Fannie Mae (FNMA.OB) said Wednesday it returned to a profit for the second quarter, driven mainly by an improvement in home prices and a decline in single-family delinquency rates.
The Mortgage guarantor also said it does not require funding from the U.S. Treasury, stating it has enough funds to pay the second quarter dividend of $2.9 billion.
Fannie Mae and its sister company Freddie Mac went bankrupt after the financial crisis and had to survive on federal funds. But both companies have recorded positive net worth on the back of improved home prices and lower delinquencies amid a slight recovery in the housing market.
Fannie Mae CEO Timothy Mayopoulos attributed the positive growth in the second quarter to better market conditions, actions to strengthen news business and limit losses.
"While it is too early to declare a national housing recovery, and our results for the second half of 2012 may not be as strong as the first half, we expect our financial results in 2012 to be substantially better than the past few years...," Mayopoulos added.
Fannie Mae as of June 30, had net worth of $2.8 billion. The company noted that the total liquidation preference of Treasury's senior preferred stock remains at $117.1 billion, and till date, it has paid $25.6 billion in dividends to the Treasury.
Fannie Mae reported second quarter net profit of $5.1 billion, compared to net loss of $2.9 billion last year.
After preferred stock dividends, net income to common shares for the quarter was $2.2 billion or $0.37 per share, compared to net loss of $5.18 billion or $0.20 per share a year ago.
Fannie Mae benefited from credit related income of $3.1 billion for the quarter, compared to credit losses of over $6 billion last year. This was partly offset by fair value losses and impairments of about $3 billion, compared to $1.65 billion last year.
Net revenues for the quarter increased to $5.8 billion from $5.2 billion a year ago.
Fannie Mae said it expects stable home prices and lower single-family serious delinquency rates to continue. As of June 30, its single-family serious delinquency rate was 3.53 percent, compared with 5.47 percent as of March 31, 2010.
Meanwhile, Freddie Mac (FMCC.OB) said Tuesday it turned around to a profit for the second quarter, helped by a decrease in loan-loss provisions and derivative losses. Freddie Mac also said it does not require additional capital from the U.S. Treasury as the company recorded positive net worth of $1.1 billion as at June 30, 2012.
FNMA.OB is trading at $0.31, up 8.97%, on a volume of about 14 million shares.
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