Federal National Mortgage Association, which fell victim to high interest rates along with most other segments of the housing industry, yesterday reported its first profitable quarter since the end of 1980. It showed net income of $15 million (22 cents a share) compared with a loss of $42.8 million a year ago.
"This is a great day, not just for FNMA, but for housing," declared its chairman, David O. Maxwell. For him, it represented the first black ink since he became chief executive officer in May 1981. Known by its nickname Fannie Mae, the government-chartered private corporation buys and sells mortgages to provide funds for the housing market. It had losses of $190 million in 1981 and $105 million in 1982.
Much of the turnaround was due to a decrease in interest rates, which reduced Fannie Mae's borrowing costs and brought them more into line with the yield on its mortgage portfolio. Other policies Maxwell initiated or emphasized to get the company out of the hole were building guaranteed fee income on the sale of mortgage-backed securities, emphasizing fee commitments, and aggressively purchasing new, high yielding mortgages. He also froze executives' salaries for a year to cut costs.
Maxwell said yesterday Fannie Mae had made substantial progress in reversing its financial plight, but cautioned that it would take more time for Fannie Mae to get rid of the mismatch in its portfolio caused by the continued presence of old, low-yielding loans.
Martin Marietta Corp. reported slightly lower net income for the first quarter on an increase in sales as high interest costs cut into one-time gains from the sale of some of the Bethesda-based aerospace conglomerate's assets.
The company said it earned $13.8 million (60 cents a share) in the quarter, down 13 percent from $15.8 million (44 cents) a year ago. Sales rose 2 percent to $801.9 million from $784.5 million.
Per-share earnings increased in the quarter because of a 49 percent reduction in the number of the company's outstanding shares as a result of the transactions that ended Martin Marietta's merger fight with Bendix Corp. last September. In the settlement of the battle, Allied Corp. took over Bendix and gained a 30 percent stake in Martin Marietta.
Martin Marietta said its operating income in the quarter slipped 5 percent to $16.5 million from $17.3 million a year ago. The company said that $37.4 million in income from divestitures (compared with $17.3 million a year earlier) was almost consumed by $31.7 million in interest expense--triple that of a year ago. Outstanding debt ballooned from $360 million to $1.3 billion as a result of the Bendix fight and has now been reduced to less than $1 billion, company officials said.
United Services Life Insurance Co., with headquarters in D.C., reported net income increased by 14.5 percent during the first quarter of this year to $3.8 million (61 cents a share) from $3.3 million (53 cents) for the same period last year. Total income increased to $39.1 million from $30.5 million.
The company cited a 24 percent increase in new life insurance sales due to its acquisition of Provident Life in December 1982. Also contributing to its earnings were a decrease in policy loans and low death claims.