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FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE (FNMA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net revenues were $7.09B and net income was $3.66B, marking the 29th consecutive profitable quarter; net worth rose to $98.3B (+$3.7B q/q) as capital build continued .
  • Net revenues missed S&P Global consensus ($7.64B est. vs $7.09B actual, ~7% miss)*, while diluted EPS was $0.00 both vs. consensus and actual; efficiency ratio worsened to 36.1% (vs. 32.3% in Q4’24) as non‑interest expense rose and fair‑value gains fell sharply q/q .
  • Single‑Family remained resilient with average charged guaranty fees up and SDQ steady at 0.56%, but Multifamily SDQ increased to 0.63% (0.57% at year‑end), underscoring credit normalization in that book .
  • Management emphasized operational efficiency and capital progress; CFO now expects 2025 mortgage rates to average ~6.5% (prior outlook “>6%”) and raised 2025 home price growth to 4.1% (from 3.5%) while trimming multifamily origination outlook to $325–$365B (from $330–$375B), setting catalysts around macro path, credit trends, and capital trajectory .

What Went Well and What Went Wrong

  • What Went Well

    • Sustained profitability with $3.7B net income; net worth reached $98.3B, building available regulatory capital and reinforcing balance sheet strength .
    • Single‑Family franchise durability: average charged guaranty fee on newly acquired loans rose to 56.5 bps (vs. 54.8 bps YoY), and SDQ remained 0.56%, reflecting strong credit quality (WA MTM‑LTV 50%, WA FICO 753) .
    • Management focus on execution and efficiency: “There remains great opportunity to trim fat…turn the business around…while ensuring safety and soundness,” said Chairman William J. Pulte; CEO added the quarter delivered $76B in liquidity assisting ~287K households, including ~74K first‑time homebuyers .

  • What Went Wrong

    • Net revenues declined 3% q/q and were flat y/y; fee & other income fell sequentially and fair‑value gains declined sharply to $123M (vs. $842M in Q4), pressuring overall profitability drivers .
    • Expense pressure: non‑interest expense rose to $2.60B (from $2.34B YoY), and the efficiency ratio deteriorated to 36.1% (from 30.9% YoY; 32.3% in Q4) .
    • Multifamily credit normalization: SDQ increased to 0.63% (from 0.57% at year‑end) amid a market with values still below peak; while DUS risk‑sharing mitigates losses, investors remain sensitive to MF credit trends .

Financial Results

Key P&L metrics (oldest → newest)

MetricQ1 2024Q4 2024Q1 2025
Net Revenues ($USD Billions)$7.10 $7.30 $7.09
Net Income ($USD Billions)$4.32 $4.13 $3.66
Diluted EPS ($)0.00 0.00 0.00
Efficiency Ratio (%)30.9% 32.3% 36.1%
Return on Assets (%)0.40% 0.38% 0.34%

Q1 2025 Actual vs S&P Global Consensus

MetricConsensusActual
Net Revenues ($USD Billions)$7.64*$7.09
Diluted EPS ($)0.00*0.00

Values with asterisks (*) retrieved from S&P Global.

Segment results (oldest → newest)

SegmentNet Revenues ($MM) Q1 2024Q4 2024Q1 2025Net Income ($MM) Q1 2024Q4 2024Q1 2025
Single‑Family5,929 6,120 5,931 3,607 3,454 2,918
Multifamily1,166 1,177 1,154 713 676 743

Key KPIs (oldest → newest)

KPIQ1 2024Q4 2024Q1 2025
Total Guaranty Book of Business (UPB, $T)4.10 approx. (context) 4.12 approx. (context) 4.10
Single‑Family: Avg Charged GFee on New Acquisitions (net of TCCA, bps)54.8 56.3 56.5
Single‑Family: Avg Charged GFee on Book (net of TCCA, bps)47.4 47.9 48.1
Single‑Family SDQ (by loan count, %)0.56% (context near period) 0.56% 0.56%
Single‑Family Acquisitions (UPB, $B)62.3 84.7 64.3
Multifamily New Business Volume ($B)10.1 22.5 11.8
Multifamily Guaranty Book ($B)476.9 499.7 504.5
Multifamily SDQ (UPB, %)—0.57% 0.63%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Mortgage Rates (average)2025“Above 6%” ~6.5% Clarified higher mid‑6% average
Total Home Sales2025Existing home sales 4.15M (context) Total home sales 4.9M (framework change) Methodology shift; overall outlook slightly firmer
Home Price Growth (YoY, FNM‑HPI)20253.5% 4.1% Raised
SF Mortgage Originations2025~$1.9T ~$2.0T Raised
MF Market Originations2025$330–$375B $325–$365B Lowered
Rent Growth (YoY)20252.0%–2.5% 2.0%–2.5% Maintained
Vacancy Rate (MF)20256.0%–6.25% ~6.25% Narrowed to upper end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Housing Affordability & MacroQ3: Lowest existing home sales since 1995; strong HPI; affordability headwinds . Q4: Rates to remain >6%; sales suppressed .Rates to average ~6.5%; total home sales ~4.9M; HPI +4.1% in 2025 .Slightly firmer sales outlook; still constrained by affordability.
Single‑Family CreditQ3: SDQ 0.52% (Sep); solid credit; CRT activity ongoing . Q4: SDQ 0.56% (Dec) .SDQ 0.56%; WA MTM‑LTV 50%, WA FICO 753 .Stable, strong borrower quality.
Multifamily CreditQ3: Rising SDQ; MF values -19.5% from peak; ARM portfolio stress . Q4: SDQ 0.57%; values down ~19%; fraud reviews .SDQ increased to 0.63%; values ~-18% from peak; broad credit protection via DUS/CRT .Gradual normalization; vigilant stance.
Capital & ConservatorshipQ3: Reduced minimum capital shortfall by $17B YTD . Q4: Shortfall ~$146B; building capital .Shortfall ~$140B; progress via retained earnings, RWA decline .Improving but substantial gap remains.
Fee Income & NIM DriversQ3/Q4: Revenues driven by guaranty fees .Net revenues primarily from guaranty fees on $4.1T book; SF new‑acq GFee up .Steady GFee engine; incremental pricing tailwind.
Loss Mitigation & MissionQ3: Disaster/workout tools highlighted . Q4: Loss mitigation breadth reiterated .~27K borrowers helped via workouts; $76B liquidity; 287K households supported .Consistent mission execution.

Management Commentary

  • “Our current focus at Fannie Mae is on operational efficiency…great opportunity to trim fat, turn the business around, generate more earnings…while ensuring safety and soundness.” — William J. Pulte, Chairman .
  • “We grew our net worth to $98 billion, continued to build our regulatory capital, and delivered on our mission…provided $76 billion of liquidity…helping 287,000 households…including 74,000 first‑time homebuyers.” — Priscilla Almodovar, CEO .
  • “At quarter end, we had a $140 billion capital shortfall to our minimum total risk‑based capital requirement, excluding buffers, primarily because the $120.8 billion stated value of the senior preferred stock does not qualify as regulatory capital.” — Chryssa C. Halley, CFO .

Q&A Highlights

  • The company hosted prepared remarks only; there was no open Q&A session on the call .

Estimates Context

  • Q1 2025 net revenues were $7.09B vs S&P Global consensus of $7.64B (~7% miss); diluted EPS was $0.00 vs $0.00 consensus, reflecting the enterprise’s capital structure and senior preferred distributions .
  • Estimate breadth was limited (Revenue: 2 estimates; EPS: 1 estimate), reducing confidence in consensus precision for a GSE with unique reporting dynamics* .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Core GFee engine intact; SF pricing power (new‑acq GFee +1.7 bps YoY) and stable SF credit (SDQ 0.56%) underpin resilient earnings capacity despite softer fee/other income and lower fair‑value gains q/q .
  • Multifamily normalization continues (SDQ 0.63%); risk‑sharing via DUS/CRT meaningfully mitigates loss content, but investors should monitor ARM cohorts and delinquency migration .
  • Expense discipline and operational efficiency are a strategic priority; the wider efficiency ratio (36.1%) highlights opportunity for execution improvements to support ROA amid macro volatility .
  • Capital trajectory improving through retained earnings; nevertheless, the ~$140B shortfall to minimum total risk‑based requirements keeps capital policy and conservatorship path as medium‑term valuation drivers .
  • Macro path is the near‑term catalyst: CFO outlook for 2025 mortgage rates (~6.5%), home price growth (4.1%), and originations ($2.0T SF) supports gradual activity recovery; revenue sensitivity remains tied to rates, spreads, and prepay behavior .
  • Revenue miss vs S&P consensus (~7%)* and weaker fair‑value gains q/q are watch‑items; ongoing stability in GFees and credit, plus expense execution, are key to sustaining mid‑cycle earnings power .

Supporting detail and additional context

  • Home prices rose 5.2% YoY and 1.4% QoQ in Q1 2025 per FNM‑HPI, consistent with CFO’s 2025 HPI outlook; sustained HPA supports SF credit, offsets refi headwinds .
  • Liquidity and mission delivery remained strong: $76B provided; ~287K households supported; Multifamily volume $11.8B, SF acquisitions $64.3B .

Values with asterisks (*) retrieved from S&P Global.