WASHINGTON (dpa-AFX) - Mortgage guarantor Fannie Mae (FNMA.OB), Wednesday reported a swing to profit in the first quarter from a year ago, aided mostly by much lower credit expenses and a seven percent rise in revenue.
Fannie Mae also said it does not require funding from the U.S. Treasury for the first quarter 2012, stating it has enough funds to pay the quarterly dividend of $2.8 billion.
Fannie Mae, which went bankrupt after the financial crisis and had to subsist on federal funds, said loan provisions for the 2012 quarter dropped sharply to $2 billion from $10.5 billion last year. The drop was due mainly to stable home prices, a drop in inventory of single-family real estate owned properties, and lower single-family serious delinquency rates. The company said it expects credit expenses for 2012 to be lower compared to the prior year.
Fannie Mae CEO Michael Williams said, 'Our financial performance has improved significantly and we successfully limited losses on the legacy book of business through our efforts to help homeowners avoid foreclosure...'
Fannie Mae, which guarantees a major part of U.S. home loans, reported first-quarter net income of $2.7 billion, compared to a net loss of $6.5 billion last year.
After preferred stock dividends, net loss to common shares for the quarter was $98 million or $0.02 per share, compared to net loss of $8.7 billion or $1.52 per share last year.
Net revenue for the quarter was $5.57 billion, compared to $5.2 billion last year. Net interest income was $5.2 billion, up 5 percent from the prior year.
As of March, 31, 2012, Fannie Mae had assets of $3.2 trillion, compared with $3.21 trillion as of December 31, 2011. Its total mortgage loans aggregated $2.92 trillion, compared to $2.9 trillion a year ago.
Total loss reserves as of March 31, 2012, decreased to $74.6 billion from $76.9 billion as of December 31, 2011.
Fannie Mae said its first-quarter 2012 dividend of $2.8 billion on its senior preferred stock held by Treasury was paid on March 30, 2012.
The company said its aggregate liquidation preference of the senior preferred stock remains at $117.1 billion as of March 31, 2012, which requires an annualized dividend payment of $11.7 billion.
As of March 31, 2012, Fannie Mae had paid an aggregate of $22.6 billion to Treasury in dividends on the senior preferred stock.
Meanwhile, its sister concern Freddie Mac (FMCC.OB) last Thursday reported a lower quarterly profit, hurt by derivative-related losses. Freddie Mac reported first-quarter net income of $577 million.
Freddie Mac paid dividends of $1.8 billion to the U.S. Treasury during the quarter and had requested a capital draw of $19 million to cover its net worth deficit, increasing its aggregate liquidation preference of the senior preferred stock to $72.34 billion.
FNMA.OB is trading at $0.2950, up $0.0325 or 12.38%, on a volume of 9.7 million shares. In the past year, the stock has traded in a range $0.19 - $0.41.
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