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FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE (FNMA)·Q3 2025 Earnings Summary

Executive Summary

  • Net income rose to $3.9B, up 16% q/q on lower credit loss provisions and lower non‑interest expense; net revenues were stable at $7.3B; efficiency ratio improved to 29.3% from 31.5% q/q .
  • Single‑Family net income increased 13% q/q to $3.1B on reduced provision and opex; Multifamily net income increased 33% q/q to $0.8B on lower provision/opex and higher net revenues .
  • Credit metrics remained stable: total SDQ 0.63%, Single‑Family SDQ 0.58%, Multifamily SDQ 0.59%; net charge‑offs remained muted at 0.04% .
  • S&P Global consensus “Revenue” estimate was $8.01B vs actual $6.99B (miss), and EPS was 0.00 vs 0.00 (in line)*; note Fannie Mae’s reported “net revenues” were $7.31B, a different definition than S&P “Revenue” .
  • Strategic catalysts: continued cost management (admin expense down $65M y/y), strong capital build (net worth to $105.5B), and ongoing AI fraud detection rollout (Palantir partnership) as risk/compliance tailwind .

What Went Well and What Went Wrong

What Went Well

  • Efficiency gains: Efficiency ratio improved to 29.3% in 3Q from 31.5% in 2Q, driven by lower administrative expense and other income (debt extinguishment gains and lower foreclosed property expense) .
  • Segment strength: Single‑Family net income up 13% q/q to $3.1B; Multifamily net income up 33% q/q to $0.8B on lower provisioning and opex; net revenues rose modestly in both segments .
  • Management focus on operational discipline: “Net revenues remained steady at $7.3 billion this quarter… Our performance underscores our commitment to the long‑term financial health of Fannie Mae.” – CFO Chryssa C. Halley .

What Went Wrong

  • Revenue miss vs S&P consensus: S&P “Revenue” estimate $8.01B vs actual $6.99B (miss)*; definitional differences with Fannie Mae “net revenues” remain a communication challenge .
  • Provisioning still elevated: Total provision for credit losses was $338M (vs $946M in 2Q), largely attributable to Single‑Family acquisitions; Multifamily provision was $69M amid increased delinquencies .
  • Slight deterioration in some credit indicators: Total SDQ rose to 0.63% and total NPLs to 0.83%; Multifamily average guaranty fee edged down to 72.4 bps (pricing pressure) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net revenues ($USD Millions)$7,085 $7,241 $7,307
Net income ($USD Millions)$3,661 $3,317 $3,859
Basic EPS ($USD)$0.00 $0.00 $0.00
Diluted EPS ($USD)$0.00 $0.00 $0.00
Efficiency Ratio (%)36.1% 31.5% 29.3%
Return on Assets (%)0.34% 0.31% 0.33%* (YTD annualized)

Segment breakdown (net revenues, net income):

SegmentQ1 2025 Net Revenues ($MM)Q1 2025 Net Income ($MM)Q2 2025 Net Revenues ($MM)Q2 2025 Net Income ($MM)Q3 2025 Net Revenues ($MM)Q3 2025 Net Income ($MM)
Single‑Family$5,931 $2,918 $6,061 $2,736 $6,096 $3,085
Multifamily$1,154 $743 $1,180 $581 $1,211 $774

KPIs:

KPIQ1 2025Q2 2025Q3 2025
Total Guaranty Book ($USD Trillions)~$4.1 ~$4.1 ~$4.1
Single‑Family Avg Charged Guaranty Fee (bps, book)48.1 48.3 48.5
Multifamily Avg Charged Guaranty Fee (bps, book)74.1 73.3 72.4
Single‑Family SDQ (%)0.56% 0.53% 0.58%
Multifamily SDQ (%)0.63% 0.61% 0.59%
Single‑Family Acquisitions ($USD Billions)$64.3 $84.1 $90.4 (purchase $72.0, refi $18.4)
Multifamily New Business ($USD Billions)$11.8 $17.4 $18.7
Net Worth ($USD Billions)$98.3 $101.6 $105.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company revenue/margins/tax rate/dividendsFY/QuarterlyNot providedNot providedMaintained (no formal guidance)
Capital/RegulatoryOngoingIllustrative CET1 ROA framework; no formal targetsIllustrative CET1 return 10.3%* (YTD annualized); capital deficit improving via retained earningsMaintained disclosure framework

Note: Fannie Mae does not provide formal financial guidance; management reiterates capital build focus and efficiency initiatives .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/technology & fraud detectionAnnounced AI fraud detection partnership with Palantir to combat mortgage fraud ; Emphasis on efficiency and deregulation efforts aiding expense control Continued emphasis on cost management; administrative expenses reduced by $65M y/y; operational efficiency highlighted Execution continuing; tech/ops discipline supporting opex and credit outcomes
Macro/housingElevated mortgage rates, affordability headwinds; Single‑Family originations muted; home price growth ~5.2% y/y (Q1 ESR) Q3 HPI published; Single‑Family home price index +0.1% q/q; 30‑year fixed down ~47 bps q/q (presentation context) Slight rate relief; HPI stable; seasonal volume uptick
Credit trendsQ2: higher provision on lower home price growth and multifamily delinquencies Total provision down q/q to $338M; SDQ rates stable; net charge‑offs muted Stabilizing vs 2Q spike
Regulatory/capital buildNet worth surpassed $100B in Q2; capital deficit shrinking via retained earnings Net worth $105.5B; illustrative CET1 return 10.3%* (YTD); deficit narrowed vs 4Q22 Continued improvement
Affordability/first‑time buyersLiquidity provided; ~52% first‑time homebuyers in Q2 ~51% first‑time homebuyers; ~401k households helped in Q3 Sustained mission execution

Management Commentary

  • William J. Pulte, Chairman: “Trimming $173 million in administrative expenses since the first quarter of 2025, we have grown our net worth to over $105 billion… earnings up $542 million from the second quarter to $3.9 billion this quarter…” .
  • Chryssa C. Halley, CFO: “Net revenues remained steady at $7.3 billion this quarter, reflecting the consistency of our guaranty fee-driven business model. Our performance underscores our commitment to the long-term financial health of Fannie Mae.” .
  • Jake Williamson, Acting Head of Single‑Family: “Acquisition volumes… reflect our continued commitment to providing consistent and reliable liquidity… enabled by our industry-leading Desktop Underwriter platform.” .
  • Kelly Follain, Head of Multifamily: “We remain focused on flexibly and safely meeting the needs of our multifamily lenders, investors, and borrowers… to help meet the demand for affordable rental housing.” .

Q&A Highlights

  • A full Q3 2025 earnings call transcript was not available in our document set. Materials include the press release, earnings presentation, and financial supplement. No Q&A themes were published for Q3 within accessible sources .

Estimates Context

Metric (S&P Global)Q3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Millions)8,005*6,990*
Primary EPS ($USD)0.00*0.00*
Net Income Normalized ($USD Millions)—3,859*

Notes:

  • Fannie Mae’s reported “net revenues” were $7,307M, which differs from S&P Global’s “Revenue” definition used for consensus comparisons .
  • Values retrieved from S&P Global*.
  • Based on the above, the quarter was a revenue miss vs S&P consensus but in line on EPS*.

Key Takeaways for Investors

  • Operational discipline is driving margin expansion: the efficiency ratio improved to 29.3%, and admin costs fell y/y; expect continued opex focus to underpin earnings resilience .
  • Credit stabilization after 2Q provision spike: 3Q provisions fell to $338M with SDQ rates steady; watch home price trends and multifamily delinquencies into 4Q .
  • Single‑Family momentum: seasonal tailwinds lifted acquisitions to $90.4B (purchase $72B); stable guaranty fees support durable net interest income .
  • Multifamily improving: new business volume rose to $18.7B; credit metrics remain solid (DSCR 1.9, OLTV 63%) with extensive lender loss sharing and CRT coverage .
  • Capital build continues: net worth reached $105.5B; illustrative CET1 return at 10.3%* YTD; ongoing earnings retention should further reduce the capital deficit .
  • S&P consensus mismatch on revenue highlights definitional differences; investors should focus on company “net revenues” and segment drivers when benchmarking performance .
  • Near‑term trading: improving opex and stable credit are positives; monitor rate trajectory, HPI, and Multifamily delinquencies; medium‑term thesis anchored in fee‑based stability and capital accretion.