The Federal Home Loan Mortgage Corp., known as Freddie Mac, said its profit fell 5 percent in 1990 because of a fourth-quarter provision for possible future losses on apartment building loans.
The Reston company buys mortgages from lenders and repackages them for the secondary market.
Freddie Mac's 1990 net income was $414 million ($6.90 a share), compared with $437 million ($7.28) in 1989. Its net interest margin -- essentially the company's revenue -- rose 18 percent to $1.3 billion from $1.1 billion in 1989.
Unlike other financial institutions, Freddie Mac reports its assets on a "mark-to-market" basis; that is, it values both assets and liabilities at current market prices before computing net assets. On that basis, the company's year-end net assets were $4.8 billion, up 20 percent from $4 billion at the end of 1989.
In the fourth quarter, the company set aside $100 million to provide for possible losses on its portfolio of multifamily housing loans. It was this provision that caused its profit to fall.
Chairman Leland Brendsel said the company decided in the third quarter to review that portfolio. "We concluded that in order to be well-positioned for 1991, we wanted to set aside the additional $100 million."
Actual charge-offs for bad loans in the year totaled $321 million, compared with $207 million in 1989.
In the fourth quarter, Freddie Mac's net income after the $100 million reserve provision was $62 million, down 50 percent from $123 million in the same quarter a year earlier. Its net interest margin rose 19 percent to $342 million from $288 million a year earlier.
Ryland Group Inc., a Columbia home builder, yesterday reported a 62 percent drop in profits in 1990, mostly because of a real estate slump stretching across most of the country that is reducing home sales and squeezing profit margins for all builders.
For the year ended Dec. 31, Ryland said its net earnings fell to $21.8 million ($1.42 per share) from $58 million ($3.94) the previous year. Revenue for the year fell 6 percent to $1.32 billion, from $1.4 billion the previous year.
Ryland reported its profit in the fourth quarter fell 78 percent to $3.9 million (24 cents) from $18 million ($1.2 million) in 1989's fourth quarter. Revenue fell 16 percent to $335.6 million from $398 million in 1989.
Washington Gas Light Co. said its profit fell 27 percent in 1990 because of the weather.
The District-based gas company's net income for the year was $41.5 million ($2.11 per share), compared with $56.8 million ($2.95) in 1989. Revenue fell 14 percent to $683.7 million from $798.7 the previous year.
"Calendar year 1990 was the warmest year in weather bureau history. ... In contrast, weather was 12 percent colder that normal in 1989," the company said in a release. "The wide swing in weather between the two years is an extremely unusual occurrence."
In 1990's final quarter, net income fell 24 percent to $24.4 million ($1.22) from $32.1 million ($1.64) in the same quarter a year earlier. Revenue fell 19 percent to $223.1 million from $274.9 million a year earlier.
Harman International Industries Inc., the District-based audio equipment maker, said its profit fell precipitously in the quarter ended Dec. 31.
The company blamed the soft economy, particularly consumer reluctance to buy autos and other durable goods, for its weak results. The company's customers include automakers, which sell its stereo systems as part of new cars.
In the quarter, the second of Harman's fiscal year, net income fell 96 percent to $173,000 (2 cents per share) from $4.8 million (55 cents) in the same quarter a year earlier. Revenue rose 15 percent to $167.2 million from $145 million a year earlier.
Chairman Sidney Harman said the company is trying to improve its performance, but that it will take some time for programs to work. He predicted that the company would lose money in the third fiscal quarter and would not make a profit again until the fourth quarter.
Alex. Brown & Sons Inc., the Baltimore-based investment banking and brokerage firm, said its profit fell 27 percent in 1990, which was a generally difficult year for the securities industry.
Net income was $7.8 million (50 cents a share) compared with $10.7 million (65 cents) in 1989. Revenue fell 7 percent to $271.7 million from $290.6 million a year earlier.
In the year's final quarter, profit fell 40 percent to $3.8 million (26 cents) from $6.4 million (39 cents) in the same quarter a year earlier. Revenue dropped 15 percent to $68 million from $80.2 million a year earlier.