Goldman Loses $700m on Commercial Mortgages

Goldman Sachs Group (GS) posted strong $3.44bn net earnings for the second quarter of 2009 (Q209) despite a $700m loss on commercial mortgages. The positive earnings come even after the firm’s one-time preferred dividend of $426m, included in the $10.04bn repurchase of TARP preferred stock from the US Treasury Department. Goldman completed a public offering of 46.7m common shares at $123 per share for total proceeds of $5.75bn in an effort to boost capital. “While markets remain fragile and we recognize the challenges the broader economy faces, our second quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise,” said chairman and CEO Lloyd Blankfein in the earnings statement. Net revenues in the firm’s fixed income, currency and commodities business were $6.8bn, from $6.5bn in Q1 and much higher than the year-ago period’s $2.4bn, driven by strong performances in credit products and mortgages. The firm lost $700m on commercial mortgage loans as defaults in the commercial market rise, slightly improved from $800m lost in Q109. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.