligations to it, effects from activities the company takes to support the mortgage market and help borrowers, the conservatorship and its effect on the company’s business, the investment by Treasury and its effect on the company’s business, the uncertainty of the company’s future, the company’s future guaranty fee pricing and the impact of that pricing on the company’s competitive environment, challenges the company faces in retaining and hiring qualified employees, the deteriorated credit performance of many loans in the company’s guaranty book of business, a decrease in the company’s credit ratings, defaults by one or more institutional counterparties, resolution or settlement agreements the company may enter into with its counterparties, operational control weaknesses, 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 performance of the company’s servicers, conditions in the foreclosure environment, natural or other disasters, and many other factors, including those discussed in the “Risk Factors” section of and elsewhere in the company’s annual report on Form 10-K for the year ended December 31, 2013, and elsewhere in this release.
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 enables people to buy, refinance, or rent a home.
Visit us at: www.fanniemae.com/progress
Follow us on Twitter: http://twitter.com/FannieMae

Fourth Quarter and Full Year 2013 Results
8



APPENDIX
SUMMARY OF FOURTH QUARTER AND FULL YEAR 2013 RESULTS
Fannie Mae reported net income of $6.5 billion for the fourth quarter of 2013, compared with net income of $8.7 billion for the third quarter of 2013 and net income of $7.6 billion for the fourth quarter of 2012. The company reported net income of $84.0 billion for 2013, compared with net income of $17.2 billion for 2012.
(Dollars in millions)
 
4Q13
 
3Q13
 
Variance
 
FY 2013
 
FY 2012
 
Variance
Net interest income
 
$
4,851

 
$
5,582

 
$
(731
)
 
$
22,404

 
$
21,501

 
$
903

Fee and other income
 
2,136

 
741

 
1,395

 
3,930

 
1,487

 
2,443

Net revenues
 
6,987

 
6,323

 
664

 
26,334

 
22,988

 
3,346

Investment gains, net
 
135

 
648

 
(513
)
 
1,191

 
487

 
704

Net other-than-temporary impairments
 
(22
)
 
(27
)
 
5

 
(64
)
 
(713
)
 
649

Fair value gains (losses), net
 
961

 
335

 
626

 
2,959

 
(2,977
)
 
5,936

Administrative expenses
 
(632
)
 
(646
)
 
14

 
(2,545
)
 
(2,367
)
 
(178
)
Credit-related income
 
 
 
 
 
 
 
 
 
 
 
 
Benefit for credit losses
 

 
2,609

 
(2,609
)
 
8,949

 
852

 
8,097

Foreclosed property income
 
1,082

 
1,165

 
(83
)
 
2,839

 
254

 
2,585

Total credit-related income
 
1,082

 
3,774

 
(2,692
)
 
11,788

 
1,106

 
10,682

Other non-interest expenses(1)
 
(237
)
 
(308
)
 
71

 
(1,096
)
 
(1,304
)
 
208

Net gains (losses) and income (expenses)
 
1,287

 
3,776

 
(2,489
)
 
12,233

 
(5,768
)
 
18,001

Income before federal income taxes
 
8,274

 
10,099

 
(1,825
)
 
38,567

 
17,220

 
21,347

(Provision) benefit for federal income taxes
 
(1,816
)
 
(1,355
)
 
(461
)
 
45,415

 

 
45,415

Net income
 
6,458

 
8,744

 
(2,286
)
 
83,982

 
17,220

 
66,762

Less: Net (income) loss attributable to the noncontrolling interest
 
(1
)
 
(7
)
 
6

 
(19
)
 
4

 
(23
)
Net income attributable to Fannie Mae
 
$
6,457

 
$
8,737

 
$
(2,280
)
 
$
83,963

 
$
17,224

 
$
66,739

Total comprehensive income attributable to Fannie Mae
 
$
6,590

 
$
8,603

 
$
(2,013
)
 
$
84,782

 
$
18,843

 
$
65,939

Preferred stock dividends
 
$
(7,191
)
 
$
(8,617
)
 
$
1,426

 
$
(85,419
)
 
$
(15,827
)
 
$
(69,592
)
(1) 
Consists of debt extinguishment gains (losses), net, TCCA fees and other expenses.
Net revenues were $7.0 billion for the fourth quarter of 2013, compared with $6.3 billion for the third quarter of 2013. For the year, net revenues were $26.3 billion, up from $23.0 billion in 2012.
Net interest income was $4.9 billion for the fourth quarter of 2013, compared with $5.6 billion for the third quarter of 2013. The decrease in net interest income compared to the third quarter of 2013 was due to lower amortization driven by prepayment volumes and lower interest income from retained mortgage portfolio assets due to a decline in the company’s retained mortgage portfolio. For the year, net interest income was $22.4 billion for 2013, compared with net interest income of $21.5 billion for 2012. The increase in net interest income compared to 2012 was due primarily to higher amortization driven by prepayment volumes and an increase in guaranty fees, partially offset by lower interest income from retained mortgage portfolio assets due to a decline in the company’s retained mortgage portfolio.

Fourth Quarter and Full Year 2013 Results
9



Fee and other income was $2.1 billion for the fourth quarter of 2013, compared with $741 million for the third quarter of 2013. For the year, fee and other income was $3.9 billion for 2013, compared with $1.5 billion for 2012. The increases in fee and other income were due primarily to funds the company received in 2013 pursuant to settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities sold to Fannie Mae.
Credit-related income, which consists of recognition of a benefit for credit losses and foreclosed property income, was $1.1 billion in the fourth quarter of 2013, compared with $3.8 billion in the third quarter of 2013. Credit-related income decreased in the fourth quarter of 2013 compared with the third quarter of 2013 due primarily to slower home price improvement in the quarter. For the year, credit-related income was $11.8 billion, compared with credit-related income of $1.1 billion in 2012. The company’s credit results for 2013 and 2012 were positively impacted by increases in home prices, which resulted in reductions in our loss reserves. Credit-related income improved year over year due primarily to a decline in the number of delinquent loans in the company’s single-family guaranty book of business; recognition of compensatory fee income in 2013 related to servicing matters and gains resulting from resolution agreements reached in 2013 related to representation and warranty matters; and updates to assumptions and data used to estimate the company’s allowance for loan losses of individually impaired single-family loans, which resulted in a decrease to the company’s allowance for loan losses.


Fourth Quarter and Full Year 2013 Results
10



Credit losses, which the company defines as net charge-offs plus foreclosed property expense, excluding the effect of certain fair-value losses, were $260 million in the fourth quarter of 2013, compared with $1.1 billion in the third quarter of 2013. For the year, credit losses were $4.5 billion compared with $14.6 billion in 2012. Credit losses decreased in 2013 compared with 2012 due primarily to the recognition of compensatory fee income in 2013 related to servicing matters and gains resulting from resolution agreements reached in 2013 related to representation and warranty matters. Also contributing to the decrease in credit losses in 2013 was an improvement in sales prices on Fannie Mae-owned properties and lower REO acquisitions driven primarily by lower delinquencies.

Total loss reserves, which reflect the company’s estimate of the probable losses the company has incurred in its guaranty book of business, including concessions it granted borrowers upon modification of their loans, were $47.3 billion as of December 31, 2013, compared with $48.4 billion as of September 30, 2013 and $62.6 billion as of December 31, 2012. The total loss reserve coverage to total nonaccrual loans was 57 percent as of December 31, 2013, compared with 55 percent as of December 31, 2012 and 54 percent as of December 31, 2011.
Net fair value gains were $1.0 billion in the fourth quarter of 2013, compared with $335 million in the third quarter of 2013. For the year, net fair value gains were $3.0 billion, compared with net fair value losses of $3.0 billion in 2012. The company recorded fair value gains in the fourth quarter of 2013 and for the full year of 2013 due primarily to fair value gains on risk management derivatives as interest rates increased during the year.


Fourth Quarter and Full Year 2013 Results
11



BUSINESS SEGMENT RESULTS
The business groups running Fannie Mae’s three reporting segments – its Single-Family business, its Multifamily business, and its Capital Markets group – engage in complementary business activities in pursuing the company’s mission of providing liquidity, stability, and affordability to the U.S. housing market. 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 mortgage-related assets and other interest-earning non-mortgage investments, funding purchases of mortgage-related assets 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.
Single-Family business had net income of $2.1 billion in the fourth quarter of 2013, compared with net income of $4.7 billion in the third quarter of 2013. The decrease in net income in the fourth quarter compared to the third quarter was driven by lower credit-related income due primarily to slower home price improvement in the quarter. For the year, the Single-Family business had net income of $48.3 billion, compared with net income of $6.3 billion in 2012. The improvement in annual net income was due primarily to the release of the company’s valuation allowance against its deferred tax assets, as well as an increase in credit-related income. In addition, guaranty fee income increased in 2013 compared with 2012 due to the impact of guaranty fee increases. The single-family guaranty book of business was $2.89 trillion as of December 31, 2013, compared with $2.88 trillion as of September 30, 2013 and $2.83 trillion as of December 31, 2012.
Multifamily business had net income of $706 million in the fourth quarter of 2013, compared with $478 million in the third quarter of 2013. The increase in net income in the fourth quarter compared to the third quarter was driven primarily by increased credit-related income due to improvements in property valuations, as well as increased gains from partnership investments as the continued strength of national multifamily market fundamentals resulted in improved property-level operating performance and increased gains on the sale of investments. For the year, Multifamily had net income of $10.1 billion, compared with $1.5 billion in 2012. The improvement in annual net income was due primarily to the release of the company’s valuation allowance against its deferred tax assets, as well as increased credit-related income due to improvements in default and loss severity trends and improvements in property

Fourth Quarter and Full Year 2013 Results
12



valuations. The Multifamily guaranty book of business was $200.6 billion as of December 31, 2013, compared with $203.7 billion as of September 30, 2013 and $206.2 billion as of December 31, 2012.
Capital Markets group had net income of $4.5 billion in the fourth quarter of 2013, compared with $3.8 billion in the third quarter of 2013. The increase in quarterly net income was due primarily to settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities sold to Fannie Mae and fair value gains on the company’s risk management derivatives as interest rates increased during the quarter. The group had net income of $27.5 billion for the year, compared with $14.2 billion for 2012. The improvement in annual net income was due primarily to the release of the company’s valuation allowance against its deferred tax assets, the recognition of fair value gains in 2013 compared with fair value losses in 2012, and the increase in fee and other income as a result of funds the company received pursuant to settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities sold to Fannie Mae. The improvement in net income was partially offset by a decline in net interest income due to a decline in the company’s retained mortgage portfolio. The Capital Markets retained mortgage portfolio balance decreased to $490.7 billion as of December 31, 2013, compared with $633.1 billion as of December 31, 2012, resulting from purchases of $269.4 billion and liquidations and sales of $411.8 billion during the year.
(Dollars in millions)
4Q13
 
3Q13
 
Variance
 
2013
 
2012
 
Variance
Single-Family Segment:
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
$
2,830

 
$
2,719

 
$
111

 
$
10,468

 
$
8,151

 
$
2,317

Credit-related income
848

 
3,642

 
(2,794
)
 
11,205

 
919

 
10,286

Other
(877
)
 
(865
)
 
(12
)
 
(2,507
)
 
(2,700
)
 
193

Income before federal income taxes
2,801

 
5,496

 
(2,695
)
 
19,166

 
6,370

 
12,796

(Provision) benefit for federal income taxes
(667
)
 
(751
)
 
84

 
29,110

 
(80
)
 
29,190

Net income
$
2,134

 
$
4,745

 
$
(2,611
)
 
$
48,276

 
$
6,290

 
$
41,986

Multifamily Segment:
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
$
315

 
$
311

 
$
4

 
$
1,217

 
$
1,040

 
$
177

Credit-related income
234

 
132

 
102

 
583

 
187

 
396

Other
203

 
43

 
160

 
345

 
80

 
265

Income before federal income taxes
752

 
486

 
266

 
2,145

 
1,307

 
838

(Provision) benefit for federal income taxes
(46
)
 
(8
)
 
(38
)
 
7,924

 
204

 
7,720

Net income
$
706

 
$
478

 
$
228

 
$
10,069

 
$
1,511

 
$
8,558

Capital Markets Segment:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
2,031

 
$
2,311

 
$
(280
)
 
$
9,764

 
$
13,241

 
$
(3,477
)
Investment gains, net
1,074

 
1,590

 
(516
)
 
4,911

 
6,217

 
(1,306
)
Fair value gains (losses), net
1,061

 
371

 
690

 
3,148

 
(3,041
)
 
6,189

Other
1,461

 
123

 
1,338

 
1,319

 
(2,092
)
 
3,411

Income before federal income taxes
5,627

 
4,395

 
1,232

 
19,142

 
14,325

 
4,817

(Provision) benefit for federal income taxes
(1,103
)
 
(596
)
 
(507
)
 
8,381

 
(124
)
 
8,505

Net income
$
4,524

 
$
3,799

 
$
725

 
$
27,523

 
$
14,201

 
$
13,322


Fourth Quarter and Full Year 2013 Results
13



ANNEX I
FANNIE MAE
(In conservatorship)
Consolidated Balance Sheets
(Dollars in millions, except share amounts)
 
As of December 31,
 
2013
 
2012
ASSETS
Cash and cash equivalents
 
$
19,228

 
 
 
$
21,117

 
Restricted cash (includes $23,982 and $61,976, respectively, related to consolidated trusts)
 
28,995

 
 
 
67,919

 
Federal funds sold and securities purchased under agreements to resell or similar arrangements
 
38,975

 
 
 
32,500

 
Investments in securities:
 
 
 
 
 
 
 
Trading, at fair value
 
30,768

 
 
 
40,695

 
Available-for-sale, at fair value (includes $998 and $935, respectively, related to consolidated trusts)
 
38,171

 
 
 
63,181

 
Total investments in securities
 
68,939

 
 
 
103,876

 
Mortgage loans:
 
 
 
 
 
 
 
Loans held for sale, at lower of cost or fair value (includes $31 and $72, respectively, related to consolidated trusts)
 
380

 
 
 
464

 
Loans held for investment, at amortized cost:
 
 
 
 
 
 
 
Of Fannie Mae
 
300,159

 
 
 
355,544

 
Of consolidated trusts (includes $14,268 and $10,800, respectively, at fair value and loans pledged as collateral that may be sold or repledged of $442 and $943, respectively)
 
2,769,547

 
 
 
2,652,193

 
Total loans held for investment
 
3,069,706

 
 
 
3,007,737

 
Allowance for loan losses
 
(43,846
)
 
 
 
(58,795
)
 
Total loans held for investment, net of allowance
 
3,025,860

 
 
 
2,948,942

 
Total mortgage loans
 
3,026,240

 
 
 
2,949,406

 
Accrued interest receivable, net (includes $7,271 and $7,567, respectively, related to consolidated trusts)
 
8,319

 
 
 
9,176

 
Acquired property, net
 
11,621

 
 
 
10,489

 
Deferred tax assets, net
 
47,560

 
 
 

 
Other assets (includes cash pledged as collateral of $1,590 and $1,222, respectively)
 
20,231

 
 
 
27,939

 
Total assets
 
$
3,270,108

 
 
 
$
3,222,422

 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
 
 
 
Accrued interest payable (includes $8,276 and $8,645, respectively, related to consolidated trusts)
 
$
10,553

 
 
 
$
11,303

 
Debt:
 
 
 
 
 
 
 
Of Fannie Mae (includes $1,308 and $793, respectively, at fair value)
 
529,434

 
 
 
615,864

 
Of consolidated trusts (includes $14,976 and $11,647, respectively, at fair value)
 
2,705,089

 
 
 
2,573,653

 
Other liabilities (includes $488 and $1,059, respectively, related to consolidated trusts)
 
15,441

 
 
 
14,378

 
Total liabilities
 
3,260,517

 
 
 
3,215,198

 
Commitments and contingencies (Note 19)
 

 
 
 

 
Fannie Mae stockholders’ equity:
 
 
 
 
 
 
 
Senior preferred stock, 1,000,000 shares issued and outstanding
 
117,149

 
 
 
117,149

 
Preferred stock, 700,000,000 shares are authorized—555,374,922 shares issued and outstanding
 
19,130

 
 
 
19,130

 
Common stock, no par value, no maximum authorization—1,308,762,703 shares issued, 1,158,080,657 and 1,158,077,970 shares outstanding, respectively
 
687

 
 
 
687

 
Accumulated deficit
 
(121,227
)
 
 
 
(122,766
)
 
Accumulated other comprehensive income
 
1,203

 
 
 
384

 
Treasury stock, at cost, 150,682,046 and 150,684,733 shares, respectively
 
(7,401
)
 
 
 
(7,401
)
 
Total Fannie Mae stockholders’ equity
 
9,541

 
 
 
7,183

 
Noncontrolling interest
 
50

 
 
 
41

 
Total equity (See Note 1: Impact of U.S. Government Support and (Loss) Earnings per Share for information on our dividend obligation to Treasury)
 
9,591

 
 
 
7,224

 
Total liabilities and equity
 
$
3,270,108

 
 
 
$
3,222,422

 

See Notes to Consolidated Financial Statements

Fourth Quarter and Full Year 2013 Results
14



FANNIE MAE
(In conservatorship)
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Dollars and shares in millions, except per share amounts)
 
For the Year Ended December 31,
 
2013
 
2012
 
2011
Interest income:
 
 
 
 
 
 
 
 
 
 
 
Trading securities
 
$
779

 
 
 
$
989

 
 
 
$
1,087

 
Available-for-sale securities
 
2,357

 
 
 
3,299

 
 
 
3,277

 
Mortgage loans (includes $101,448, $110,451, and $123,633, respectively, related to consolidated trusts)
 
114,238

 
 
 
124,706

 
 
 
138,462

 
Other
 
175

 
 
 
196

 
 
 
117

 
Total interest income
 
117,549

 
 
 
129,190

 
 
 
142,943

 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
131

 
 
 
152

 
 
 
310

 
Long-term debt (includes $84,751, $95,612, and $108,641, respectively, related to consolidated trusts)
 
95,014

 
 
 
107,537

 
 
 
123,352

 
Total interest expense
 
95,145

 
 
 
107,689

 
 
 
123,662

 
Net interest income
 
22,404

 
 
 
21,501

 
 
 
19,281

 
Benefit (provision) for credit losses
 
8,949

 
 
 
852

 
 
 
(26,718
)
 
Net interest income (loss) after benefit (provision) for credit losses
 
31,353

 
 
 
22,353

 
 
 
(7,437
)
 
Investment gains, net
 
1,191

 
 
 
487

 
 
 
506

 
Net other-than-temporary impairments
 
(64
)
 
 
 
(713
)
 
 
 
(308
)
 
Fair value gains (losses), net
 
2,959

 
 
 
(2,977
)
 
 
 
(6,621
)
 
Debt extinguishment gains (losses), net
 
131

 
 
 
(244
)
 
 
 
(232
)
 
Fee and other income
 
3,930

 
 
 
1,487

 
 
 
1,163

 
Non-interest income (loss)
 
8,147

 
 
 
(1,960
)
 
 
 
(5,492
)
 
Administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
1,218

 
 
 
1,195

 
 
 
1,236

 
Professional services
 
910

 
 
 
766

 
 
 
736

 
Occupancy expenses
 
189

 
 
 
188

 
 
 
179

 
Other administrative expenses
 
228

 
 
 
218

 
 
 
219

 
Total administrative expenses
 
2,545

 
 
 
2,367

 
 
 
2,370

 
Foreclosed property (income) expense
 
(2,839
)
 
 
 
(254
)
 
 
 
780

 
Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees
 
1,001

 
 
 
238

 
 
 

 
Other expenses, net
 
226

 
 
 
822

 
 
 
866

 
Total expenses
 
933

 
 
 
3,173

 
 
 
4,016

 
Income (loss) before federal income taxes
 
38,567

 
 
 
17,220

 
 
 
(16,945
)
 
Benefit for federal income taxes
 
45,415

 
 
 

 
 
 
90

 
Net income (loss)
 
83,982

 
 
 
17,220

 
 
 
(16,855
)
 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes
 
693

 
 
 
1,735

 
 
 
622

 
Other
 
126

 
 
 
(116
)
 
 
 
(175
)
 
Total other comprehensive income
 
819

 
 
 
1,619

 
 
 
447

 
Total comprehensive income (loss)
 
84,801

 
 
 
18,839

 
 
 
(16,408
)
 
Less: Comprehensive (income) loss attributable to noncontrolling interest
 
(19
)
 
 
 
4

 
 
 

 
Total comprehensive income (loss) attributable to Fannie Mae
 
$
84,782

 
 
 
$
18,843

 
 
 
$
(16,408
)
 
Net income (loss)
 
$
83,982

 
 
 
$
17,220

 
 
 
$
(16,855
)
 
Less: Net (income) loss attributable to noncontrolling interest
 
(19
)
 
 
 
4

 
 
 

 
Net income (loss) attributable to Fannie Mae
 
$
83,963

 
 
 
$
17,224

 
 
 
$
(16,855
)
 
Dividends distributed or available for distribution to senior preferred stockholder (Note 11)
 
(85,419
)
 
 
 
(15,827
)
 
 
 
(9,614
)
 
Net (loss) income attributable to common stockholders (Note 11)
 
$
(1,456
)
 
 
 
$
1,397

 
 
 
$
(26,469
)
 
(Loss) earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.25
)
 
 
 
$
0.24

 
 
 
$
(4.61
)
 
Diluted
 
(0.25
)
 
 
 
0.24

 
 
 
(4.61
)
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
5,762

 
 
 
5,762

 
 
 
5,737

 
Diluted
 
5,762

 
 
 
5,893

 
 
 
5,737

 

See Notes to Consolidated Financial Statements

Fourth Quarter and Full Year 2013 Results
15



FANNIE MAE
(In conservatorship)
Consolidated Statements of Cash Flows
(Dollars in millions)
 
For the Year Ended December 31,
 
2013
 
2012
 
2011
Cash flows provided by (used in) operating activities:
 
 
 
 
 
Net income (loss)
$
83,982

 
$
17,220

 
$
(16,855
)
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
Amortization of cost basis adjustments
(5,104
)
 
(2,335
)
 
(369
)
(Benefit) provision for credit losses
(8,949
)
 
(852
)
 
26,718

Current and deferred federal income taxes
(47,766
)
 
10

 
1,044

Net change in trading securities
1,575

 
31,972

 
(17,048
)
Net gains related to the disposition of acquired property and preforeclosure sales, including credit enhancements
(6,024
)
 
(6,009
)
 
(5,109
)
Other, net
(4,811
)
 
(3,005
)
 
(3,619
)
Net cash provided by (used in) operating activities
12,903

 
37,001

 
(15,238
)
Cash flows provided by investing activities:
 
 
 
 
 
Purchases of trading securities held for investment
(7,521
)
 
(3,216
)
 
(2,951
)
Proceeds from maturities and paydowns of trading securities held for investment
2,491

 
3,508

 
2,591

Proceeds from sales of trading securities held for investment
14,585

 
3,861

 
1,526

Purchases of available-for-sale securities

 
(34
)
 
(192
)
Proceeds from maturities and paydowns of available-for-sale securities
10,116

 
12,636

 
13,552

Proceeds from sales of available-for-sale securities
15,497

 
1,306

 
3,192

Purchases of loans held for investment
(195,386
)
 
(210,488
)
 
(78,099
)
Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae
48,875

 
31,322

 
25,190

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts
631,088

 
797,331

 
544,145

Net change in restricted cash
38,924

 
(17,122
)
 
12,881

Advances to lenders
(139,162
)
 
(144,064
)
 
(70,914
)
Proceeds from disposition of acquired property and preforeclosure sales
38,349

 
38,685

 
47,248

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements
(6,475
)
 
13,500

 
(34,249
)
Other, net
1,373

 
468

 
468

Net cash provided by investing activities
452,754

 
527,693

 
464,388

Cash flows used in financing activities:
 
 
 
 
 
Proceeds from issuance of debt of Fannie Mae
372,361

 
736,065

 
766,598

Payments to redeem debt of Fannie Mae
(459,745
)
 
(854,111
)
 
(815,838
)
Proceeds from issuance of debt of consolidated trusts
409,979

 
396,513

 
233,516

Payments to redeem debt of consolidated trusts
(707,544
)
 
(832,537
)
 
(647,695
)
Payments of cash dividends on senior preferred stock to Treasury
(82,452
)
 
(11,608
)
 
(9,613
)
Proceeds from senior preferred stock purchase agreement with Treasury

 
4,571

 
23,978

Other, net
(145
)
 
(9
)
 
146

Net cash used in financing activities
(467,546
)
 
(561,116
)
 
(448,908
)
Net (decrease) increase in cash and cash equivalents
(1,889
)
 
3,578

 
242

Cash and cash equivalents at beginning of period
21,117

 
17,539

 
17,297

Cash and cash equivalents at end of period
$
19,228

 
$
21,117

 
$
17,539

Cash paid during the period for:
 
 
 
 
 
Interest
$
109,240

 
$
119,259

 
$
128,806

Income taxes
2,350

 

 

Non-cash activities:
 
 
 
 
 
Net mortgage loans acquired by assuming debt
$
433,007

 
$
537,862

 
$
448,437

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts
179,097

 
165,272

 
33,859

Transfers from advances to lenders to loans held for investment of consolidated trusts
137,074

 
133,554

 
69,223

Net transfers from mortgage loans to acquired property
34,024

 
46,981

 
56,517


See Notes to Consolidated Financial Statements



Fourth Quarter and Full Year 2013 Results
16



FANNIE MAE
(In conservatorship)
Consolidated Statements of Changes in Equity (Deficit)
(Dollars and shares in millions)
 
Fannie Mae Stockholders’ Equity (Deficit) 
 
 
 
 
 
Shares Outstanding
 
Senior
Preferred Stock
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
(Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Non
Controlling
Interest
 
Total
Equity
(Deficit)
Senior
Preferred
 
Preferred
 
Common
 
 
 
 
 
 
 
Balance as of January 1, 2011
1

 
577

 
1,119

 
$
88,600

 
$
20,204

 
$
667

 
$

 
$
(102,986
)
 
$
(1,682
)
 
$
(7,402
)
 
$
82

 
$
(2,517
)
Change in investment in noncontrolling interest

 

 

 

 

 

 

 

 

 

 
(29
)
 
(29
)
Comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss

 

 

 

 

 

 

 
(16,855
)
 

 

 

 
(16,855
)
Other comprehensive income, net of tax effect:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in net unrealized losses on available-for-sale securities (net of tax of $250)

 

 

 

 

 

 

 

 
465

 

 

 
465

Reclassification adjustment for other-than-temporary impairments recognized in net loss (net of tax of $99)

 

 

 

 

 

 

 

 
209

 

 

 
209

Reclassification adjustment for gains included in net loss (net of tax of $28)

 

 

 

 

 

 

 

 
(52
)
 

 

 
(52
)
Prior service cost and actuarial gains, net of amortization for defined benefit plans

 

 

 

 

 

 

 

 
(175
)
 

 

 
(175
)
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(16,408
)
Senior preferred stock dividends

 

 

 

 

 

 
(1,072
)
 
(8,541
)
 

 

 

 
(9,613
)
Increase to senior preferred liquidation preference

 

 

 
23,978

 

 

 

 

 

 

 

 
23,978

Conversion of convertible preferred stock into common stock

 
(21
)
 
39

 

 
(1,074
)
 
20

 
1,054

 

 

 

 

 

Other

 

 

 

 

 

 
18

 
1

 

 
(1
)
 

 
18

Balance as of December 31, 2011
1

 
556

 
1,158

 
112,578

 
19,130

 
687

 

 
(128,381
)
 
(1,235
)
 
(7,403
)
 
53

 
(4,571
)
Change in investment in noncontrolling interest

 

 

 

 

 

 

 

 

 

 
(8
)
 
(8
)
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 

 

 
17,224

 

 

 
(4
)
 
17,220

Other comprehensive income, net of tax effect:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in net unrealized losses on available-for-sale securities (net of tax of $702)

 

 

 

 

 

 

 

 
1,289

 

 

 
1,289

Reclassification adjustment for other-than-temporary impairments recognized in net income (net of tax of $250)

 

 

 

 

 

 

 

 
463

 

 

 
463

Reclassification adjustment for gains included in net income (net of tax of $9)

 

 

 

 

 

 

 

 
(17
)
 

 

 
(17
)
Prior service cost and actuarial gains, net of amortization for defined benefit plans

 

 

 

 

 

 

 

 
(116
)
 

 

 
(116
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18,839

Senior preferred stock dividends

 

 

 

 

 

 
1

 
(11,609
)
 

 

 

 
(11,608
)
Increase to senior preferred liquidation preference

 

 

 
4,571

 

 

 

 

 

 

 

 
4,571

Other

 

 

 

 

 

 
(1
)
 

 

 
2

 

 
1

Balance as of December 31, 2012
1

 
556

 
1,158

 
117,149

 
19,130

 
687

 

 
(122,766
)
 
384

 
(7,401
)
 
41

 
7,224

Change in investment in noncontrolling interest

 

 

 

 

 

 

 

 

 

 
(10
)
 
(10
)
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 

 

 
83,963

 

 

 
19

 
83,982

Other comprehensive income, net of tax effect:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in net unrealized gains on available-for-sale securities (net of tax of $529)

 

 

 

 

 

 

 

 
983

 

 

 
983

Reclassification adjustment for other-than-temporary impairments recognized in net income (net of tax of $22)

 

 

 

 

 

 

 

 
42

 

 

 
42

Reclassification adjustment for gains included in net income (net of tax of $179)

 

 

 

 

 

 

 

 
(332
)
 

 

 
(332
)
Prior service cost and actuarial gains, net of amortization for defined benefit plans (net of tax of $68)

 

 

 

 

 

 

 

 
126

 

 

 
126

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
84,801

Senior preferred stock dividends

 

 

 

 

 

 

 
(82,452
)
 

 

 

 
(82,452
)
Other

 

 

 

 

 

 

 
28

 

 

 

 
28

Balance as of December 31, 2013
1