Fannie Mae (FNM) Reports Q2 Loss of $2.3B, Or $2.54/Share
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Fannie Mae (NYSE: FNM) reported a net loss of $2.3 billion, or ($2.54) per diluted share, in the second quarter of 2008, compared with a first quarter 2008 net loss of $2.2 billion, or ($2.57) per diluted share. Results were driven primarily by an increase in the provision for credit losses that more than offset higher revenue and fair value gains.
Reducing the common stock dividend from $0.35 per share to $0.05 per share, effective for the third quarter, to preserve $1.9 billion in capital through 2009.
Credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, rose to $5.3 billion from $3.2 billion in the first quarter. The main driver was a $3.7 billion addition to our combined loss reserves as well as higher charge-offs.
Combined loss reserves were $8.9 billion as of June 30, up from $5.2 billion as of March 31, as the company substantially increased its combined loss reserves to reflect losses it believes will be recorded over time in charge-offs.
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