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FANNIE MAE EXPECTS DOUBLE-DIGIT EARNINGS GROWTH AND TO OUTPERFORM SIGNIFICANTLY S&P 500 FOR NEXT FIVE YEARS; COMPANY DOES WELL IN RECESSION AND SOFT MARKET

FANNIE MAE EXPECTS DOUBLE-DIGIT EARNINGS GROWTH AND TO OUTPERFORM

SIGNIFICANTLY S&P 500 FOR NEXT FIVE YEARS; COMPANY DOES WELL IN
 RECESSION AND SOFT MARKET
 WASHINGTON, Dec. 12 /PRNewswire/ -- James A. Johnson, chairman and chief executive officer of the Federal National Mortgage Association (Fannie Mae) (NYSE: FNM), today said he expects the company's earnings growth to outperform significantly the Standard & Poor's 500 companies over the next five years.
 "We expect to have double-digit earnings growth for the next five years and see continued prospects to outperform significantly the S&P 500's growth and returns," Johnson told a group of financial analysts and investors. "We also see continued excellent management of risks, stability of earnings, and strong support for Fannie Mae's mission as a federally chartered, shareholder-owned company."
 Johnson also said that the company's strong credit standards had allowed it to perform well in spite of a recession, a weak housing market and decline in the Northeast and California economies. "We are by no means complacent about the soft economy, but we are confident that our credit performance will be solid even if the economy continues to sputter," Johnson said.
 Johnson's remarks opened Fannie Mae's sixth biennial conference for investors and financial analysts.
 Noting Fannie Mae's 15 consecutive quarters of record earnings, Johnson told investors that the company's successful interest rate management techniques provide stability for future earnings from the company's current $123.3 billion mortgage portfolio.
 Michael Smilow, executive vice president and chief credit officer, told the conference, "The primary measures of quality -- delinquency rates, foreclosure rates, and the risk characteristics of our outstanding mortgages -- all point toward continued strength in the quality of our mortgage investments."
 Smilow said, "For some time we have had a credit management program in place that has enabled us to withstand the economy's lackluster performance, and we are confident that it will continue to serve us well in the future."
 In terms of market growth, Johnson said the $800 billion secondary mortgage market in which Fannie Mae operates and has the major share -- more than $470 billion -- now represents 36 percent of the $2.3 trillion of conventional home mortgage debt outstanding in the United States. By the end of the decade, the secondary market should grow by 12 percent to 15 percent; by 1995, it should represent 45 percent of mortgage debt outstanding.
 Johnson said that the primary mortgage market is expected to grow at a slower rate of 6 percent to 8 percent in the 1990s. He said the secondary market should grow at double this rate because of the "increased reliance on the secondary market by primary lenders as they restructure and the general shift from being a deposit-based system to being an investor-based system."
 Fannie Mae, the USA's Housing Partner, is a congressionally chartered, shareholder-owned company and the nation's largest investor in home mortgages.
 -0- 12/12/91
 /CONTACT: Tom Marder of Fannie Mae, 202-752-7608/
 (FNM) CO: Fannie Mae ST: District of Columbia IN: FIN SU:


TW -- DC006 -- 1821 12/12/91 09:44 EST
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Publication:PR Newswire
Date:Dec 12, 1991
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