Fannie Mae Profit Rises; To Pay $4.4 Bln. Dividend To Treasury

(RTTNews) - Mortgage guarantor Fannie Mae (FMCC.OB) on Thursday reported a higher second-quarter profit, as an increase in interest rate boosted revenues and also recorded fair value gains, partly offset by credit losses.

Fannie Mae expects to pay $4.4 billion in dividend to the Treasury in September, bringing its total dividend payments to $142.5 billion. The company noted that dividend payments to the do not reduce prior Treasury draws, which total $116.1 billion since 2008.

Looking ahead, Fannie Mae said it expects to remain profitable on an annual basis, on the back of higher home prices and sustenance in the housing sector.

Home buyers are continuing to reap the benefits of attractive mortgage rates, with the average 30-year fixed mortgage rate dropping further to 3.91 percent for the week ending August 6.

The Federal Reserve is broadly expected to raise interest rates. A statement last week by Fed provided no timetable, but the central bank is awaiting further economic gains and higher inflation before raising rates.

Fannie Mae and smaller sibling Freddie Mac (FMCC.OB) were rescued by the federal government amid the September 2008 financial crisis, receiving a total bailout of about $187 billion. Both have since rebounded.

For the second quarter, Fannie Mae reported net income of $4.64 billion, compared with $3.67 billion in the prior year.

After dividend payment to the Treasury, Fannie Mae reported net earnings to common stock holders of $281 million or $0.05 per share, compared with a loss of $46 million or $0.01 per share last year.

Fannie Mae's revenues for the second quarter rose to $6.23 billion from $5.29 billion a year ago.

The company said serious delinquency rate for its portfolio of loans dropped to 1.67 percent in the quarter from 2.05 percent last year.

Smaller peer Freddie Mac on Tuesday reported a surge in second-quarter profit, driven by increase in net interest income and derivative gains.

Freddie Mac will pay a dividend of $3.9 billion to the U.S. Treasury next month; with that, Freddie Mac will have paid $96.5 billion in dividends.

Fannie Mae stock is trading at $2.34, up about $0.01 or 0.21%, on a volume of 1.2 million shares.