Freddie Mac · OTC:FMCC
Freddie Mac — Investor Presentation (February 2008)
22 slides from Freddie Mac's investor presentation, Feb 28, 2008
Slide 1: Summary of Adjusted Operating Income Investor Presentation
Summary of Adjusted Operating Income Investor Presentation February 28, 2008
Slide 2: Summary
Summary The purpose of this presentation is to introduce a new non-GAAP financial metric to be called Adjusted Operating Income (“AOI”): AOI is designed to highlight the results from ongoing operations and the underlying results of the segments in a manner that is useful to the way we manage and eva
Slide 3: Overview of Adjusted Operating Income
Overview of Adjusted Operating Income Freddie Mac has developed a new method of presenting the financial performance of the business, Adjusted Operating Income (AOI), which is a non-GAAP financial measure. AOI differs from, and should not be used as a substitute for, “net income” as determined in ac
Slide 4: Investment Activity-Related Adjustments
Investment Activity-Related Adjustments Derivative and foreign currency translation-related adjustments: Fair value adjustments on derivative positions, recorded pursuant to GAAP, are not recognized in Adjusted operating income as these positions economically hedge our investment activities. Payment
Slide 5: Investment Activity-Related Adjustments (continued)
Investment Activity-Related Adjustments (continued) Investment sales, debt retirements and fair value-related adjustments: Gains and losses on investment sales and debt retirements that are recognized at the time of the transaction pursuant to GAAP are not immediately recognized in Adjusted operatin
Slide 6: Credit Guarantee Activity-Related Adjustments
Credit Guarantee Activity-Related Adjustments Credit guarantee activity-related adjustments: Amortization and valuation adjustments pertaining to the guarantee asset and guarantee obligation are excluded from Adjusted operating income. Cash compensation exchanged at the time of securitization, exclu
Slide 7: Reporting Adjusted Operating Income for Segments
Reporting Adjusted Operating Income for Segments The company will present its results in three segments based on the type of business activities each performs, with certain remaining items in an “All Other” category. Segment results will be reported using AOI. Investments: Reflects results from the
Slide 8: Three Reportable Segments and All Other
Three Reportable Segments and All Other Segment Definition Included Activities Investments Returns on investments in whole loans and • Investments in PCs and single-family whole loans bonds backed by single-family assets, non- • Investments in ABS mortgage securities and commercial • Investments in
Slide 9: Consolidated Adjusted Operating Income
Consolidated Adjusted Operating Income1 ($ Millions) 1Q 2007 2Q 2007 3Q 2007 4Q 2007 2007 2006 2005 1 Investments $ 514 $ 571 $ 503 $ 440 $ 2,028 $ 2,111 $ 2,284 2 Single-family Guarantee 224 129 (483) (126) (256) 1,289 965 3 Multifamily 125 84 83 106 398 434 363 4 All Other (16) (43) (45) 1 (103) 1
Slide 10: Adjusted Operating Income – Investments Segment
Adjusted Operating Income – Investments Segment1 ($ Millions) 1Q 2007 2Q 2007 3Q 2007 4Q 2007 2007 2006 2005 1 Net interest income $ 902 $ 990 $ 909 $ 825 $ 3,626 $ 3,736 $ 4,117 2 Non-interest income (loss) 24 30 (4) (10) 40 38 (74) 3 Total revenues 926 1,020 905 815 3,666 3,774 4,043 Non-interest
Slide 11: Adjusted Operating Income (Loss) – Single-family Guarantee Segment
Adjusted Operating Income (Loss) – Single-family Guarantee Segment1 ($ Millions) 1Q 2007 2Q 2007 3Q 2007 4Q 2007 2007 2006 2005 1 Net interest income $ 168 $ 179 $ 181 $ 175 $ 703 $ 556 $ 349 2 Management and guarantee income 677 704 738 770 2,889 2,541 2,341 3 Other non-interest income 22 28 27 40
Slide 12: Adjusted Operating Income – Multifamily Segment
Adjusted Operating Income – Multifamily Segment1 ($ Millions) 1Q 2007 2Q 2007 3Q 2007 4Q 2007 2007 2006 2005 1 Net interest income $ 123 $ 94 $ 88 $ 121 $ 426 $ 479 $ 417 2 Management and guarantee income 14 16 14 15 59 61 59 3 Other non-interest income 4 5 7 8 24 28 19 4 Total revenues 141 115 109
Slide 13: Adjusted Operating Income (Loss) – All Other
Adjusted Operating Income (Loss) – All Other1 ($ Millions) 1Q 2007 2Q 2007 3Q 2007 4Q 2007 2007 2006 2005 1 Net interest income (loss) $ (1) $ - $ 1 $ (1) $ (1) $ (3) $ (3) 2 Non-interest income (loss) 3 (1) 5 4 11 15 (7) Non-interest expense: 3 Administrative expenses (31) (51) (52) (30) (164) (149
Slide 14: Selected Tables from the Company’s Press Release - Consolidated Financial Statements and Core Tables
Selected Tables from the Company’s Press Release - Consolidated Financial Statements and Core Tables 13
Slide 15: Adjusted Operating Income Results and Reconciliation to GAAP Results 1Q 2006
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 1Q 2006 TABLE 18 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 16: Adjusted Operating Income Results and Reconciliation to GAAP Results 2Q 2006
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 2Q 2006 TABLE 19 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 17: Adjusted Operating Income Results and Reconciliation to GAAP Results 3Q 2006
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 3Q 2006 TABLE 20 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 18: Adjusted Operating Income Results and Reconciliation to GAAP Results 4Q 2006
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 4Q 2006 TABLE 21 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 19: Adjusted Operating Income Results and Reconciliation to GAAP Results 1Q 2007
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 1Q 2007 TABLE 22 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 20: Adjusted Operating Income Results and Reconciliation to GAAP Results 2Q 2007
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 2Q 2007 TABLE 23 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 21: Adjusted Operating Income Results and Reconciliation to GAAP Results 3Q 2007
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 3Q 2007 TABLE 24 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership
Slide 22: Adjusted Operating Income Results and Reconciliation to GAAP Results 4Q 2007
FREDDIE MAC (1) ADJUSTED OPERATING INCOME RESULTS AND RECONCILIATION TO GAAP RESULTS 4Q 2007 TABLE 25 (unaudited) (dollars in millions) Net Interest Management Other Provision REO Other LIHTC Income Income and Guarantee Non-Interest Administrative for Credit Operations LIHTC Non-Interest Partnership