The government sponsored enterprises (GSEs) Fannie Mae
and Freddie Mac released their first quarter financial results on
Wednesday. Both had slightly lower net
income results for the year while only Freddie Mac reported higher income
compared to the previous quarter. Despite that, earnings were strong enough that the companies will collectively remit a dividend of $4.1 billion to taxpayers (well… to the US Treasury anyway).
Fannie Mae reported both net income and comprehensive
income of $2.4 billion during the quarter on revenues (interest, fee, and other
income) of $5 billion. In the fourth
quarter of 2018 both net and comprehensive income were $3.2 billion on income of
$5.1 billion. The net and comprehensive
results in the first quarter of last year were $4.3 and $3.9 billion
Net interest income of $4.7 billion was $240 billion
lower than in the fourth quarter while fee income increased from $149 billion
to $227 billion. Fannie Mae said the
lower interest income was due primarily to lower mortgage prepayment activity due
to higher interest rates.
Net fair value losses in the first quarter were $831
million compared to $539 million the previous quarter. The losses were driven primarily by net
interest expense on the company’s risk management derivatives and net decrease
in the fair value of those derivatives and mortgage commitment derivatives.
The company said it provided $85.1 billion in
liquidity to the single-family mortgage market during the quarter and was the
largest issuer of single-family mortgage-related securities in the secondary
market at 36 percent. It also provided
$16.9 billion in multifamily financing, supporting 171,000 units of multifamily
The company had a net worth of $5.4 billion at the end
of March and as a result will pay a $2.4 billion dividend to the U.S. Treasury
at the end of the current quarter. This
will bring the total paid to the Treasury since the company was placed in
conservatorship in 2008 to $179 billion.
Freddie Mac had net income of $1.4 billion compared to
$1.10 billion in the fourth quarter.
Comprehensive income was up 13 percent to $1.7 billion. Net income a year earlier was $2.9 billion,
and the comprehensive income was $2.2 billion.
The company had net revenues of $3.4 billion compared
to $3.0 billion in the fourth quarter, with the increase coming from interest
income which totaled $3.15 billion (up from $2.7 billion). Guarantee fee income was up $11 million to
$217 million, almost entirely due to an increase in multifamily guarantee fees.
Revenues in the first quarter of 2018
totaled $3.3 billion.
The company said it helped nearly a half-million
families to rent or own a home during the quarter, providing $86 billion in
liquidity to the mortgage market.
The company expects to pay a dividend to the Treasury
of $1.7 billion. This will bring its
cumulative dividend payments to $118.0 billion.