Freddie Mac Profit Falls, To Pay Treasury $2.8 Bln In Dividends

(RTTNews) - Freddie Mac (FMCC.OB) on Thursday reported a sharp drop in profit for the third quarter, as last year's bottom line was driven by a hefty tax benefit. Nonetheless, the U.S government controlled mortgage guarantor posted its 12th consecutive quarterly profit.

Freddie Mac reported third-quarter net income of $2.08 billion, down sharply from $30.49 billion reported last year. Last year's profit included tax benefit of $24.0 billion related to the release of valuation allowance on deferred tax assets.

Freddie Mac said it will pay $2.8 billion in dividends to the Treasury in December. With the December dividend payment, Freddie Mac will have repaid the U.S. Treasury $91.0 billion, more than the entire $71.3 billion received in aid during the sub-prime crisis.

After payment of dividends, the third-quarter loss attributable to common stockholders was $705 million or $0.22 per share, compared to net income of $50 million or $0.02 per share last year.

Freddie Mac and its sister concern Fannie Mae (FNMA.OB) went bankrupt after the 2008 financial crisis and had to be rescued by $187 billion federal aid. Both entities have since rebounded on the back of some improved home prices and lower delinquencies, and have repaid the bailout funds. As per the bailout deal, Freddie Mac and Fannie Mae had to pay the Treasury its profit as dividends. They cannot buyback its stake.

Net interest income for the quarter dropped to $3.66 billion from $4.28 billion last year. Non-interest income was $764 million, down from last year's $1.69 billion.

Freddie Mac reported derivative losses of $617 million for the period, compared to derivative losses of $74 million last year. The company reported provision of credit losses of $574 million in the period, compared to a benefit of 1.14 billion recorded last year.

The firm said its delinquency rates remained below industry benchmarks. Its single-family serious delinquency rate declined to 1.96 percent, the lowest since January 2009.

FMCC is currently trading at $2.14, down $0.07 or 3.17%, over the OTC BB.