- The Washington Times - Wednesday, January 21, 2004

From combined dispatches

Fannie Mae, the nation’s largest mortgage-finance company, reported yesterday that its fourth-quarter profits more than doubled as business volume surged 68 percent during the year.

For the fourth quarter, the District-based company reported net income of $2.2 billion, or $2.21 a share, compared with $952 million (94 cents) a year earlier.

Fannie Mae buys home loans from banks to hold in its portfolio or package into securities. It uses derivatives and other hedging instruments to manage the risk that comes with building big portfolios.

Core business earnings — which the company considers a better measure of its financial performance — rose 5.9 percent to $1.77 billion, or $1.77 a share, from $1.67 billion, or $1.66 a share, a year earlier. Core business earnings take hedging out of the mix.

For the full year, Fannie Mae reported net income of $7.91 billion ($7.91), up 71 percent from $4.62 billion ($4.52) in 2002. Core business earnings for 2003 rose 14 percent to $7.31 billion ($7.29) from $6.39 billion ($6.30) the year before.

Fannie Mae said 2003 business volume rose 68 percent to a record $1.42 billion.

At the same time, credit-related costs rose 22 percent to $111.6 million in 2003. Fannie Mae blamed an increase in the number of foreclosed properties, along with an increase in its loss per case on foreclosure.

Fannie Mae has been under scrutiny since a major accounting scandal last summer at Freddie Mac, the country’s other big mortgage buyer. Congress is currently trying to agree on oversight legislation.

Among other area companies reporting earnings yesterday:

• General Dynamics Corp., the Falls Church maker of Abrams battle tanks and Gulfstream jets, said fourth-quarter profits rose 3.7 percent to $279 million ($1.40) because of acquisitions in its computer technology unit and a rebound in civilian airplane sales.

• Capital One Financial Corp., the McLean credit-card issuer, reported a 12 percent increase in the fourth quarter to $267.5 million ($1.11) from $239.7 million ($1.05) during the same period in 2002. For the year, the company’s profits rose 23 percent to $1.1 billion ($4.85) from $900 million ($3.93) in 2002.

• CACI International Inc., an Arlington information-technology company, said it posted a 35 percent boom for its second quarter ended Dec. 31 to $14.3 million (48 cents per diluted share) from $10.6 million (36 cents)for the comparable period a year ago.

• Fairfax Internet services company WebMethods Inc. posted a wider loss for its third quarter ended Dec. 31 to $11.1 million (21 cents) from $4.5 million (9 cents) a year ago.

• Legg Mason Inc., the Baltimore brokerage whose money manager Bill Miller has outperformed the Standard & Poor’s 500 Index for 13 years running, said third-quarter earnings increased 69 percent to $80.8 million ($1.07 a share) as investors poured money into Mr. Miller’s fund.

• Provident Bankshares Corp. of Baltimore reported a 7 percent increase in fourth-quarter income to $14.2 million (56 cents per diluted share) from $13.3 million (53 cents) in the previous year. Profits for the full year also climbed 7 percent to $51.5 million ($2.05) from $48.3 million ($1.88) in 2002.

• Southern Financial Bancorp Inc. of Warrenton, Va., posted a 42 percent increase in fourth-quarter profits to $3.55 million (56 cents per diluted share) from $2.5 million (40 cents) from the 2002 quarter. Earnings for 2003 also rose 32 percent to $13.2 million ($2.10) from $10 million ($1.71) in the previous year.

• Tredegar Corp., a Richmond manufacturer of laminate film, said fourth-quarter net income surged to $9.31 million (25 cents per diluted share) from $1.98 million (5 cents) in the 2002 quarter. However, the company posted a wider loss for the year of $26.3 million (69 cents) from $2.53 million (7 cents) in 2002.

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