10/31/2024 | Press release | Distributed by Public on 10/31/2024 05:25
• |
$4.0 billion net income for the third quarter of 2024, with net worth reaching $90.5 billion as of September 30, 2024
|
"Fannie Mae had a strong third quarter, earning $4.0 billion in net income and marking our twenty-seventh quarter of consecutive, positive results. This demonstrates our continued progress in transforming our business and strengthening our balance sheet, so that we fulfill our mission in any economic environment. Our net worth increased to $90.5 billion and, since the start of the year, we've reduced our minimum regulatory capital shortfall by $17 billion. Despite ongoing challenges in housing affordability, we provided $106 billion in liquidity, helping 383,000 households to buy, refinance, or rent homes. We remain dedicated to being a consistent source of liquidity and stability for America's housing finance system, managing risks effectively, and helping to shape a housing market that sees and serves more people."
Priscilla Almodovar
President & Chief Executive Officer
|
• |
Net income decreased $440 million in the third quarter of 2024 compared with the second quarter of 2024, primarily driven by a decrease in fair value gains and a decrease in benefit for credit losses
|
|
• |
$106 billion in liquidity provided in the third quarter of 2024, which enabled the financing of approximately 383,000 home purchases, refinancings, and rental units
|
|
• |
Acquired approximately 231,000 single-family purchase loans, of which approximately half were for first-time homebuyers, and approximately 50,000 single-family refinance loans during the third quarter of 2024
|
|
• |
Financed approximately 103,000 units of multifamily rental housing in the third quarter of 2024; a significant majority were affordable to households earning at or below 120% of area median income, providing support for both workforce and affordable housing
|
|
• |
Home prices grew 0.9% on a national basis in the third quarter of 2024 according to the Fannie Mae Home Price Index
|
|
• |
The U.S. weekly average 30-year fixed-rate mortgage rate decreased from 6.86% as of the end of the second quarter of 2024 to 6.08% as of the end of the third quarter of 2024
|
Q3 2024 Key Results
|
|||
$90.5 Billion Net Worth
|
$274 Billion Supporting Housing Activity
|
||
Increase of $4.0 billion in the third quarter of 2024
|
SF Home Purchases | SF Refinancings | MF Rental Units |
$4.0 Billion Net Income for Q3 2024
|
Serious Delinquency Rates | |
Decrease of $440 million compared with second quarter 2024
|
Single-Family SDQ Rate | Multifamily SDQ Rate |
Third Quarter 2024 Results
|
1
|
Summary of Financial Results | ||||||||||||||
(Dollars in millions) | Q324 | Q224 | Variance | % Change | Q323 | Variance | % Change | |||||||
Net interest income | $ | 7,275 | $ | 7,268 | $ | 7 | - | %* | $ | 7,220 | $ | 55 | 1 | % |
Fee and other income | 66 | 68 | (2) | (3) | % | 76 | (10) | (13) | % | |||||
Net revenues | 7,341 | 7,336 | 5 | - | %* | 7,296 | 45 | 1 | % | |||||
Investment gains (losses), net | 12 | (62) | 74 | NM | 8 | 4 | 50 | % | ||||||
Fair value gains (losses), net | 52 | 447 | (395) | (88) | % | 795 | (743) | (93) | % | |||||
Administrative expenses | (925) | (939) | 14 | 1 | % | (897) | (28) | (3) | % | |||||
Benefit (provision) for credit losses | 27 | 300 | (273) | (91) | % | 652 | (625) | (96) | % | |||||
TCCA fees | (862) | (859) | (3) | - | %* | (860) | (2) | - | %* | |||||
Credit enhancement expense(1)
|
(411) | (405) | (6) | (1) | % | (390) | (21) | (5) | % | |||||
Change in expected credit enhancement recoveries | 89 | 37 | 52 | 141 | % | (128) | 217 | NM | ||||||
Other expenses, net(2)
|
(270) | (251) | (19) | (8) | % | (535) | 265 | 50 | % | |||||
Income before federal income taxes | 5,053 | 5,604 | (551) | (10) | % | 5,941 | (888) | (15) | % | |||||
Provision for federal income taxes | (1,009) | (1,120) | 111 | 10 | % | (1,242) | 233 | 19 | % | |||||
Net income | $ | 4,044 | $ | 4,484 | $ | (440) | (10) | % | $ | 4,699 | $ | (655) | (14) | % |
Total comprehensive income | $ | 4,047 | $ | 4,477 | $ | (430) | (10) | % | $ | 4,681 | $ | (634) | (14) | % |
Net worth | $ | 90,530 | $ | 86,483 | $ | 4,047 | 5 | % | $ | 73,725 | $ | 16,805 | 23 | % |
NM - Not meaningful | ||||||||||||||
* Represents less than 0.5% | ||||||||||||||
(1) Consists of costs associated with freestanding credit enhancements, which primarily include the company's Connecticut Avenue Securities® ("CAS") and Credit Insurance Risk TransferTM programs, enterprise-paid mortgage insurance, and certain lender risk-sharing programs.
|
||||||||||||||
(2) Includes debt extinguishment gains and losses, expenses associated with legal claims, foreclosed property income (expense), gains and losses from partnership investments, housing trust fund expenses, loan subservicing costs, and servicer fees paid in connection with certain loss mitigation activities.
|
Financial Highlights
|
|
Net income decreased $440 million in the third quarter of 2024 compared with the second quarter of 2024, primarily driven by a decrease in fair value gains and a decrease in benefit for credit losses.
|
|
• |
Net interest income remained relatively flat in the third quarter of 2024 compared with the second quarter of 2024.
|
• |
Fair value gains were $52 million in the third quarter of 2024, compared with $447 million in the second quarter of 2024. Fair value gains in the third quarter of 2024 were primarily due to declining interest rates during the quarter.
|
• |
Benefit for credit losses was $27 million in the third quarter of 2024, compared with $300 million in the second quarter of 2024. The benefit for credit losses in the third quarter of 2024 reflects a $451 million single-family benefit for credit losses, mostly offset by a $424 million multifamily provision for credit losses.
• The single-family benefit for credit losses in the third quarter of 2024 was primarily driven by a benefit from forecasted home price growth and a benefit from actual and projected interest rates, partially offset by a provision on newly acquired loans.
• The multifamily provision for credit losses in the third quarter of 2024 was primarily driven by adjustable-rate conventional loans that were written down during the period. In addition, compared to its previous forecast, the company expects further slight decreases in projected multifamily property values and that it will take longer for those property values to improve. The company's multifamily allowance also reflects uncertainty relating to property values and the ongoing investigation of multifamily lending transactions with suspected fraud.
|
Third Quarter 2024 Results
|
2
|
Single-Family Business Financial Results | ||||||||||||||
(Dollars in millions) | Q324 | Q224 | Variance | % Change | Q323 | Variance | % Change | |||||||
Net interest income | $ | 6,131 | $ | 6,096 | $ | 35 | 1 | % | $ | 6,074 | $ | 57 | 1 | % |
Fee and other income | 48 | 51 | (3) | (6) | % | 56 | (8) | (14) | % | |||||
Net revenues | 6,179 | 6,147 | 32 | 1 | % | 6,130 | 49 | 1 | % | |||||
Investment gains (losses), net | 9 | (70) | 79 | NM | 9 | - | - | % | ||||||
Fair value gains (losses), net | (8) | 454 | (462) | NM | 742 | (750) | NM | |||||||
Administrative expenses | (766) | (784) | 18 | 2 | % | (745) | (21) | (3) | % | |||||
Benefit (provision) for credit losses | 451 | 548 | (97) | (18) | % | 736 | (285) | (39) | % | |||||
TCCA fees | (862) | (859) | (3) | - | %* | (860) | (2) | - | %* | |||||
Credit enhancement expense | (336) | (333) | (3) | (1) | % | (335) | (1) | - | %* | |||||
Change in expected credit enhancement recoveries | (45) | (47) | 2 | 4 | % | (170) | 125 | 74 | % | |||||
Other expenses, net | (218) | (218) | - | - | % | (411) | 193 | 47 | % | |||||
Income before federal income taxes | 4,404 | 4,838 | (434) | (9) | % | 5,096 | (692) | (14) | % | |||||
Provision for federal income taxes | (890) | (983) | 93 | 9 | % | (1,071) | 181 | 17 | % | |||||
Net income | $ | 3,514 | $ | 3,855 | $ | (341) | (9) | % | $ | 4,025 | $ | (511) | (13) | % |
Average charged guaranty fee on new conventional acquisitions, net of TCCA fees | 54.1 bps | 51.9 bps | 2.2 bps | 4 | % | 54.3 bps | (0.2) bps | - | %* | |||||
Average charged guaranty fee on conventional guaranty book of business, net of TCCA fees | 47.7 bps | 47.6 bps | 0.1 bps | - | %* | 47.0 bps | 0.7 bps | 1 | % | |||||
NM - Not meaningful | ||||||||||||||
* Represents less than 0.5% |
Key Business Highlights
|
|
• |
Single-family conventional acquisition volume was $93.1 billion in the third quarter of 2024, compared with $85.9 billion in the second quarter of 2024. Purchase acquisition volume, of which approximately half was for first-time homebuyers, increased to $80.0 billion in the third quarter of 2024 from $74.5 billion in the second quarter of 2024. Refinance acquisition volume was $13.1 billion in the third quarter of 2024, an increase from $11.4 billion in the second quarter of 2024.
|
• |
The average single-family conventional guaranty book of business increased by $882 million to $3,625.7 billion in the third quarter of 2024 compared with the second quarter of 2024, driven by acquisitions outpacing loan paydowns and liquidations during the quarter. The overall credit characteristics of the single-family conventional guaranty book of business remained strong, with a weighted-average mark-to-market loan-to-value ratio of 50% and a weighted-average FICO credit score at origination of 753 as of September 30, 2024.
|
• |
The average charged guaranty fee, net of TCCA fees, on the single-family conventional guaranty book remained relatively flat at 47.7 basis points in the third quarter of 2024. The average charged guaranty fee on newly acquired single-family conventional loans, net of TCCA fees, increased to 54.1 basis points in the third quarter of 2024.
|
• |
The single-family serious delinquency rate increased to 0.52% as of September 30, 2024 from 0.48% as of June 30, 2024. Single-family seriously delinquent loans are loans that are 90 days or more past due or in the foreclosure process.
|
Third Quarter 2024 Results
|
3
|
Multifamily Business Financial Results
|
||||||||||||||
(Dollars in millions) | Q324 | Q224 | Variance | % Change | Q323 | Variance | % Change | |||||||
Net interest income | $ | 1,144 | $ | 1,172 | $ | (28) | (2) | % | $ | 1,146 | $ | (2) | - | %** |
Fee and other income | 18 | 17 | 1 | 6 | % | 20 | (2) | (10) | % | |||||
Net revenues | 1,162 | 1,189 | (27) | (2) | % | 1,166 | (4) | - | %** | |||||
Fair value gains (losses), net | 60 | (7) | 67 | NM | 53 | 7 | 13 | % | ||||||
Administrative expenses | (159) | (155) | (4) | (3) | % | (152) | (7) | (5) | % | |||||
Benefit (provision) for credit losses | (424) | (248) | (176) | (71) | % | (84) | (340) | NM | ||||||
Credit enhancement expense | (75) | (72) | (3) | (4) | % | (55) | (20) | (36) | % | |||||
Change in expected credit enhancement recoveries | 134 | 84 | 50 | 60 | % | 42 | 92 | NM | ||||||
Other expenses, net* | (49) | (25) | (24) | (96) | % | (125) | 76 | 61 | % | |||||
Income before federal income taxes | 649 | 766 | (117) | (15) | % | 845 | (196) | (23) | % | |||||
Provision for federal income taxes | (119) | (137) | 18 | 13 | % | (171) | 52 | 30 | % | |||||
Net income | $ | 530 | $ | 629 | $ | (99) | (16) | % | $ | 674 | $ | (144) | (21) | % |
Average charged guaranty fee rate on multifamily guaranty book of business, at period end | 75.1 bps | 75.5 bps | (0.4) bps | (1) | % | 76.8 bps | (1.7) bps | (2) | % | |||||
NM - Not meaningful | ||||||||||||||
* Includes investment gains or losses and other income or expenses.
|
||||||||||||||
** Represents less than 0.5% |
Key Business Highlights
|
|
• |
New multifamily business volume was $13.2 billion in the third quarter of 2024, compared with $9.3 billion in the second quarter of 2024.
|
• |
The multifamily guaranty book of business grew by 1% in the third quarter of 2024 to $485.6 billion, driven by the company's acquisitions combined with low prepayment volumes due to the high interest rate environment.
|
• |
The average charged guaranty fee on the multifamily guaranty book of business declined slightly in the third quarter to 75.1 basis points as of September 30, 2024, primarily due to lower average charged fees on the company's third quarter 2024 acquisitions as compared with the existing loans in the multifamily guaranty book of business.
|
• |
The multifamily serious delinquency rate increased to 0.56% as of September 30, 2024 from 0.44% as of June 30, 2024, due to a portfolio of approximately $600 million of adjustable-rate conventional loans that became seriously delinquent in the third quarter of 2024. Multifamily seriously delinquent loans are loans that are 60 days or more past due.
|
Third Quarter 2024 Results
|
4
|
Additional Matters |
Third Quarter 2024 Results
|
5
|
As of | ||||
September 30, 2024 | December 31, 2023 | |||
ASSETS | ||||
Cash and cash equivalents | $ | 38,146 | $ | 35,817 |
Restricted cash and cash equivalents (includes $31,314 and $25,836, respectively, related to consolidated trusts) | 38,626 | 32,889 | ||
Securities purchased under agreements to resell | 18,065 | 30,700 | ||
Investments in securities, at fair value | 61,790 | 53,116 | ||
Mortgage loans: | ||||
Loans held for sale, at lower of cost or fair value | 1,278 | 2,149 | ||
Loans held for investment, at amortized cost: | ||||
Of Fannie Mae | 51,455 | 48,199 | ||
Of consolidated trusts | 4,093,581 | 4,094,013 | ||
Total loans held for investment (includes $3,255 and $3,315, respectively, at fair value) | 4,145,036 | 4,142,212 | ||
Allowance for loan losses | (7,656) | (8,730) | ||
Total loans held for investment, net of allowance | 4,137,380 | 4,133,482 | ||
Total mortgage loans | 4,138,658 | 4,135,631 | ||
Advances to lenders | 2,595 | 1,389 | ||
Deferred tax assets, net | 10,968 | 11,681 | ||
Accrued interest receivable (includes $10,703 and $10,132, respectively, related to consolidated trusts) | 11,277 | 10,724 | ||
Other assets | 14,431 | 13,490 | ||
Total assets | $ | 4,334,556 | $ | 4,325,437 |
LIABILITIES AND EQUITY | ||||
Liabilities: | ||||
Accrued interest payable (includes $10,724 and $10,212, respectively, related to consolidated trusts) | $ | 11,451 | $ | 10,931 |
Debt: | ||||
Of Fannie Mae (includes $451 and $761, respectively, at fair value) | 121,715 | 124,065 | ||
Of consolidated trusts (includes $13,237 and $14,343, respectively, at fair value) | 4,096,063 | 4,098,653 | ||
Other liabilities (includes $1,673 and $1,713, respectively, related to consolidated trusts) | 14,797 | 14,106 | ||
Total liabilities | 4,244,026 | 4,247,755 | ||
Commitments and contingencies (Note 14) | - | - | ||
Fannie Mae stockholders' equity: | ||||
Senior preferred stock (liquidation preference of $207,982 and $195,224, respectively) | 120,836 | 120,836 | ||
Preferred stock, 700,000,000 shares are authorized-555,374,922 shares issued and outstanding | 19,130 | 19,130 | ||
Common stock, no par value, no maximum authorization-1,308,762,703 shares issued and 1,158,087,567 shares outstanding | 687 | 687 | ||
Accumulated deficit | (42,755) | (55,603) | ||
Accumulated other comprehensive income | 32 | 32 | ||
Treasury stock, at cost, 150,675,136 shares | (7,400) | (7,400) | ||
Total stockholders' equity
|
90,530 | 77,682 | ||
Total liabilities and equity | $ | 4,334,556 | $ | 4,325,437 |
Third Quarter 2024 Results
|
6
|
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Interest income: | ||||||||
Investments in securities | $ | 993 | $ | 1,075 | $ | 2,829 | $ | 3,157 |
Mortgage loans | 36,390 | 33,711 | 107,223 | 98,503 | ||||
Other | 629 | 629 | 2,033 | 1,665 | ||||
Total interest income | 38,012 | 35,415 | 112,085 | 103,325 | ||||
Interest expense: | ||||||||
Short-term debt | (137) | (201) | (462) | (503) | ||||
Long-term debt | (30,600) | (27,994) | (90,057) | (81,781) | ||||
Total interest expense | (30,737) | (28,195) | (90,519) | (82,284) | ||||
Net interest income | 7,275 | 7,220 | 21,566 | 21,041 | ||||
Benefit (provision) for credit losses | 27 | 652 | 507 | 1,786 | ||||
Net interest income after benefit (provision) for credit losses | 7,302 | 7,872 | 22,073 | 22,827 | ||||
Investment gains (losses), net | 12 | 8 | (28) | (34) | ||||
Fair value gains (losses), net | 52 | 795 | 979 | 1,403 | ||||
Fee and other income | 66 | 76 | 206 | 209 | ||||
Non-interest income | 130 | 879 | 1,157 | 1,578 | ||||
Administrative expenses: | ||||||||
Salaries and employee benefits | (500) | (477) | (1,507) | (1,424) | ||||
Professional services | (203) | (211) | (622) | (587) | ||||
Other administrative expenses | (222) | (209) | (664) | (618) | ||||
Total administrative expenses | (925) | (897) | (2,793) | (2,629) | ||||
TCCA fees | (862) | (860) | (2,581) | (2,571) | ||||
Credit enhancement expense | (411) | (390) | (1,235) | (1,115) | ||||
Change in expected credit enhancement recoveries | 89 | (128) | 189 | (168) | ||||
Other expenses, net | (270) | (535) | (720) | (922) | ||||
Total expenses | (2,379) | (2,810) | (7,140) | (7,405) | ||||
Income before federal income taxes | 5,053 | 5,941 | 16,090 | 17,000 | ||||
Provision for federal income taxes | (1,009) | (1,242) | (3,242) | (3,535) | ||||
Net income | 4,044 | 4,699 | 12,848 | 13,465 | ||||
Other comprehensive income (loss) | 3 | (18) | - | (17) | ||||
Total comprehensive income | $ | 4,047 | $ | 4,681 | $ | 12,848 | $ | 13,448 |
Net income | $ | 4,044 | $ | 4,699 | $ | 12,848 | $ | 13,465 |
Dividends distributed or amounts attributable to senior preferred stock
|
(4,047) | (4,681) | (12,848) | (13,448) | ||||
Net income (loss) attributable to common stockholders | $ | (3) | $ | 18 | $ | - | $ | 17 |
Earnings per share: | ||||||||
Basic | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
Diluted | 0.00 | 0.00 | 0.00 | 0.00 | ||||
Weighted-average common shares outstanding: | ||||||||
Basic | 5,867 | 5,867 | 5,867 | 5,867 | ||||
Diluted | 5,867 | 5,893 | 5,893 | 5,893 |
Third Quarter 2024 Results
|
7
|