Second Largest Profit Ever for Freddie Mac
Freddie Mac has again reported strong quarterly financial results with net income in the second quarter of 2013 coming in at $5.0 billion, $0.6 billion more than one year earlier. This was the seventh consecutive quarter the company, operating under federal conservatorship, has showed a profit and it was the second largest profit in the company’s history.
Net comprehensive income was down from its record first quarter total of $7.0 billion to $4.4 billion. The change was due entirely to a $3 billion drop in Comprehensive Income from $2.4 billion in the first quarter to ($0.6) billion in the second. The company said the decrease primarily reflects changes in the fair values on the company’s non-agency available-for-sale (AFS) securities which fluctuate considerably from quarter to quarter due to market conditions.
Based on its net worth of $7.4 billion at the end of the quarter, the company will pay a dividend of $4.4 billion to the U.S. Treasury. This will bring the aggegate total of dividends paid to Treasury to $41 billion, none of which may be used to retire Freddie Mac’s outstanding obligation to Treasury of $72.3 billion. The company will not require an additional Treasury draw this quarter.
Freddie Mac’s Investments segment earned $3.3 billion in the second quarter compared to $2.8 billion in the first with the increase coming primarily from higher derivative gains. The Single-Family Guarantee segment earned $1.3 billion compared to $1.2 billion with the change attributable to higher REO operations income and higher benefit for credit losses. Earnings from the Multifamily segment fell from $585 million in the first quarter to $393 million in the second because of higher losses on mortgage loans recorded at fair value due to spread widening. Read more…