Fannie Mae, Washington, has reported earnings of $1.90 billion ($1.90 per share) under generally accepted accounting principals for the fiscal first quarter, down 2.1% from $1.94 billion ($1.93 per share) a year earlier.However, using a non-GAAP measure called core business earnings, Fannie Mae earned $2.02 billion ($2.03 per share), up 9.2% from $1.85 billion ($1.84 per share) earned for the same period in 2003. Among the reason cited for the decline in GAAP earnings was an increase in unrealized mark-to-market losses on the time value of purchased options. For the first quarter of 2003, this was $624.6 million; in the most recent period, it was $959.3 million. In addition, net interest income declined 5.1% to $3.2 billion. Business volume in the first quarter was $163.0 billion, compared with $335.9 billion for the same period last year. In a statement issued by the company, chief financial officer Tim Howard said lower interest rates in the first quarter would likely result in Fannie Mae posting a higher net interest margin for the year than it previously projected. "While we continue to project that the net interest margin will decline towards the 100 basis point level, we now expect this further margin compression to occur somewhat later in the year," he said.

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