BANKING & FINANCE - Dec. 28, 1995

Fannie Mae to Sell $1 Billion in Preferred Stock: The Federal National Mortgage Assn. said it will sell $1 billion of preferred stock to buy back its common shares. The company, better known as Fannie Mae, also plans to split its stock on a 4-for-1 basis and will contribute 3 million shares of common stock to its charitable foundation. Fannie Mae may repurchase as much as 6% more shares of its common stock, meaning it could buy back about 9% of its shares in total. The company will take a pretax charge of $350 million in the fourth quarter. The plan comes as Fannie Mae’s wider profit margins generate more cash for the company to put to work and it becomes more difficult to buy mortgages to expand its $250-billion portfolio at the same pace. Fannie Mae shares soared $5.25 to a record $125 on the New York Stock Exchange.