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FANNIE MAE REPORTS THIRD QUARTER EARNINGS OF $412.9 MILLION, OR $1.51 PER SHARE; NET INCOME UP 18 PERCENT OVER THIRD QUARTER 1991

 FANNIE MAE REPORTS THIRD QUARTER EARNINGS OF $412.9 MILLION, OR $1.51 PER SHARE; NET INCOME UP 18 PERCENT OVER THIRD QUARTER 1991
 WASHINGTON, Oct. 8 /PRNewswire/ -- The Federal National Mortgage Association (Fannie Mae) (NYSE: FNM) today reported net income for the third quarter of 1992 of $412.9 million, or $1.51 per share, fully diluted. This compares with earnings of $350.7 million or $1.28 per share for the third quarter of 1991 and $402.0 million or $1.47 per share for the second quarter of 1992.
 For the first nine months of 1992 Fannie Mae's net income was $1.197 billion, or $4.36 per share. This compares with $1.002 billion or $3.66 per share for the same period of 1991.
 James A. Johnson, chairman and chief executive officer of Fannie Mae, said: "Our 19th consecutive quarter of record earnings was fueled by strong growth in Mortgage-Backed Securities and record REMIC fees. With business volume in the third quarter exceeding $52 billion, total volume for the year is now over $175 billion. We are on a pace to substantially exceed $200 billion in total business for the year, far surpassing our previous record of $139 billion in 1991."
 Lawrence M. Small, Fannie Mae's president and chief operating officer, noted that compared with the second quarter of 1992, increases in Mortgage-Backed Securities and REMIC fees in the third quarter more than offset a decline in net interest income. The net interest income decline was caused primarily by an $11 million reduction in float income from Mortgage-Backed Securities and costs associated with the prefunding of mortgage purchases.
 Small said that although mortgage to debt spreads narrowed during the spring and early summer, the mortgage portfolio grew at an 8.4 percent annual rate during the third quarter. He added that based on outstanding commitments, the portfolio is likely to grow at a significantly faster rate in the fourth quarter.
 Small also noted that acquisitions of foreclosed properties edged up to 2,470 properties in the third quarter from 2,391 properties in the second quarter. Third quarter charge-offs were $62.9 million, compared with $58.6 million in the second quarter and $55.3 million in the third quarter of 1991.
 Following are specific measures of Fannie Mae's performance for the third quarter of 1992:
 Investment Portfolio
 Net interest income was $506.9 million in the third quarter of 1992, compared with $518.2 million in the second quarter of 1992 and $456.0 million in the third quarter of 1991.
 The net interest margin averaged 133 basis points in the third quarter of 1992, compared with an average of 139 basis points in the second quarter of 1992 and 144 basis points in the third quarter of 1991.
 In September, the net interest margin declined to 129 basis points from 133 basis points in August. The decline was attributable to a large increase in short-term investment balances, which earned at lower margins than the mortgage portfolio, as well as to the full- month effect of prefunding in August. The interest margin is expected to rebound significantly during the fourth quarter.
 Fannie Mae's net investment balance -- mortgage loans held, less unamortized discount and deferred fees, plus other investments -- was $164 billion at the end of the third quarter of 1992, compared with $157 billion at the end of the second quarter of 1992 and $134 billion at the end of the third quarter of 1991.
 Fannie Mae's net mortgage portfolio was $143 billion at the end of the third quarter of 1992, compared with $140 billion at the end of the second quarter of 1992 and $122 billion at the end of the third quarter of 1991.
 Mortgage Commitments, Purchases and Sales Mandatory commitments issued to purchase mortgages from lenders, net of commitments to sell mortgages, were $18.6 billion in the third quarter of 1992, compared with $8.7 billion in the second quarter of 1992 and $6.4 billion in the third quarter of 1991.
 The company purchased $14.6 billion of mortgages in the third quarter of 1992, compared with $18.6 billion in the second quarter of 1992 and $9.3 billion in the third quarter of 1991. Mortgage sales were $3.1 billion in the third quarter of 1992, compared with $4.2 billion in the second quarter of 1992 and $2.9 billion in the third quarter of 1991. Purchases net of sales were $11.5 billion in the third quarter of 1992, compared with $14.5 billion in the second quarter of 1992 and $6.4 billion in the third quarter of 1991.
 MBS
 Lender-originated mortgage-backed securities issued were $38.2 billion in the third quarter of 1992. This compares with $48.3 billion in the second quarter of 1992 and $27.1 billion in the third quarter of 1991. Total Mortgage-Backed Securities issued, which include MBS originated by Fannie Mae, were $41.3 billion in the third quarter of 1992, compared with $53.8 billion in the second quarter of 1992 and $31.9 billion in the third quarter of 1991.
 MBS outstanding at the end of the third quarter of 1992 totaled $430 billion, compared with $413 billion at the end of the second quarter of 1992 and $352 billion at the end of the third quarter of 1991.
 MBS guaranty fees increased to $214.9 million in the third quarter of 1992 from $203.8 million in the second quarter of 1992 and $173.2 million in the third quarter of 1991.
 Miscellaneous Income
 Miscellaneous income totaled $51.3 million for the third quarter of 1992, compared with $44.5 million for the second quarter of 1992 and $28.1 million for the third quarter of 1991. REMIC fees, which are included in miscellaneous income, were a record $28.6 million in the third quarter of 1992 compared with $21.5 million in the second quarter of 1992 and $15.0 million in the third quarter of 1991.
 Other Income
 Third quarter results included a gain of $13.4 million on sales of mortgages, compared with $4.4 million in the second quarter of 1992 and $5.1 million in the third quarter of 1991. Losses from repurchase of debt were $14.2 million pre-tax ($9.3 million after tax) in the third quarter of 1992, compared with losses of $13.0 million pre-tax ($8.7 million after tax) in the second quarter of 1992. There were no losses on the repurchase of debt in the third quarter of 1991.
 Foreclosures and Inventory of Acquired Properties
 The company acquired 2,470 conventional single-family properties through foreclosure in the third quarter of 1992, compared with 2,391 properties in the second quarter of 1992 and 1,913 properties in the third quarter of 1991.
 The inventory of foreclosed property was 4,001 at the end of the third quarter of 1992, up from 3,638 at June 30, 1992, and 3,306 at Sept. 30, 1991.
 Loan Charge-Offs and Provisions
 Charge-offs to Fannie Mae's allowance for loan losses were $62.9 million in the third quarter of 1992, compared with $58.6 million for the second quarter of 1992 and $55.3 million in the third quarter of 1991.
 The provision for losses was $80.0 million for the third and second quarters of 1992 and for the third quarter of 1991. The allowance for loan losses was $765.8 million at Sept. 30, 1992, compared with $748.7 million at June 30, 1992 and $676.2 million at Sept. 30, 1991.
 The company maintained its provision for losses at $80.0 million in anticipation of the adoption, in January 1993, of a new AICPA standard relating to the accounting for foreclosed assets. Under this new standard, foreclosure, holding, disposition and interest carrying costs, which are currently charged against the loss allowance, will be recorded in the income statement either as foreclosed property expense or as a reduction in net interest income.
 Administrative Expenses
 Administrative expenses totaled $96.9 million for the third quarter of 1992, compared with $94.9 million for the second quarter of 1992 and $81.5 million for the third quarter of 1991.
 Capital
 Fannie Mae's capital, defined as shareholders' equity plus allowance for losses, was $7.2 billion at the end of the third quarter of 1992, compared with $6.9 billion at the end of the second quarter of 1992, and $5.9 billion at the end of the third quarter of 1991.
 Fannie Mae, the USA's Housing Partner, is a congressionally chartered, shareholder-owned company and the nation's largest investor in home mortgages.
 FEDERAL NATIONAL MORTGAGE ASSOCIATION
 Summary Statements of Operations
 Quarter Ended
 (Dollars in millions, except Sept. 30 June 30, Sept. 30
 per share amounts) 1992 1992 1991
 Net interest income $506.9 $518.2 $456.0
 Guaranty fees 214.9 203.8 173.2
 Income from tax settlement -- -- --
 Gain (loss) on sales of
 mortgages, net 13.4 4.4 5.1
 Miscellaneous, net 51.3 44.5 28.1
 Provision for losses (80.0) (80.0) (80.0)
 Administrative expenses (96.9) (94.9) (81.5)
 Income before federal income
 taxes 609.6 596.0 500.9
 Federal income taxes (187.4) (185.3) (150.2)
 Extraordinary loss-early
 retirement of debt
 (net of year-to-date taxes
 of $12.6 million) (9.3) (8.7) --
 Net income $412.9 $402.0 $350.7
 Earnings per share:
 Primary $1.51 $1.47 $1.28
 Fully diluted 1.51 1.47 1.28
 Cash dividends 0.34 0.34 0.26
 Average shares (fully diluted)
 in millions 274.2 274.2 274.4
 Nine Months Ended
 (Dollars in millions, except Sept. 30 Sept. 30
 per share amounts) 1992 1991
 Net interest income $1,514.0 $1,320.7
 Guaranty fees 612.3 492.2
 Income from tax settlement -- 239.1
 Gain (loss) on sales of
 mortgages, net 24.3 (44.8)
 Miscellaneous, net 132.0 70.2
 Provision for losses (240.0) (290.0)
 Administrative expenses (277.9) (231.6)
 Income before federal income
 taxes 1,764.7 1,555.8
 Federal income taxes (543.9) (467.4)
 Extraordinary loss-early
 retirement of debt
 (net of year-to-date taxes
 of $12.6 million) (24.3) (86.2)
 Net income $1,196.5 $1,002.2
 Earnings per share:
 Primary $4.36 $3.67
 Fully diluted 4.36 3.66
 Cash dividends 0.98 0.74
 Average shares (fully diluted)
 in millions 274.4 273.6
 Sept. 30, June 30, Sept. 30,
 End of period: 1992 1992 1991
 Total assets $170,055.2 $162,478.3 $139,619.0
 Total investment
 portfolio (gross) 166,386.9 159,248.9 136,442.9
 Interest margin
 (last month average) 1.29 pct. 1.38 pct. 1.42 pct.
 Investment spread
 (last month average) 0.71 pct. 0.83 pct. 0.86 pct.
 Shareholders' equity $6,453.2 $6,132.2 $5,267.4
 Book value per share 23.63 22.46 19.30
 MBS outstanding 429,935.0 413,225.6 351,917.5
 Note: Shares outstanding at Sept. 30, 1992, were 273,040,000.
 -0- 10/8/92
 /CONTACT: Tom Marder of Fannie Mae, 202-752-7608/
 (FNM) CO: Federal National Mortgage Association ST: District of Columbia IN: FIN SU: ERN


MH -- DC013 -- 7810 10/08/92 11:41 EDT
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