Fannie Mae

(FNM)

said its second-quarter earnings were up on high volumes, a rising net interest margin, and a low level of credit losses.

The mortgage market-maker said it earned $1.464 billion, or $1.44 a share, in the quarter, up 4.4% from $1.402 billion, or $1.36 a share, in the year-ago period.

Excluding special charges, the company earned $1.573 billion, or $1.55 a share, up from $1.314 billion, or $1.27 a share, last year. On that basis, analysts polled by Thomson Financial/First Call had been looking for $1.52 a share.

In the second quarter, the company's portfolio growth slowed to 4.9%, but the net interest margin was higher than expected. The company said it expects the margin to move lower in the remainder of the year and into next year, while expected portfolio growth should be in the low to mid teens range.

Fannie Mae's business volume, or mortgages purchased for portfolio in addition to mortgage-backed security issues acquired by other investors, was $159.8 billion in the quarter, compared to $165.7 billion last year.

Credit losses due to delinquencies in the quarter were less than expected, with the company saying, "We keep anticipating that our credit losses will rise from their extremely low levels, but so far they have not."

Looking ahead, Fannie Mae said it expects to see 2002 operating EPS above its long-term EPS growth trend, but the company warned that its growth in 2003 will be below "the exceptional rates recorded" in 2001 and 2002. The company said it still expects 2003 operating earnings to exceed its long-term trend, however.

On Friday, in an attempt to quell growing investor fears that the company's congressional backing has allowed it to obscure its financial results, Fannie Mae said that it will voluntarily file its results with the

Securities and Exchange Commission

.

Shares of Fannie Mae closed at $70.63 Friday before the news.