FMCC 8-K
Federal Home Loan Mortgage Corp (FMCC)
8-K
2024-10-30
For: 2024-10-30
View Original
Added on
April 05, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2024
(Exact name of registrant as specified in its charter)
Freddie Mac
| Federally chartered corporation | ||||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
Registrant’s telephone number, including area code: (703 ) 903-2000
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| None | N/A | N/A | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 30, 2024, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) announced its results of operations for the quarter ended September 30, 2024. A copy of the related press release for the quarter ended September 30, 2024 is being filed as Exhibit 99.1 to this report and is incorporated herein by reference. In addition, a copy of the Third Quarter 2024 Financial Results Supplement is being furnished as Exhibit 99.2 to this report and is incorporated herein by reference.
Exhibit 99.1 submitted herewith shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.
Exhibit 99.2 submitted herewith shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed to be incorporated by reference into any disclosure document relating to Freddie Mac, except to the extent, if any, expressly set forth by specific reference in such document.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibits listed in the Exhibit Index below are being filed or furnished as part of this Current Report on Form 8-K:
| Exhibit Number | Description of Exhibit | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document | |||||||
__________________________________________________________________________________________________________
Freddie Mac Form 8-K
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FEDERAL HOME LOAN MORTGAGE CORPORATION | ||||||||
| By: | /s/ | James Whitlinger | ||||||
| James Whitlinger | ||||||||
| Interim Chief Financial Officer | ||||||||
Date: October 30, 2024
__________________________________________________________________________________________________________
Freddie Mac Form 8-K
| Exhibit 99.1 | ||||||||
Freddie Mac Reports Net Income of $3.1 Billion for Third Quarter 2024
Making Home Possible for 415,000 Households in Third Quarter 2024
•Financed 284,000 mortgages, with 51% of eligible loans affordable to low- to moderate-income families.
•First-time homebuyers represented 51% of new single-family home purchase loans.
•Financed 131,000 rental units, with 94% of eligible units affordable to low- to moderate-income families.
Third Quarter 2024 Financial Results
Market Liquidity Provided - $113 Billion | Homes and Rental Units Financed - 415,000 | Net Worth - $56 Billion | Total Mortgage Portfolio - $3.5 Trillion | |||||||||||||||||
| Consolidated | •Net income of $3.1 billion, an increase of $0.4 billion year-over-year, primarily driven by a decline in non-interest expense, as the prior year period included a $0.3 billion additional expense accrual. •Net revenues of $5.8 billion, an increase of 3% year-over-year, primarily driven by higher net interest income. •Benefit for credit losses of $0.2 billion, primarily driven by credit reserve releases in both Single-Family and Multifamily. •New business activity of $98 billion, up from $85 billion in the third quarter of 2023, as both home purchase and refinance volume increased due to lower mortgage interest rates. •Mortgage portfolio of $3.1 trillion, up 2% year-over-year. •Serious delinquency rate of 0.54%, up from 0.50% at June 30, 2024 and down from 0.55% at September 30, 2023. •Completed approximately 18,000 loan workouts. •62% of mortgage portfolio covered by credit enhancements. •New business activity of $15 billion, up from $13 billion in the third quarter of 2023, primarily driven by lower mortgage interest rates. •Mortgage portfolio of $452 billion, up 5% year-over-year. •Delinquency rate of 0.39%, up from 0.38% at June 30, 2024 and 0.24% at September 30, 2023. •93% of mortgage portfolio covered by credit enhancements. | "Freddie Mac delivered another strong quarter, earning net income of $3.1 billion and increasing the company’s net worth to $56 billion. The company helped 415,000 families buy, refinance or rent a home, including 110,000 first-time homebuyers. We expanded support for renters, including by establishing a new grace period for rent payments. We also are providing relief to homeowners and resources for renters affected by recent hurricanes. "As Freddie Mac's new chief executive officer, I am privileged to lead a great team delivering results like these, which make home possible for millions of families across the nation." Diana W. Reid Chief Executive Officer | ||||||||||||
Net Revenues $5.8 Billion Net Income $3.1 Billion Comprehensive Income $3.2 Billion | ||||||||||||||
Single-Family | ||||||||||||||
Net Revenues $5.1 Billion Net Income $2.6 Billion Comprehensive Income $2.6 Billion | ||||||||||||||
Multifamily | ||||||||||||||
Net Revenues $0.8 Billion Net Income $0.5 Billion Comprehensive Income $0.6 Billion | ||||||||||||||
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 2
McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $3.1 billion for the third quarter of 2024, an increase of $420 million year-over-year, primarily driven by a decline in non-interest expense, as the prior year period included a $313 million additional expense accrual.
Net revenues were $5.8 billion for the third quarter of 2024, up 3% year-over-year, primarily driven by higher net interest income. Net interest income for the third quarter of 2024 was $5.0 billion, up 5% year-over-year, primarily driven by lower expense related to debt in hedge accounting relationships. Non-interest income for the third quarter of 2024 was $0.8 billion, compared to $0.9 billion for the third quarter of 2023.
Benefit for credit losses was $0.2 billion for the third quarter of 2024, driven by a credit reserve release in Single-Family as a result of lower mortgage interest rates and a credit reserve release in Multifamily due to enhancements in the credit loss estimation process. The benefit for credit losses for 3Q 2023 was primarily driven by a credit reserve release in Single-Family due to improvements in house prices.
Non-interest expense was $2.2 billion for the third quarter of 2024, down $393 million, as the prior year period included a $313 million expense accrual for an adverse judgment at trial.
Summary of Consolidated Statements of Income and Comprehensive Income
(Dollars in millions) | 3Q 2024 | 2Q 2024 | Change | 3Q 2023 | Change | |||||||||||||||||||||||||||
| Net interest income | $4,999 | $4,928 | $71 | $4,749 | $250 | |||||||||||||||||||||||||||
| Non-interest income | 839 | 1,060 | (221) | 941 | (102) | |||||||||||||||||||||||||||
| Net revenues | 5,838 | 5,988 | (150) | 5,690 | 148 | |||||||||||||||||||||||||||
| (Provision) benefit for credit losses | 191 | (394) | 585 | 263 | (72) | |||||||||||||||||||||||||||
| Non-interest expense | (2,183) | (2,134) | (49) | (2,576) | 393 | |||||||||||||||||||||||||||
| Income before income tax expense | 3,846 | 3,460 | 386 | 3,377 | 469 | |||||||||||||||||||||||||||
| Income tax expense | (741) | (695) | (46) | (692) | (49) | |||||||||||||||||||||||||||
| Net income | 3,105 | 2,765 | 340 | 2,685 | 420 | |||||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | 62 | (5) | 67 | 19 | 43 | |||||||||||||||||||||||||||
| Comprehensive income | $3,167 | $2,760 | $407 | $2,704 | $463 | |||||||||||||||||||||||||||
| Conservatorship metrics (in millions) | ||||||||||||||||||||||||||||||||
| Net worth | $56,390 | $53,223 | $3,167 | $44,661 | $11,729 | |||||||||||||||||||||||||||
| Senior preferred stock liquidation preference | 125,871 | 123,111 | 2,760 | 114,605 | 11,266 | |||||||||||||||||||||||||||
| Remaining Treasury funding commitment | 140,162 | 140,162 | — | 140,162 | — | |||||||||||||||||||||||||||
| Cumulative dividend payments to Treasury | 119,680 | 119,680 | — | 119,680 | — | |||||||||||||||||||||||||||
| Cumulative draws from Treasury | 71,648 | 71,648 | — | 71,648 | — | |||||||||||||||||||||||||||
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 3
| Single-Family Segment | ||
| Financial Results | ||
Net Revenues
(In billions)
Net Income
(In billions)
Comprehensive Income
(In billions)
| (Dollars in millions) | 3Q 2024 | 2Q 2024 | Change | 3Q 2023 | Change | |||||||||||||||||||||||||||
| Net interest income | $4,692 | $4,635 | $57 | $4,534 | $158 | |||||||||||||||||||||||||||
| Non-interest income | 364 | 459 | (95) | 393 | (29) | |||||||||||||||||||||||||||
| Net revenues | 5,056 | 5,094 | (38) | 4,927 | 129 | |||||||||||||||||||||||||||
| (Provision) benefit for credit losses | 99 | (315) | 414 | 304 | (205) | |||||||||||||||||||||||||||
| Non-interest expense | (1,966) | (1,921) | (45) | (2,310) | 344 | |||||||||||||||||||||||||||
| Income before income tax expense | 3,189 | 2,858 | 331 | 2,921 | 268 | |||||||||||||||||||||||||||
| Income tax expense | (616) | (574) | (42) | (598) | (18) | |||||||||||||||||||||||||||
| Net income | 2,573 | 2,284 | 289 | 2,323 | 250 | |||||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | 10 | (5) | 15 | (6) | 16 | |||||||||||||||||||||||||||
| Comprehensive income | $2,583 | $2,279 | $304 | $2,317 | $266 | |||||||||||||||||||||||||||
Third Quarter 2024
Net income of $2.6 billion, up 11% year-over-year.
•Net revenues were $5.1 billion, up 3% year-over year. Net interest income was $4.7 billion, up 3% year-over-year, primarily driven by lower expense related to debt in hedge accounting relationships.
•Benefit for credit losses was $0.1 billion for the third quarter of 2024, primarily driven by a credit reserve release as a result of lower mortgage interest rates. The benefit for credit losses for 3Q 2023 was primarily driven by a credit reserve release due to improvements in house prices.
•Non-interest expense was $2.0 billion, down $344 million year-over-year, as the prior year period included an allocation of $250 million for the $313 million accrual for the adverse judgment at trial.
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 4
| Single-Family Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Serious Delinquency Rate
| 3Q 2024 | 2Q 2024 | Change | 3Q 2023 | Change | ||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||
| Single-Family homes funded (in thousands) | 284 | 257 | 27 | 271 | 13 | |||||||||||||||||||||||||||
| Purchase borrowers (in thousands) | 235 | 212 | 23 | 233 | 2 | |||||||||||||||||||||||||||
| Refinance borrowers (in thousands) | 49 | 45 | 4 | 38 | 11 | |||||||||||||||||||||||||||
Affordable to low- to moderate-income families (%)(1) | 51 | 53 | (2) | 56 | (5) | |||||||||||||||||||||||||||
First-time homebuyers (%)(2) | 51 | 53 | (2) | 50 | 1 | |||||||||||||||||||||||||||
| Average estimated guarantee fee rate (bps) | 57 | 54 | 3 | 55 | 2 | |||||||||||||||||||||||||||
| Weighted average original loan-to-value (LTV) (%) | 77 | 78 | (1) | 78 | (1) | |||||||||||||||||||||||||||
| Weighted average original credit score | 755 | 754 | 1 | 753 | 2 | |||||||||||||||||||||||||||
| UPB covered by new CRT issuance (in billions) | $44 | $43 | $1 | $8 | $36 | |||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||
| Average estimated guarantee fee rate (bps) | 49 | 49 | — | 48 | 1 | |||||||||||||||||||||||||||
| Weighted average current LTV (%) | 52 | 52 | — | 53 | (1) | |||||||||||||||||||||||||||
| Weighted average current credit score | 755 | 755 | — | 756 | (1) | |||||||||||||||||||||||||||
| Loan count (in millions) | 13.8 | 13.8 | — | 13.7 | 0.1 | |||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||
| Loan workout activity (in thousands) | 18 | 18 | — | 18 | — | |||||||||||||||||||||||||||
Allowance for credit losses to total loans outstanding (%)(3) | 0.21 | 0.21 | — | 0.22 | (0.01) | |||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 62 | 62 | — | 62 | — | |||||||||||||||||||||||||||
(1) Eligible loans acquired affordable to families earning at or below 120% of area median income (AMI).
(2) Calculated as a percentage of purchase borrowers with loans secured by primary residences.
(3) Calculated as the allowance for credit losses on mortgage loans held-for-investment divided by the amortized cost basis of mortgage loans held-for-investment for which the fair value option has not been elected.
Business Highlights
•New business activity of $98 billion, up from $85 billion in the third quarter of 2023, as both home purchase and refinance volume increased due to lower mortgage interest rates. Financed 284,000 mortgages and enabled 110,000 first-time homebuyers to purchase a home.
•Credit enhancement coverage of the Single-Family mortgage portfolio remained at 62%, unchanged from September 30, 2023.
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 5
| Multifamily Segment | ||
Financial Results | ||
Net Revenues
(In billions)
Net Income
(In billions)
Comprehensive Income
(In billions)
(Dollars in millions) | 3Q 2024 | 2Q 2024 | Change | 3Q 2023 | Change | |||||||||||||||||||||||||||
| Net interest income | $307 | $293 | $14 | $215 | $92 | |||||||||||||||||||||||||||
| Non-interest income | 475 | 601 | (126) | 548 | (73) | |||||||||||||||||||||||||||
| Net revenues | 782 | 894 | (112) | 763 | 19 | |||||||||||||||||||||||||||
| (Provision) benefit for credit losses | 92 | (79) | 171 | (41) | 133 | |||||||||||||||||||||||||||
| Non-interest expense | (217) | (213) | (4) | (266) | 49 | |||||||||||||||||||||||||||
| Income before income tax expense | 657 | 602 | 55 | 456 | 201 | |||||||||||||||||||||||||||
| Income tax expense | (125) | (121) | (4) | (94) | (31) | |||||||||||||||||||||||||||
| Net income | 532 | 481 | 51 | 362 | 170 | |||||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | 52 | — | 52 | 25 | 27 | |||||||||||||||||||||||||||
| Comprehensive income | $584 | $481 | $103 | $387 | $197 | |||||||||||||||||||||||||||
Third Quarter 2024
Net income of $0.5 billion, up 47% year-over-year.
•Net revenues were $0.8 billion for the third quarter of 2024, up 2% year-over-year, driven by higher net interest income, partially offset by lower non-interest income.
•Benefit for credit losses was $92 million for the third quarter of 2024, primarily driven by a credit reserve release due to enhancements in the credit loss estimation process.
•Non-interest expense was $217 million, down $49 million year-over-year, as the prior year period included an allocation of $63 million for the $313 million accrual for the adverse judgment at trial.
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 6
| Multifamily Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Delinquency Rate
| 3Q 2024 | 2Q 2024 | Change | 3Q 2023 | Change | ||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||
Number of rental units financed (in thousands)(1) | 131 | 92 | 39 | 118 | 13 | |||||||||||||||||||||||||||
Affordable to low-income families (%)(2) | 68 | 65 | 3 | 66 | 2 | |||||||||||||||||||||||||||
Affordable to low- to moderate-income families (%)(3) | 94 | 93 | 1 | 90 | 4 | |||||||||||||||||||||||||||
| Weighted average original LTV (%) | 63 | 61 | 2 | 60 | 3 | |||||||||||||||||||||||||||
Weighted average original debt service coverage ratio(4) | 1.28 | 1.28 | — | 1.26 | 0.02 | |||||||||||||||||||||||||||
| UPB covered by new CRT issuance (in billions) | $7 | $14 | ($7) | $17 | ($10) | |||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 49 | 48 | 1 | 46 | 3 | |||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||
Allowance for credit losses to total loans outstanding (%)(5) | 0.49 | 0.61 | (0.12) | 0.54 | (0.05) | |||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 93 | 95 | (2) | 95 | (2) | |||||||||||||||||||||||||||
(1) Includes rental units financed by supplemental loans.
(2) Eligible units that are acquired affordable to families earning at or below 80% of AMI.
(3) Eligible units that are acquired affordable to families earning at or below 120% of AMI.
(4) Assumes monthly payments that reflect amortization of principal.
(5) Calculated as the allowance for credit losses on mortgage loans held-for-investment divided by the amortized cost basis of mortgage loans held-for-investment for which the fair value option has not been elected.
Business Highlights
•New business activity increased by 15% year-over-year, primarily driven by lower mortgage interest rates.
•The company provided financing for 131,000 multifamily rental units. 68% of the eligible multifamily rental units financed were affordable to low-income families.
•The Multifamily delinquency rate increased to 0.39% at September 30, 2024, from 0.24% at September 30, 2023, primarily driven by an increase in delinquent floating rate loans including small balance loans that are in their floating rate period. As of September 30, 2024, 96% of the delinquent loans in the Multifamily mortgage portfolio had credit enhancement coverage.
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 7
About Freddie Mac’s Conservatorship
Since September 2008, Freddie Mac has been operating under conservatorship with FHFA as Conservator. The support provided by Treasury pursuant to the Purchase Agreement enables the company to maintain access to the debt markets and have adequate liquidity to conduct its normal business operations. The amount of funding available to Freddie Mac under the Purchase Agreement was $140.2 billion at September 30, 2024.
Pursuant to the Purchase Agreement, Freddie Mac will not be required to pay a dividend to Treasury on the senior preferred stock until it has built sufficient capital to meet the capital requirements and buffers set forth in the Enterprise Regulatory Capital Framework. As a result, the company was not required to pay a dividend to Treasury on the senior preferred stock in September 2024. As the company builds capital during this period, the quarterly increases in its Net Worth Amount have been, or will be, added to the aggregate liquidation preference of the senior preferred stock. The liquidation preference of the senior preferred stock increased to $125.9 billion on September 30, 2024 based on the increase in the Net Worth Amount during the second quarter of 2024, and will increase to $129.0 billion on December 31, 2024 based on the increase in the Net Worth Amount during the third quarter of 2024.
Additional Information
For more information, including information related to Freddie Mac’s financial results, conservatorship, and related matters, see the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 and the company’s Third Quarter 2024 Financial Results Supplement. These documents are available on the Investor Relations page of the company’s website at www.FreddieMac.com.
Additional information about Freddie Mac and its business is also set forth in the company’s other filings with the SEC, which are available on the Investor Relations page of the company’s website at www.FreddieMac.com and the SEC’s website at www.sec.gov. Freddie Mac encourages all investors and interested members of the public to review these materials for a more complete understanding of the company’s financial results and related disclosures.
Webcast Announcement
Management will host a conference call at 9 a.m. Eastern Time on October 30, 2024 to share the company’s results with the media. The conference call will be concurrently webcast. To access the audio webcast, use the following link: https://edge.media-server.com/mmc/p/3z2upcv9/. The replay will be available on the company’s website at www.FreddieMac.com for approximately 30 days. All materials related to the call will be available on the Investor Relations page of the company’s website at www.FreddieMac.com.
| Media Contact: Frederick Solomon (703) 903-3861 | Investor Contact: Mahesh Lal (571) 382-4732 | ||||
* * * *
This press release contains forward-looking statements, which may include statements pertaining to the conservatorship, the company’s current expectations and objectives for its Single-Family and Multifamily segments, its efforts to assist the housing market, liquidity and capital management, economic and market conditions and trends including, but not limited to, changes in observed and forecasted house price appreciation, its market share, the effect of legislative and regulatory developments and new accounting guidance, the credit quality of loans the company owns or guarantees, the costs and benefits of the company’s CRT transactions, the impact of banking crises or failures, the effects of natural disasters, other catastrophic events, and significant climate change effects and actions taken in response thereto on its business, results of operations, and financial condition. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments, and estimates, and various factors, including changes in economic and market conditions, liquidity, mortgage spreads, credit outlook, actions by the U.S. government (including FHFA, Treasury, and Congress) and state and local governments, changes in the fiscal and monetary policies of the Federal Reserve, the impact of any downgrade in our credit ratings or those of the U.S. government, and the impacts of legislation or regulations and new or amended accounting guidance, that could cause actual results to differ materially from these expectations. These assumptions, judgments, estimates, and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Reports on Form 10-Q
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 8
for the quarters ended March 31, 2024, June 30, 2024, and September 30, 2024, and Current Reports on Form 8-K, which are available on the Investor Relations page of the company’s website at www.FreddieMac.com and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this press release.
Freddie Mac's mission is to make home possible for families across the nation. Freddie Mac promotes liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, Freddie Mac has helped tens of millions of families buy, rent or keep their home.
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 9
FREDDIE MAC
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
(In millions, except share-related amounts) | 3Q 2024 | 2Q 2024 | 3Q 2023 | |||||||||||||||||
| Net interest income | ||||||||||||||||||||
| Interest income | $29,809 | $29,064 | $26,799 | |||||||||||||||||
| Interest expense | (24,810) | (24,136) | (22,050) | |||||||||||||||||
| Net interest income | 4,999 | 4,928 | 4,749 | |||||||||||||||||
| Non-interest income | ||||||||||||||||||||
| Guarantee income | 487 | 383 | 301 | |||||||||||||||||
| Investment gains, net | 243 | 549 | 555 | |||||||||||||||||
| Other income | 109 | 128 | 85 | |||||||||||||||||
| Non-interest income | 839 | 1,060 | 941 | |||||||||||||||||
| Net revenues | 5,838 | 5,988 | 5,690 | |||||||||||||||||
| (Provision) benefit for credit losses | 191 | (394) | 263 | |||||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Salaries and employee benefits | (424) | (420) | (418) | |||||||||||||||||
| Credit enhancement expense | (616) | (588) | (634) | |||||||||||||||||
| Benefit for (decrease in) credit enhancement recoveries | (4) | (7) | (103) | |||||||||||||||||
| Legislative assessments expense | (780) | (768) | (757) | |||||||||||||||||
| Other expense | (359) | (351) | (664) | |||||||||||||||||
| Non-interest expense | (2,183) | (2,134) | (2,576) | |||||||||||||||||
| Income before income tax expense | 3,846 | 3,460 | 3,377 | |||||||||||||||||
| Income tax expense | (741) | (695) | (692) | |||||||||||||||||
| Net income | 3,105 | 2,765 | 2,685 | |||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | 62 | (5) | 19 | |||||||||||||||||
| Comprehensive income | $3,167 | $2,760 | $2,704 | |||||||||||||||||
| Net income | $3,105 | $2,765 | $2,685 | |||||||||||||||||
| Amounts attributable to senior preferred stock | (3,167) | (2,760) | (2,704) | |||||||||||||||||
| Net income (loss) attributable to common stockholders | ($62) | $5 | ($19) | |||||||||||||||||
| Net income (loss) per common share | ($0.02) | $0.00 | ($0.01) | |||||||||||||||||
| Weighted average common shares (in millions) | 3,234 | 3,234 | 3,234 | |||||||||||||||||
Freddie Mac Third Quarter 2024 Financial Results
October 30, 2024
Page 10
FREDDIE MAC
Condensed Consolidated Balance Sheets (Unaudited)
| September 30, | December 31, | |||||||||||||
(In millions, except share-related amounts) | 2024 | 2023 | ||||||||||||
| Assets | ||||||||||||||
Cash and cash equivalents (includes $1,219 and $978 of restricted cash and cash equivalents) | $4,857 | $6,019 | ||||||||||||
| Securities purchased under agreements to resell | 103,110 | 95,148 | ||||||||||||
| Investment securities, at fair value | 43,613 | 43,275 | ||||||||||||
Mortgage loans held-for-sale (includes $8,353 and $7,356 at fair value) | 11,678 | 12,941 | ||||||||||||
Mortgage loans held-for-investment (net of allowance for credit losses of $6,737 and $6,383 and includes $2,371 and $1,806 at fair value) | 3,140,319 | 3,083,665 | ||||||||||||
| Accrued interest receivable, net | 10,561 | 9,925 | ||||||||||||
| Deferred tax assets, net | 4,730 | 4,076 | ||||||||||||
Other assets (includes $6,166 and $6,095 at fair value) | 23,715 | 25,927 | ||||||||||||
| Total assets | $3,342,583 | $3,280,976 | ||||||||||||
| Liabilities and equity | ||||||||||||||
| Liabilities | ||||||||||||||
| Accrued interest payable | $9,222 | $8,812 | ||||||||||||
Debt (includes $3,122 and $2,476 at fair value) | 3,265,267 | 3,208,346 | ||||||||||||
Other liabilities (includes $937 and $873 at fair value) | 11,704 | 16,096 | ||||||||||||
| Total liabilities | 3,286,193 | 3,233,254 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
Senior preferred stock (liquidation preference of $125,871 and $117,309) | 72,648 | 72,648 | ||||||||||||
| Preferred stock, at redemption value | 14,109 | 14,109 | ||||||||||||
Common stock, $0.00 par value, 4,000,000,000 shares authorized, 725,863,886 shares issued and 650,059,553 shares outstanding | — | — | ||||||||||||
| Retained earnings | (26,492) | (35,128) | ||||||||||||
| AOCI, net of taxes, related to: | ||||||||||||||
| Available-for-sale securities | 107 | 72 | ||||||||||||
| Other | (97) | (94) | ||||||||||||
| Total AOCI, net of taxes | 10 | (22) | ||||||||||||
Treasury stock, at cost, 75,804,333 shares | (3,885) | (3,885) | ||||||||||||
| Total equity | 56,390 | 47,722 | ||||||||||||
| Total liabilities and equity | $3,342,583 | $3,280,976 | ||||||||||||
The table below presents the carrying value and classification of the assets and liabilities related to consolidated variable interest entities (VIEs) on the company's condensed consolidated balance sheets. | ||||||||||||||
| September 30, | December 31, | |||||||||||||
| (In millions) | 2024 | 2023 | ||||||||||||
| Assets: | ||||||||||||||
Cash and cash equivalents (includes $1,106 and $890 of restricted cash and cash equivalents) | $1,107 | $891 | ||||||||||||
| Securities purchased under agreements to resell | 13,429 | 9,396 | ||||||||||||
| Investment securities, at fair value | 2 | 65 | ||||||||||||
| Mortgage loans held-for-investment, net | 3,084,458 | 3,039,461 | ||||||||||||
| Accrued interest receivable, net | 9,604 | 8,885 | ||||||||||||
| Other assets | 6,575 | 4,858 | ||||||||||||
| Total assets of consolidated VIEs | $3,115,175 | $3,063,556 | ||||||||||||
| Liabilities: | ||||||||||||||
| Accrued interest payable | $8,218 | $7,527 | ||||||||||||
| Debt | 3,092,140 | 3,041,927 | ||||||||||||
| Total liabilities of consolidated VIEs | $3,100,358 | $3,049,454 | ||||||||||||
© Freddie Mac Third Quarter 2024 Financial Results Supplement October 30, 2024 Exhibit 99.2
© Freddie Mac 2 Financial Highlights $5.7 $5.4 $5.8 $6.0 $5.8 $2.7 $2.9 $2.8 $2.8 $3.1 Net revenues Net income 3Q23 4Q23 1Q24 2Q24 3Q24 Net revenues and net income $ Billions ▪ Net income of $3.1 billion for the third quarter of 2024, an increase of $420 million year-over-year, primarily driven by a decline in non-interest expense, as the prior year period included a $313 million additional expense accrual. ▪ Net revenues of $5.8 billion for the third quarter of 2024, an increase of 3% year-over-year, primarily driven by higher net interest income.
© Freddie Mac 3 $3,456 $3,480 $3,486 $3,506 $3,534 $3,024 $3,039 $3,043 $3,058 $3,082 $432 $441 $443 $447 $452 Single-Family mortgage portfolio Multifamily mortgage portfolio 09/30/23 12/31/23 03/31/24 06/30/24 09/30/24 Mortgage Portfolio Balances Mortgage portfolio1 UPB in $ Billions 2% YoY increase 5% YoY increase 2% YoY increase ▪ Total mortgage portfolio increased 2% year-over-year to $3.5 trillion, driven by a 2% increase in the Single- Family mortgage portfolio and a 5% increase in the Multifamily mortgage portfolio.
© Freddie Mac 4 $56.4 $125.9 $140.2 Net worth Senior preferred stock liquidation preference Remaining Treasury funding commitment As of September 30, 2024 Conservatorship Matters Pursuant to the Purchase Agreement, Freddie Mac will not be required to pay a dividend to Treasury until it has built sufficient capital to meet the capital requirements and buffers set forth in the Enterprise Regulatory Capital Framework (ERCF). Draws and dividend payments $ Billions Net worth, liquidation preference, and Treasury funding commitment $ Billions $71.6 $119.7 Cumulative draws from Treasury Cumulative dividend payments to Treasury As of September 30, 2024 2
© Freddie Mac 5 National home prices3 increased by an average of 3.6% over the past year 7.31% 6.61% 6.79% 6.86% 6.08% 5.32% 5.34% 5.32% 5.34% 5.16% 30-year mortgage rate, based on Primary Mortgage Market Survey (PMMS) SOFR 09/30/23 12/31/23 03/31/24 06/30/24 09/30/24 Key Economic Indicators Quarterly ending interest rates SOFR interest rates are 30-day average rates.
© Freddie Mac 6 $3,024 $3,039 $3,043 $3,058 $3,082 3Q23 4Q23 1Q24 2Q24 3Q24 0.99% 1.10% 0.96% 1.12% 1.05% 0.24% 0.27% 0.24% 0.25% 0.27% 0.55% 0.55% 0.52% 0.50% 0.54% One month past due Two months past due Seriously delinquent 3Q23 4Q23 1Q24 2Q24 3Q24 $85 $73 $62 $85 $98 $76 $65 $53 $74 $84 $9 $8 $9 $11 $14 55 56 55 54 57 Home purchase Refinance 3Q23 4Q23 1Q24 2Q24 3Q24 Single-Family Financial Highlights and Key Metrics $4.9 $4.8 $4.5 $5.1 $5.1 $2.3 $2.7 $1.9 $2.3 $2.6 Net revenues Net income 3Q23 4Q23 1Q24 2Q24 3Q24 Net revenues and net income $ Billions 2% YoY increase Mortgage portfolio UPB in $ Billions Average estimated guarantee fee rate on new acquisitions (bps)4 Delinquency rates New business activity UPB in $ Billions
© Freddie Mac 7 78% 77% 78% 78% 77% 3Q23 4Q23 1Q24 2Q24 3Q24 89% 89% 86% 87% 86% 8% 8% 8% 8% 8% 6% 5% 6% Home purchase Cash-out refinance Other refinance 3Q23 4Q23 1Q24 2Q24 3Q24 753 752 753 754 755 3Q23 4Q23 1Q24 2Q24 3Q24 29% 31% 28% 31% 29% 3Q23 4Q23 1Q24 2Q24 3Q24 New business activity with debt-to-income ratio > 45% Weighted average original loan-to-value ratio (OLTV) Weighted average original credit score Single-Family Loan Purchase Credit Characteristics Loan purpose 3% 3%
© Freddie Mac 8 UPB covered by new CRT issuance $ Billions $8 $36 $58 $43 $44 3Q23 4Q23 1Q24 2Q24 3Q24 Mortgage portfolio with credit enhancement UPB in $ Billions Single-Family Credit Risk Transfer $1,865 $1,860 $1,867 $1,900 $1,897 62% 61% 61% 62% 62% UPB Percentage 09/30/23 12/31/23 03/31/24 06/30/24 09/30/24
© Freddie Mac 9 $13 $16 $9 $11 $15 3Q23 4Q23 1Q24 2Q24 3Q24 0.24% 0.39% 0.29% 0.50%0.57% 1.21% Freddie Mac (60+ day) FDIC insured institutions (90+ day) MF CMBS market (60+ day) 3Q23 4Q23 1Q24 2Q24 3Q24 Multifamily delinquency rates $432 $441 $443 $447 $452 3Q23 4Q23 1Q24 2Q24 3Q24 Multifamily Financial Highlights and Key Metrics $0.8 $0.6 $1.3 $0.9 $0.8 $0.4 $0.3 $0.8 $0.5 $0.5 Net revenues Net income 3Q23 4Q23 1Q24 2Q24 3Q24 (89 %) New business activity UPB in $ Billions 5% YoY increase The delinquency rate for FDIC insured institutions is as of June 30, 2024 (latest available information). Mortgage portfolio UPB in $ Billions Net revenues and net income $ Billions
© Freddie Mac 10 Acquisitions of units by area median income (AMI) (% of eligible units acquired) 36% 38% 35% 32% 39% 30% 29% 28% 33% 29% 24% 27% 28% 28% 26% 10% 6% 9% 7% 6% ≤60% >60% to ≤80% >80% to ≤120% >120% 3Q23 4Q23 1Q24 2Q24 3Q24 Weighted average ODSCR assumes monthly payments that reflect amortization of principal. 1.26 1.27 1.29 1.28 1.28 60% 59% 61% 61% 63% Weighted average ODSCR Weighted average OLTV ratio 3Q23 4Q23 1Q24 2Q24 3Q24 Multifamily New Business Characteristics (89 %) Weighted average original debt service coverage ratio (ODSCR) and weighted average OLTV ratio
© Freddie Mac 11 $410 $415 $415 $423 $421 95% 94% 94% 95% 93% UPB Percentage 09/30/23 12/31/23 03/31/24 06/30/24 09/30/24 Mortgage portfolio with credit enhancement UPB in $ Billions $17 $11 $7 $14 $7 3Q23 4Q23 1Q24 2Q24 3Q24 Multifamily Credit Risk Transfer UPB covered by new CRT issuance $ Billions
© Freddie Mac 12 18 19 21 18 18 5 6 5 4 5 7 8 10 8 6 6 5 6 6 7 Forbearance and other Payment deferral plans Loan modifications 3Q23 4Q23 1Q24 2Q24 3Q24 Number of families Freddie Mac helped to own or rent a home5 In Thousands Housing Market Support 389 391 279 349 415 38 37 33 45 49 233 199 161 212 235 118 155 85 92 131 Single-Family refinance borrowers Single-Family home purchase borrowers Multifamily rental units 3Q23 4Q23 1Q24 2Q24 3Q24 Other includes repayment plans and foreclosure alternatives. 7 Number of Single-Family loan workouts6 In Thousands 7 7
© Freddie Mac 13 Endnotes 1 Based on unpaid principal balances (UPB) of mortgage loans held-for-investment, mortgage loans held-for-sale, and mortgage loans underlying our mortgage-related guarantees. 2 Includes the initial $1 billion liquidation preference of the senior preferred stock issued to Treasury in September 2008, the $71.6 billion of draws from Treasury, and the $53.2 billion in increases to our Net Worth Amount pursuant to the Purchase Agreement. 3 Based on the Freddie Mac House Price Index. The Freddie Mac House Price Index for the U.S. is a value-weighted average of the state indexes where the value weights are based on Freddie Mac’s single-family credit guarantee portfolio. Other indices of home prices may have different results, as they are determined using different pools of mortgage loans and calculated under different conventions. The Freddie Mac House Price Index for the U.S. is a seasonally-adjusted monthly series. Percent changes were rounded to nearest whole percentage point. 4 Represents the estimated average rate of guarantee fees for new acquisitions during the period assuming amortization of upfront fees using the estimated life of the related loans rather than the original contractual maturity date of the related loans. Net of the legislated 10 basis point fee remitted to Treasury pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 as extended by the Infrastructure Investment and Jobs Act. 5 Based on the company’s purchases of loans and issuances of mortgage-related securities. For the periods presented, a single-family borrower may be counted more than once if the company purchased more than one loan (purchase or refinance mortgage) relating to the same borrower. For Multifamily, rental units include units financed by supplemental loans. 6 Consists of both home retention actions and foreclosure alternatives. 7 Categories are not mutually exclusive, and a borrower in one category may also be included in another category in the same or another period. For example, a borrower helped through a home retention action in one period may subsequently lose his or her home through a foreclosure alternative in a later period.
© Freddie Mac 14 Safe Harbor Statements Freddie Mac obligations Freddie Mac’s securities are obligations of Freddie Mac only. The securities, including any interest or return of discount on the securities, are not guaranteed by and are not debts or obligations of the United States or any federal agency or instrumentality other than Freddie Mac. No offer or solicitation of securities This presentation includes information related to, or referenced in the offering documentation for, certain Freddie Mac securities, including offering circulars and related supplements and agreements. Freddie Mac securities may not be eligible for offer or sale in certain jurisdictions or to certain persons. This information is provided for your general information only, is current only as of its specified date and does not constitute an offer to sell or a solicitation of an offer to buy securities. The information does not constitute a sufficient basis for making a decision with respect to the purchase or sale of any security. All information regarding or relating to Freddie Mac securities is qualified in its entirety by the relevant offering circular and any related supplements. Investors should review the relevant offering circular and any related supplements before making a decision with respect to the purchase or sale of any security. In addition, before purchasing any security, please consult your legal and financial advisors for information about and analysis of the security, its risks and its suitability as an investment in your particular circumstances. Forward-looking statements Freddie Mac's presentations may contain forward-looking statements, which may include statements pertaining to the conservatorship, the company’s current expectations and objectives for its Single-Family and Multifamily segments, its efforts to assist the housing market, liquidity and capital management, economic and market conditions and trends including, but not limited to, changes in observed and forecasted house price appreciation, its market share, the effect of legislative and regulatory developments and new accounting guidance, the credit quality of loans the company owns or guarantees, the costs and benefits of the company’s CRT transactions, the impact of banking crises or failures, the effects of natural disasters, other catastrophic events, and significant climate change effects and actions taken in response thereto on its business, results of operations, and financial condition. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments, and estimates, and various factors, including changes in economic and market conditions, liquidity, mortgage spreads, credit outlook, actions by the U.S. government (including FHFA, Treasury, and Congress) and state and local governments, changes in the fiscal and monetary policies of the Federal Reserve, the impact of any downgrade in our credit ratings or those of the U.S. government, and the impacts of legislation or regulations and new or amended accounting guidance, that could cause actual results to differ materially from these expectations. These assumptions, judgments, estimates and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024, and September 30, 2024, and Current Reports on Form 8-K, which are available on the Investor Relations page of the company’s website at www.freddiemac.com and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this presentation.