First Quarter 2019 Results 1

Contact: Pete Bakel Resource Center: 1-800-732-6643

202-752-2034 

Date: May 1, 2019

Fannie Mae Reports Net Income of $2.4 Billion and

Comprehensive Income of $2.4 Billion for First Quarter 2019

First Quarter 2019 Results

Fannie Mae reported net income of $2.4 billion and comprehensive income of

$2.4 billion for the first quarter of 2019, reflecting the strength of the

company’s underlying business fundamentals.

“Fannie Mae’s solid first 

quarter financial results 

demonstrate the strength of 

our business model, our risk 

management capabilities, 

and our customer focus.

“We are enhancing our credit 

risk transfer programs and 

attracting more private 

capital into the U.S. 

mortgage market. 

“We continue to drive 

technology innovations to 

help make the mortgage 

market more certain, 

efficient, and simple for our 

customers.

“And we’re working with 

customers and partners to 

address critical challenges 

such as the shortage of 

affordable homes and 

apartments across the 

country.” 

Hugh R. Frater, 

Chief Executive Officer

Fannie Mae expects to pay a $2.4 billion dividend to Treasury by June 30,

2019. Through the first quarter of 2019, the company has paid $179 billion in

dividends to Treasury.

Business Highlights

Fannie Mae provided $85.1 billion in liquidity to the single-family mortgage

market in the first quarter of 2019 and was the largest issuer of single-family

mortgage-related securities in the secondary market. More than 55% of the

single-family mortgage loans the company acquired were affordable to families

earning at or below 120% of the area median income, providing support for

both affordable and workforce housing. The company’s estimated market

share of new single-family mortgage-related securities issuances was 36% for

the first quarter of 2019.

Fannie Mae has transferred a portion of the credit risk on single-family

mortgages with an unpaid principal balance of more than $1.6 trillion since

2013, measured at the time of the transactions, including $91 billion in the first

quarter of 2019. As of March 31, 2019, $1.2 trillion in single-family mortgages

or approximately 42% of the loans in the company’s single-family conventional

guaranty book of business, measured by unpaid principal balance, were

covered by a credit risk transfer transaction.

Fannie Mae provided $16.9 billion in multifamily financing in the first quarter of

2019, which supported 171,000 units of multifamily housing. More than 85% of

the multifamily units the company financed were affordable to families earning

at or below 120% of the area median income, providing support for both

affordable and workforce housing. Through the first quarter of 2019, Fannie

Mae continued to be one of the largest issuers of Green bonds in the world,

issuing more than $54 billion in Green bonds since inception of the program.

Fannie Mae continued to share credit risk with lenders on nearly 100% of the 

company’s new multifamily business volume, primarily through its Delegated 

Underwriting and Servicing (DUS®) program. To complement the company’s 

lender loss sharing program through DUS, the company completed its fifth 

multifamily Credit Insurance Risk TransferTM (CIRTTM) transaction in the first 

quarter of 2019, which covered multifamily loans with an unpaid principal 

balance of $11.7 billion. As of March 31, 2019, $49 billion in multifamily 

mortgages or 15% of the loans in the company’s multifamily guaranty book of 

business, measured by unpaid principal balance, were covered by a CIRT

transaction.
First Quarter 2019 Results 2

WASHINGTON, DC — Fannie Mae (FNMA/OTCQB) reported net income of $2.4 billion and comprehensive income 

of $2.4 billion for the first quarter of 2019. The company reported a net worth of $5.4 billion as of March 31, 2019. As 

a result, Fannie Mae expects to pay a $2.4 billion dividend to Treasury by June 30, 2019. 

SUMMARY OF FANNIE MAE’S FINANCIAL PERFORMANCE

Condensed Consolidated Results

(Dollars in billions)

Fannie Mae’s net income of $2.4 billion for the first quarter of 2019 compares with net income of $3.2 billion for the 

fourth quarter of 2018. The decrease in net income in the first quarter of 2019 was driven primarily by lower creditrelated income, an increase in fair value losses, and lower net interest income during the quarter.
First Quarter 2019 Results 3

Summary of Financial Results

(Dollars in millions) 1Q19 4Q18 Variance 1Q19 1Q18 Variance

Net interest income $ 4,733 $ 4,973 $ (240) $ 4,733 $ 5,232 $ (499)

Fee and other income 227 149 78 227 320 (93)

Net revenues 4,960 5,122 (162) 4,960 5,552 (592)

Investment gains, net 133 259 (126) 133 250 (117)

Fair value gains (losses), net (831) (539) (292) (831) 1,045 (1,876)

Administrative expenses (744) (814) 70 (744) (750) 6

Credit-related income

Benefit for credit losses 650 1,080 (430) 650 217 433

Foreclosed property expense (140) (157) 17 (140) (162) 22

Total credit-related income 510 923 (413) 510 55 455

Temporary Payroll Tax Cut Continuation Act of 2011

(TCCA) fees (593) (586) (7) (593) (557) (36)

Other expenses, net (408) (307) (101) (408) (203) (205)

Income before federal income taxes 3,027 4,058 (1,031) 3,027 5,392 (2,365)

Provision for federal income taxes (627) (828) 201 (627) (1,131) 504

Net income $ 2,400 $ 3,230 $ (830) $ 2,400 $ 4,261 $ (1,861)

Total comprehensive income $ 2,361 $ 3,239 $ (878) $ 2,361 $ 3,938 $ (1,577)

Net revenues, which consist of net interest income and fee and other income, were $5.0 billion for the first quarter

of 2019, compared with $5.1 billion for the fourth quarter of 2018.

Net interest income was $4.7 billion for the first quarter of 2019, compared with $5.0 billion for the fourth quarter of 

2018. The decrease in net interest income for the first quarter of 2019 was due primarily to lower amortization 

income from the company’s guaranty book of business driven by lower mortgage prepayment activity in the first 

quarter of 2019 due to a higher prevailing interest rate environment at the end of 2018. Additionally, the company 

saw a decrease in interest income from its portfolios due to lower average balances.

Fannie Mae’s net interest income is derived from two primary sources: guaranty fees the company receives for 

managing the credit risk on loans underlying Fannie Mae MBS held by third parties; and the difference between 

interest income earned on the assets in the company’s retained mortgage portfolio and its other investments 

portfolio (collectively, its portfolios) and the interest expense associated with the debt that funds those assets. More 

than 75 percent of Fannie Mae’s net interest income in the first quarter of 2019 was derived from the loans 

underlying Fannie Mae MBS in consolidated trusts, which primarily generate income through guaranty fees. 

Guaranty fees consist of two primary components: base guaranty fees that the company receives over the life of the 

loan; and amortization income, which consists of upfront fees that the company receives at the time of loan 

acquisition primarily related to single-family loan level pricing adjustments and other fees received from lenders; 

these fees are amortized into net interest income as cost basis adjustments over the contractual life of the loan.
First Quarter 2019 Results 4

Net Interest Income 

(Dollars in billions)

__________

(1) Includes revenues generated by the 10 basis point guaranty fee increase the company implemented pursuant to the TCCA, the incremental 

revenue from which is remitted to Treasury and not retained by us. 

(2) Includes interest income from assets held in the company’s retained mortgage portfolio and other investments portfolio, as well as other 

assets used to generate lender liquidity. Also includes interest expense on the company’s outstanding Connecticut Avenue Securities®. 

Net fair value losses were $831 million in the first quarter of 2019, compared with $539 million in the fourth quarter

of 2018. Net fair value losses in the first quarter of 2019 were driven primarily by net interest expense on the 

company’s risk management derivatives, as well as net decreases in the fair value of the company’s risk 

management and mortgage commitment derivatives due to decreases in interest rates during the quarter. In 

addition, we recognized fair value losses on long-term debt of consolidated trusts held at fair value during the 

quarter.

The estimated fair value of the company’s derivatives, trading securities, and other financial instruments carried at 

fair value may fluctuate substantially from period to period because of changes in interest rates, the yield curve, 

mortgage and credit spreads, implied volatility, and activity related to these financial instruments. While the 

estimated fair value of the company’s derivatives that serve to mitigate certain risk exposures may fluctuate, some 

of the financial instruments that generate these exposures are not recorded in the company’s condensed 

consolidated financial statements. The company is developing capabilities to implement hedge accounting to reduce 

interest rate volatility in its consolidated statements of operations and comprehensive income.
First Quarter 2019 Results 5

Net Fair Value Gains (Losses) 

(Dollars in billions)

Credit-related income (expense) consists of a benefit or provision for credit losses and foreclosed property 

expense. Credit-related income was $510 million in the first quarter of 2019, compared with $923 million in the 

fourth quarter of 2018. The decrease in credit-related income in the first quarter of 2019 was driven primarily by a 

lower volume of redesignations of loans from held-for-investment to held-for-sale and a smaller improvement in 

actual and forecasted home prices compared with the fourth quarter of 2018. This decrease was partially offset by a 

larger benefit from lower projected future interest rates compared with the fourth quarter of 2018. 

Fannie Mae’s credit-related income or expense can vary substantially from period to period based on a number of 

factors such as changes in actual and expected home prices, fluctuations in interest rates, borrower payment 

behavior, the overall size of the company’s allowance, events such as natural disasters, the types and volume of its 

loss mitigation activities, the volume of foreclosures completed, and redesignations of loans from held-forinvestment to held-for-sale. In addition, the company’s credit-related income or expense and its loss reserves can 

be impacted by updates to the models, assumptions, and data used in determining its allowance for loan losses.

While the redesignation of certain reperforming and nonperforming single-family loans from held-for-investment to 

held-for-sale has been a significant driver of credit-related income in recent periods, the company may see a 

reduced impact from this activity in the future to the extent the population of loans it is considering for redesignation 

declines. Further, Fannie Mae’s implementation of ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), 

Measurement of Credit Losses on Financial Instruments (the CECL standard) on January 1, 2020 will likely 

introduce additional volatility in the company’s results thereafter as credit-related income or expense will include 

expected lifetime losses on the company’s loans and other financial instruments subject to the standard and thus 

become more sensitive to fluctuations in the factors detailed above.

Credit-Related Income

(Dollars in billions)
First Quarter 2019 Results 6

FINANCIAL PERFORMANCE OUTLOOK

Fannie Mae’s long-term financial performance will depend in large part upon both the size of and its share of the 

U.S. mortgage market, which in turn will depend upon such factors as population growth, household formation, and 

home price appreciation. While Fannie Mae expects to remain profitable on an annual basis for the foreseeable 

future, certain factors could result in significant volatility in the company’s financial results from quarter to quarter or 

year to year. Fannie Mae expects quarterly volatility in its financial results due to a number of factors, particularly 

changes in market conditions that result in fluctuations in the estimated fair value of derivatives and other financial 

instruments that it marks to market through its earnings. Other factors that may result in volatility in the company’s 

quarterly financial results include factors that affect its loss reserves, such as redesignations of loans from held for 

investment to held for sale, changes in interest rates, home prices or accounting standards, or events such as 

natural disasters, and other factors, as the company discusses in “Risk Factors” and “MD&A—Consolidated Results 

of Operations—Credit-Related Income (Expense)” in its 2018 Form 10-K and in “MD&A—Consolidated Results of 

Operations—Credit-Related Income” in its First Quarter 2019 Form 10-Q. Further, Fannie Mae’s implementation on 

January 1, 2020 of the CECL standard will likely introduce additional volatility in the company’s results thereafter as 

credit-related income or expense will include expected lifetime losses on the company’s loans and other financial 

instruments subject to the standard and thus become more sensitive to fluctuations in these factors. 

The potential for significant volatility in the company’s financial results could result in a net loss in a future quarter. 

Fannie Mae is permitted to retain up to $3.0 billion in capital reserves as a buffer in the event of a net loss in a 

future quarter. However, any net loss the company experiences in the future could be greater than the amount of its 

capital reserves, which would result in a net worth deficit for that quarter. For example, Fannie Mae’s 

implementation of the CECL standard will likely decrease, perhaps substantially, the company’s retained earnings 

and increase its allowance for credit losses, which could result in a net worth deficit when the company adopts the 

guidance in the first quarter of 2020. If the company experiences a net worth deficit in a future quarter, it will be 

required to draw funds from Treasury to avoid being placed into receivership. See “Risk Factors” in the company’s 

2018 Form 10-K for a discussion of the risks associated with the limitations on the company’s ability to rebuild its 

capital reserves, including factors that could result in a net loss or net worth deficit in a future quarter.

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae provided $102 billion in liquidity to the mortgage market in the first quarter of 2019. Through its 

purchases and guarantees of mortgage loans in the first quarter of 2019, Fannie Mae acquired approximately 

356,000 single-family mortgage loans. Fannie Mae also financed approximately 171,000 units of multifamily 

housing in the first quarter of 2019.

Fannie Mae Provided $102 Billion in Liquidity in the First Quarter of 2019

$16.9B 171K 

Multifamily Rental Units 

$56.3B 229K 

Single-Family Home Purchases

$28.8B 127K 

Single-Family Refinancings

Unpaid Principal Balance Units
First Quarter 2019 Results 7

SUMMARY OF FIRST QUARTER 2019 BUSINESS SEGMENT RESULTS

Fannie Mae’s two reportable business segments—Single-Family and Multifamily—engage in complementary 

business activities to provide liquidity, access to credit, and affordability in all U.S. housing markets at all times, 

while effectively managing risk. Fannie Mae is pursuing four strategic objectives: advancing a sustainable and 

reliable business model with low risk to the housing finance system and taxpayers; providing great service to its 

customers and partners, enabling them to serve the needs of American households more effectively; supporting and 

sustainably increasing access to credit and affordable housing; and building a simple, efficient, innovative, and 

continuously improving company. 

Business Segments

Single-Family Business

(Dollars in millions) 1Q19 4Q18 Variance 1Q19 1Q18 Variance

Single-Family Segment:

Net interest income $ 4,039 $ 4,208 $ (169) $ 4,039 $ 4,561 $ (522)

Fee and other income 106 144 (38) 106 158 (52)

Net revenues 4,145 4,352 (207) 4,145 4,719 (574)

Investment gains, net 94 210 (116) 94 242 (148)

Fair value gains (losses), net (887) (519) (368) (887) 1,034 (1,921)

Administrative expenses (631) (703) 72 (631) (643) 12

Credit-related income 518 934 (416) 518 34 484

TCCA fees (593) (586) (7) (593) (557) (36)

Other expenses, net (337) (328) (9) (337) (132) (205)

Income before federal income taxes 2,309 3,360 (1,051) 2,309 4,697 (2,388)

Provision for federal income taxes (484) (710) 226 (484) (1,016) 532

Net income $ 1,825 $ 2,650 $ (825) $ 1,825 $ 3,681 $ (1,856)

Financial Results

• Single-Family net income was $1.8 billion in the first quarter of 2019, compared with $2.7 billion in the fourth 

quarter of 2018. The decrease in net income in the first quarter of 2019 was driven primarily by:

a decrease in credit-related income due to a lower volume of redesignations of loans from held-forinvestment to held-for-sale and a smaller improvement in actual and forecasted home prices compared 

with the fourth quarter of 2018, partially offset by a larger benefit from lower projected future interest 

rates compared with the fourth quarter of 2018, and

larger fair value losses resulting from tightening of CAS spreads and losses on debt of consolidated 

trusts held at fair value due to larger price increases compared with the fourth quarter of 2018.

Business Highlights

• The single-family conventional guaranty book of business continued to grow in the first quarter of 2019, 

while the average charged guaranty fee, net of Temporary Payroll Tax Cut Continuation Act of 2011 (TCCA) 

fees, on the single-family conventional guaranty book in the first quarter increased slightly from the prior 

quarter to 43.3 basis points.

• Fannie Mae’s Single-Family business provided $85.1 billion in liquidity to the mortgage market in the first 

quarter of 2019. Through its purchases and guarantees of mortgage loans in the first quarter of 2019, the 

company acquired approximately 356,000 mortgage loans, comprised of 229,000 home purchases and 

127,000 refinancings.

• The single-family serious delinquency rate was 0.74% as of March 31, 2019, a decrease from 0.76% as of 

December 31, 2018.
First Quarter 2019 Results 8

Multifamily Business

(Dollars in millions) 1Q19 4Q18 Variance 1Q19 1Q18 Variance

Multifamily Segment:

Net interest income $ 694 $ 765 $ (71) $ 694 $ 671 $ 23

Fee and other income 121 5 116 121 162 (41)

Net revenues 815 770 45 815 833 (18)

Fair value gains (losses), net 56 (20) 76 56 11 45

Administrative expenses (113) (111) (2) (113) (107) (6)

Credit-related income (expense) (8) (11) 3 (8) 21 (29)

Other income (expense) (32) 70 (102) (32) (63) 31

Income before federal income taxes 718 698 20 718 695 23

Provision for federal income taxes (143) (118) (25) (143) (115) (28)

Net income $ 575 $ 580 $ (5) $ 575 $ 580 $ (5)

Financial Results

• Multifamily net income was $575 million in the first quarter of 2019, compared with $580 million in the fourth 

quarter of 2018. Net income for the first quarter of 2019 was driven by guaranty fee revenue as the 

multifamily guaranty book continued to grow. 

Business Highlights

• The multifamily guaranty book of business reached over $310 billion in the first quarter of 2019, while the 

average charged guaranty fee on the multifamily book decreased slightly from the prior quarter to 74.1

basis points as of March 31, 2019. 

• New multifamily business volume was $16.9 billion in the first quarter of 2019, a decrease from $21.4 billion 

in the fourth quarter of 2018 due primarily to seasonality. The Federal Housing Finance Agency’s (FHFA) 

2019 conservatorship scorecard includes an objective to maintain the dollar volume of new multifamily 

business at or below $35 billion, excluding certain targeted affordable and underserved market business 

segments. Approximately 63%, or $10.7 billion, of the company’s multifamily business volume in the first 

quarter of 2019 counted toward FHFA’s 2019 multifamily volume cap. 

• Fannie Mae’s multifamily financing in the first quarter of 2019 supported 171,000 units of multifamily 

housing. More than 85% of the multifamily units the company financed in the first quarter of 2019 were 

affordable to families earning at or below 120% of the area median income, providing support for both 

affordable and workforce housing. 

• The multifamily serious delinquency rate was 0.07% as of March 31, 2019, an increase from 0.06% as of 

December 31, 2018.
First Quarter 2019 Results 9

CREDIT RISK TRANSFER TRANSACTIONS

Fannie Mae continues to innovate and improve its credit risk transfer programs, expanding the types of loans 

covered and promoting the continued growth of the credit risk transfer market. For single-family mortgages, Fannie 

Mae has relied principally on two types of transactions to transfer credit risk: its Connecticut Avenue Securities®

(CAS) transactions and its Credit Insurance Risk Transfer (CIRT) transactions. In these transactions, the company 

transfers to investors a portion of the credit risk associated with losses on a reference pool of mortgage loans and in 

exchange pays investors a premium that effectively reduces the guaranty fee income the company retains on the 

loans.

As a part of Fannie Mae’s continued effort to innovate and improve its credit risk transfer programs, the company 

completed its first CAS offering under the new REMIC structure in November 2018. This enhancement to the 

company’s CAS program is designed to promote the continued growth of the market by expanding the potential 

investor base for these securities and limiting investor exposure to Fannie Mae counterparty risk, without disrupting 

the to-be-announced (TBA) MBS market. The new structure also aligns the timing of the company’s recognition of 

provisions for credit losses with the related recovery from CAS REMIC transactions, which differs from the 

company’s previous CAS structures. For a description of the CAS REMIC structure, see “Management’s Discussion 

and Analysis of Financial Condition and Results of Operations—Single-Family Business—Single-Family Credit Risk 

Transfer Transactions” in the company’s 2018 Form 10-K.

Fannie Mae continued to transfer a portion of the credit risk on multifamily mortgages, and nearly 100% of the 

company’s new multifamily business volume in the first quarter of 2019 had lender risk-sharing, primarily through 

the company’s Delegated Underwriting and Servicing (DUS®) program. To complement the company’s lender loss 

sharing program through DUS, Fannie Mae also transferred a portion of the mortgage credit risk on multifamily 

loans in its multifamily guaranty book of business to insurers and reinsurers through multifamily CIRT transactions. 

In the first quarter of 2019, the company completed its fifth multifamily CIRT transaction. 

COMMON SECURITIZATION PLATFORM AND SINGLE SECURITY INITIATIVE

After five years of working on the Single Security Initiative with Freddie Mac, Common Securitization Solutions 

(CSS), and FHFA, Fannie Mae expects that in June 2019 the company and Freddie Mac will start issuing singlefamily uniform mortgage-backed securities (UMBS). At that time, Fannie Mae will also begin using the common 

securitization platform developed in conjunction with FHFA, Freddie Mac, and CSS to perform certain aspects of the 

securitization process. The objective of the Single Security Initiative is to enhance the overall liquidity of Fannie Mae 

and Freddie Mac MBS eligible for forward trading in the TBA market by supporting their fungibility without regard to 

which company is the issuer. Forward trading of UMBS began in March 2019, and, as of April 25, 2019, $755 billion 

of UMBS had been traded in the TBA market for settlement beginning in June 2019.

The common securitization platform and the Single Security Initiative represent significant changes for the mortgage 

market and for Fannie Mae’s securitization operations and business. Fannie Mae expects that once it begins issuing 

UMBS, the vast majority of the company’s single-family MBS will be issued as UMBS. See “Business—Mortgage 

Securitizations—Common Securitization Platform and Single Security Initiative” in the company’s 2018 Form 10-K 

and “Risk Factors” in the company’s First Quarter 2019 Form 10-Q for more information on these efforts and the 

risks they present.

ABOUT FANNIE MAE’S CONSERVATORSHIP AND AGREEMENTS WITH TREASURY

Fannie Mae has operated under the conservatorship of FHFA since September 6, 2008. Treasury has made a 

commitment under a senior preferred stock purchase agreement to provide funding to Fannie Mae under certain 

circumstances if the company has a net worth deficit. Pursuant to this agreement and the senior preferred stock the 

company issued to Treasury in 2008, the conservator has declared and directed Fannie Mae to pay dividends to 

Treasury on a quarterly basis for every dividend period for which dividends were payable since the company 

entered conservatorship in 2008.
First Quarter 2019 Results 10

The chart below shows all of the funds Fannie Mae has drawn from Treasury pursuant to the senior preferred stock 

purchase agreement, as well as all of the dividends the company has paid to Treasury on the senior preferred 

stock.

Treasury Draws and Dividend Payments: 2008 - Q1 2019

(Dollars in billions)

(1) Under the terms of the senior preferred stock purchase agreement, dividend payments the company makes to Treasury do not offset prior 

draws of funds from Treasury. Amounts may not sum due to rounding.

(2) Treasury draws are shown in the period for which requested, not when the funds were received by the company. Draw requests have been 

funded in the quarter following a net worth deficit.

Fannie Mae expects to pay Treasury a second quarter 2019 dividend of $2.4 billion by June 30, 2019. The senior 

preferred stock provides for dividends each quarter in the amount, if any, by which the company’s net worth as of 

the end of the prior quarter exceeds a $3.0 billion capital reserve amount.

As of the date of this filing, the maximum amount of remaining funding under the agreement is $113.9 billion. If the 

company were to draw additional funds from Treasury under the agreement with respect to a future period, the 

amount of remaining funding under the agreement would be reduced by the amount of its draw. Dividend payments 

the company makes to Treasury do not restore or increase the amount of funding available to it under the 

agreement. 

For a description of the terms of the senior preferred stock purchase agreement and the senior preferred stock, see 

“Conservatorship, Treasury Agreements and Housing Finance Reform—Treasury Agreements” in the company’s 

2018 Form 10-K.

Although Treasury owns Fannie Mae’s senior preferred stock and a warrant to purchase 79.9% percent of the 

company’s common stock, and has made a commitment under the senior preferred stock purchase agreement to 

provide the company with funds to maintain a positive net worth under specified conditions, the U.S. government 

does not guarantee the company’s securities or other obligations.

—

Fannie Mae’s financial statements for the first quarter of 2019 are available in the accompanying Annex; however, 

investors and interested parties should read the company’s quarterly report on Form 10-Q for the quarter ended 

March 31, 2019 (First Quarter 2019 Form 10-Q), which was filed today with the Securities and Exchange 

Commission and is available on Fannie Mae’s website, www.fanniemae.com. The company provides further 

discussion of its financial results and condition, credit performance, and other matters in its First Quarter 2019 Form 

10-Q. Additional information about the company’s financial and credit performance is contained in the Fannie Mae 

Quarterly Financial Supplement Q1 2019 at www.fanniemae.com.
First Quarter 2019 Results 11

# # #

In this release, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements, including 

statements regarding: the company’s business plans and strategies, and the impact of these plans and strategies; the company’s future 

profitability, financial condition and financial performance, and the factors that will affect them; volatility in the company’s future results, factors 

that may affect that volatility, and efforts the company may make to address volatility; the company’s dividend payments to Treasury; the 

company’s expectations regarding the implementation and its use of the common securitization platform and the implementation and impact of 

the Single Security Initiative, as well as the company’s issuances of UMBS; the company’s plans relating to and the effects of the company’s 

credit risk transfer transactions; and the impact of accounting guidance and accounting changes on the company’s business or financial results, 

including the impact of the CECL standard. These estimates, forecasts, expectations, and statements are forward-looking statements based on 

the company’s current assumptions regarding numerous factors. Actual results, and future projections, could be materially different from what is 

set forth in the forward-looking statements as a result of: the uncertainty of the company’s future; future legislative or regulatory requirements or 

changes that have a significant impact on the company’s business, such as the enactment of housing finance reform legislation, including all or 

any portion of the to-be-developed Treasury Housing Reform Plan; home price changes; interest rate and credit spread changes; 

macroeconomic factors such as U.S. gross domestic product, unemployment rates, personal income, and the volume of mortgage originations; 

the size and the company’s share of the U.S. mortgage market and the factors that affect them, including population growth and household 

formation; the company’s future serious delinquency rates; the company’s and its competitors’ future guaranty fee pricing and the impact of that 

pricing on the company’s guaranty fee revenues and competitive environment; credit availability; changes in borrower behavior; the effectiveness 

of its loss mitigation strategies; significant changes in modification and foreclosure activity; the volume and pace of future nonperforming and 

reperforming loan sales and their impact on the company’s results and serious delinquency rates; the effectiveness of its management of its real 

estate owned inventory and pursuit of contractual remedies; changes in the fair value of its assets and liabilities; the company’s reliance on CSS 

and the common securitization platform for the operation of many of its securitization activities once it begins issuing UMBS; the stability and 

adequacy of the systems and infrastructure that impact the company’s operations, including the company’s and those of CSS, its other 

counterparties and other third parties on which the business relies; actions by FHFA, Treasury, the Department of Housing and Urban 

Development or other regulators that affect the company’s business; the size, composition and quality of the company’s guaranty book of 

business and retained mortgage portfolio; the competitive landscape in which the company operates, including the impact of legislative or other 

developments on levels of competition in its industry and other factors affecting its market share; the life of the loans in the company’s guaranty 

book of business; the company’s reliance on and future updates it makes to its models, including the assumptions used by these models; 

changes in generally accepted accounting principles; changes to the company’s accounting policies; effects from activities the company takes to 

support the mortgage market and help borrowers; the company’s future objectives and activities in support of those objectives, including actions 

the company may take to reach additional underserved creditworthy borrowers; actions the company may be required to take by FHFA, in its role 

as the company’s conservator or as its regulator, such as changes in the type of business the company does or the implementation of the Single 

Security Initiative; limitations on the company’s business imposed by FHFA, in its role as the company’s conservator or as its regulator; the 

conservatorship, including any changes to or termination (by receivership or otherwise) of the conservatorship and its effect on the company’s 

business; the investment by Treasury and its effect on the company’s business; challenges the company faces in retaining and hiring qualified 

executives and other employees; the deteriorated credit performance of many loans in the company’s guaranty book of business; a decrease in 

the company’s credit ratings; defaults by one or more institutional counterparties; resolution or settlement agreements the company may enter 

into with its counterparties; operational control weaknesses; changes in the fiscal and monetary policies of the Federal Reserve; changes in the 

structure and regulation of the financial services industry; the company’s ability to access the debt markets; changes in the demand for Fannie 

Mae MBS; disruptions or instability in the housing and credit markets; uncertainties relating to the potential phasing out of LIBOR, or other 

market changes that could impact the loans the company owns or guarantees or its MBS; the company’s need to rely on third parties to fully 

achieve some of its corporate objectives; the company’s reliance on mortgage servicers; domestic and global political risks and uncertainties; 

natural disasters, environmental disasters, terrorist attacks, pandemics, or other major disruptive events; cyber attacks or other information 

security breaches or threats; and many other factors, including those discussed in the “Risk Factors” and “Forward-Looking Statements” sections 

of and elsewhere in the company’s 2018 Form 10-K, First Quarter 2019 Form 10-Q, and elsewhere in this release.

Fannie Mae provides website addresses in its news releases solely for readers’ information. Other content or information appearing on these 

websites is not part of this release. 

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with 

lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home 

buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.
First Quarter 2019 Results 12

ANNEX

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets — (Unaudited)

(Dollars in millions)

As of

March 31,

2019

December 31,

2018

ASSETS

Cash and cash equivalents $ 27,496 $ 25,557

Restricted cash (includes $19,216 and $17,849, respectively, related to consolidated trusts) 24,745 23,866

Federal funds sold and securities purchased under agreements to resell or similar arrangements 22,250 32,938

Investments in securities:

Trading, at fair value (includes $2,922 and $3,061, respectively, pledged as collateral) 40,899 41,867

Available-for-sale, at fair value 3,214 3,429

Total investments in securities 44,113 45,296

Mortgage loans:

Loans held for sale, at lower of cost or fair value 10,066 7,701

Loans held for investment, at amortized cost:

Of Fannie Mae 105,889 113,039

Of consolidated trusts 3,157,042 3,142,858

Total loans held for investment (includes $8,752 and $8,922, respectively, at fair value) 3,262,931 3,255,897

Allowance for loan losses (13,232) (14,203)

Total loans held for investment, net of allowance 3,249,699 3,241,694

Total mortgage loans 3,259,765 3,249,395

Deferred tax assets, net 13,411 13,188

Accrued interest receivable, net (includes $8,390 and $7,928, respectively, related to consolidated trusts) 8,926 8,490

Acquired property, net 2,489 2,584

Other assets 17,839 17,004

Total assets $ 3,421,034 $ 3,418,318

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $9,221 and $9,133, respectively, related to consolidated trusts) $ 10,364 $ 10,211

Debt:

Of Fannie Mae (includes $6,682 and $6,826, respectively, at fair value) 221,238 232,074

Of consolidated trusts (includes $23,050 and $23,753, respectively, at fair value) 3,173,772 3,159,846

Other liabilities (includes $343 and $356, respectively, related to consolidated trusts) 10,299 9,947

Total liabilities 3,415,673 3,412,078

Commitments and contingencies (Note 14) — —

Fannie Mae stockholders’ equity:

Senior preferred stock, 1,000,000 shares issued and outstanding 120,836 120,836

Preferred stock, 700,000,000 shares are authorized—555,374,922 shares issued and outstanding 19,130 19,130

Common stock, no par value, no maximum authorization—1,308,762,703 shares issued and

1,158,087,567 shares outstanding 687 687

Accumulated deficit (128,175) (127,335)

Accumulated other comprehensive income 283 322

Treasury stock, at cost, 150,675,136 shares (7,400) (7,400)

Total stockholders’ equity (See Note 1: Senior Preferred Stock Purchase Agreement and Senior

Preferred Stock for information on our dividend obligation to Treasury) 5,361 6,240

Total liabilities and equity $ 3,421,034 $ 3,418,318

See Notes to Condensed Consolidated Financial Statements in the First Quarter 2019 Form 10-Q
First Quarter 2019 Results 13

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Operations and Comprehensive Income — (Unaudited)

(Dollars in millions, except per share amounts)

For the Three Months

Ended March 31,

2019 2018

Interest income:

Trading securities $ 427 $ 236

Available-for-sale securities 53 71

Mortgage loans (includes $28,445 and $26,298, respectively, related to consolidated trusts) 29,768 28,034

Federal funds sold and securities purchased under agreements to resell or similar arrangements 263 142

Other 32 31

Total interest income 30,543 28,514

Interest expense:

Short-term debt (125) (107)

Long-term debt (includes $24,189 and $21,715, respectively, related to consolidated trusts) (25,685) (23,175)

Total interest expense (25,810) (23,282)

Net interest income 4,733 5,232

Benefit for credit losses 650 217

Net interest income after benefit for credit losses 5,383 5,449

Investment gains, net 133 250

Fair value gains (losses), net (831) 1,045

Fee and other income 227 320

Non-interest income (loss) (471) 1,615

Administrative expenses:

Salaries and employee benefits (386) (381)

Professional services (225) (243)

Other administrative expenses (133) (126)

Total administrative expenses (744) (750)

Foreclosed property expense (140) (162)

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees (593) (557)

Other expenses, net (408) (203)

Total expenses (1,885) (1,672)

Income before federal income taxes 3,027 5,392

Provision for federal income taxes (627) (1,131)

Net income 2,400 4,261

Other comprehensive loss:

Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes (36) (320)

Other, net of taxes (3) (3)

Total other comprehensive loss (39) (323)

Total comprehensive income $ 2,361 $ 3,938

Net income $ 2,400 $ 4,261

Dividends distributed or available for distribution to senior preferred stockholder (2,361) (938)

Net income attributable to common stockholders $ 39 $ 3,323

Earnings per share:

Basic $ 0.01 $ 0.58

Diluted 0.01 0.56

Weighted-average common shares outstanding:

Basic 5,762 5,762

Diluted 5,893 5,893

See Notes to Condensed Consolidated Financial Statements in the First Quarter 2019 Form 10-Q
First Quarter 2019 Results 14

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows — (Unaudited)

(Dollars in millions)

For the Three Months

Ended March 31,

2019 2018

Net cash provided by (used in) operating activities $ 1,816 $ (1,409)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 15 110

Proceeds from sales of trading securities held for investment 49 —

Proceeds from maturities and paydowns of available-for-sale securities 113 266

Proceeds from sales of available-for-sale securities 131 648

Purchases of loans held for investment (33,631) (40,045)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 2,786 4,164

Proceeds from sales of loans acquired as held for investment of Fannie Mae 26 80

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 88,419 96,626

Advances to lenders (22,991) (27,898)

Proceeds from disposition of acquired property and preforeclosure sales 1,965 2,360

Net change in federal funds sold and securities purchased under agreements to resell or similar

arrangements 10,688 (20,231)

Other, net (124) (264)

Net cash provided by investing activities 47,446 15,816

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 173,122 288,281

Payments to redeem debt of Fannie Mae (184,222) (299,797)

Proceeds from issuance of debt of consolidated trusts 64,821 89,493

Payments to redeem debt of consolidated trusts (96,925) (119,413)

Payments of cash dividends on senior preferred stock to Treasury (3,240) —

Proceeds from senior preferred stock purchase agreement with Treasury — 3,687

Other, net — 442

Net cash used in financing activities (46,444) (37,307)

Net increase (decrease) in cash, cash equivalents and restricted cash 2,818 (22,900)

Cash, cash equivalents and restricted cash at beginning of period 49,423 60,260

Cash, cash equivalents and restricted cash at end of period $ 52,241 $ 37,360

Cash paid during the period for:

Interest $ 28,650 $ 27,041

Income taxes — —

See Notes to Condensed Consolidated Financial Statements in the First Quarter 2019 Form 10-Q
First Quarter 2019 Results 15

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Changes in Equity (Deficit) — (Unaudited)

(Dollars and shares in millions, except per share amounts)

Fannie Mae Stockholders’ Equity (Deficit)

Shares Outstanding

Senior

Preferred 

Stock

Preferred

Stock

Common

Stock

Accumulated

Deficit

Accumulated 

Other

Comprehensive

Income

Treasury

Stock

Total

Equity

Senior

Preferred Preferred Common

Balance as of December 31, 2018 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (127,335) $ 322 $ (7,400) $ 6,240

Senior preferred stock dividends

paid ($3,240.33/share) — — — — — — (3,240) — — (3,240)

Comprehensive income:

Net income — — — — — — 2,400 — — 2,400

Other comprehensive income, net of tax effect:

Changes in net unrealized gains on available-forsale securities (net of taxes of $2) — — — — — — — 8 — 8

Reclassification adjustment for gains included in

net income (net of taxes of $12) — — — — — — — (44) — (44)

Other (net of taxes of $1) — — — — — — — (3) — (3)

Total comprehensive income 2,361

Balance as of March 31, 2019 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (128,175) $ 283 $ (7,400) $ 5,361

Fannie Mae Stockholders’ Equity (Deficit)

Shares Outstanding

Senior

Preferred 

Stock

Preferred

Stock

Common

Stock

Accumulated

Deficit

Accumulated 

Other

Comprehensive

Income

Treasury

Stock

Total

Equity

(Deficit)

Senior

Preferred Preferred Common

Balance as of December 31, 2017 1 556 1,158 $ 117,149 $ 19,130 $ 687 $ (133,805) $ 553 $ (7,400) $ (3,686)

Senior preferred stock dividends

paid ($0.00/share) — — — — — — — — — —

Increase to senior preferred stock — — — 3,687 — — — — — 3,687

Comprehensive income:

Net income — — — — — — 4,261 — — 4,261

Other comprehensive income, net of tax effect:

Changes in net unrealized gains on availablefor-sale securities (net of taxes of $15) — — — — — — — (57) — (57)

Reclassification adjustment for gains included

in net income (net of taxes of $70) — — — — — — — (263) — (263)

Other — — — — — — — (3) — (3)

Total comprehensive income 3,938

Reclassification related to Tax Cuts

and Jobs Act — — — — — — (117) 117 — —

Other — — — — — — (1) — — (1)

Balance as of March 31, 2018 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (129,662) $ 347 $ (7,400) $ 3,938

See Notes to Condensed Consolidated Financial Statements in the First Quarter 2019 Form 10-Q