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FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE (FNMA)·Q4 2024 Earnings Summary

Executive Summary

  • Fannie Mae delivered Q4 2024 net income of $4.13B, up 2% q/q, driven primarily by a sharp increase in fair value gains; full-year 2024 net income was $16.98B and net worth rose to $94.7B .
  • Net revenues were $7.30B in Q4 (down 1% q/q), while a swing to a credit loss provision (-$321MM) partially offset stronger non-interest income; q/q net income increase was aided by fair value gains of $842MM versus $52MM in Q3 .
  • Single-family remains the earnings engine ($3.45B Q4 net income), with stable guaranty fee economics and low SDQ (0.56%); multifamily net income improved q/q to $676MM despite higher delinquency tied to a ~$600MM ARM loan portfolio .
  • Management outlook: 2025 mortgage rates expected to remain >6%, existing home sales ~4.15M, single-family originations ~$1.9T, home price growth decelerating to ~3.5%, and multifamily originations ~$330–$375B; property values expected to stabilize in 2025 .
  • Wall Street consensus estimates (EPS/revenue) from S&P Global were unavailable due to a retrieval limit; as a result, no beat/miss analysis versus estimates is provided (see Estimates Context) [SPGI retrieval error].

What Went Well and What Went Wrong

What Went Well

  • Strong quarter and year anchored by guaranty fee income on a $4.1T guaranty book; CEO highlighted mission execution and net worth growth to nearly $95B: “Our strong results were driven by guaranty fee income… we provided $381B in liquidity… helping 1.4M households” .
  • Q4 fair value gains surged to $842MM, a key driver of the q/q net income increase (+$86MM), offsetting the shift to a credit loss provision .
  • Single-family credit quality and economics remained robust: weighted-average MTM LTV ~50%, FICO 753, SDQ 0.56%, average charged guaranty fee on book 47.9 bps and on new acquisitions 56.3 bps .

What Went Wrong

  • Credit costs turned to a provision in Q4 (-$321MM), with single-family provision driven by higher rates versus Q3; multifamily benefited from improved NOI/property value projections but SDQ rose y/y to 0.57% .
  • Multifamily provisions were elevated in 2024 (+$257MM y/y to $752MM) due to declines in property values, rising delinquencies, and transactions with suspected fraud; SDQ lifted by a ~$600MM ARM portfolio becoming seriously delinquent in Q3 .
  • Administrative expenses increased y/y for both the company and segments (Q4 admin expenses $947MM; full-year $3.62B), reflecting ongoing investment in operations and technology .

Financial Results

Consolidated P&L (quarterly)

Metric ($USD Millions)Q2 2024Q3 2024Q4 2024
Net revenues7,336 7,341 7,297
Net interest income7,268 7,275 7,182
Benefit (Provision) for credit losses300 27 (321)
Fair value gains (losses), net447 52 842
Administrative expenses939 925 947
Legislative assessments859 862 949
Credit enhancement expense405 411 406
Income before federal income taxes5,604 5,053 5,179
Provision for federal income taxes(1,120) (1,009) (1,049)
Net income4,484 4,044 4,130

Segment Net Income (quarterly)

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Single-Family Net Income3,855 3,514 3,454
Multifamily Net Income629 530 676

Key KPIs and Balance Metrics (quarterly)

KPIQ2 2024Q3 2024Q4 2024
Net worth ($USD Billions)$86.483 $90.530 $94.657
Single-family conventional guaranty book (average, $USD Billions)$3,625 $3,626 $3,622
Avg charged G-fee on SF book (bps)47.6 47.7 47.9
Avg charged G-fee on SF new acquisitions (bps)51.9 54.1 56.3
Single-family SDQ (%)0.48% 0.52% 0.56%
Multifamily guaranty book ($USD Billions, period end)$480.1 $485.6 $499.7
Multifamily SDQ (%)0.44% 0.56% 0.57%

Full-year comparison

MetricFY 2023FY 2024
Net revenues ($USD Millions)29,048 29,069
Net interest income ($USD Millions)28,773 28,748
Fair value gains (losses), net ($USD Millions)1,304 1,821
Benefit (Provision) for credit losses ($USD Millions)1,670 186
Total non-interest expense ($USD Millions)10,013 9,769
Net income ($USD Millions)17,408 16,978
Return on assets (%)0.40% 0.39%
Efficiency ratio (%)33.0% 31.7%

Notes:

  • EPS is not a meaningful performance measure for Fannie Mae while in conservatorship; reported EPS is 0.00 (e.g., Q3 and Q2), and annual EPS is 0.00 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Mortgage rates (30Y)2025Not quantifiedExpected to remain above 6% New qualitative
Existing home sales (units)2025Not quantified~4.15M units New quantitative
New home sales (annualized units)2025Not quantified~738k units New quantitative
Single-family originations ($USD)2025Not quantified~$1.9T New quantitative
Home price growth (YoY)2025Not quantified~3.5% (FHPI) New quantitative
Multifamily originations ($USD)2025Not quantified~$330–$375B New quantitative
Multifamily property values2025Expected further slight decreases, longer recovery (Q3) Expect stabilization in 2025 Improved outlook

Fannie Mae does not provide formal revenue/earnings guidance; management provides macro and market outlook and credit commentary .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Housing affordability and macroAffordability pressures; liquidity provided ($95B Q2, $106B Q3) to support households Affordability remains challenging; 2025 sales outlook modestly better; macro outlook detailed Stable concern; gradual improvement expected
Guaranty fee-driven modelConsistent revenue base; SF G-fees stable; book growth CEO reiterates guaranty fee-driven model driving strong results Stable
Single-family credit performanceSDQ decreased in Q2 to 0.48%; rose to 0.52% in Q3 SDQ at 0.56%; uptick linked to hurricane-impacted areas Slight deterioration from very low base
Multifamily credit/valuesContinued declines and rising delinquencies (Q2); further slight decreases and longer recovery (Q3) Expect stabilization in 2025; SDQ 0.57%, ARM portfolio effect, suspected fraud noted Improving outlook; risks monitored
Capital build/regulatory shortfallQ3: reduced minimum capital shortfall by ~$17B YTD; net worth to $90.5B Net worth ~$94.7B; $146B shortfall to minimum total risk-based capital requirement due to senior preferred stock classification Continued progress; significant shortfall remains
Credit risk transfer (CRT)Ongoing CRT; SF book covered by multiple credit enhancements; MF DUS loss-sharing SF: CRT on ~$186B UPB; MF: 3 transactions on ~$26B; ~99% MF book with lender loss-sharing Ongoing risk distribution

Management Commentary

  • CEO (press release): “Our strong results were driven by guaranty fee income… we provided $381 billion in liquidity to the U.S. housing market, helping 1.4 million households buy, refinance, or rent a home.” .
  • CFO: “We reported $17 billion of net income in 2024… Q4 net income of $4.1 billion versus $4.0 billion in Q3, primarily due to an increase in fair value gains, partially offset by a shift to provision for credit losses.” .
  • CFO on multifamily: “Property values declined ~19% from peak to Q4 2024, pace of decline slowed; we expect stabilization in 2025. MF SDQ rose to 57 bps, driven by ~$600MM ARM loans and suspected fraud; increased expected credit enhancement recoveries helped offset.” .
  • CFO on capital: “We have nearly $95B of net worth… $146B capital shortfall to minimum total risk-based capital today, primarily because the $120.8B stated value of the senior preferred stock does not qualify as regulatory capital.” .

Q&A Highlights

  • The call consisted of prepared remarks; there was no analyst Q&A segment, and the operator concluded the call after management’s statements .

Estimates Context

  • Attempted to retrieve S&P Global consensus estimates (EPS, revenue, net income, EBITDA, target price, recommendation) for Q4 2024; request failed due to an SPGI daily limit. As a result, no beat/miss analysis versus Wall Street consensus can be provided, and FNMA’s unique capital/earnings structure in conservatorship limits typical EPS coverage [SPGI retrieval error].
  • Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

  • Earnings quality remains anchored by stable guaranty fee income; Q4’s fair value gains are volatile by nature, but core NII stayed resilient .
  • Single-family economics and credit quality are strong; modest SDQ uptick from very low levels is manageable and partly weather-related .
  • Multifamily risk is the focal point: SDQ and provisions reflect late-cycle stresses and specific ARM/suspected fraud issues, but DUS loss-sharing and CRT provide meaningful offsets; management sees stabilization in 2025 .
  • Capital build continues (net worth +$17B in 2024) and efficiency ratio improved to 31.7%, but the regulatory capital shortfall remains large due to senior preferred stock classification under the framework—an ongoing structural consideration .
  • 2025 outlook implies subdued transaction volumes given rates >6% and affordability constraints, but incremental improvement in existing home sales and originations supports a steady operating backdrop .
  • With no formal revenue/EPS guidance and limited consensus coverage, investor focus should remain on guaranty fee dynamics, credit performance (especially multifamily), CRT execution, and capital trajectory disclosed in supplements and 10-K .