Fannie Mae reported the largest annual profit in company history as a housing rebound helped the firm stop drawing federal aid.
The government-sponsored enterprise had net income of $17.2 billion for 2012, compared with a loss of $16.9 billion in 2011, the company said today in a statement. Profits totaled $7.6 billion for the three months ended Dec. 31 after accounting for a $4.2 billion dividend payment to the Treasury Department for the government's stake.
"Our financial results improved significantly in 2012 and we expect our earnings to remain strong over the next few years," Timothy J. Mayopoulos, Fannie Mae's president and chief executive officer, said in the statement. "We have taken a number of actions since 2009 to manage our legacy book of business, build a healthy new book of business with responsible underwriting standards, price appropriately for risk, and reduce uncertainty."
Fannie Mae could have to report as much as $58.9 billion in deferred tax assets as income as soon as the first quarter of this year, according to the statement. The company on March 14 requested extra time to file as accountants examined whether those assets would have to be reported as income in the final quarter of 2012 now that the company is profitable.
The credits weren't reported as assets when Fannie Mae didn't expect it would ever earn taxable income. The company determined it didn't have to treat the credits as assets during 2012, according to the statement.
Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest. The two companies have drawn $187.5 billion from Treasury and have sent back more than $60 billion in the form of dividends, which count as a return on the government's investment and not as a repayment.
Under the terms of an agreement with Treasury that went into effect this year, the enterprises will be allowed to retain only $3 billion in net worth. Any profits beyond that amount will go to taxpayers. If Fannie Mae starts reporting its deferred tax assets as income, the company could have to send a significant payment to Treasury to stay under the $3 billion net worth cap.
Regulators who took the GSEs into conservatorship in 2008 didn't create an avenue for them to regain independence because lawmakers were expected to wind them down and replace them before they returned to profitability.
Freddie Mac reported in February that it earned $11 billion in all of 2012, compared with a loss of $5.3 billion in 2011.
