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Freddie Mac (FMCC)
Form 8-K | Filed: November 1, 2016
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): November 1, 2016
Federal Home Loan Mortgage Corporation
(Exact name of registrant as specified in its charter)
Freddie Mac
Federally chartered
corporation
001-34139 52-0904874
(State or other jurisdiction of
incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
8200 Jones Branch Drive
McLean, Virginia
22102-3110
(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))
Item 2.02. Results of Operations and Financial Condition.
On November 1, 2016, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) announced its results of operations for the quarter ended September 30, 2016. A copy of the related press release for the quarter ended September 30, 2016 is being filed as Exhibit 99.1 to this report and is incorporated herein by reference. In addition, a copy of the Third Quarter 2016 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 following exhibits are being filed or furnished as part of this Report on Form 8-K:
Exhibit Number
Description of Exhibit
99.1
Press release, dated November 1, 2016, issued by Freddie Mac
99.2
Third Quarter 2016 Financial Results Supplement
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 G. Mackey
James G. Mackey
Executive Vice President — Chief Financial Officer
Date: November 1, 2016
EXHIBIT INDEX
Exhibit Number
Description of Exhibit
99.1
Press release, dated November 1, 2016, issued by Freddie Mac
99.2
Third Quarter 2016 Financial Results Supplement
Exhibit 99.1
LOGO LOGO
News Release For Immediate Release // November 1, 2016
Freddie Mac Reports Both Net Income and Comprehensive Income of $2.3 Billion for Third Quarter 2016
Company Will Have Returned Over $100 Billion to Taxpayers, Including $2.3 Billion in December 2016
Third Quarter 2016 Results
Positive Earnings Driven by Solid Business Results and Market-Related Gains
? $3.6 billion of net interest income, up $203 million from the second quarter of 2016.
¡ Single-family guarantee fee income increased, partially offset by a decline in revenue from the investments portfolio.
? $0.7 billion (after-tax) estimated gain due to the impact of spreads tightening on agency and non-agency mortgage-related securities and multifamily mortgage loans and commitments measured at fair value.
? Minimal net interest rate effect as the impact of a modest increase in longer-term interest rates was offset by the flattening of the yield curve.
? $113 million provision for credit losses, a shift from a benefit of $775 million in the second quarter of 2016, reflecting fewer seriously delinquent single-family loans reclassified from held-for-investment to held-for-sale in the third quarter.
Net Income
3Q16 = $2.3 Billion
Comprehensive Income
3Q16 = $2.3 Billion
Available PSPA Funding
3Q16 = $140.5 Billion
(See Financial Results Discussion, Selected Financial Measures and Non-GAAP Financial Measure Highlights on pages 2-7 for additional details.)
Third Quarter 2016 Business Highlights
Business Fundamentals Remain Strong
Single-Family Guarantee Business
? Core (post-2008) book, which excludes HARP and other relief refinance loans, grew to 71 percent of the credit guarantee portfolio, from 69 percent in the second quarter.
? Purchase volume of $116 billion, up $25 billion from the second quarter primarily driven by lower mortgage interest rates.
? Serious delinquency rate of 1.02 percent, a decline of 6 basis points from June 30, 2016, and the lowest since July 2008.
Multifamily Business
? Purchase volume of $12 billion, bringing year-to-date September 30, 2016 volume to $39 billion, an increase of 15 percent from the same period a year ago.
Reducing Taxpayer Exposure Through Credit Risk Transfer Programs
Single-Family Guarantee Business
? Transferred a significant portion of the credit risk on over $40 billion of loans this quarter, and over $570 billion of loans since the program’s inception in 2013.
Multifamily Business
? Transferred a large majority of the credit risk on over $10 billion of loans this quarter, and on approximately $165 billion of loans since the program’s inception in 2009.
Actively Reduc ing Legacy Assets
? Sold $0.6 billion of seriously delinquent single-family loans, and $6.0 billion since 2013.
? Sold $3.3 billion of single-family non-agency mortgage-related securities, and $35.7 billion since 2013, bringing the single-family non-agency mortgage-related securities balance to $17.2 billion as of September 30, 2016.
Delivering on Our Mission
? Provided approximately $129 billion in liquidity to the mortgage market – funding nearly 485,000 single-family homes and more than 165,000 multifamily rental units.
? Helped approximately 16,000 borrowers avoid foreclosure.
$ 1 01.4 Billion in Cumulative Dividends Returned to Taxpayers Following Fourth Quarter Payment
? Senior preferred stock held by Treasury remains at $72.3 billion.
“Freddie Mac’s improving business fundamentals and competitiveness were strongly reflected in our results this quarter. Volumes were higher, credit quality is at its best in eight years, and legacy assets are continuing to decline. Investments in technology are bearing fruit both for ourselves and our customers. In particular, due largely to our leadership in credit risk transfer, the new business we’re winning from single-family and multifamily customers poses significantly less risk to taxpayers.
“We’re continuing to improve affordability and access to credit for homebuyers and renters – the core of our community mission, often working with industry partners and community organizations. We are also innovating to improve the operations of the mortgage markets, including giving our customers products and tools to make it easier and less expensive to make loans to working families.”
Donald H. Layton
Chief Executive Officer
Freddie Mac Third Quarter 2016 Financial Results
November 1, 2016
Page 2
McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $2.3 billion for the third quarter of 2016, compared to net income of $993 million for the second quarter of 2016. The company also reported comprehensive income of $2.3 billion for the third quarter of 2016, compared to comprehensive income of $1.1 billion for the second quarter of 2016.
Summary Consolidated Statements of Comprehensive Income
Three Months Ended
($ Millions)
9/30/16
6/30/16
Change
1
Net interest income
$ 3,646 $ 3,443 $ 203
2
(Provision) benefit for credit losses
(113 ) 775 (888 )
3
Derivative gains (losses)
(36 ) (2,058 ) 2,022
4
Other non-interest income (1)
813 234 579
5
Non-interest income (loss)
777 (1,824 ) 2,601
6
Administrative expense
(498 ) (475 ) (23 )
7
Other non-interest expense
(487 ) (460 ) (27 )
8
Non-interest expense
(985 )
