Fannie Mae reported this morning that it posted its sixth consecutive quarterly profit in the second quarter of 2013 and will pay taxpayers a $10.2 billion dividend in September. That payment will bring the aggregate dividents paid to Treasury since the company was placed in conservatoryship at $105 billion.

The company's net income was $10.1 billion in the second quarter and the comprehensive income was $10.3 billion. One year earlier net comprehensive income was $5.4 billion. A quarter-over-quarter comparison of net comprehensive income is negated by a one-time benefit for federal income taxes taken in the first quarter of 2013 of $31.6 billion. This brought the net compehensive income in the quarter to $59.3 billion.

The company said its strong second quarter showing was driven primarily by continued stable revenues and boosted by a significant increase in home prices during the quarter which resulted in a reduction in the company's loss reserves. The company posted a positive net worth of $13.2 billion at quarter's end.

Net revenues were $6.2 billion in the second quarter compared with $6.9 billion in the first and net interest income was $5.7 billion against $6.3 billion. The decrease in net interest income was due to lower interest income from portfolio assets due to a decline in those assets and the recognition of $518 million of unamortized cost basis adjustments in the first quarter related to loans repurchased by Bank of America, partially offset by high income from guaranty fees. The company said as it continues to reduce the size of its retained mortgage portfolio in compliance with its agreement with the Department of the Treasury the revenues generated by these assets will also decrease. It expects that eventually guaranty fees will become its primary source of revenues.

Credit-related income was $5.7 billion in the second quarter compared to $1.2 billion in the first quarter due primarily to an increase in home prices. The company also updated assumptions and data used in calculating loss reserves on modified loans which resulted in an incremental benefit for credit losses of $2.2 billion.

Credit losses were $1.6 billion compared to $1.5 billion in the first quarter. Both quarters were favorably impacted by increases in home prices and sales prices for disposition of the companies owned real estate as well as by recoveries from loan repurchase requests.

Total loss reserves fell from $60.2 billion to $53.1 billion and total loss reserves covered to total nonperforming loans was 23 percent at the end of the second quarter compared to 25 percent at the end of the first.

Like Freddie Mac, Fannie Mae said that approximately three quarters of its single-family guaranty book of business now consists of loans it has purchased or guaranteed since the beginning of 2009. The strong credit profile and performance to date lead the company to expect these loans will be profitable over their lifetime and thus exceed the company's credit losses and administrative costs for them.

Fannie Mae acquired 36,106 single family REO properties in the second quarter compared with 38,717 in the first quarter and had an inventory at the end of the quarter of 96,920, down from 101,449 at the end of Q1. The carrying value of the REO was $9.1 billion.

The serious delinquency rate in the single-family portfolio has declined each quarter since Q1 2010 and was 2.77 percent at the end of the current reporting period compared to 5.47 percent on March 31, 2010.

The company said it expects to remain profitable for the foreseeable future but its earnings may vary significantly from quarter to quarter due to factors such as interest rate changes and rising or falling home prices. In addition to dividend payments, the company said it expects to make substantial federal income tax payments going forward.

Fannie Mae said it expects to remain profitable for the foreseeable future. While its revenues are projected to be stable and its annual earnings to remain strong over the next few years, its earnings may vary significantly from quarter to quarter due to many different factors, such as changes in interest rates or home prices. In addition to dividend payments, the company expects to make substantial federal income tax payments to Treasury going forward.