Federal Home Loan Mortgage Corporation
) reported third-quarter 2013 net income of $30.5 billion, well
ahead of the prior-quarter earnings of $5 billion. A benefit for
federal income taxes of $23.9 billion related to valuation
allowance against net deferred tax assets in the reported quarter
drove the increase in income.
CITIGROUP INC (C): Free Stock Analysis Report
FREDDIE MAC (FMCC): Get Free Report
JPMORGAN CHASE (JPM): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.
Freddie Mac reported pre-tax income of $6.5 billion, up 32.7%
sequentially, reflecting the 8th consecutive quarter of positive
earnings and the second highest earnings in the company's
Performance in Detail
Net interest income rose 3.2% sequentially to $4.3 billion. Net
interest yield stood at 0.86%, up 3 basis points sequentially.
The surge reflects lower funding costs, partially offset by
reduced yielding earning assets. Further, non-interest income
more than doubled from the prior quarter to $1.7 billion.
Non-interest expense surged 15.9% from the prior quarter to $577
million. The rise in expense reflects reduced real estate owned
(REO) operations income driven by lower REO outflows.
Freddie Mac reported benefit for credit losses of $1.1 billion in
the quarter, compared with $623 million in the prior quarter. The
increase was driven by $0.9 billion of recoveries from
counterparty settlements along with persistent improvement in
national home prices.
Furthermore, segment-wise, on a sequential basis, Investments,
Single-family Guarantee and Multifamily segments recorded 12.1%,
53.8% and 100% rise in earnings, respectively.
Based on net worth of $33.4 billion, Freddie Mac's dividend
obligation to Treasury will stand at $30.4 billion in Dec 2013.
Notably, including this dividend obligation, the company's
aggregate cash dividends paid to Treasury will sum to $71.345
billion as compared with cumulative cash draws of $71.336 billion
received from Treasury.
Further, since Jan 1, 2009, Freddie Mac provided $2.1 trillion of
liquidity to the mortgage market, which helped in funding 7.5
million refinancings, 1.9 million home purchases and 1.5 million
units of multifamily rental housing. Moreover, the company helped
about 913,000 borrowers to avoid foreclosure.
During the reported quarter, Freddie Mac entered into deals with
Wells Fargo Bank, N.A., a subsidiary of
Wells Fargo & Company
), certain affiliates of
), and SunTrust Mortgage, Inc. to discharge precise loans from
certain repurchase obligations in lieu of one-time cash payments.
Notably, these agreements increased the company's pre-tax income
by $0.9 billion in the third quarter.
Additionally, in Oct 2013, Freddie Mac entered into settlements
JPMorgan Chase & Co.
) under which the company will be paid about $3.2 billion in the
We believe Freddie Mac's improving top-line performance and
recent settlements will yield profitability in the coming
quarters. Moreover, enhancement in the credit quality is another
positive. However, increase in non-interest expenses remains a
concern. Currently, Freddie Mac carries a Zacks Rank #2