Freddie Mac · OTC:FMCC
Freddie Mac — FY2004 Earnings Presentation
16 slides from Freddie Mac's earnings presentation, Mar 31, 2005
Slide 1: Freddie Mac's 2004 Financial Results
Freddie Mac’s 2004 Financial Results March 31, 2005
Slide 2: Overview
Overview Net income Fair value Market share Risk management Capital Financial reporting controls and timeline Slide 1
Slide 3: GAAP Income Results
GAAP Income Results $ millions, except share-related amounts 2004 2003 Change 1 Net interest income $9,137 $9,498 ($361) 2 Management and guarantee income 1,382 1,653 (271) 3 Other non-interest income (loss) (4,421) (1,897) (2,524) 4 Administrative expenses (1,550) (1,181) (369) 5 Other non-interest
Slide 4: Net Interest Income and Yield
Net Interest Income and Yield $ millions 2004 2003 Income (Expense): Amounts Yield Amounts Yield 1 Total income on interest-earning assets $35,603 4.66% $37,098 4.93% 2 Total interest expense on debt securities ($25,858) (3.50%) ($24,868) (3.52%) 3 Due to Participation Certificate investors (708) (5
Slide 5: Management and Guarantee Income
Management and Guarantee Income $ millions, rates in basis points 2004 2003 Amount Rate Amount Rate 1 Contractual management and guarantee fees $1,303 16.5 $1,229 17.3 2 Amortization of deferred fees 79 1.0 424 6.0 3 Total management and guarantee income $1,382 17.5 $1,653 23.3 4 Unamortized balance
Slide 6: Other Non-Interest Income (Loss)
Other Non-Interest Income (Loss)(1) $ millions 2004 2003 Change 1 Gains (losses) on "Guarantee asset for PCs, at fair value" (GA) ($1,135) ($1,461) $326 2 Income on "Guarantee obligation for PCs" (GO) 732 925 (193) 3 Derivative gains (losses) (4,475) 39 (4,514) 4 Hedge accounting gains (losses) 743
Slide 7: Derivatives Not in Hedge Accounting Relationships
Derivatives Not in Hedge Accounting Relationships $ billions 2004 2003 Change Notional Gains Notional Gains Gains 12/31/04 (Losses) 12/31/03 (Losses) (Losses) 1 Call swaptions $189.9 $0.4 $216.9 ($0.6) $1.0 2 Put swaptions 25.2 (1.4) 123.1 (0.3) (1.1) 3 Receive-fixed swaps 25.6 (0.4) 13.8 (0.2) (0.2
Slide 8: Total Derivative Portfolio
Total Derivative Portfolio $ billions Notional or Contractual Amount December 31, 2004 2003 Change 1 Total interest-rate swaps $178.7 $287.6 ($108.9) 2 Total option-based 234.2 361.3 (127.1) 3 Futures 129.1 130.8 (1.7) 4 Foreign-currency swaps 56.9 46.5 10.4 5 Subtotal $598.9 $826.2 ($227.3) 6 Other
Slide 9: Non-Interest Expense
Non-Interest Expense $ millions 2004 2003 Change 1 Salaries and employee benefits $758 $624 $134 2 Professional services 588 311 277 3 Occupancy expense 60 52 8 4 Other administrative expenses 144 194 (50) 5 Total administrative expenses $1,550 $1,181 $369 6 Other non-interest expense 821 1,055 (234
Slide 10: Selected Balance Sheets Results
Selected Balance Sheets Results $ millions December 31, 2004 2003 Change 1 Retained portfolio $664,468 $660,357 $4,111 2 Cash and investments 97,280 109,078 (11,798) 3 Other items included in total assets 33,426 34,014 (588) 4 Total assets $795,174 $803,449 ($8,275) 5 Total debt securities, net $731
Slide 11: Fair Value Attributable to Common Stockholders
Fair Value Attributable to Common Stockholders Annual Growth Before Dividends Balance as of December 31, and Capital Transactions $ billions $ billions Percent 35 7 50 30 $5.6 $26.7 6 $5.3 40 25 $22.9 5 $4.6 20 $18.3 30 4 15 3 20 10 2 10 5 1 0 0 0 2002 2003 2004 2002 2003 2004 Slide 10
Slide 12: Market Share
Market Share Freddie Mac Share of PC/MBS Issues Relative to Fannie Mae Percent 50 45 43% 43% 41% 40 37% 35 30 2001 2002 2003 2004 Slide 11
Slide 13: Credit and Interest-Rate Risk
Credit and Interest-Rate Risk Delinquencies and Credit Losses Duration Gap 90-day single-family Total credit delinquencies losses (basis points) (basis points) (months) 90 3.0 3 80 2.5 2 2.0 70 1 1.5 0 60 1.0 -1 50 0.5 -2 40 0.0 -3 2001 2002 2003 2004 Dec-01 Dec-02 Dec-03 Dec-04 90-day single-family
Slide 14: Regulatory Capital Adequacy
Regulatory Capital Adequacy $ billions 40 $34.9 35 $33.0 $3.5 30 $10.8 $9.2 25 20 15 10 5 0 2003 2004 Total Minimum Capital Requirement 30% Target Surplus Excess Surplus Slide 13
Slide 15: Financial Reporting Controls and Timeline
Financial Reporting Controls and Timeline Continue to make significant progress on addressing the remediation of our internal controls Met previously announced financial reporting objectives » Released 2004 financial results on March 31, 2005 » Provided quarterly fair value balance sheets with o
Slide 16: Freddie Mac
Freddie Mac We make home possible“ a