Fannie Mae report annual and fourth quarter income

Fannie Mae income reports show a higher fourth quarter net income than the previous year, more than doubling its net earnings. The government-sponsored enterprise reported $5.04 billion in net earnings during the fourth quarter, up from $2.47 billion the previous year.

The fourth quarter was not the only increase in income reports. Fannie Mae also report a 12 percent increase in overall yearly net earnings from 2015, reporting net earnings of $12.3 billion in 2016. Fannie Mae’s annual comprehensive income in 2016 was $11.7 billion, and the enterprise’s comprehensive fourth quarter income was $4.9 billion.

Fannie Mae also reported a positive net worth of $6.1 billion as of December 31, 2016.

While the net income levels were very similar the last year and last quarter. However, the company is still on a “hot streak,” according to HousingWire.

“The decrease in annual net interest income was due primarily to lower net interest income from the company’s retained mortgage portfolio, almost entirely offset by an increase in guaranty fee income,” the company said in a release.

The enterprise has also made large dividend payments to the Treasury. In 2016, Fannie Mae made a $9.6 billion payment and plans to make another $5.5 billion in March. With the March payment included, the enterprise will have made $159.9 billion in dividend payments to the Treasury.

“We delivered new technologies that reduce risk and cost for our single-family customers and help them make the mortgage process simpler, more certain, and easier for borrowers,” said Timothy Mayopoulos, president and chief executive officer.

The fourth-quarter results were a shift toward significantly higher fair value gains due to the increases in longer-term interest rates. The fair value gains totaled $3.89 billion, as opposed to a $491 million fair value loss in the third quarter, and a $135 million fair value gain in the fourth quarter of 2015.

However, the gain was offset by a swing toward a larger provision for credit losses. The provision came to $1.3 billion, versus a $673 million benefit in the third quarter.

Thus, the total credit-related expense for the fourth quarter was $1.44 billion. In the third quarter, Fannie Mae earned $563 million in credit-related income.

The government-sponsored enterprise expects to remain profitable on an annual basis for the foreseeable future. However, the company notes that it could experience a net worth deficit in the future, due to the company’s limited and declining capital reserves.