Freddie Mac shares dipped $1.525, or 4.5%, to $48.8125 Tuesday after a third-quarter earnings report that raised concerns about its net interest margin and fell shy of the First Call Corp. analyst consensus.

The government-sponsored enterprise, which buys mortgage loans on the secondary market, reported 33% growth in net income, to $564 million, and a 29% gain in earnings per share, to 75 cents. But that result reflected a $9 million after-tax gain for the repurchase of debt -- an extraordinary gain that First Call, an American Banker affiliate that tracks analyst earnings projections, excludes from earnings-per-share calculations. As a result, Freddie's result was 74 cents per share -- a penny short of consensus estimates -- in First Call's calculations.

Freddie Mac attributed the decline in its net interest margin -- the difference between the yield on its assets and the cost of its liabilities -- to rising interest rates and a move to restructure its short-term financing. The net interest margin of 0.76% was off from 0.83% in the second quarter and 0.90% a year earlier.

"The bulk of the margin compression reflects specific decisions that we've made to reinvest some of our earnings power as additional protection for the fourth quarter," said Gwen Mogenson, director of shareholder relations.

Net interest income from Freddie's mortgage investments grew 27%, to $610 million. Management and guarantee-fee income was also up 9%, to $356 million. Guarantee fees averaged 19.6 basis points, down from 19.9 in the second quarter.

-- Joshua Brockman

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