Fannie Mae reported enough profit in the first quarter to offset dividend payments to the Treasury and avoid another bailout from taxpayers.

The government-sponsored enterprise reported $2.7 billion in net income for the first quarter, up from a $6.5 billion loss the same period last year. Accounting for the appreciation of its securities holdings, total comprehensive income at Fannie reached $3.1 billion, more than the $2.8 billion required payment to the Treasury.

It's the first time the mortgage giant has not required a quarterly draw since entering conservatorship in 2008.

Fannie pulled $116.1 billion and paid back $22.6 billion so far.

"We expect our financial results for 2012 to be significantly better than 2011," said Fannie Chief Financial Officer Susan McFarland. "Our credit performance is headed in the right direction with significant improvement since 2009, and we expect that the reserves we have built to cover future credit losses on the pre-2009 legacy book of business have reached their peak."

Fannie lowered its reserves for credit losses to $74.6 billion as of March 31, down from $76.9 billion at the end of last year. Most of the losses stem from mortgages purchased between 2005 and 2007.

The serious delinquency rate dropped every quarter over the last two years to 3.67% in the first quarter, down from 5.47% in March 2010.

Meanwhile, newer vintages remain extremely restricted.

Mortgages acquired by Fannie in the first quarter averaged a 763 FICO score and an original loan-to-value ratio of 70%.