DOW JONES NEWSWIRES
Freddie Mac (FRE) swung to a second-quarter profit on accounting
adjustments and gains while the mortgage financier, which was
placed under conservatorship in September to prevent its potential
implosion, said it did not need more federal funds at this
time.
Shares surged 26% after hours, to $0.93.
"We are pleased that our financial results allowed us to finish
the quarter with a positive net worth, meaning we will not need to
request any additional financial support from the government at
this time," said interim Chief Executive John Koskinen.
He added that despite "some early signs pointing to a housing
recovery," Freddie's outlook is cautious because of rising
foreclosures, growing unemployment, tight lending standards and
buyers' reluctance to re-enter the market.
The results contrast with larger peer Fannie Mae (FNM), which
late Thursday said its loss ballooned on surging credit impacts and
that it needed another $10.7 billion from the government as Fannie
admitted it is reliant on the government's help to stay in
business.
For the latest quarter, Freddie Mac reported a profit of $768
million compared with a year-earlier loss of $821 million. The
results include $2.2 billion of securities write-downs that were
more than offset by $4.2 billion in gains on the company's
derivative portfolio. Excluding items, Freddie would have had an
11-cent loss in the latest quarter.
Revenue surged to $7.47 billion from $1.59 billion on the gains
along with net interest income more than doubling to $4.26 billion
on lower funding costs.
Credit-loss provisions were $5.2 billion, compared with $8.8
billion in the first quarter.
Delinquencies of at least 90 days surged to 2.78% from 0.93% a
year earlier.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com