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FANNIE MAE REPORTS SECOND QUARTER EARNINGS OF $458.8 MILLION, OR $1.67 PER SHARE; NET INCOME UP 14 PERCENT OVER SECOND QUARTER 1992

 WASHINGTON, July 12 /PRNewswire/ -- The Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) today reported net income for the second quarter of 1993 of $458.8 million, or $1.67 per share fully diluted. This compares with earnings of $402.0 million or $1.47 per share for the second quarter of 1992, and $443.6 million or $1.61 per share for the first quarter of 1993.
 For the first six months of 1993, Fannie Mae's net income was $902.4 million or $3.28 per share, compared with $783.6 million or $2.86 per share for the same period of 1992.
 James A. Johnson, chairman and chief executive officer of Fannie Mae, said, "Second quarter earnings were fueled by strong growth in our mortgage portfolio, increased interest income from the investment of proceeds from Mortgage-Backed Security (MBS) repayments, and continued high levels of miscellaneous income, principally REMIC fees." Johnson added, "With this earnings performance, our capital base now exceeds $8.0 billion, double the amount of capital we had as recently as three years ago."
 Lawrence M. Small, Fannie Mae's president and chief operating officer, said that the $28.2 million increase in net interest income which drove the company's earnings growth between the first and second quarters of 1993 stemmed primarily from a $6.1 billion increase in the average net mortgage balance, a $1.5 billion increase in average mortgage-backed security float balances, and a two basis point increase in the net interest margin on investments to an average of 145 basis points.
 Small noted that second quarter results included $39.8 million in after-tax losses, consisting of $18.5 million from the call of debt at a premium and $21.3 million from the repurchase of high coupon debt.
 Small said that the company's acquisitions of single-family foreclosed properties in the second quarter rose only slightly to 2,790 from 2,747 in the first quarter.
 Small also noted that the company's serious delinquency rate for single-family loans -- an important indicator of credit quality -- was 0.59 percent in May 1993, the latest date for which figures are available, down from 0.63 percent in December 1992 and 0.60 percent in May 1992.
 Following are specific measures of Fannie Mae's performance for the second quarter of 1993:
 Investment Portfolio
 Net interest income was $632.1 million in the second quarter of 1993 compared with $603.9 million in the first quarter of 1993 and $518.2 million in the second quarter of 1992.
 The net interest margin averaged 145 basis points in the second quarter of 1993, compared with an average of 143 basis points in the first quarter of 1993 and 139 basis points in the second quarter of 1992.
 Fannie Mae's net investment balance -- mortgage loans held, less unamortized discount and deferred fees, plus other investments -- was $187 billion at the end of the second quarter of 1993, compared with $175 billion at the end of the first quarter of 1993 and $157 billion at the end of the second quarter of 1992.
 Fannie Mae's net mortgage portfolio was $170 billion at the end of the second quarter of 1993, up at a 26.2 percent annual rate compared with $159 billion at the end of the first quarter of 1993 and up by 21.4 percent compared with $140 billion at the end of the second quarter of 1992.
 Mortgage Commitments, Purchases and Sales
 Mandatory commitments issued to purchase mortgages from lenders, net of commitments to sell mortgages, were $23.8 billion in the second quarter of 1993 compared with $13.6 billion in the first quarter of 1993 and $8.7 billion in the second quarter of 1992.
 The company purchased $23.4 billion of mortgages in the second quarter of 1993 compared with $13.8 billion in the first quarter of 1993 and $18.6 billion in the second quarter of 1992. Mortgage sales were $0.4 billion in the second quarter of 1993, compared with $3.0 billion in the first quarter of 1993 and $4.2 billion in the second quarter of 1992.
 MBS
 Lender-originated mortgage-backed securities issued were $48.5 billion in the second quarter of 1993. This compares with $35.5 billion in the first quarter of 1993 and $48.3 billion in the second quarter of 1992. Total mortgage-backed securities issued, which include MBS originated by Fannie Mae, were $50.4 billion in the second quarter of 1993, compared with $39.0 billion in the first quarter of 1993 and $53.8 billion in the second quarter of 1992.
 MBS outstanding at the end of the second quarter of 1993 totaled $465 billion, compared with $457 billion at the end of the first quarter of 1993 and $413 billion at the end of the second quarter of 1992.
 MBS guaranty fees increased to $234.8 million in the second quarter of 1993 from $230.4 million in the first quarter of 1993 and $203.8 million in the second quarter of 1992.
 Miscellaneous Income
 Miscellaneous income totaled $49.4 million for the second quarter of 1993, compared with $47.0 million for the first quarter of 1993 and $44.5 million for the second quarter of 1992.
 REMIC fees, which are included in miscellaneous income, were $26.1 million in the second quarter of 1993, compared with $22.6 million in the first quarter of 1993 and $21.5 million in the second quarter of 1992.
 Other Income
 Second quarter results included $0.8 million of losses on sales of mortgages, compared with $3.6 million of gains in the first quarter of 1993 and $4.4 million of gains in the second quarter of 1992. Losses from the call or repurchase of debt were $60.3 million pre-tax ($39.8 million after tax) in the second quarter of 1993, compared with $60.8 million pre-tax ($40.1 million after tax) in the first quarter of 1993 and $13.0 million pre-tax ($8.7 million after tax) in the second quarter of 1992.
 Debt called or repurchased in the second quarter of 1993 totaled $3.6 billion, compared with $3.3 billion in the first quarter of 1993 and $0.6 billion in the second quarter of 1992.
 Foreclosures and Inventory of Acquired Properties
 The company acquired 2,790 conventional single-family properties through foreclosure in the second quarter of 1993, compared with 2,747 properties in the first quarter of 1993 and 2,391 properties in the second quarter of 1992.
 The inventory of foreclosed property was 4,952 at the end of the second quarter of 1993, up from 4,872 at March 31, 1993, and 3,638 at June 30, 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 $81.5 million in the second quarter of 1993 compared with $77.6 million in the first quarter of 1993. Credit related expenses were $80.0 million in the second quarter of 1992.
 Charge-offs under the new standard were $32.4 million in the second quarter of 1993, compared with $30.5 million in the first quarter of 1993. Charge-offs under the previous standard (all foreclosure-related costs) were $58.6 million in the second quarter of 1992.
 The allowance for loan losses was $808 million at June 30, 1993, compared with $795 million at March 31, 1993, and $749 million at June 30, 1992.
 Administrative Expenses
 Administrative expenses totaled $106.5 million for the second quarter of 1993, compared with $103.6 million for the first quarter of 1993 and $94.9 million for the second quarter of 1992.
 Capital
 Fannie Mae's capital, defined as shareholders' equity plus allowance for losses, was $8.2 billion at the end of the second quarter of 1993, compared with $8.0 billion at the end of the first quarter of 1993, and $6.9 billion at the end of the second quarter of 1992.
 During the second quarter of 1993, the company repurchased 1.2 million shares of common stock. The shares were purchased to offset the dilutive effect of shares previously issued under employee stock related benefit plans. As of June 30, 1993, Fannie Mae had approximately 273 million shares outstanding.
 At June 30, 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 Statement of Operations
 Quarter Ended
 (Dollars in millions, June 30, March 31, June 30,
 except per share amounts) 1993 1993 1992
 Net interest income $632.1 $603.9 $518.2
 Guaranty fees 234.8 230.4 203.8
 Gain (loss) on sales
 of mortgages (0.8) 3.6 4.4
 Miscellaneous income, net 49.4 47.0 44.5
 Provision for losses (45.0) (45.0) (80.0)
 Foreclosed property expenses (36.5) (32.6) --
 Administrative expenses (106.5) (103.6) (94.9)
 Income before federal income
 taxes 727.5 703.7 596.0
 Federal income taxes (228.9) (220.0) (185.3)
 Extraordinary loss-repurchase
 of debt (net of YTD taxes of
 $41.2 million) (39.8) (40.1) (8.7)
 Net income $458.8 $443.6 $402.0
 Earnings per share:
 Primary $1.67 $1.61 $1.47
 Fully diluted 1.67 1.61 1.47
 Cash dividends 0.46 0.40 0.34
 Average shares (fully diluted)
 in millions 274.9 275.3 274.2
 Six Months Ended
 June 30, June 30,
 1993 1992
 Net interest income $1,236.0 $1,007.1
 Guaranty fees 465.2 397.4
 Gain (loss) on sales
 of mortgages 2.8 10.9
 Miscellaneous income, net 96.4 80.7
 Provision for losses (90.0) (160.0)
 Foreclosed property expenses (69.1) --
 Administrative expenses (210.1) (181.0)
 Income before federal income
 taxes 1,431.2 1,155.1
 Federal income taxes (448.9) (356.5)
 Extraordinary loss-repurchase
 of debt (net of YTD taxes of
 $41.2 million) (79.9) (15.0)
 Net income $902.4 $783.6
 Earnings per share:
 Primary $3.28 $2.86
 Fully diluted 3.28 2.86
 Cash dividends 0.86 0.64
 Average shares (fully diluted)
 in millions 275.1 274.4
 End of period: June 30, March 31, June 30,
 1993 1993 1992
 Total assets $192,042.6 $180,259.9 $162,473.3
 Total investment
 portfolio (gross) 188,243.4 177,062.2 159,248.9
 Interest margin
 (last month average) 1.45 pct. 1.42 pct. 1.38 pct.
 Investment spread
 (last month average) 0.91 pct. 0.95 pct. 0.83 pct.
 Shareholders' equity $7,398.6 $7,157.8 $6,132.2
 Book value per share 27.10 26.10 22.46
 MBS outstanding 465,219.8 457,316.0 413,225.6
 Note: Shares outstanding at June 30, 1993, were 273,041,000.
 -0- 7/12/93
 /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 -- DC014 -- 0346 07/12/93 10:52 EDT
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