The Federal Home Loan Banks saw their interest-earning assets continue to decline in the third quarter, although somewhat less rapidly than earlier in the year. (Includes three data charts.)
KBW analysts believe it will take 15 years for the two government-sponsored enterprises to meet FHFA’s capital requirement to exit conservatorship. KBW reduced its target price on Fannie and Freddie stocks to $1.00 each.
Spikes in amortization income, guarantee-fee income and credit-related expenses are all closely tied to the government’s intervention in the coronavirus crisis. (Includes data chart.)
Fannie and Freddie reported a combined profit of $6.69 billion in the third quarter, a 54.8% sequential increase. However, year-to-date profits were down more than 19% due to COVID and CECL implementation. (Includes data chart.)
Models using the most likely assumptions about retained earnings, capital requirements and expected returns suggest the GSEs would have unsuccessful public offerings.
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