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FANNIE MAE REPORTS RECORD 1993 EARNINGS PER SHARE OF $6.82, UP 15 PERCENT OVER $5.91 IN 1992

 WASHINGTON, Jan. 12 /PRNewswire/ -- The Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) today reported net income for 1993 of $1.873 billion, or $6.82 per share, fully diluted. This compares with earnings of $1.623 billion, or $5.91 per share for 1992.
 James A. Johnson, chairman and chief executive officer, said: "Fannie Mae's performance this year was truly outstanding in all respects. We were able to serve a record 3.3 million families through our mortgage purchases and security guarantees, our risk management strategies withstood extremely severe tests, and we posted our seventh consecutive year of record earnings while positioning ourselves very favorably for strong earnings growth in the future."
 Johnson added that with the economy gaining momentum and inflation and interest rates remaining low, the housing market was poised for another strong year in 1994. "In this environment," Johnson said, "our unquestioned financial strength will enable us to achieve even more in the coming year for home buyers and renters as well as for shareholders."
 Lawrence M. Small, Fannie Mae's president and chief operating officer, noted that the company's performance in 1993 was led by very strong growth in the net mortgage portfolio and REMIC fees and occurred during a period of record mortgage prepayments and $169.3 million in after-tax losses from the call or repurchase of debt. Small added that total business volume surged to $300 billion in 1993 -- 17 percent above last year and 116 percent higher than 1991.
 Specifically, 1993 net income increased primarily due to:
 -- a 22 percent increase in the size of the company's net mortgage
 portfolio to $190 billion;
 -- a 45 percent increase in REMIC fees to $125.5 million; and
 -- an 11 percent increase in the balance of outstanding Mortgage-
 Backed Securities (MBS) to $496 billion.
 Small also noted that while acquisitions of foreclosed properties rose 1,911 to 11,557 in 1993, the single-family delinquency rate was 57 basis points at Nov. 30, 1993, the latest date available, a six basis point decline from the year-end 1992 rate. Multifamily losses were $17.1 million in 1993, down substantially from $41.5 million in 1992.
 Net income for the fourth quarter of 1993 was $493.6 million, or $1.80 per share. This compares with net income of $477.2 million, or $1.74 per share, for the third quarter of 1993 and $426.4 million, or $1.55 per share, for the fourth quarter of 1992.
 The company recorded $38.8 million in after-tax losses in the fourth quarter, consisting of $36.6 million from the call of debt at a premium and $2.2 million from the repurchase of high coupon debt. Fourth quarter results also included $28.3 million in prepayment fees from a special multifamily loan refinancing program, and a $15.0 million additional contribution to the Fannie Mae Foundation.
 Following are specific measures of Fannie Mae's performance for 1993:
 Investment Portfolio
 For the year, the company's net interest income was $2.533 billion, an increase of $474.8 million, or 23 percent, from the $2.058 billion earned in 1992.
 In the fourth quarter of 1993, net interest income totaled $635.3 million, compared with $661.7 million for the third quarter of 1993. Net interest income for the fourth quarter of 1992 was $544.2 million.
 The company's average net interest margin during 1993 was 138 basis points, compared with 137 basis points during 1992. The net interest margin averaged 125 basis points in the fourth quarter of 1993, compared with an average of 140 basis points in the third quarter of 1993 and 131 basis points in the fourth quarter of 1992.
 At the end of 1993, Fannie Mae's net investment balance -- mortgage loans held, less unamortized discount and deferred fees, plus other investments -- was $212 billion, compared with $206 billion at the end of the third quarter of 1993 and $176 billion at the end of 1992.
 Fannie Mae's net mortgage portfolio was $190 billion at the end of 1993, compared with $179 billion at the end of the third quarter of 1993 and $156 billion at the end of 1992.
 Mortgage Commitments, Purchases and Sales
 Mandatory commitments issued to purchase mortgages from lenders, net of commitments to sell mortgages, increased to a record $87.4 billion in 1993 from $64.5 billion in 1992. In the fourth quarter of 1993, mandatory commitments issued, net of commitments to sell, were $26.9 billion, compared with $23.1 billion in the third quarter of 1993 and $18.4 billion in the fourth quarter of 1992.
 The company purchased a record $92.0 billion of mortgages in 1993, compared with $75.9 billion in 1992. Mortgage sales were $6.9 billion in 1993, compared with $8.8 billion in 1992. Purchases net of sales were $28.9 billion in the fourth quarter of 1993, compared with $22.4 billion in the third quarter of 1993 and $24.9 billion in the fourth quarter of 1992.
 MBS
 The company issued a record $221.4 billion of MBS in 1993, of which $208.4 billion were originated by lenders. In 1992, total MBS issues were $194.0 billion, including $180.7 billion that were lender originated. In the fourth quarter of 1993, MBS issues totaled $69.8 billion, compared with $62.3 billion in the third quarter of 1993 and $57.7 billion in the fourth quarter of 1992. Lender-originated MBS issues were $66.0 billion in the fourth quarter of 1993, compared with $58.4 billion in the third quarter of 1993 and $56.0 billion in the fourth quarter of 1992.
 MBS outstanding at the end of 1993 totaled $496 billion, compared with $482 billion at the end of the third quarter of 1993 and $445 billion at the end of 1992.
 MBS guaranty fees increased to $961.4 million in 1993 from $833.9 million in 1992. In the fourth quarter of 1993, guaranty fees increased to $253.3 million from $242.9 million in the third quarter of 1993 and $221.6 million in the fourth quarter of 1992.
 Miscellaneous Income
 Miscellaneous income increased to $260.2 million in 1993 from $167.7 million in 1992. REMIC fees, which are included in miscellaneous income, were a record $125.5 million in 1993 compared with $86.7 million in 1992. In addition, miscellaneous income in 1993 included $32.9 million of multifamily prepayment fees, which were primarily earned in the fourth quarter of the year. Such fees were insignificant in 1992. In the fourth quarter of 1993, miscellaneous income was $97.6 million, compared with $66.2 million for the third quarter of 1993 and $35.7 million for the fourth quarter of 1992. REMIC fees were $39.0 million for the fourth quarter of 1993, compared with $37.8 million for the third quarter of 1993 and $13.6 million for the fourth quarter of 1992.
 Other Income
 Results for 1993 included $1.5 million of losses on sales of mortgages, compared with $22.7 million of gains in 1992. Fourth quarter results included $7.8 million of losses on sales of mortgages, compared with $3.5 million of gains in the third quarter of 1993 and $1.6 million of losses in the fourth quarter of 1992.
 Losses from the call or repurchase of debt were $260.4 million pre- tax ($169.3 million after tax) in 1993, compared with $39.2 million pre- tax ($25.8 million after tax) in 1992. Losses from the call or repurchase of debt were $59.6 million pre- tax ($38.8 million after tax) in the fourth quarter of 1993, compared with $79.7 million pre-tax ($50.6 million after tax) in the third quarter of 1993 and $2.3 million pre-tax ($1.5 million after tax) in the fourth quarter of 1992.
 Debt called or repurchased in 1993 totaled $15.5 billion, compared with $8.3 billion in 1992. Debt called or repurchased in the fourth quarter of 1993 totaled $3.0 billion, compared with $5.6 billion in the third quarter of 1993 and $4.0 billion in the fourth quarter of 1992.
 Foreclosures and Inventory of Acquired Properties
 The company acquired 11,577 conventional single-family properties through foreclosure in 1993, compared with 9,646 properties in 1992. Acquisitions were 2,814 in the fourth quarter of 1993, compared with 3,206 in the third quarter of 1993 and 2,547 in the fourth quarter of 1992.
 The inventory of single-family acquired property stood at 5,323 properties at Dec. 31, 1993, compared with 5,459 at Sept. 30, 1993, and 4,413 at the end of December 1992.
 Credit-Related Expenses and Loan Charge-Offs
 The 1993 results reflect the adoption of a new AICPA standard related to the accounting for foreclosed assets. Under this new standard, foreclosure, holding and disposition costs, which were previously charged against the loss allowance, are recorded as foreclosed property expenses.
 Total credit-related expenses, which include foreclosed property expenses and the provision for loan losses, were $304.8 million in 1993, compared with $320.0 million in 1992. Total credit-related expenses were $69.5 million in the fourth quarter of 1993, compared with $76.2 million in the third quarter of 1993 and $80.0 million in the fourth quarter of 1992.
 Charge-offs under the new standard were $114.7 million in 1993. Charge-offs under the previous standard (all foreclosure- related costs) were $243.6 million in 1992. Charge-offs in the fourth quarter of 1993 were $23.3 million, compared with $28.5 million in the third quarter of 1993. Charge-offs under the previous standard were $65.4 million in the fourth quarter of 1992.
 The allowance for loan losses was $841 million at Dec. 31, 1993, compared with $824 million at Sept. 30, 1993, and $780 million at Dec. 31, 1992.
 Administrative Expenses
 Administrative expenses totaled $442.9 million in 1993, compared with $381.0 million in 1992. For the fourth quarter of 1993, administrative expenses were $122.8 million, including a $15.0 million additional contribution to the Fannie Mae Foundation. Administrative expenses were $110.0 million in the third quarter of 1993, and $103.1 million in the fourth quarter of 1992.
 Income Taxes
 Federal income tax expense totaled $872 million in 1993 compared with $719 million in 1992. The effective federal income tax rate was 32 percent in 1993 compared with 31 percent in 1992. The statutory federal income tax rate was 35 percent in 1993, compared with 34 percent in 1992.
 Capital
 Fannie Mae's capital, defined as shareholders' equity plus allowance for losses, was $8.9 billion at Dec. 31, 1993, compared with $8.5 billion at Sept. 30, 1993, and $7.6 billion at Dec. 31, 1992.
 The company repurchased 0.3 million shares of common stock during the fourth quarter of 1993, and 1.9 million shares during the full year. These shares were purchased to offset the dilutive effect of shares previously issued or anticipated to be issued under employee stock related benefit plans. As of Dec. 31, 1993, Fannie Mae had 272 million shares outstanding.
 Fannie Mae is a congressionally chartered, shareholder-owned company and the nation's largest source of home mortgage funds.
 FANNIE MAE
 Summary Statements of Operations
 (Dollars in millions, except per share amounts)
 Quarter Ended
 Dec. 31, Sept. 30, Dec. 31,
 1993 1993 1992
 Net interest income $ 635.3 $ 661.7 $ 554.2
 Guaranty fees 253.3 242.9 221.6
 Gain (loss) on sales
 of mortgages (7.8) 3.5 (1.6)
 Miscellaneous income, net 97.6 66.2 35.7
 Provision for losses (40.0) (45.0) (80.0)
 Foreclosed property
 expenses (29.5) (31.2) --
 Administrative expenses (122.8) (110.0) (103.1)
 Income before federal
 income taxes 786.1 788.1 616.8
 Federal income taxes (253.7) (260.3) (188.9)
 Extraordinary loss --
 repurchase of debt (38.8) (50.6) (1.5)
 Net income $ 493.6 $ 477.2 $ 426.4
 Earnings per share --
 Fully diluted $ 1.80 1.74 1.55
 Cash dividends 0.52 0.46 0.40
 Average shares
 (fully diluted) in millions 273.8 274.2 274.6
 End of period: Dec. 31, Sept. 30, Dec. 31,
 1993 1993 1992
 Total assets $216,978.5 $211,441.6 $180,978.1
 Total investment
 portfolio (gross) 212,664.5 207,119.8 177,826.8
 Interest margin
 (last month average) 1.25 pct. 1.34 pct. 1.32 pct.
 Investment spread
 (last month average) 0.68 pct. 0.80 pct. 0.74 pct.
 Shareholders' equity $ 8,052.0 $ 7,719.1 $ 6,773.8
 Book value per share 29.55 28.31 24.79
 MBS outstanding 495,524.6 481,879.8 444,978.5
 Twelve Months Ended
 Dec. 31, Dec. 31
 1993 1992
 Net interest income $ 2,533.0 $ 2,058.2
 Guaranty fees 961.4 833.9
 Gain (loss) on sales
 of mortgages (1.5) 22.7
 Miscellaneous income, net 260.2 167.7
 Provision for losses (175.0) (320.0)
 Foreclosed property
 expenses (129.8) --
 Administrative expenses (442.9) (381.0)
 Income before federal
 income taxes 3,005.4 2,381.5
 Federal income taxes (962.9) (732.8)
 Extraordinary loss --
 repurchase of debt (169.3) (25.8)
 Net income $ 1,873.2 $ 1,622.9
 Earnings per share:
 Fully diluted $ 6.82 $ 5.91
 Cash dividends 1.84 1.38
 Average shares
 (fully diluted) in millions 274.5 274.6
 Note: Shares outstanding at Dec. 31, 1993, were 272,450,000.
 -0- 1/12/94
 /CONTACT: Tom Marder of Fannie Mae, 202-752-7608/
 (FNM)


CO: Federal National Mortgage Association ST: District of Columbia IN: FIN SU: ERN

IH-DC -- DC007 -- 1345 01/12/94 10:32 EST
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Date:Jan 12, 1994
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