Fannie's Profits Plunge in 4Q

Fannie Mae's fourth-quarter profits plunged nearly 52% from those of a year earlier (although operating earnings increased), bringing its net income to $4.62 billion ($4.53 per share) for the year, down 21.6% from $5.89 billion ($5.72 per share) in 2001.The results ended a 15-year string of record earnings under generally accepted accounting principles for the government-sponsored enterprise. Fourth-quarter net income totaled $952 million ($0.94 per share), down 51.7% from $1.97 billion ($1.92 per share) in the fourth quarter of 2001. However, net income includes the variability in the market value of purchased options and options embedded in callable debt, so the GSE said its management uses operating net income figures as the "primary performance measures" for the company. Operating net income totaled $6.39 billion ($6.31 per share) for the year, up 19.1% from $5.37 billion ($5.20 per share) in 2001, and $1.67 billion ($1.66 per share) for the quarter, up 16.3% from $1.44 billion ($1.40 per share) a year earlier. "In an extremely difficult business environment that affected virtually every company in America, Fannie Mae's operating results in 2002 were among the best in the company's history," said Fannie Mae chairman and chief executive officer Franklin D. Raines. Fannie Mae's website address is http://www.fanniemae.com.