Freddie Mac (FMCC.OB), Thursday reported a sharp increase in fourth-quarter profit, as the mortgage guarantor benefited from better home prices amid a recovery in the housing market, and saw lower delinquencies.
Freddie Mac reported fourth-quarter net income of $4.5 billion, compared with $619 million in the prior year.
During the quarter, Freddie Mac said its dividend payment to the U.S. Treasury totaled $5.8 billion, andthat it did not seek further aid due to a positive net worth.
Including the payment to the U.S. Treasury, Freddie Mac reported net loss to common shares of $3.2 billion, compared with net loss of $1.04 billion last year.
Net interest income for the quarter was $4.5 billion, compared with $4.7 billion a year ago.
Benefit for credit losses totaled $700 million for the quarter, while the prior year had a provision of $2.6 billion.
Non interest income for the quarter was negative at $1.3 billion, compared with negative $971 million a year ago.
Meanwhile, for fiscal year 2012, Freddie Mac reported net income of $11 billion, compared with net loss of $5.3 billion a year ago.
Through December 2012, Freddie Mac paid $23.8 billion in cash dividends to Treasury on the company's senior preferred stock. This represents 33 percent of its cumulative draws received under the Purchase Agreement with Treasury.
Freddie Mac said it is required to pay dividends to the extent that its Net Worth Amount, as defined in the Purchase Agreement, exceeds the permitted capital reserve.The amount of the permitted capital reserve is $3 billion in 2013 and will be reduced by $600 million each year thereafter until it reaches zero in 2018.
Freddie Mac and its sister company Fannie Mae went bankrupt after the 2008 crisis and had to bank on federal aid aggregating about $190 billion. Both have regained ground on the back of better home prices and lower delinquencies.
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