Fannie Mae Preferred S (FNMAS)

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Fannie Mae posted a net profit of $1.3 billion in the fourth quarter, a 66 percent decline sequentially, blaming the earnings downdraft on a reduction in the fair value of its derivatives.
The GSE ?derivative problem? also plagued the fourth quarter results of Freddie Mac, which reported a slim profit of $227 million after writing down its derivatives by $3.4 billion.
During Fannie?s fourth quarter earnings call with the media, company CEO Tim Mayopoulos addressed the issue of the slim capital cushion the company keeps as proscribed by a rewriting of the preferred stock purchase agreement three years ago.
?The fact that we don?t have a significant amount of capital increases the likelihood? that eventually Fannie will need to take a capital draw from the Treasury Department, which controls the GSE?s senior preferred stock.
Fannie ended 2014 with a capital cushion of $2.4 billion. Under the PSPA, its allowable capital cushion for 2015 is $1.8 billion, Mayopoulos said. ?It goes to zero in 2018,? he noted.
As far as Fannie?s operating results are concerned, the GSE took in $5.142 billion of net interest income in 4Q compared to $5.184 billion in 3Q. Guaranty fee income actually rose slightly: $2.994 billion in the fourth quarter compared to $2.945 billion in 3Q.
To date, Fannie has paid the Treasury $136 billion in dividends, about $20 billion more than it has received since going into conservatorship.