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    FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE (FNMA)

    Q4 2024 Earnings Summary

    Reported on Feb 14, 2025 (Before Market Open)
    Pre-Earnings Price$6.73Last close (Feb 13, 2025)
    Post-Earnings Price$6.81Open (Feb 14, 2025)
    Price Change
    $0.08(+1.19%)
    • Strong Net Income and Capital Growth: Fannie Mae reported a robust net income of $17 billion in 2024 , with a fourth quarter net income of $4.1 billion. They have grown their net worth to nearly $95 billion, increasing their financial stability. Over the past two years, they have built $37 billion of regulatory capital, significantly reducing their regulatory capital deficit.
    • Resilient Credit Profile and Low Delinquency Rates: The single-family book has a strong credit profile with a weighted average mark-to-market loan-to-value ratio of 50% and a weighted average credit score at origination of 753. Fannie Mae's single-family serious delinquency rate remains near historically low levels at 56 basis points , demonstrating effective underwriting and servicing standards.
    • Positive Outlook for Mortgage Originations and Housing Market: Fannie Mae forecasts single-family mortgage originations of about $1.9 trillion in 2025, up from an estimated $1.7 trillion in 2024. They anticipate home price growth to decelerate to 3.5% in 2025 from 5.8% in 2024, which may improve affordability and stimulate market activity.
    • Increased provisions for credit losses in the multifamily segment, driven by an incremental decline in property values, rising delinquencies, and ongoing investigations into lending transactions with suspected fraud, could negatively impact financial performance.
    • The multifamily serious delinquency rate increased to 57 basis points at the end of 2024 from 46 basis points at the end of 2023, indicating deteriorating credit quality in this segment.
    • Despite building its net worth to nearly $95 billion, Fannie Mae has a capital shortfall of $146 billion to meet its minimum total risk-based capital requirement, primarily because the $120.8 billion stated value of the senior preferred stock does not qualify as regulatory capital.
    MetricYoY ChangeReason

    Total Revenue Q3 2023

    +$67 million vs Q3 2022

    Net revenues increased by $67 million in Q3 2023 driven by a $96 million rise in net interest income and a substantial $503 million increase in fair value gains, partially offset by a $29 million drop in fee and other income compared to Q3 2022.

    Total Revenue Q3 2024

    +$45 million (1%) vs Q3 2023

    In Q3 2024, although net interest income increased by $55 million (1%), the total revenue growth was muted by a drastic 93% drop in fair value gains (from $795 million to $52 million) and a 96% decrease in the benefit for credit losses (a decline of $625 million) compared to Q3 2023, reflecting the effects of changing interest rates and market conditions.

    Net Revenues (Single-Family) Q3 2023

    +$129 million vs Q3 2022

    The Single-Family segment saw net revenues up by $129 million due to a **$156 million increase in net interest income, a sharp $433 million rise in fair value gains, and a notable improvement shifting from $178 million in net investment losses to a $9 million gain, although partially offset by a $27 million decline in fee and other income.

    Net Revenues (Single-Family) Q3 2024

    +$49 million vs Q3 2023

    Q3 2024 improvements were modest with a $49 million increase driven by higher base guaranty fee income and reduced expenses from hedge accounting, which were partly negated by lower net deferred guaranty fee income compared to Q3 2023.

    Net Income Q3 2023

    +$2.3 billion vs Q3 2022; –$295 million vs Q2 2023

    Q3 2023 net income of $4.7 billion marked a significant $2.3 billion improvement over Q3 2022 due to a $3.2 billion shift from a provision to a benefit for credit losses and an additional $503 million in fair value gains. However, compared to Q2 2023, net income declined by $295 million because the benefit for credit losses shrank from $1.3 billion to $652 million and a $491 million litigation expense was incurred, underscoring the impact of both economic recovery and one‐off legal challenges.

    Net Income Q3 2024

    –$655 million (14%) vs Q3 2023; –$440 million vs Q2 2024

    The Q3 2024 net income of $4.0 billion fell by $655 million (14%) compared to Q3 2023 and $440 million (10%) versus Q2 2024, primarily due to a collapse in fair value gains—from $795 million to $52 million—and a steep decline in the credit loss benefit (from $300 million to $27 million), compounded by higher administrative and legal expenses and deteriorating multifamily performance.

    Earnings Per Share (EPS) Q3 2023

    0.00 (unchanged)

    EPS remained at $0.00 in Q3 2023, as all net income is allocated to senior preferred stockholders under the conservatorship and the existing senior preferred stock agreement, leaving no impact on common EPS despite fluctuations in other metrics.

    Earnings Per Share (EPS) Q3 2024

    Not explicitly provided

    Although the decline in net income in Q3 2024 would generally pressure EPS, specific EPS figures were not disclosed for Q3 2024. The downward trend in net income suggests potential future EPS implications if the allocation framework changes.

    Key Performance Metrics Q3 2023

    Mixed; some improvements offset by expense increases

    Q3 2023 performance was mixed with robust figures in net interest income (+$185 million) and enhanced fair value gains (increased from $404 million to $795 million), yet the overall net income was moderated by a sharp drop in benefit for credit losses and a significant $491 million litigation expense. Additionally, while single-family loan delinquency slightly improved (0.55% to 0.54%), multifamily delinquency increased, highlighting evolving credit market challenges.

    Key Performance Metrics Q3 2024

    Overall decline across key metrics

    In Q3 2024, declining fair value gains (dropping to $52 million) and substantial reductions in the benefit for credit losses (from $300 million down to $27 million) led to a notable drop in net income. Furthermore, rising delinquency rates in both single-family (from 0.48% to 0.52%) and multifamily (from 0.44% to 0.56%) segments—exacerbated by specific issues in adjustable-rate loans—emphasize the impact of adverse market conditions on performance.

    Key Performance Metrics Q4 2024

    Flat compared to recent quarters

    Q4 2024 metrics remained consistent with no dramatic (>5%) changes: Total Revenue was $7,297 million, Single-Family net revenues reached $1,177 million (driven by $1,153 million in net interest income), and Net Income stood at $4,130 million with EPS at 0.00. This flat performance reflects a stabilization phase where previous fluctuations in fair value gains and credit loss benefits were not as pronounced, likely indicating a period of operational steadiness.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Home Price Growth

    FY 2025

    3.6%

    3.5%

    lowered

    Multifamily Property Values

    FY 2025

    no prior guidance

    Expected to stabilize in 2025

    no prior guidance

    Mortgage Rates

    FY 2025

    no prior guidance

    Expected to remain elevated above 6% in 2025

    no prior guidance

    Existing Home Sales

    FY 2025

    no prior guidance

    4.15 million units

    no prior guidance

    New Home Sales

    FY 2025

    no prior guidance

    738,000 units

    no prior guidance

    Single-Family Mortgage Originations

    FY 2025

    no prior guidance

    about $1.9 trillion

    no prior guidance

    Multifamily Market Originations

    FY 2025

    no prior guidance

    between $330 billion and $375 billion

    no prior guidance

    Rent Growth

    FY 2025

    no prior guidance

    in the 2% to 2.5% range

    no prior guidance

    Vacancy Rates

    FY 2025

    no prior guidance

    between 6% and 6.25%

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Steady net income growth and capital accumulation

    Q1–Q3: Net income ranged from $4.3B to $4.5B per quarter, with net worth increasing from $82B to $90.5B by Q3. The company consistently noted continued efforts to build net worth despite a lower benefit for credit losses.

    Q4: Reported $17B in net income for 2024, down by $430M from 2023, but up slightly quarter-over-quarter (to $4.1B). Net worth climbed to $95B.

    Continues to be a core strength, with some annual dip but quarter-on-quarter improvement.

    Continuing capital shortfall relative to regulatory minimums

    Q1: Not mentioned. Q2: No specific figure but noted ongoing reduction in shortfall. Q3: Shortfall reduced by $17B since start of year.

    Q4: Capital shortfall of $146B, primarily due to senior preferred stock not qualifying as regulatory capital.

    Reiterated shortfall details, with a higher figure and ongoing emphasis on reducing it.

    Strong single-family credit performance with historically low delinquency rates

    Q1–Q3: Delinquency rates remained near record lows (around 51–52 bps), with slight upticks in Q2 and Q3 due to economic and regional factors.

    Q4: Delinquency rate of 56 bps, still historically low but slightly higher, partly due to hurricane impacts.

    Continues to be strong despite minor increases, reflecting robust underwriting standards.

    Declining multifamily property values and increasing delinquency rates

    Q1–Q3: Values declined about 19–20% from peak (Q2 2022) to Q3 2024. Delinquency rates rose from 44 bps to 56 bps in Q3.

    Q4: Values down 19% from peak, with slowing pace of decline. Delinquency rate at 57 bps, driven partly by a $600M ARM portfolio.

    Remains a concern; values still depressed, with delinquency rates inching higher.

    Potential fraud investigations in the multifamily segment

    Q1–Q2: Not mentioned. Q3: Ongoing investigation for suspected fraud in certain multifamily lending transactions.

    Q4: Mention of fraud or suspected fraud contributing to increased credit loss provision in multifamily.

    Continues from Q3, reflecting heightened risk in multifamily.

    Affordability challenges and high mortgage rates affecting single-family demand

    Q1–Q3: Rates around 6.5–7%, low refinance volumes, low existing home sales, and only about 1 in 5 consumers seeing it as a good time to buy.

    Q4: Mortgage rates averaged 6.7%; affordability remains a barrier, with existing home sales near 30-year lows and only 1 in 5 believing it’s a good time to buy.

    Persistent challenge over all periods, with continued high rates and limited affordability.

    Positive outlook for mortgage originations and housing market forecasts

    Q1–Q3: Projected single-family originations growing from $1.5T to around $1.7–$1.8T in 2024, with home price growth of 5–6%. Multifamily originations also expected to increase modestly.

    Q4: Forecast for $1.9T in single-family originations by 2025. Slight improvement in existing home sales and 3.5% home price growth expected. Multifamily originations up to $330B–$375B.

    Continued optimism, extending the outlook into 2025 with moderate growth expectations.

    Increased liquidity support for single-family and multifamily markets

    Q1–Q3: Provided $72B in Q1, $95B in Q2, and $106B in Q3, helping hundreds of thousands of households.

    Q4: Total of $381B in liquidity for 2024, supporting 1.4M households.

    Steady increase in liquidity each quarter, reflecting mission alignment.

    Ongoing innovation to expand access to credit and reduce barriers

    Q1–Q3: Initiatives like HomeReady enhancements, social bond issuance, and using rent payment data to enhance credit access.

    Q4: Continued focus on mission index disclosures and addressing limited credit history/high upfront costs.

    Emphasized across all periods, showcasing continual program expansions.

    Potential macroeconomic risks and rising interest rates affecting refinancing

    Q1–Q2: Highlighted low refinance volumes due to higher rates; also noted issues for multifamily loans with balloon payments. Q3: Not specifically cited for the quarter.

    Q4: No direct mention, though rates remain elevated.

    Not specifically referenced in Q4, but previously flagged as a risk to refinancing activity.

    Research analysts covering FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE.