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FANNIE MAE REPORTS FIRST QUARTER EARNINGS OF $433.6 MILLION, OR $1.61 PER SHARE; NET INCOME UP 16 PERCENT OVER FIRST QUARTER 1992

 WASHINGTON, April 12 /PRNewswire/ The Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) today reported net income for the first quarter of 1993 of $443.6 million, or $1.61 per share, fully diluted. This compares with earnings of $381.6 million or $1.39 per share, for the first quarter of 1992 and $426.4 million or $1.55 per share, for the fourth quarter of 1992.
 James A. Johnson, chairman and chief executive officer of Fannie Mae, said: "Strong growth in revenues from our mortgage portfolio enabled us to post another record performance." Commenting on growth prospects, Johnson added, "With renewed refinancing activity and the recent substantial increase in housing affordability for American families, Fannie Mae's 1993 business volumes should approach, if not exceed, the record volumes of 1992."
 Lawrence M. Small, Fannie Mae's president and chief operating officer, said that the increase in net income in the first quarter compared with the fourth quarter of 1992 reflected:
 -- growth of $59.7 million in net interest income stemming from an $8.6 billion increase in the average net mortgage balance and a 12 basis point increase in the net interest margin on investments to an average of 143 basis points;
 -- an $8.8 million increase in Mortgage-Backed Security guaranty fee income, reflecting a $14.2 billion increase in average MBS outstandings; and
 -- increased miscellaneous income of $11.3 million due to higher REMIC fees.
 Small added that the first quarter net interest margin benefitted from the maturity and call of an unusually large amount of high cost debt in December, which temporarily increased the proportion of the company's short-term debt to long-term debt.
 Small noted that first quarter results included $40.1 million in after-tax losses, consisting of $21.5 million from the call of debt at a premium and $18.6 million from the repurchase of high coupon debt. Small said that with interest rates at current levels, additional calls of debt at a premium were likely this year, and further repurchases of high coupon debt were possible as well.
 Small also said that the company's acquisitions of single-family foreclosed properties rose moderately to 2,747 from 2,547 in the fourth quarter of 1992.
 Following are specific measures of Fannie Mae's performance for the first quarter of 1993:
 Investment Portfolio
 Net interest income was $603.9 million in the first quarter of 1993 compared with $544.2 million in the fourth quarter of 1992 and $488.9 million in the first quarter of 1992.
 The net interest margin averaged 143 basis points in the first quarter of 1993, compared with an average of 131 basis points in the fourth quarter of 1992 and 145 basis points in the first quarter of 1992.
 Fannie Mae's net investment balance -- mortgage loans held, less unamortized discount and deferred fees, plus other investments -- was $175 billion at the end of the first quarter of 1993, compared with $176 billion at the end of the fourth quarter of 1992 and $150 billion at the end of the first quarter of 1992.
 Fannie Mae's net mortgage portfolio was $159 billion at the end of the first quarter of 1993, up at an 8.3 percent annual rate compared with $156 billion at the end of the fourth quarter of 1992 and by 18.8 percent compared with $134 billion at the end of the first quarter of 1992.
 Mortgage Commitments, Purchases and Sales
 Mandatory commitments issued to purchase mortgages from lenders, net of commitments to sell mortgages, were $13.6 billion in the first quarter of 1993 compared with $18.4 billion in the fourth quarter of 1992 and $18.7 billion in the first quarter of 1992.
 The company purchased $13.8 billion of mortgages in the first quarter of 1993, compared with $25.2 billion in the fourth quarter of 1992 and $17.4 billion in the first quarter of 1992. Mortgage sales were $3.0 billion in the first quarter of 1993, compared with $0.3 billion in the fourth quarter of 1992 and $1.2 billion in the first quarter of 1992.
 MBS
 Lender-originated mortgage-backed securities issued were $35.5 billion in the first quarter of 1993. This compares with $56.0 billion in the fourth quarter of 1992 and $38.2 billion in the first quarter of 1992. Total mortgage-backed securities issued, which include MBS originated by Fannie Mae, were $39.0 billion in the first quarter of 1993, compared with $57.7 billion in the fourth quarter of 1992 and $41.2 billion in the first quarter of 1992.
 MBS outstanding at the end of the first quarter of 1993 totaled $457 billion, compared with $445 billion at the end of the fourth quarter of 1992 and $390 billion at the end of the first quarter of 1992.
 MBS guaranty fees increased to $230.4 million in the first quarter of 1993 from $221.6 million in the fourth quarter of 1992 and $193.6 million in the first quarter of 1992.
 Miscellaneous Income
 Miscellaneous income totaled $47.0 million for the first quarter of 1993, compared with $35.7 million for the fourth quarter of 1992 and $36.2 million for the first quarter of 1992.
 REMIC fees, which are included in miscellaneous income, were $22.6 million in the first quarter of 1993, compared with $13.6 million in the fourth quarter of 1992 and $23.0 million in the first quarter of 1992.
 Other Income
 First quarter results included $3.6 million of gains on sales of mortgages, compared with $1.6 million of losses in the fourth quarter of 1992 and $6.5 million of gains in the first quarter of 1992. Losses from the call or repurchase of debt were $60.8 million pre-tax ($40.1 million after tax) in the first quarter, compared with $2.3 million pre- tax ($1.5 million after tax) in the fourth quarter of 1992 and $9.7 million pre-tax ($6.3 million after tax) in the first quarter of 1992.
 Debt called or repurchased in the first quarter of 1993 totaled $3.3 billion, compared with $4.0 billion in the fourth quarter of 1992 and $1.0 billion in the first quarter of 1992.
 Foreclosures and Inventory of Acquired Properties The company acquired 2,747 conventional single-family properties through foreclosure in the first quarter of 1993, compared with 2,547 properties in the fourth quarter of 1992 and 2,238 properties in the first quarter of 1992.
 The inventory of foreclosed property was 4,872 at the end of the first quarter of 1993, up from 4,413 at Dec. 31, 1992, and 3,544 at March 31, 1992.
 Credit Related Expenses and Loan Charge-Offs
 First quarter 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 in the income statement as foreclosed property expenses.
 Total credit related expenses, which include foreclosed property expenses and the provision for loan losses were $77.6 million in the first quarter of 1993. Credit related expenses were $80.0 million in the fourth and first quarters of 1992.
 Charge-offs under the new standard (loss of principal only) were $30.5 million in the first quarter of 1993. Charge-offs in the fourth quarter of 1992 under the new standard would have been approximately $25 million.
 Charge-offs under the previous standard (all foreclosure-related costs) were $65.4 million in the fourth quarter of 1992 and $56.7 million in the first quarter of 1992. The allowance for loan losses was $795 million at March 31, 1993, compared with $780 million at December 31, 1992 and $727 million at March 31, 1992.
 Administrative Expenses
 Administrative expenses totaled $103.6 million for the first quarter of 1993, compared with $103.1 million for the fourth quarter of 1992 and $86.1 million for the first quarter of 1992.
 Capital
 Fannie Mae's capital, defined as shareholders' equity plus allowance for losses, was $8.0 billion at the end of the first quarter of 1993, compared with $7.6 billion at the end of the fourth quarter of 1992, and $6.6 billion at the end of the first quarter of 1992.
 At March 31, 1993, Fannie Mae met the applicable capital standards established by the Federal Housing Enterprises Safety and Soundness Act of 1992.
 Fannie Mae is a congressionally chartered, shareholder-owned company and the nation's largest investor in home mortgages.
 FANNIE MAE
 Summary Statements of Operations
 Quarter Ended
 (Dollars in millions, March 31, Dec. 31, March 31,
 except per share amounts) 1993 1992 1992
 Net interest income $603.9 $544.2 $488.9
 Guaranty fees 230.4 221.6 193.6
 Gain on sales of mortgages 3.6 (1.6) 6.5
 Miscellaneous income, net 47.0 35.7 36.2
 Provision for losses (45.0) (80.0) (80.0)
 Foreclosed property expenses (32.6) -- --
 Administrative expenses (103.6) (103.1) (86.1)
 Income before federal income
 taxes 703.7 616.8 559.1
 Federal income taxes (220.0) (188.9) (171.2)
 Extraordinary loss-repurchase
 of debt (net of taxes of
 $20.7 million in March
 1993, $0.8 million in
 December 1992 and $3.4
 million in March 1992) (40.1) (1.5) (6.3)
 Net income $443.6 $426.4 $381.6
 Earnings per share:
 Primary $1.61 $1.55 $1.39
 Fully diluted 1.61 1.55 1.39
 Cash dividends .40 .40 .30
 Average shares (fully diluted)
 in millions 275.3 274.6 274.5
 March 31, Dec. 31, March 31,
 End of period: 1993 1992 1992
 Total assets $180,259.9 $180,978.1 $155,165.0
 Total investment
 portfolio (gross) 177,062.2 177,826.8 152,101.1
 Interest margin
 (last month average) 1.42 pct. 1.32 pct. 1.42 pct.
 Investment spread
 (last month average) .95 .74 .83
 Shareholders' equity $7,157.8 $6,773.8 $5,829.6
 Book value per share 26.10 24.79 21.35
 MBS outstanding 457,316.0 444,978.5 389,853.2
 Note: Shares outstanding at March 31, 1993, were 274,217,000.
 -0- 4/12/93
 /CONTACT: Tom Marder of the Federal National Mortage Association, 202-752-7608/
 (FNM)


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

IH-DC -- DC017 -- 0509 04/12/93 11:24 EDT
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Date:Apr 12, 1993
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