Fannie Mae reported net income of $1.9 billion for the first quarter of 2015 and comprehensive income of $1.8 billion.
Article continues below
The company reported a positive net worth of $3.6 billion as of March 31, 2015 resulting in a dividend obligation to Treasury of $1.8 billion, which the company expects to pay in June 2015.
Fannie Mae’s net income of $1.9 billion and comprehensive income of $1.8 billion for the first quarter of 2015 compares to net income of $1.3 billion and comprehensive income of $1.3 billion for the fourth quarter of 2014. Net income in the first quarter of 2015 increased compared with the fourth quarter of 2014 due primarily to lower fair value losses in the first quarter of 2015.
Fannie Mae recognized a provision for federal income taxes of $870 million for the first quarter of 2015, which resulted in an effective tax rate of 31.6 percent.
Net revenues, which consist of net interest income and fee and other income, were $5.4 billion for the first quarter of 2015, compared with $5.5 billion for the fourth quarter of 2014. Net interest income, which includes guaranty fee revenue, was $5.1 billion for both the first quarter of 2015 and the fourth quarter of 2014.
Net interest income in the first quarter was driven by guaranty fee revenue, including amortization income from prepayments, and interest income earned on mortgage assets in the company’s retained mortgage portfolio.
Net fair value losses were $1.9 billion in the first quarter of 2015, compared with $2.5 billion in the fourth quarter of 2014. The decrease in fair value losses in the first quarter of 2015 compared with the fourth quarter of 2014 was due primarily to smaller declines in longer-term interest rates negatively impacting the value of the company’s risk management derivatives.
The estimated fair value of the company’s derivatives and securities may fluctuate substantially from period to period because of changes in interest rates, the yield curve, mortgage spreads, implied volatility, and activity related to these financial instruments.
Credit-related income, which consists of a benefit for credit losses and foreclosed property expense or income, was $60 million in the first quarter of 2015, compared with $97 million in the fourth quarter of 2014.
The decrease in credit-related income was driven primarily by an increase in foreclosed property expense in the first quarter of 2015, compared with the fourth quarter of 2014, and was partially offset by an increase in the company’s benefit for credit losses in the first quarter of 2015. ■