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US mortgage finance giant Freddie Mac announced Friday it swung to a profit of 768 million dollars in the second quarter, after a 9.9 billion dollar loss in the previous quarter.
Interim chief executive John Koskinen said the positive financial result for the quarter to June 30 meant the company seized by the Treasury last year would not seek new aid from the government.
Freddie Mac and its sibling Fannie Mae have received hundreds of billions of dollars as part of a virtual government takeover aimed at avoiding their collapse in the wake of the subprime mortgage crisis.
"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," Koskinen said.
Freddie Mac said its net worth on June 30 was 8.2 billion dollars.
However, Koskinen said the company recognized that its financial results for the quarter included one-time accounting adjustments and mark-to-market gains "subject to change in future periods."
"While we are seeing some early signs pointing to a housing recovery -- including a modest uptick in house prices in some markets -- our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers' reluctance to re-enter the market," he said.
The latest quarterly financial results were driven primarily by 4.3 billion dollars in net interest income mainly due to lower funding costs, as well as 4.2 billion dollars in gains on the company's derivative portfolio and guarantee asset, the company said in a statement.
They were partially offset by credit-related expenses of 5.2 billion dollars related to "the challenging economic conditions" during the quarter, it said.
After a dividend payment of 1.1 billion dollars on its preferred stock to the US Treasury Department, Freddie Mac said it suffered a net loss per diluted common share of 11 cents in the second quarter, compared to 3.14 dollar loss in the previous quarter.
Freddie Mac had a 2008 net loss of 50.1 billion dollars, bleeding nearly half of it the fourth quarter as it bore the brunt of the housing market collapse.
Freddie Mac was created in 1970 by congressional charter as a private company, to provide competition with Fannie Mae, and charged with also providing a low-cost source of credit to foster American homeownership.
Neither company makes direct mortgage loans to homebuyers. They buy mortgages from banks and home lenders, repackage the loan into securities and sell the securities -- which they guarantee -- to investors.
