Fannie Mae is paying the U.S. Treasury another $1.8 billion in June. While this dividend sounds great on the surface, Fannie Mae’s profit fell sharply in the first quarter after a drop in credit-related income and after a derivative loss. As a reminder, Fannie Mae, along with Freddie Mac, was placed in conservatorship back in 2008 due to massive credit losses.

All in all, the Treasury will have received over $138 billion in dividends from Fannie Mae. The good news is that this is much higher than the $116 billion or so in bailout funds that Fannie Mae received. The bad news, as Reuters has pointed out, is that this is the smallest dividend that Fannie Mae has paid out in five years.

Fannie Mae’s first quarter net income was down to $1.9 billion from roughly $5.3 billion a year ago. The Government Sponsored Entity (GSE) said that it recognized a provision for federal income taxes of $870 million for the first quarter, giving it an effective tax rate of 31.6%. Net revenues (interest, fees and other items) were $5.4 billion for the first quarter of 2015, compared with $5.5 billion for the fourth quarter of 2014.

Fannie Mae showed that it provided roughly $124 billion in liquidity to the mortgage market in the first quarter of 2015. It also claims to have helped distressed families retain their homes or avoid foreclosure through approximately 34,000 workout solutions during the first quarter.

While Fannie Mae has its own lending standards, the lenders which ultimately package loans through Fannie (and Freddie) have generally had more strict loan requirements. Also, other non-traditional mortgage competition has been available as well.

Timothy J. Mayopoulos, President and Chief Executive Officer of Fannie Mae, said:

This was another quarter of strong financial performance. We continued to have solid revenues. While we experienced some interest rate volatility again this quarter, we expect to remain profitable on an annual basis for the foreseeable future. We continued to make progress against our goals, and we are managing the company on a basis that produces good economic value for the taxpayer. We are focused on delivering value to our business partners and making it simpler and easier for lenders to serve the housing market safely, efficiently, and profitably.

Other details were as follows:

• Net interest income was $5.067 billion, down from $5.142 billion sequentially but up from $4.738 billion a year ago.
• Fee and other income was $308 million, down from $323 million one quarter before but down sharply from the $4.355 billion a year earlier.
• Investment gains were $342 million, and total credit related income after fair value losses was $60 million — down from $97 million in the prior sequential quarter and down from $1.036 billion a year ago.

Fannie Mae further said that an increasing portion of its net interest income in recent years has been derived from guaranty fees rather than from interest income earned on retained mortgage portfolio assets — due to the impact of guaranty fee increases and the shrinking of the retained mortgage portfolio.

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While there has been pressure in the past to effectively liquidate Fannie Mae and Freddie Mac, the taxpayer base has made more money off of the Fannie bailout than it did on most banks. Also, this does keep the mortgage market running more fluidly with more liquidity for the conforming mortgage market. Maybe there is a reason you do not hear about too many politicians trying to shutter the GSEs tied to the mortgage market any longer.

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