Fannie Mae (FNMA) reported a robust financial performance for the first quarter of 2025, with net revenue reaching $7.1 billion and net income totaling $3.7 billion, marking its 29th consecutive quarter of positive earnings. The company’s stock, however, saw a slight decline in premarket trading, dropping 2.04% to $6.25, following the earnings announcement. According to InvestingPro data, FNMA has demonstrated remarkable momentum with a 3,708% return over the past year, though it currently trades at a high earnings multiple. For deeper insights into FNMA’s valuation and 10+ additional ProTips, consider exploring InvestingPro’s comprehensive analysis.
Key Takeaways
- Fannie Mae’s net worth increased by nearly 20% year-over-year to $98 billion.
- The company provided $76 billion in liquidity to support mortgage lending.
- Noninterest expenses rose to $2.6 billion from $2.3 billion in Q1 2024.
- The single-family mortgage market saw a 16% increase in originations.
- The stock price decreased 2.04% in premarket trading.
Company Performance
Fannie Mae’s overall performance in Q1 2025 was marked by significant growth in net income and net worth, reflecting strong operational efficiency and risk management. The company continued to build its regulatory capital, reaching $41 billion since the end of 2022. Despite rising noninterest expenses, Fannie Mae maintained an efficiency ratio of 36.1%, underscoring its focus on operational efficiency. InvestingPro analysis reveals impressive financial health metrics, including a current ratio of 69.7 and a gross profit margin of 100%, indicating strong operational efficiency. The company’s last twelve months revenue stands at $31.05 billion.
Financial Highlights
- Revenue: $7.1 billion
- Net income: $3.7 billion
- Net worth: $98 billion (up nearly 20% YoY)
- Regulatory capital: $41 billion
- Noninterest expense: $2.6 billion (up from $2.3 billion in Q1 2024)
Outlook & Guidance
Looking ahead, Fannie Mae projects mortgage rates to average 6.5% in 2025, with expected home sales of 4.9 million units. The company forecasts single-family mortgage originations at $2 trillion and anticipates multifamily rent growth of 2-2.5%. These projections reflect Fannie Mae’s cautious optimism about the housing market’s resilience despite economic uncertainties. With a beta of 1.72, as reported by InvestingPro, investors should note the stock’s higher volatility compared to the market. Access InvestingPro’s exclusive research report for comprehensive analysis of FNMA’s market position and growth potential among 1,400+ top US stocks.
Executive Commentary
CEO Priscilla Amaldovar emphasized the company’s focus on risk management and profitability, stating, "We’re focused on managing our risks, strengthening our profitability, and enhancing how we run the business." Additionally, FHFA Director William J. Pulte highlighted the importance of Fannie Mae’s strong balance sheet, noting, "A profitable Fannie Mae, one with a strong balance sheet and strong capital, focused on delighting customers, means a safe and sound US mortgage market."
Risks and Challenges
- Rising interest rates could impact mortgage affordability and demand.
- Increasing noninterest expenses may pressure profit margins.
- Economic uncertainties could affect housing market stability.
- Regulatory changes might influence operational strategies.
- Competition in the mortgage market could intensify, affecting market share.
Despite the challenges, Fannie Mae’s strategic focus on enhancing its operational efficiency and risk management positions it well to navigate the evolving market landscape.
Full transcript - Federal National Mortgage Association (FNMA) Q1 2025:
Conference Operator: Good day, and welcome to the Fannie Mae First Quarter twenty twenty five Financial Results Conference Call. At this time, I will now turn it over to your host, Pete Buchel, Fannie Mae’s Director of External Communications.
Pete Buchel, Director of External Communications, Fannie Mae: Hello, and thank you all for joining today’s conference call to discuss Fannie Mae’s first quarter twenty twenty five financial results. Please note this call includes forward looking statements, including statements about Fannie Mae’s and the Director of the U. S. Federal Housing FHFA’s expectations related to economic and housing market conditions, the future performance of the company’s book of business, the company’s future financial performance, and the company’s business plans and their impact. Future events may turn out to be very different from these statements.
The forward looking statements section in the company’s first quarter twenty twenty five Form 10 Q filed today and in the company’s 2024 Form 10 k filed on 02/14/2025 describe factors that may lead to different results. A recording of this call may be posted on the company’s website. We ask that you do not record this call for public broadcast and that you do not publish any full transcript. I’d now like to turn the call over to director of the US Federal Housing FHFA and chairman of the Fannie Mae Board of Directors, William J. Pulte Fannie Mae President and Chief Executive Officer, Priscilla Amaldovar and Fannie Mae Chief Financial Officer, Chris S.
C. Haley.
William J. Pulte, Director of US Federal Housing FHFA, Chairman of Fannie Mae Board of Directors, FHFA: Thank you. Our current focus at Fannie Mae is on operational efficiency and ensuring that Fannie Mae is a world class operator. While assets are significant, there remains great opportunity to trim fat, turn the business around, generate more earnings, and do so all while ensuring safety and soundness. A profitable Fannie Mae, one with a strong balance sheet and strong capital, focused on delighting customers, means a safe and sound US mortgage market. The operational improvements we are driving at Fannie Mae will turn around the company and will make Fannie Mae a great American icon once again.
Priscilla Amaldovar, President and Chief Executive Officer, Fannie Mae: Thank you, director Fulte, and welcome all. Thank you for joining us today. We delivered solid results this quarter as we continued our focus on providing liquidity and stability to the nation’s housing market. I will start with an overview of the housing environment, then share our financial results and mission performance highlights. After that, our chief financial officer, Kirsta Halley, will discuss our financial results in more detail.
First, the housing environment. The thirty year fixed rate mortgage rate averaged 6.8% during the quarter, slightly up from the 6.6% in the last quarter. Total annualized home sales rose slightly to an estimated 4,800,000 units in the first quarter, though remained well below the level seen pre COVID. Affordability challenges and lock in effect remained persistent headwinds. High home prices continue to be the primary sticking point for buyers.
Nationally, home prices increased 5.2 for the twelve months ended March 31. Single family mortgage market originations were an estimated $378,000,000,000, a 16% increase from the first quarter of twenty twenty four. In multifamily, the national vacancy rate was 6% as of March 31, unchanged year on year. Rents went up by point 3% in the first quarter of twenty twenty five and up 1% from a year ago. While multifamily property values remain down from the peak, they have shown some initial signs of stabilizing.
Now let’s dive into our first quarter financial results. We are at $7,100,000,000 in net revenue and $3,700,000,000 in net income in the first quarter. Our results show a steady revenue stream, mainly driven by guarantee fee income on our $4,100,000,000,000 book of business. As of the end of the first quarter, we grew our net worth to $98,000,000,000 a nearly 20% increase compared to the first quarter a year ago. And since the end of twenty twenty two, we have built $41,000,000,000 of regulatory capital.
In the first quarter, we recognized $931,000,000 in expenses we paid to the US Treasury, HUD, and FHFA for TCCA fees, affordable housing funds, and FHFA assessments. Now let’s talk about how we performed on our housing mission. In the first quarter of twenty twenty five, we provided $76,000,000,000 of liquidity to support single family and multifamily mortgage lending. This helped 287,000 households buy, refinance, or rent a home. This included 93,000 units of multifamily rental housing, most of which are affordable for households earning at or below a 20% of area median income.
It also included about seventy four thousand first time homebuyers. In fact, half of the purchase loans we bought this quarter were for first time homebuyers. But it’s not just about helping people get into homes. It’s also about making sure they can stay in them. That’s why we also focus on loss mitigation.
When borrowers and renters face hardships, we have clear, consistent, and proven tools that help maintain stable housing. This includes workout options like payment deferrals, loan modifications, and repayment plans. Through these options, we helped nearly 27,000 borrowers remain in their homes during the quarter. These activities strengthen the communities we serve and make our book more resilient to losses. Our work and the underwriting and servicing standards we set help attract capital to our mortgage backed securities.
This provides diverse, global, essential liquidity to The US housing market. To wrap up, we had a solid quarter. Our team is laser focused on supporting housing affordability and stability and being a reliable source of liquidity. To do this, we’re focused on managing our risks, strengthening our profitability, and enhancing how we run the business. We look forward to our continued partnership with the new administration as we work together to tackle housing affordability.
With that, I’ll turn it over to Crissa to discuss our first quarter financial results in more detail.
Chris S. C. Haley, Chief Financial Officer, Fannie Mae: Thank you, Priscilla, and good morning. As Priscilla mentioned, we reported $3,700,000,000 of net income in the first quarter, our twenty ninth consecutive quarter of positive earnings. Revenues of $7,100,000,000 were flat year over year. We recorded a $24,000,000 provision for credit losses during the quarter compared to the 180,000,000 benefit we recorded in the first quarter of twenty twenty four. Noninterest expense was $2,600,000,000 compared to $2,300,000,000 in the first quarter of twenty twenty four.
Our efficiency ratio, as presented in our financial supplement, was 36.1 for the quarter. Turning to our business activity. Our guaranteed book stood at $4,100,000,000,000 as of the end of the quarter. This included $76,000,000,000 of new business acquisitions. In single family, we acquired $64,000,000,000 in loans this quarter.
This was up 3% year over year. Acquisitions continued to be muted due to the mortgage interest rate environment, housing affordability constraints, and limited supply. Purchase loans made up 78% of our first quarter acquisitions. The credit profile of our single family book remains strong with a weighted average mark to market loan to value ratio of 50% and a weighted average credit score at origination of seven fifty three. Our strong underwriting and servicing standards help to keep our single family serious delinquency or SDQ rate low at 56 basis points as of the March, unchanged from December 2024.
In single family credit risk transfer, we executed four transactions in the first quarter, transferring a portion of the credit risk on approximately $51,000,000,000 of unpaid principal balance at the time of the transaction. We paid $429,000,000 in premiums during the quarter on our outstanding single family credit risk transfers. Through primary mortgage insurance and programs such as CAS and CERT, at the end of the quarter, 47% of our single family book had some form of credit protection. In multifamily, we acquired $11,800,000,000 in loans during the quarter compared to $10,100,000,000 in the first quarter of twenty twenty four. Our multifamily book as of the quarter end had a weighted average original loan to value ratio of 63 and a weighted average debt service coverage ratio of two point o times.
According to the MSCI RCA Commercial Property Price Index, property values declined 18% from their peak in the second quarter of twenty twenty two to the first quarter of twenty twenty five, but are down just 1% compared to the first quarter of twenty twenty four. Our multifamily SDQ rate increased to 63 basis points at the March compared to 57 basis points as of the December 2024. Because of our unique DUS risk sharing model where we share a portion of the credit risk on the multifamily loans we acquire, coupled with our MCAS and M CERT programs, essentially, all of our multifamily book had some form of credit protection as of the March. At quarter end, we had a 140,000,000,000 capital shortfall to our minimum total risk based capital requirement, excluding buffers, primarily because the $120,800,000,000 stated value of the senior preferred stock does not qualify as regulatory capital. This shortfall declined by $6,000,000,000 compared to the year end, primarily driven by the increase in our retained earnings and the decrease in our risk weighted assets.
More information about our capital rule and progress towards our regulatory capital requirements are in our financial supplement and 10 Q filed today. Lastly, I’ll touch on our current economic outlook. Our economists currently expect that mortgage rates will average 6.5% for 2025. Total home sales are expected to improve slightly to 4,900,000 units compared to the 4,700,000 units seen for the full year of 2024. However, the continued low level of homes available for sale has helped to keep home price growth robust.
We currently project year over year home price growth will be 4.1% in 2025 as measured by the Fannie Mae home price index compared to 5.3% in 2024. We forecast single family mortgage originations of about $2,000,000,000,000 in 2025, up from an estimated $1,700,000,000,000 in 2024, with purchases forecasted to make up 73% of single family mortgage originations this year. In multifamily, we expect rent growth to be in the 2% to 2.5% range in 2025 if job growth continues at its recent pace and home prices remain elevated. Separately, we believe vacancy rates could rise to 6.25% this year, and we forecast multifamily market originations between $325,000,000,000 and $365,000,000,000 in 2025, up from $310,000,000,000 in 2024. Our expectations are based on many assumptions, and our actual results could differ materially from our current expectations.
I invite you to visit fannymay.com where you’ll find a financial supplement with today’s filing that provides additional insights into our business. Thank you for joining us today.
Conference Operator: Thank you, everyone. That concludes today’s call. You may disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.