WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $1.1 billion and comprehensive income of $936 million for the first quarter of 2016. The company reported a positive net worth of $2.1 billion as of March 31, 2016, which the company expects will result in its paying Treasury a $919 million dividend in June 2016. “We continue to run our business well while supporting the improving housing market,” said Timothy J. Mayopoulos, president and chief executive officer. “The changes we have made to the company have put us in a stronger position to fulfill our responsibility to deliver safe, affordable mortgage financing for our customers, in all markets at all times. We will continue to execute on behalf of our partners, drive further improvements to housing finance and our company, and serve those who house America.”
First Quarter 2016 Results — Fannie Mae’s net income of $1.1 billion and comprehensive income of $936 million for the first quarter of 2016 compares to net income of $2.5 billion and comprehensive income of $2.3 billion for the fourth quarter of 2015. The decrease in net income was due primarily to fair value losses in the first quarter of 2016 driven by decreases in longer-term interest rates negatively impacting the value of the company’s risk management derivatives, partially offset by credit-related income for the quarter.
Net revenues, which consist of net interest income and fee and other income, were $5.0 billion for the first quarter of 2016, compared with $5.3 billion for the fourth quarter of 2015.
Net interest income, which includes guaranty fee revenue, was $4.8 billion for the first quarter of 2016 compared with $5.1 billion for the fourth quarter of 2015. Net interest income for the first quarter of 2016 was driven by guaranty fee revenue and interest income earned on mortgage assets in the company’s retained mortgage portfolio.
In recent years, an increasing portion of Fannie Mae’s net interest income has been derived from guaranty fees rather than from the company’s retained mortgage portfolio assets. This is a result of both the impact of guaranty fee increases implemented in 2012 and the reduction of the company’s retained mortgage portfolio. Approximately two-thirds of the company’s net interest income in the first quarter of 2016 was derived from its guaranty business. The company expects that guaranty fees will continue to account for an increasing portion of its net interest income.