Freddie Mac Reports Net Income of $1.7 Billion and 

Comprehensive Income of $2.0 Billion for Second Quarter 2017

The Company is Focused on Effectively Delivering on its Mission and has Returned over $108 Billion to Taxpayers since 2008

Second Quarter 2017 Financial Results

 Comprehensive income of $2.0 billion; Net income of $1.7 billion

o GAAP net interest income of $3.4 billion; Adjusted net interest income(1) of $1.2 billion

– both remained relatively stable when compared to the prior year, despite the 

mandated decline in the mortgage-related investments portfolio.

o GAAP guarantee fee income of $0.2 billion; Adjusted guarantee fee income(1) of $1.7 

billion – both increased from the prior year partly driven by continued growth in the 

guarantee portfolios.

o Market-related impacts remained low as market spreads were relatively unchanged 

and the implementation of hedge accounting offset most net losses arising from 

changes in interest rates.

Second Quarter 2017 Business Highlights

Continued Solid Business Environment and Growing Guarantee Businesses

 Total guarantee portfolio increased to $1,958 billion at June 30, 2017; up 6 percent 

from a year ago. 

 Total investments portfolio declined to $366 billion at June 30, 2017; down 11 percent 

from a year ago.

o Total mortgage-related investments portfolio declined to $284 billion at June 30, 

2017; down 12 percent from a year ago.

Delivering on Our Mission

 Provided approximately $190 billion in liquidity to the mortgage market during the 

first six months of 2017. Expanded access to affordable housing: funding for firsttime homebuyers, as a percentage of new purchases, continued at a 10-year high 

and nearly 85 percent of rentals funded were affordable to working families.

Providing Liquidity while Transforming U.S. Housing Finance

 Guarantee portfolio increased to $1,784 billion at June 30, 2017; up 4 percent from a 

year ago.

 Core loan portfolio (after 2008) was 75 percent of the total guarantee portfolio; up 6 

percentage points from a year ago.

 Purchase volume of $73 billion declined 20 percent from a year ago, as refinancing 

volumes declined. 

 Serious delinquency rate of 0.85 percent, down 23 basis points from a year ago; at 

its lowest point since early 2008. 

 Transferred a significant portion of the credit risk on nearly $105 billion of loans; 

have now transferred a portion of the credit risk on nearly 33 percent of the total 

outstanding single-family credit guarantee portfolio; up from 26 percent a year ago.

Leading the Multifamily Finance Industry

 Guarantee portfolio increased to $174 billion at June 30, 2017; up 23 percent from a 

year ago.

 Purchase volume of $14.1 billion increased 50 percent from a year ago due to 

continued strong market demand. Outstanding loan commitments of $19 billion were 

also up significantly over the prior year.

 Delinquency rate continues near zero at 0.01 percent and has remained below 0.05 

percent since early 2014.

 Transferred a large majority of the credit risk on $12.3 billion of loans in the second 

quarter of 2017 and over $200 billion of loans since the program’s inception in 2009.

1See Non-GAAP Financial Measure Highlights on pages 5-6 and 15-16 of this press release for additional details and 

reconciliations to the comparable amounts under GAAP.

Corporate Single-family Guarantee

Multifamily

“Our continued very solid 

financial results and strong 

business fundamentals 

reflect the company’s 

transformation into a wellrun commercial enterprise. 

This transformation is 

enabling us to better deliver 

on the mission that is our 

purpose – to provide 

liquidity, stability and 

affordability to the 

American primary mortgage 

market. We’re doing that by 

helping lenders of all sizes 

compete which, in turn,

expands affordable housing 

opportunities for borrowers 

and renters nationwide. 

Additionally, through our 

award-winning credit risk 

transfer programs, we’re 

fulfilling our mission with 

much less risk to taxpayers 

than in the past. 

“We at Freddie Mac are 

proud of the work we're 

doing and proud of the 

success we're having in 

making home possible for 

millions of Americans and 

in building a better housing 

finance system.”

Donald H. Layton

Chief Executive Officer

Comprehensive Income

2Q 2017 = $2.0B

Total Guarantee Portfolio

Up 6% from 2Q 2016

Available PSPA Funding

2Q 2017 = $140.5B
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 2

McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $1.7 billion for the second quarter of 

2017, compared to net income of $2.2 billion for the first quarter of 2017. The company also reported comprehensive 

income of $2.0 billion for the second quarter of 2017, compared to comprehensive income of $2.2 billion for the first 

quarter of 2017. 

Summary Consolidated Statements of Comprehensive Income

(1) Guarantee fee income on a GAAP basis is primarily from the company’s multifamily business and is included in Other income (loss) on Freddie Mac’s 

condensed consolidated statements of comprehensive income. 

Financial Results Discussion

Freddie Mac’s second quarter 2017 net income of $1.7 billion and comprehensive income of $2.0 billion decreased 

$0.5 billion and $0.2 billion, respectively, from the first quarter of 2017. The company’s quarter-over-quarter earnings 

were relatively stable as market-related impacts remained low.

 Net Interest Rate Effect: $0.1 billion (after-tax) estimated fair value loss for the second quarter of 2017 driven 

by slight decreases in interest rates, compared to near zero (after-tax) estimated fair value gain for the first

quarter of 2017 driven by slight increases in interest rates. (See Net Interest Rate Effect table for additional 

details.)

 Spread Change Effect: $0.1 billion (after-tax) estimated gain for the second quarter of 2017, comparable to the

$0.1 billion (after-tax) estimated gain for the first quarter of 2017, as market spreads were relatively unchanged 

from the first quarter of 2017.

($ Millions) 2Q 2017 1Q 2017 Change 2Q 2016 Change

1 Net interest income $ 3,379 $ 3,795 $ (416) $ 3,443 $ (64)

2 Benefit (provision) for credit losses 422 116 306 775 (353)

3 Derivative gains (losses) (1,096) (302) (794) (2,058) 962

4 Other non-interest income (loss) (1)

 802 676 126 234 568

5 Non-interest income (294) 374 (668) (1,824) 1,530

6 Administrative expense (513) (511) (2) (475) (38)

7 Other non-interest expense (493) (453) (40) (460) (33)

8 Non-interest expense (1,006) (964) (42) (935) (71)

9 Pre-tax income 2,501 3,321 (820) 1,459 1,042

1 0 Income tax expense (837) (1,110) 273 (466) (371)

1 1 Net income $ 1,664 $ 2,211 $ (547) $ 993 $ 671

1 2 Total other comprehensive income (loss) 322 23 299 140 182

1 3 Comprehensive income $ 1,986 $ 2,234 $ (248) $ 1,133 $ 853

Memo Item

1 4 Guarantee fee income(1) $ 158 $ 149 $ 9 $ 124 $ 34
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 3

Net Interest Rate Effect 

(1) Includes the interest-rate effect on the company’s trading securities, available-for-sale securities, mortgage loans held-for-sale, and other assets and debt for 

which the company elected the fair value option, which is reflected in Other non-interest income (loss) and Total other comprehensive income (loss) on Freddie 

Mac’s condensed consolidated statements of comprehensive income.

Selected Financial Measures

 Net interest income was $3.4 billion for the second quarter of 2017, a decrease of $0.4 billion, or 11 percent, from 

the first quarter of 2017 and unchanged from the prior year. 

 The decrease in net interest income from the prior quarter primarily reflected lower amortization income

and a 2 percent decline in the balance of the mortgage-related investments portfolio.

($ Billions) 2Q 2017 1Q 2017 Change 2Q 2016 Change

1 Interest rate effect on derivative fair values $ (1.1) $ 0.5 $ (1.6) $ (1.7) $ 0.6

2

Estimate of offsetting interest rate effect related to financial 

instruments measured at fair value(1) 0.5 (0.5) 1.0 1.0 (0.5)

3 Gains (losses) on mortgage loans in fair value hedge relationships 0.4 - 0.4 - 0.4

4 Income tax (expense) benefit 0.1 - 0.1 0.3 (0.2)

5

Estimated net interest rate effect on comprehensive income 

(loss) $ (0.1) $ 0.0 $ (0.1) $ (0.4) $ 0.3

$3.4 $3.6 $3.9 $3.8

$3.4

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

Net Interest Income 

$ Billions
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 4

(1) Guarantee fee income on a GAAP basis is primarily from the company’s multifamily business and is included in Other income (loss) on Freddie Mac’s 

condensed consolidated statements of comprehensive income.

 Guarantee fee income, primarily from the company’s multifamily business, was $158 million for the second

quarter of 2017, increasing $9 million, or 6 percent, from the first quarter of 2017 and $34 million from the 

prior year.

 The increases in guarantee fee income primarily reflected higher average multifamily guarantee portfolio 

balances.

 Benefit for credit losses was $422 million, an increase of $306 million from the first quarter of 2017 and a 

decrease of $353 million from the prior year.

 The increase in benefit for credit losses from the prior quarter primarily reflected a significant increase 

in the number of reperforming loans reclassified from held-for-investment to held-for-sale as the 

company continued to focus on reducing the balance of its less liquid assets.

 The decrease in benefit for credit losses from the prior year primarily resulted from smaller 

improvements in probability of default and estimated loss severity in the second quarter of 2017, 

$142 $149 $158 $164 $174

$124 $133 

$146 $149 $158 

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

Multifamily Guarantee Portfolio (in $B) Guarantee Fee Income (in $M)

Guarantee Fee Income(1) and Multifamily Guarantee Portfolio

$775 

($113)

($326)

$116 

$422 

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

Benefit (Provision) for Credit Losses

$ Millions
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 5

compared to larger improvements in probability of default and estimated loss severity in the second 

quarter of 2016.

Non-GAAP Financial Measure Highlights

In addition to analyzing the company’s results on a GAAP basis, management reviews certain financial measures on 

an “adjusted”, or non-GAAP, basis. The adjusted, or non-GAAP, financial measures are calculated by reclassifying 

certain credit guarantee-related activities and investment-related activities between various line items on the 

company’s GAAP condensed consolidated statements of comprehensive income. Management believes the nonGAAP financial measures are useful because they more clearly explain the company’s sources of revenue. The 

company does not present adjusted measures for net income or comprehensive income. 

 The company’s GAAP net interest income includes the spread earned on its investments activities plus the 

guarantee fees earned by its single-family business. GAAP guarantee fees are primarily those generated by 

its multifamily business. 

 Adjusted net interest income is the net spread earned on the company’s investments activities, including 

the cost of funds associated with using derivatives. 

 Adjusted guarantee fee income consists of the revenues from guarantee fees from both the single-family 

and multifamily businesses, net of the 10 basis point guarantee fee remitted to Treasury as part of the 

Temporary Payroll Tax Cut Continuation Act of 2011. 

The two graphs that follow show the company’s non-GAAP financial measures – adjusted net interest income and 

adjusted guarantee fee income. 

(1) Non-GAAP financial measure. For reconciliations to the comparable amounts under GAAP, see pages 15-16 of this press release.

(2) During the first quarter of 2017, the company discontinued adjustments which reflected the reclassification of amortization of upfront cash paid and received 

upon acquisitions and issuances of swaptions and options from GAAP derivative gains (losses) to adjusted net interest income. Prior period results have been 

revised to conform to the current period presentation.

Note: Amounts may not add due to rounding.

 Adjusted net interest income was $1.17 billion, a decrease of $33 million from the first quarter of 2017 and 

$41 million from the prior year.

 Adjusted net interest income has remained relatively stable over the last year, despite the expectation of 

a decline over the long-term, primarily due to higher net interest yield on both other investments and 

mortgage-related investments.

$321 $308 $298 $291 $284

$88 $104 $96 $92 $82

$409 $412 $394 $383 $366

$1.21 $1.19 $1.16 $1.20 $1.17

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

Mortgage-Related Investments Portfolio Balance Other Investments and Cash Portfolio Balance

Adjusted Net Interest Income

Adjusted Net Interest Income(1)(2) and Investments Portfolio Balance 

$ Billions
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 6

 The expectation of a decline in adjusted net interest income over the long-term is primarily a result of the 

company’s ongoing reduction of its mortgage-related investments portfolio in accordance with the 

requirements of the Purchase Agreement and FHFA. 

 The mortgage-related investments portfolio was $283.7 billion as of June 30, 2017, a decline of $7.5 billion 

from March 31, 2017.

 The company remains focused on reducing the balance of less liquid assets in this portfolio. The balance 

of less liquid assets was $109.2 billion as of June 30, 2017, a decline of $8 billion, or 7 percent, from

March 31, 2017.

o Less liquid assets include reperforming loans, single-family seriously delinquent loans, and 

mortgage-related securities not guaranteed by a GSE or the U.S. government.

(1) Non-GAAP financial measure. For reconciliations to the comparable amounts under GAAP, see pages 15-16 of this press release. 

(2) Calculated as annualized quarterly adjusted guarantee fee income divided by the total guarantee portfolio balance.

Note: Amounts may not add due to rounding.

 Adjusted guarantee fee income was $1.67 billion, an increase of $99 million from the first quarter of 2017 and 

$43 million from the prior year.

 The increase in adjusted guarantee fee income from the prior quarter primarily reflected higher

amortization of single-family upfront fees driven by an increase in loan prepayments during the second 

quarter of 2017.

 Adjusted guarantee fee income increased slightly when compared to the prior year driven by continued 

growth in the total guarantee portfolio.

o Adjusted guarantee fee income from contractual guarantee fees is expected to increase over the 

long-term as guarantee fees on new single-family business are generally higher than the fees 

received on older vintages that continue to run off.

o Changes in the rates of amortization of single-family upfront fees into income are driven by fluctuating 

levels of loan prepayments due to changes in interest rates.

 The total guarantee portfolio balance grew to $1,958 billion at June 30, 2017, an increase of $15 billion, 

or 1 percent, from March 31, 2017 and $103 billion, or 6 percent, from the prior year.

$1,855 $1,882

$1,913 $1,943 $1,958

$1,713 $1,733 $1,755 $1,779 $1,784

$142 $149 $158 $164 $174

$1.63

$1.78 $1.81

$1.57

$1.67

2Q 2016 3Q 2016 4Q 2016 1Q 2017

Single-family Credit Guarantee Portfolio Multifamily Guarantee Portfolio Adjusted Guarantee Fee Income

Adjusted Guarantee Fee Income(1) and Total Guarantee Portolio Balance

$ Billions

2Q 2017

Adjusted Guarantee Fee Income (bps)(2)

35 38 38 32 34
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 7

Segment Financial Results and Business Highlights

Freddie Mac’s operations consist of three reportable segments, which are based on the types of business activities 

they perform – Single-family Guarantee, Multifamily and Capital Markets (formerly called “Investments”). The 

company presents Segment Earnings by reclassifying certain credit guarantee-related activities and investmentrelated activities between various line items on its GAAP condensed consolidated statements of comprehensive 

income and allocating certain revenues and expenses, including funding costs and administrative expenses, to its 

three reportable segments. For more information about Segment Earnings, see Note 11 to the financial statements 

included in the company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2017 and page 16 of 

this press release.

Single-family Guarantee Segment

Providing liquidity to the U.S. housing market while continuing to transfer credit risk to the private market 

Financial Results(1)

(1) The financial performance of the company’s Single-family Guarantee segment is measured based on its contribution to GAAP net income (loss).

 Single-family Guarantee segment earnings were $778 million for the second quarter of 2017, an increase of 

$68 million, or approximately 10 percent, from the first quarter of 2017 and $194 million, or 33 percent, from 

the prior year. 

 The increase in segment earnings from the prior quarter primarily reflected higher amortization of upfront

fees driven by an increase in loan prepayments during the second quarter of 2017.

 The increase in segment earnings from the prior year was primarily driven by gains due to price 

improvements on reperforming loans reclassified from held-for-investment to held-for-sale in the second 

quarter of 2017 compared to losses primarily on seriously delinquent loans reclassified during the second 

quarter of 2016.

Business Highlights

 Core loan portfolio (after 2008), which excludes HARP and other relief refinance loans, continued to grow 

and was 75 percent of the single-family credit guarantee portfolio at June 30, 2017.

 Average guarantee fees charged on new acquisitions were 43.6 basis points (net of the legislated 10 basis 

point guarantee fee remitted to Treasury as part of the Temporary Payroll Tax Cut Continuation Act of 

2011) for the second quarter of 2017, down slightly from 44.2 basis points in the first quarter of 2017.

 Average guarantee fees on the single-family credit guarantee portfolio were 33.9 basis points, an

increase of 1.8 basis points from the first quarter of 2017, primarily due to higher amortization of 

upfront fees driven by loan prepayments during the second quarter of 2017.

($ Millions) 2Q 2017 1Q 2017 Change 2Q 2016 Change

1 Guarantee fee income $ 1,506 $ 1,418 $ 8 8 $ 1,501 $ 5

2 Benefit (provision) for credit losses 1 2 3 9 (27) 121 (109)

3 Administrative expense (332) (333) 1 (314) (18)

4 Other (17) (58) 4 1 (398) 381

5 Income tax (expense) benefit (391) (356) (35) (326) (65)

6 Segment earnings, net of taxes 778 710 6 8 584 194

7

Total other comprehensive income (loss), 

net of tax - (2) 2 (1) 1

8 Total comprehensive income $ 778 $ 708 $ 7 0 $ 583 $ 195
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 8

 Transferred a small portion of expected credit losses and a significant portion of the credit losses in a 

stressed economic environment on approximately $105.2 billion in UPB of mortgage loans in the Core loan 

portfolio during the second quarter of 2017.

Multifamily Segment

Providing financing for workforce housing while continuing to transfer credit risk to the private market

Financial Results(1)

(1) The financial performance of the company’s Multifamily segment is measured based on its contribution to GAAP comprehensive income (loss).

 Multifamily segment comprehensive income was $462 million for the second quarter of 2017, an increase of 

$17 million, or 4 percent, from the first quarter of 2017 and $191 million, or 70 percent, from the prior year.

 The increase in comprehensive income from the prior quarter was primarily driven by higher net interest

income on certain multifamily securities and higher guarantee fee income, partially offset by lower markto-market gains in the second quarter of 2017. 

 The increase in comprehensive income from the prior year was primarily driven by fair value gains and 

increased guarantee fee income.

 Derivative gains (losses) for the Multifamily segment are largely offset by interest rate-related fair value 

changes of the loans and investment securities being economically hedged. As a result, there is minimal net 

impact on total comprehensive income for the Multifamily segment from interest rate-related derivatives.

Business Highlights

 New purchase volume of $14.1 billion for the second quarter of 2017 increased 11 percent from the first

quarter of 2017, while outstanding loan commitments increased $5 billion to $19 billion, reflecting continued 

strong market demand. 

 The capped multifamily new business activity for the second quarter of 2017 was $6.7 billion.

o The 2017 FHFA Scorecard goal is to maintain the dollar volume of annual multifamily new business 

activity at or below a production cap of $36.5 billion.

 Executed 12 K Certificate and 5 SB (Small Balance) Certificate transactions that transferred a large majority 

of expected and stress credit losses associated with $12.3 billion in UPB of loans during the second quarter of 

2017. 

 Provided financing for approximately 174,000 rental units in the second quarter of 2017. 

 84 percent of the eligible units financed in the first half of 2017 were affordable to families earning at or 

below area median incomes.

($ Millions) 2Q 2017 1Q 2017 Change 2Q 2016 Change

1 Net interest income $ 292 $ 271 $ 2 1 $ 283 $ 9

2 Guarantee fee income 162 151 1 1 124 3 8

3 Gains (losses) on loans and other noninterest income 412 236 176 378 3 4

4 Derivative gains (losses) (180) 127 (307) (296) 116

5 Administrative expense (95) (95) - (86) (9)

6 Other (6) (15) 9 (3) (3)

7 Income tax (expense) benefit (196) (226) 3 0 (136) (60)

8 Segment earnings, net of taxes 389 449 (60) 264 125

9

Total other comprehensive income (loss), 

net of tax 7 3 (4) 7 7 7 6 6

1 0 Total comprehensive income $ 462 $ 445 $ 1 7 $ 271 $ 191
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 9

Capital Markets Segment

Enhancing the liquidity of the company’s securities in the secondary mortgage market while reducing less liquid 

assets using an economically sensible approach

Financial Results(1)

(1) The financial performance of the company’s Capital Markets segment is measured based on its contribution to GAAP comprehensive income (loss).

 Capital Markets segment comprehensive income was $746 million for the second quarter of 2017, a decrease 

of $335 million, or 31 percent, from the first quarter of 2017 and an increase of $467 million from the prior 

year.

 The decrease in comprehensive income from the prior quarter was primarily driven by lower amortization 

income and higher fair value losses as a result of decreases in longer-term interest rates during the 

second quarter of 2017.

 The increase in comprehensive income from the prior year was primarily driven by decreased losses due 

to the use of hedge accounting during the second quarter of 2017.

 On February 2, 2017, the company began using fair value hedge accounting for certain single-family 

mortgage loans, which reduced its GAAP earnings sensitivity to large interest rate movements by nearly 

55 percent in the second quarter of 2017.

Business Highlights

 Continued to responsibly reduce the balance of the company’s mortgage-related investments portfolio, 

with a focus on reducing the balance of less liquid assets. The Capital Markets segment less liquid assets 

were $73.3 billion at June 30, 2017, down $2.7 billion, or 4 percent, from March 31, 2017, due primarily to 

sales of $1.1 billion of reperforming loans and $0.5 billion of non-agency mortgage-related securities and 

ongoing portfolio liquidations. 

 The Capital Markets segment securitization pipeline assets, which represent performing single-family loans 

purchased for cash and held until securitized, were $12.1 billion at June 30, 2017, up $4.4 billion from 

March 31, 2017.

 Continued to maintain a presence in the agency mortgage-related securities market to strategically support 

the guarantee business. 

 Liquid assets held by the Capital Markets segment were $137 billion at June 30, 2017, or 62 percent of 

the portfolio.

($ Millions) 2Q 2017 1Q 2017 Change 2Q 2016 Change

1 Net interest income $ 875 $ 929 $ (54) $ 925 $ (50)

2 Derivative gains (losses) (485) 5 2 (537) (1,322) 837

3 Other non-interest income 444 686 (242) 622 (178)

4 Administrative expense (86) (83) (3) (75) (11)

5 Other (1) (4) 3 (1) -

6 Income tax (expense) benefit (250) (528) 278 (4) (246)

7 Segment earnings, net of taxes 497 1,052 (555) 145 352

8

Total other comprehensive income (loss), 

net of tax 249 2 9 220 134 115

9 Total comprehensive income $ 746 $ 1,081 $ (335) $ 279 $ 467
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 10

Housing Market Support

Freddie Mac supports the U.S. housing market by executing its charter mission to ensure credit availability for new 

and refinanced mortgages as well as rental housing while also helping struggling homeowners avoid foreclosure. 

Preventing Foreclosures – Freddie Mac continued to help struggling borrowers retain their homes or otherwise 

avoid foreclosure, completing approximately 35,000 single-family loan workouts in the six months ended June 30,

2017.

Mortgage Funding – Freddie Mac provided approximately $190 billion in liquidity to the market in the six months 

ended June 30, 2017, funding: 

 Nearly 692,000 single-family homes, approximately 343,000 of which were refinance loans; and

 Approximately 332,000 multifamily rental units. 

(1) As of June 30, 2017.

Note: Amounts may not add due to rounding.

388 413 

650 739 

332 

515 606 

677

745 

349 

1,555 

608 

910

937 

343 

2,458 

1,627 

2,237 

2,421 

1,024 

2013 2014 2015 2016 YTD

2017

Number of Families Helped to Own or Rent a Home

Thousands

Multifamily rental units Purchase borrowers Refinance borrowers (1)
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 11

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 to have adequate liquidity to conduct its normal business operations. 

Treasury Draw Requests and Dividend Payments

(1) Excludes the initial $1 billion liquidation preference of senior preferred stock issued to Treasury in September 2008 as consideration for Treasury’s funding 

commitment. The company received no cash proceeds as a result of issuing this initial $1 billion liquidation preference of senior preferred stock.

(2) As of June 30, 2017.

Note: Amounts may not add due to rounding.

 Based on our Net Worth Amount of $2.6 billion as of June 30, 2017 and the Capital Reserve Amount of $600 

million in 2017, our dividend requirement to Treasury in September 2017 will be $2.0 billion. If the Conservator 

declares a senior preferred stock dividend equal to our dividend requirement and directs us to pay it before 

September 30, 2017, we would expect to pay a dividend of $2.0 billion by September 30, 2017.

 The applicable capital reserve amount is $600 million for 2017 and will be zero beginning on January 1, 

2018.

 The declining capital reserve required under the terms of the Purchase Agreement (ultimately reaching zero 

in 2018) increases the risk of Freddie Mac having a negative net worth and thus being required to draw from 

Treasury.

 Aggregate cash dividends paid to Treasury totaled $108.2 billion, $36.9 billion more than cumulative cash 

draws of $71.3 billion received from Treasury through June 30, 2017.

 The amount of funding available to Freddie Mac under the Purchase Agreement remains unchanged at 

$140.5 billion and will be reduced by any future draws.

 Treasury still maintains a liquidation preference of $72.3 billion on the company’s senior preferred stock as of 

June 30, 2017. 

 The payment of dividends does not reduce the outstanding liquidation preference under the Purchase 

Agreement, although we are permitted to pay down the liquidation preference of the outstanding shares of 

senior preferred stock to the extent of accrued and unpaid dividends previously added to the liquidation 

preference and not previously paid down.

 Freddie Mac is not permitted to redeem the senior preferred stock prior to the termination of Treasury’s 

funding commitment under the Purchase Agreement.

$71.3 $71.3

$91.0

$5.5 $5.0 $6.7

$108.2

2008 - 2014 2015 2016 YTD

2017

Cumulative Total

Treasury Draw Requests and Dividend Payments

$ Billions

Draw Requests from Treasury Dividend Payments to Treasury

(2)

(1)

(2)
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 12

 

Additional Information

For more information, including that 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 June 30, 2017, and the company’s Financial 

Results Supplement. These documents are available on the Investor Relations page of the company’s Web site at 

www.FreddieMac.com/investors.

Additional information about Freddie Mac and its business is also set forth in the company’s filings with the SEC, 

which are available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and 

the SEC’s Web site 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 August 1, 2017 to discuss the company’s results 

with the media. The conference call will be concurrently webcast. To access the live audio webcast, use the following 

link: http://edge.media-server.com/m/p/gg52puix. The replay will be available on the company’s Web site at 

www.FreddieMac.com/investors for approximately 30 days. All materials related to the call will be available on the 

Investor Relations page of the company’s Web site at www.FreddieMac.com/investors.

* * * *

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 Guarantee, Multifamily and 

Capital Markets segments, its efforts to assist the housing market, liquidity and capital management, economic and 

market conditions and trends, market share, the effect of legislative and regulatory developments and new accounting 

guidance, credit quality of loans the company owns or guarantees, the costs and benefits of the company’s credit risk 

transfer transactions, and results of operations and financial condition on a GAAP, Segment Earnings, non-GAAP and 

fair value basis. 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 market conditions, liquidity, 

mortgage spreads, credit outlook, actions by the U.S. government (including FHFA, Treasury and Congress), and the 

impacts of legislation or regulations and new or amended accounting guidance, 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, 2016, Quarterly Reports on Form 10-Q for 

the quarters ended March 31, 2017 and June 30, 2017 and Current Reports on Form 8-K, which are available on the 

Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site 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 makes home possible for millions of families and individuals by providing mortgage capital to lenders. 

Since its creation by Congress in 1970, the company has made housing more accessible and affordable for 

homebuyers and renters in communities nationwide. The company is building a better housing finance system for 

homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie 

Mac’s blog FreddieMac.com/blog.

Media Contact: Lisa Gagnon (703) 903-3385 Investor Contact: Laurie Garthune (571) 382-4732
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 13

June 30, 2017 March 31, 2017 June 30, 2016

Interest income

Mortgage loans $ 15,848 $ 15,965 $ 15,238

Investments in securities 902 914 978

Other 150 101 56

Total interest income 16,900 16,980 16,272

Interest expense (13,479) (13,142) (12,781)

Expense related to derivatives (42) (43) (48)

Net interest income 3,379 3,795 3,443

Benefit for credit losses 422 116 775

3,801 3,911 4,218

Non-interest income (loss)

Gains (losses) on extinguishment of debt 50 218 (119)

Derivative (losses) (1,096) (302) (2,058)

(3) (13) (72)

61 56 450

Other income (loss) 694 415 (25)

Non-interest income (loss) (294) 374 (1,824)

Non-interest expense

Salaries and employee benefits (266) (275) (240)

Professional services (118) (112) (117)

Occupancy expense (16) (13) (15)

Other administrative expense (113) (111) (103)

Total administrative expense (513) (511) (475)

(37) (56) (29)

(330) (321) (280)

Other expense (126) (76) (151)

Non-interest expense (1,006) (964) (935)

Income before income tax (expense) 2,501 3,321 1,459

Income tax (expense) (837) (1,110) (466)

Net income 1,664 2,211 993

295 (2) 109

27 28 32

Changes in defined benefit plans - (3) (1)

322 23 140

Comprehensive income $ 1,986 $ 2,234 $ 1,133

Net income $ 1,664 $ 2,211 $ 993

 (1,986) (2,234) (933)

$ (322) $ (23) $ 60

$ (0.10) $ (0.01) $ 0.02

3,234 3,234 3,234

Three Months Ended

(in millions, except share-related amounts)

FREDDIE MAC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Undistributed net worth sweep and senior preferred stock 

dividends

Weighted average common shares outstanding (in millions) — 

basic and diluted

Net interest income after benefit for credit losses

Real estate owned operations expense

Temporary Payroll Tax Cut Continuation Act of 2011 expense

Net income (loss) attributable to common stockholders

Net income (loss) per common share — basic and diluted

Total other comprehensive income, net of taxes and 

reclassification adjustments

Other gains on investment securities recognized in earnings

Other comprehensive income (loss), net of taxes and 

reclassification adjustments:

Changes in unrealized gains (losses) related to available-forsale securities

Changes in unrealized gains related to cash flow hedge 

relationships

Net impairment of available-for-sale securities recognized in 

earnings
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 14

June 30, 2017 December 31, 2016

Assets

$ 6,666 $ 12,369

 4,464 9,851

 47,791 51,548

Investments in securities, at fair value 98,799 111,547

 28,019 18,088

 1,804,123 1,784,915

 6,237 6,135

Derivative assets, net 951 747

Deferred tax assets, net 14,751 15,818

 10,956 12,358

Total assets $ 2,022,757 $ 2,023,376

Liabilities and equity

Liabilities

$ 6,090 $ 6,015

Debt, net (includes $6,124 and $6,010 at fair value) 2,009,166 2,002,004

Derivative liabilities, net 298 795

Other liabilities 4,617 9,487

Total liabilities 2,020,171 2,018,301

Commitments and contingencies

Equity

Senior preferred stock 72,336 72,336

Preferred stock, at redemption value 14,109 14,109

 - -

Additional paid-in capital - -

Retained earnings (accumulated deficit) (80,777) (77,941)

AOCI, net of taxes, related to:

 1,208 915

Cash flow hedge relationships (425) (480)

Defined benefit plans 18 21

Total AOCI, net of taxes 801 456

 (3,883) (3,885)

Total equity 2,586 5,075

Total liabilities and equity $ 2,022,757 $ 2,023,376

Treasury stock, at cost, 75,809,155 shares and 75,817,058 shares

Mortgage loans held-for-investment (net of allowance for loan losses of 

$10,311 and $13,431)

Restricted cash and cash equivalents

FREDDIE MAC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share-related amounts)

Cash and cash equivalents

Other assets (includes $2,629 and $2,408 at fair value)

Accrued interest payable

Common stock, $0.00 par value, 4,000,000,000 shares authorized, 

725,863,886 shares issued and 650,054,731 shares and 650,046,828 

shares outstanding

Available-for-sale securities (includes $813 and $782, related to net 

unrealized gains on securities for which other-than-temporary 

impairment has been recognized in earnings)

Securities purchased under agreements to resell

Accrued interest receivable

Mortgage loans held-for-sale (includes $17,982 and $16,255 at fair value)

(UNAUDITED)
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 15

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

1 GAAP Net Interest Income $ 3,443 $ 3,646 $ 3,885 $ 3,795 $ 3,379

Reclassifications:

2 Guarantee fee income reclassified out of net interest income (1), (2) (1,781) (1,935) (1,970) (1,741) (1,840)

3 Accrual of periodic cash settlements reclassified into net interest income (3) (420) (416) (434) (467) (429)

4 Other reclassifications (4) (34) (106) (325) (387) 58

5 Total reclassifications $ (2,235) $ (2,456) $ (2,730) $ (2,595) $ (2,212)

6 Adjusted Net Interest Income $ 1,208 $ 1,190 $ 1,155 $ 1,200 $ 1,167

2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017

7 GAAP Guarantee Fee Income* $ 124 $ 133 $ 146 $ 149 $ 158

Reclassifications:

8 Guarantee fee income reclassified from net interest income (1), (2) 1,781 1,935 1,970 1,741 1,840

9 Temporary Payroll Tax Cut Continuation Act of 2011 expense reclassified from other non-interest expense (5) (280) (293) (307) (321) (330)

10 Total reclassifications 1,501 1,642 1,663 1,420 1,510

11 Adjusted Guarantee Fee Income $ 1,625 $ 1,775 $ 1,809 $ 1,569 $ 1,668

* Guarantee fee income on a GAAP basis is included in Other income (loss) on Freddie Mac’s condensed consolidated statements of comprehensive income. 

Note: Columns may not add due to rounding.

For notes on reclassifications, see page 16 of this press release.

Freddie Mac

Non-GAAP Reconciliations

$ Millions, Pre-Tax

Reconciliation of GAAP Net Interest Income to Adjusted Net Interest Income

Reconciliation of GAAP Guarantee Fee Income* to Adjusted Guarantee Fee Income
Freddie Mac Second Quarter 2017 Financial Results 

August 1, 2017

Page 16

During the first quarter of 2017, the company changed how it calculates certain components of its Segment 

Earnings for its Capital Markets segment. The purpose of this change is to simplify Segment Earnings results 

relative to GAAP results in order to better reflect how management evaluates the Capital Markets segment. Prior 

period results have been revised to conform to the current period presentation. The change to the calculation of net 

interest income for the Capital Markets segment is also reflected in the company’s calculation of adjusted net 

interest income.

The change includes:

 The discontinuation of adjustments which reflected the reclassification of amortization of upfront cash paid 

and received upon acquisitions and issuances of swaptions and options from derivative gains (losses) to net 

interest income for the Capital Markets segment. 

o The discontinuation of the adjustments resulted in an increase to adjusted net interest income of 

$281 million, $319 million, $402 million, and $347 million for the three months ended March 31, 

2016, June 30, 2016, September 30, 2016, and December 31, 2016, respectively, to align with the 

current presentation. This change did not affect the calculation of adjusted guarantee fee income.

Notes on Significant Reclassifications

(1) Net guarantee fees are reclassified from GAAP net interest income to adjusted guarantee fee income.

(2) Implied guarantee fee income related to unsecuritized loans held in the mortgage investments portfolio is 

reclassified from GAAP net interest income to adjusted guarantee fee income.

(3) The accrual of periodic cash settlements of all derivatives is reclassified from GAAP derivative gains (losses) into 

adjusted net interest income to fully reflect the periodic cost associated with the protection provided by these 

contracts.

(4) Other reclassifications primarily relate to items reclassified out of GAAP net interest income, including the 

amortization of premiums and discounts associated with the company’s PCs and the loans underlying those PCs, 

amortization of non-cash premiums on single-family loans in trusts and on consolidated PCs, amortization of 

discounts on loans purchased with deteriorated credit quality that are on accrual status, the accretion of other-thantemporary impairments on available-for-sale securities, STACR debt note expense and net float income or expense.

(5) The expense related to the Temporary Payroll Tax Cut Continuation Act of 2011 is reclassified from GAAP other 

non-interest expense to adjusted guarantee fee income. As a result of the reclassification, the revenue and expense 

related to the legislated 10 basis point increase are netted within adjusted guarantee fee income.