Fannie Mae on Tuesday said second-quarter earnings grew 12.9%, to $957.6 million.

Earnings per share grew 13.8% to 91 cents, matching analysts' expectations. The secondary mortgage market giant also said its fee to guarantee loans it bought was unchanged from the first quarter at 19.4 basis points, allaying some concern that pricing competition with Freddie Mac would hurt its results.

Fannie Mae's mortgage portfolio grew an annualized 29.7%, to $473 billion. Thomas O'Donnell, an analyst for Salomon Smith Barney, said this was a major reason for the strong report.

Mr. O'Donnell said there were no "negative surprises" in the report. He expects mortgage portfolio growth to remain brisk this year and because mortgage volume for home purchases remains healthy, even though refinancings have declined.

The stable average guarantee fee rate should "help to undercut fears that a price war is raging between Fannie and Freddie Mac," Mr. O'Donnell said. Investors have been wary of Fannie and Freddie's stocks since the two began forging alliances with large lenders to lock up market share. Mr. O'Donnell said he expects to see continued "competition in price in other areas as they try and nail down these relationships."

Fannie said it purchased $55.8 billion of mortgages in the second quarter, up from $53 billion in the first quarter, and $44 billion in the second quarter of 1998.

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