Magazine article American Banker

Fannie Mae Profits Up 20%

Magazine article American Banker

Fannie Mae Profits Up 20%

Article excerpt

Fannie Mae earnings jumped nearly 20% in the second quarter, to $1.314 billion, reflecting the recent strength of the mortgage and housing markets.

Fannie Tuesday said per-share earnings rose 21% from a year earlier, to $1.27, as revenue grew 29.1%, to $2.45 billion. Business volume, which includes mortgage portfolio purchases and securities acquired by investors, surged 22.3%, to a record $165.7 billion.

Amid weak earnings in the larger financial services industry, mortgage and housing-related companies have reported healthy second-quarter gains.

Countrywide Credit Industries had a 47% earnings jump in its latest quarter, which ended May 31, to $123.1 million. MGIC Investment Corp., parent of the nation's largest mortgage insurance company, reported last week that its second-quarter earnings rose 16%, to $161 million.

And MDC Holdings Inc., one of the nation's largest homebuilders, reported Tuesday that second-quarter net income increased 35%, to $38.8 million. The quarter and the first half were the strongest in its history.

One analyst credited Fannie's performance to its ability to exploit the strong mortgage market. "They're really taking advantage of this interest rate rally, which set off the refi boom," said Gary Gordon, the managing director for specialty finance research at UBS Warburg.

Fannie's loan portfolio growth -- 14.6% from a year earlier -- was "very nice," Mr. Gordon said, and its interest rate margin of 106 basis points was "tremendous. …

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