Freddie Mac Reports Both Net Income and

Comprehensive Income of $4.7 Billion for Third Quarter 2017

The Company is Effectively Delivering on Its Mission and Transforming Its Business; Having Returned over $110 Billion to Taxpayers

Third Quarter 2017 Financial Results

• Comprehensive income of $4.7 billion, driven by a $2.9 billion (after-tax) benefit from a non-agency Comprehensive

Income

3Q 2017 = $4.7B

mortgage-related securities litigation settlement and continued strong underlying business fundamentals.

• Excluding the settlement, comprehensive income would have been approximately $1.8 billion which

included:

o Market-related impacts of $0.9 billion (pre-tax); $0.6 billion (after-tax) primarily driven by a $0.4 billion

benefit from spread tightening and a $0.2 billion benefit from single-family legacy asset dispositions. Total Guarantee

Portfolio

Up 5% from 3Q16

Interest rate impacts continued to be minimal after the company's adoption of hedge accounting.

o $0.9 billion (pre-tax), or $0.6 billion (after-tax), in provision for credit losses attributable to recent

hurricane activity.

o GAAP guarantee fee income of $0.2 billion, which increased from the prior year due to continued

growth in the multifamily guarantee portfolio; Adjusted guarantee fee income(1) of $1.8 billion Available PSPA

Funding

3Q 2017 = $140.5B

decreased slightly from the prior year due to lower amortization income from upfront fees driven by

lower prepayments, which was partially offset by continued growth in the guarantee portfolios.

o GAAP net interest income of $3.5 billion; Adjusted net interest income(1) of $1.1 billion - both down

slightly from the prior year, reflecting the mandated decline in the mortgage-related investments portfolio.

Third Quarter 2017 Business Highlights

Continued Solid Business Environment and Growing Guarantee Businesses

• Total guarantee portfolio grew 5 percent from prior year to $1,984 billion at September 30,

2017.

• Total investments portfolio declined 15 percent from prior year to $349 billion at

September 30, 2017.

o Total mortgage-related investments portfolio declined 13 percent from prior year to

$267 billion at September 30, 2017.

Delivering on Our Mission

• Provided approximately $299 billion in liquidity to the mortgage market during the first nine

months of 2017 – funded nearly 1.1 million single-family homes and 530 thousand

multifamily rental units.

• Provided disaster relief to homeowners affected by recent hurricane activity. 

“We clearly had a strong 

quarter - even excluding the 

large legal settlement, Freddie 

Mac made a profit of $1.8 

billion. This reflects the 

growing strength of our 

business model as well as an 

improving quality of execution. 

And we’re doing this while 

increasingly protecting 

taxpayers through credit risk 

transfer, transacting greater 

volumes with more offerings 

than ever before - we recently 

reached a milestone of $1 

trillion of mortgages with 

significant credit risk 

transferred. 

“This performance is evidence 

of good progress toward our 

goal to be one of the best-run 

financial institutions in the 

country, while successfully 

delivering on our public policy 

mission. We call this our 

transformation to “A Better 

Freddie Mac.” We’re better at 

managing our risks, better at 

disposing of legacy assets, 

and getting better all the time 

at serving our customers - 

helping them meet the 

nation’s critical need for 

housing, especially for lowerincome families and first-time 

homebuyers.

“We’re proud of this 

transformation, and we’re 

committed to getting even 

better.” 

Donald H. Layton

Chief Executive Officer

 Providing Liquidity while Transforming U.S. Housing Finance

• Guarantee portfolio grew 4 percent from prior year to $1,800 billion at September 30, 2017.

• Core loan portfolio (after 2008) was 77 percent of the total guarantee portfolio; up

6 percentage points from a year ago.

• Total purchase volume of $87 billion decreased 25 percent from a year ago, as refinancing

volumes declined.

• Serious delinquency rate of 0.86 percent, down 16 basis points from a year ago; up 1 basis

point from the prior quarter due in part to recent hurricane activity.

• Transferred a portion of credit losses on nearly $176 billion of loans during the first nine

months of 2017; have now transferred a portion of the credit risk on nearly 32 percent of

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

Leading the Multifamily Finance Industry

• Guarantee portfolio grew 23 percent from prior year to $184 billion at September 30, 2017.

• Record purchase volume of $19 billion increased 56 percent from a year ago due to

continued strong market demand. Outstanding loan purchase commitments of $22 billion

were up more than $7 billion over the prior year.

• Delinquency rate continues near zero at 0.02 percent and has remained below 0.05

percent since early 2014.

• Transferred a large majority of the credit risk on nearly $16 billion of loans in the third

quarter of 2017 and more than $216 billion of loans since the inception of the K and SB

Certificate programs in 2009 and 2015, respectively.

(1)See Non-GAAP Financial Measure Highlights on pages 4-6 and 15-16 of this press release for additional details and reconciliations to the comparable amounts under GAAP.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 2

McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $4.7 billion for the third quarter of 2017, 

compared to net income of $1.7 billion for the second quarter of 2017. The company also reported comprehensive 

income of $4.7 billion for the third quarter of 2017, compared to comprehensive income of $2.0 billion for the second 

quarter of 2017.

Summary Consolidated Statements of Comprehensive Income

($ Millions) 3Q 2017 2Q 2017 Change 3Q 2016 Change

1 Net interest income $ 3,489 $ 3,379 $ 110 $ 3,646 $ (157)

2 Benefit (provision) for credit losses (716) 422 (1,138) (113) (603)

3 Derivative gains (losses) (678) (1,096) 418 (36) (642)

4 Other non-interest income (loss) (1) 6,152 802 5,350 813 5,339

5 Non-interest income 5,474 (294) 5,768 777 4,697

6 Administrative expense (524) (513) (11) (498) (26)

7 Other non-interest expense (533) (493) (40) (487) (46)

8 Non-interest expense (1,057) (1,006) (51) (985) (72)

9 Pre-tax income 7,190 2,501 4,689 3,325 3,865

10 Income tax expense (2,519) (837) (1,682) (996) (1,523)

11 Net income $ 4,671 $ 1,664 $ 3,007 $ 2,329 $ 2,342

12 Total other comprehensive income (loss) (21) 322 (343) (19) (2)

13 Comprehensive income $ 4,650 $ 1,986 $ 2,664 $ 2,310 $ 2,340

Memo Item

14 Guarantee fee income(1) $ 169 $ 158 $ 11 $ 133 $ 36

(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 third quarter 2017 net income of $4.7 billion and comprehensive income of $4.7 billion increased $3.0 

billion and $2.7 billion, respectively, from the second quarter of 2017. Net income and comprehensive income both 

increased $2.3 billion from the prior year. 

The company’s earnings increased primarily due to a $2.9 billion (after-tax) litigation settlement related to nonagency mortgage-related securities and the benefit from market-related impacts of $0.6 billion (after-tax) primarily 

driven by a $0.4 billion benefit from credit spread tightening and a $0.2 billion benefit due to market gains from 

single-family legacy asset dispositions, partially offset by $0.6 billion (after-tax) in provision for credit losses 

attributable to recent hurricane activity. Interest rate impacts continued to be minimal after the company's adoption 

of hedge accounting. 
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 3

Selected Financial Measures

 

• Net interest income was $3.5 billion for the third quarter of 2017, an increase of $0.1 billion, or 3 percent, 

from the second quarter of 2017 and a decrease of nearly $0.2 billion, or 4 percent, from the prior year.

The increase in net interest income from the prior quarter primarily reflected higher amortization 

income of single-family upfront fees partially offset by a 6 percent decline in the balance of the 

mortgage-related investments portfolio.

The decrease in net interest income from the prior year primarily reflected a 13 percent decline in 

the balance of the mortgage-related investments portfolio. 

 

(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 $169 million for the third 

quarter of 2017, increasing $11 million, or 7 percent, from the second quarter of 2017 and $36 million, or 27 

percent, from the prior year.

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

portfolio balances.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 4

 

• Provision for credit losses was $716 million for the third quarter of 2017, a shift from a benefit for credit 

losses of $422 million for the second quarter of 2017 and an increase to provision for credit losses of $603 

million from the prior year.

The increase in provision for credit losses from the prior quarter and the prior year primarily 

reflected the company's estimate of losses related to Hurricanes Harvey, Irma and Maria.

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 

non-GAAP 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 singlefamily 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.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 5

(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 $1.15 billion for the third quarter of 2017, a decrease of $21 million from 

the second quarter of 2017 and $42 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.

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 declined $17 billion from the prior quarter to $267 billion as of 

September 30, 2017. The company's mortgage-related investments portfolio cap is reduced 15 percent 

annually until it reaches $250 billion at the end of 2018.

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

balance of less liquid assets was $99 billion as of September 30, 2017, a decline of $11 billion, or 

10 percent, from June 30, 2017.

Less liquid assets include single-family reperforming loans, single-family seriously 

delinquent loans, multifamily unsecuritized mortgage loans not in the securitization pipeline, 

and mortgage-related securities not guaranteed by a GSE or the U.S. government.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 6

 

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

Note: Amounts may not add due to rounding.

• Adjusted guarantee fee income was $1.75 billion for the third quarter of 2017, an increase of $83 million

from the second quarter of 2017 and a decrease of $24 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 third 

quarter of 2017.

The decrease in adjusted guarantee fee income from the prior year primarily reflected lower 

amortization of single-family upfront fees driven by a decrease in loan prepayments in the third 

quarter of 2017 as compared to the third quarter of 2016, partially offset by an increase in 

contractual guarantee fees.

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.

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 grew $26 billion, or 1 percent, from the prior quarter and $102 billion, 

or 5 percent, from the prior year to $1,984 billion as of September 30, 2017.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 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. The company presents Segment Earnings 

by reclassifying certain credit guarantee-related activities and investment-related 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 quarter ended September 30, 2017 and page 16 of this press release.

Single-family Guarantee Segment

Providing liquidity while transforming U.S. housing finance

Financial Results(1)

($ Millions) 3Q 2017 2Q 2017 Change 3Q 2016 Change

1 Guarantee fee income $ 1,581 $ 1,506 $ 75 $ 1,641 $ (60)

2 Benefit (provision) for credit losses (826) 12 (838) (297) (529)

3 Administrative expense (353) (332) (21) (330) (23)

4 Other 17 (17) 34 (364) 381

5 Income tax (expense) benefit (164) (391) 227 (153) (11)

6 Segment earnings, net of taxes 255 778 (523) 497 (242)

7 Total other comprehensive income (loss), net of

tax — — — (1) 1

8 Total comprehensive income $ 255 $ 778 $ (523) $ 496 $ (241)

(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 $255 million for the third quarter of 2017, a decrease of 

$523 million from the second quarter of 2017 and $242 million from the prior year. 

The decrease in segment earnings from the prior quarter and the prior year primarily reflected 

increased provision for credit losses due to estimated losses related to Hurricanes Harvey, Irma 

and Maria.

Business Highlights

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

and was 77 percent of the single-family credit guarantee portfolio at September 30, 2017.

• Average guarantee fees charged on new acquisitions were 42 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 third quarter of 2017, down from 44 basis points in the prior quarter.

Average guarantee fees on the single-family credit guarantee portfolio were 35 basis points, an 

increase of 1 basis point from the prior quarter, primarily due to higher amortization of upfront fees 

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

• Transferred a portion of credit losses on approximately $176 billion in UPB of mortgage loans in the Core 

loan portfolio during the first nine months of 2017.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 8

Multifamily Segment

Leading the Multifamily finance industry

Financial Results(1)

($ Millions) 3Q 2017 2Q 2017 Change 3Q 2016 Change

1 Net interest income $ 342 $ 292 $ 50 $ 255 $ 87

2 Guarantee fee income 170 162 8 134 36

3 Gains (losses) on loans and other non-interest

income 183 412 (229) 551 (368)

4 Derivative gains (losses) 22 (180) 202 205 (183)

5 Administrative expense (98) (95) (3) (89) (9)

6 Other (33) (6) (27) (2) (31)

7 Income tax (expense) benefit (212) (196) (16) (310) 98

8 Segment earnings, net of taxes 374 389 (15) 744 (370)

9 Total other comprehensive income (loss), net of

tax (4) 73 (77) 46 (50)

10 Total comprehensive income $ 370 $ 462 $ (92) $ 790 $ (420)

(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 $370 million for the third quarter of 2017, a decrease of 

$92 million, or 20 percent, from the second quarter of 2017 and $420 million, or 53 percent, from the prior 

year.

The decrease in comprehensive income from the prior quarter and the prior year was primarily 

driven by lower fair value gains in the third quarter of 2017.

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

changes on 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

• Record new purchase volume of $19.0 billion for the third quarter of 2017 increased 35 percent from the 

second quarter of 2017, while outstanding loan purchase commitments increased 14 percent to $21.6 

billion, reflecting continued strong market demand.

The capped multifamily new business activity for the third quarter of 2017 was $7.9 billion while 

uncapped new business activity was $11.1 billion. Capped multifamily new business activity was 

$21.1 billion for the first nine months of 2017.

The 2017 FHFA Scorecard goal is to maintain the dollar volume of annual capped 

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

• Executed 14 K Certificate and 5 SB Certificate transactions that transferred a large majority of expected and 

stress credit losses associated with $15.7 billion in UPB of loans during the third quarter of 2017.

In addition, Freddie Mac entered into certain other risk transfer transactions in which the company 

transferred a portion of the credit risk on $0.4 billion in UPB associated with multifamily loans and 

guarantees during the third quarter of 2017 and $3.7 billion in UPB life-to-date.

• Provided financing for approximately 198 thousand rental units in the third quarter of 2017.

83 percent of the eligible units financed were affordable to families earning at or below area median 

incomes.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 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 economically sensible transactions

Financial Results(1)

($ Millions) 3Q 2017 2Q 2017 Change 3Q 2016 Change

1 Net interest income $ 804 $ 875 $ (71) $ 933 $ (129)

2 Derivative gains (losses) (324) (485) 161 212 (536)

3 Other non-interest income 5,781 444 5,337 555 5,226

4 Administrative expense (73) (86) 13 (79) 6

5 Other (3) (1) (2) — (3)

6 Income tax (expense) benefit (2,143) (250) (1,893) (533) (1,610)

7 Segment earnings, net of taxes 4,042 497 3,545 1,088 2,954

8 Total other comprehensive income (loss), net of

tax (17) 249 (266) (64) 47

9 Total comprehensive income $ 4,025 $ 746 $ 3,279 $ 1,024 $ 3,001

(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 $4.0 billion for the third quarter of 2017, an increase 

of $3.3 billion from the second quarter of 2017 and $3.0 billion from the prior year.

The increase in comprehensive income from the prior quarter and the prior year was primarily 

driven by a settlement of $2.9 billion (after-tax) related to non-agency mortgage-related securities 

litigation and spread gains on non-agency securities.

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 

$64.3 billion at September 30, 2017, down $9.1 billion, or 12 percent, from June 30, 2017, due primarily to 

sales of $2.7 billion of reperforming loans and $5.0 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 $13.3 billion at September 30, 2017, up $1.2 billion from 

June 30, 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 $129.0 billion at September 30, 2017, or 

62 percent of the portfolio.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 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.

During the third quarter of 2017, the company made disaster relief options available to borrowers with homes or 

places of employment in presidentially-declared major disaster areas, suspended all foreclosure sales through yearend and suspended all eviction activities, until further notice, for borrowers in eligible disaster areas.

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

avoid foreclosure, completing approximately 50 thousand single-family loan workouts in the nine months ended

September 30, 2017. 

Mortgage Funding – Freddie Mac provided approximately $299 billion in liquidity to the market in the nine months 

ended September 30, 2017, funding: 

• Nearly 1.1 million single-family homes, approximately 477 thousand of which were refinance loans; and

• Approximately 530 thousand multifamily rental units.

(1) As of September 30, 2017.

Note: Amounts may not add due to rounding.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 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.

(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 September 30, 2017.

Note: Amounts may not add due to rounding.

• Based on Freddie Mac's Net Worth Amount of $5.3 billion as of September 30, 2017 and the Capital 

Reserve Amount of $600 million in 2017, the company's dividend requirement to Treasury in December 

2017 will be $4.7 billion. Upon the Conservator declaring and directing the company to pay a senior 

preferred stock dividend equal to the company's dividend requirement before December 31, 2017, Freddie 

Mac would pay a dividend of $4.7 billion by December 31, 2017.

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

January 1, 2018.

The declining capital reserve amount required under the terms of the Purchase Agreement 

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

Treasury.

• Through September 30, 2017, aggregate cash dividends paid to Treasury totaled $110.1 billion (which 

excludes the scheduled December 2017 dividend obligation of $4.7 billion), $38.8 billion more than 

cumulative cash draws of $71.3 billion received from Treasury.

• 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 September 30, 2017.

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

Purchase Agreement, although Freddie Mac is 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.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 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 September 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 October 31, 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: https://edge.media-server.com/m6/p/6hibd6s9. 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.

Media Contact: Lisa Gagnon (703) 903-3385 Investor Contact: Laurie Garthune (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 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, June 30, 2017 and 

September 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.
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 13

FREDDIE MAC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended

September 30,

2017

June 30,

2017

September 30,

2016

(in millions, except share-related amounts)

Interest income

Mortgage loans $ 15,867 $ 15,848 $ 14,997

Investments in securities 821 902 976

Other 185 150 74

Total interest income 16,873 16,900 16,047

Interest expense (13,344) (13,479) (12,354)

Expense related to derivatives (40) (42) (47)

Net interest income 3,489 3,379 3,646

Benefit (provision) for credit losses (716) 422 (113)

Net interest income after benefit (provision) for credit losses 2,773 3,801 3,533

Non-interest income (loss)

Gains (losses) on extinguishment of debt 27 50 (92)

Derivative (losses) (678) (1,096) (36)

 Net impairment of available-for-sale securities recognized in earnings (1) (3) (9)

Other gains on investment securities recognized in earnings 723 61 309

Other income 5,403 694 605

Non-interest income (loss) 5,474 (294) 777

Non-interest expense

Salaries and employee benefits (272) (266) (248)

Professional services (110) (118) (129)

Occupancy expense (17) (16) (13)

Other administrative expense (125) (113) (108)

Total administrative expense (524) (513) (498)

Real estate owned operations expense (35) (37) (56)

Temporary Payroll Tax Cut Continuation Act of 2011 expense (339) (330) (293)

Other expense (159) (126) (138)

Non-interest expense (1,057) (1,006) (985)

Income before income tax (expense) 7,190 2,501 3,325

Income tax (expense) (2,519) (837) (996)

Net income 4,671 1,664 2,329

Other comprehensive income (loss), net of taxes and reclassification adjustments:

 Changes in unrealized gains (losses) related to available-for-sale securities (47) 295 (47)

Changes in unrealized gains related to cash flow hedge relationships 26 27 29

Changes in defined benefit plans — — (1)

Total other comprehensive income (loss), net of taxes and reclassification

adjustments (21) 322 (19)

Comprehensive income $ 4,650 $ 1,986 $ 2,310

Net income $ 4,671 $ 1,664 $ 2,329

Undistributed net worth sweep and senior preferred stock dividends (4,650) (1,986) (2,310)

Net income (loss) attributable to common stockholders $ 21 $ (322) $ 19

Net income (loss) per common share — basic and diluted $ 0.01 $ (0.10) $ 0.01

Weighted average common shares outstanding (in millions) — basic and diluted 3,234 3,234 3,234
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 14

FREDDIE MAC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30,

2017

December 31,

2016

(in millions, except sharerelated amounts)

Assets

Cash and cash equivalents $ 8,183 $ 12,369

Restricted cash and cash equivalents 7,684 9,851

Securities purchased under agreements to resell 47,202 51,548

Investments in securities, at fair value 87,148 111,547

Mortgage loans held-for-sale (includes $18,995 and $16,255 at fair value) 32,042 18,088

Mortgage loans held-for-investment (net of allowance for loan losses of $10,085 and $13,431) 1,812,850 1,784,915

Accrued interest receivable 6,268 6,135

Derivative assets, net 705 747

Deferred tax assets, net 14,576 15,818

Other assets (includes $2,761 and $2,408 at fair value) 13,998 12,358

Total assets $ 2,030,656 $ 2,023,376

Liabilities and equity

Liabilities

Accrued interest payable $ 5,990 $ 6,015

Debt, net (includes $5,808 and $6,010 at fair value) 2,009,578 2,002,004

Derivative liabilities, net 212 795

Other liabilities 9,626 9,487

Total liabilities 2,025,406 2,018,301

Commitments and contingencies

Equity

Senior preferred stock 72,336 72,336

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 650,054,731 shares and 650,046,828 shares outstanding — —

Additional paid-in capital — —

Retained earnings (accumulated deficit) (78,092) (77,941)

AOCI, net of taxes, related to:

Available-for-sale securities (includes $726 and $782, related to net unrealized gains on

securities for which other-than-temporary impairment has been recognized in earnings) 1,161 915

Cash flow hedge relationships (399) (480)

Defined benefit plans 18 21

Total AOCI, net of taxes 780 456

Treasury stock, at cost, 75,809,155 shares and 75,817,058 shares (3,883) (3,885)

Total equity 5,250 5,075

Total liabilities and equity $ 2,030,656 $ 2,023,376
Freddie Mac Third Quarter 2017 Financial Results

October 31, 2017

Page 15

Freddie Mac

Non-GAAP Reconciliations

$ Millions, Pre-Tax

Reconciliation of GAAP Net Interest Income to Adjusted Net Interest Income

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

1 GAAP Net Interest Income $ 3,646 $ 3,885 $ 3,795 $ 3,379 $ 3,489

Reclassifications:

2 Guarantee fee income reclassified out of net interest 

income (1)(2)

(1,935) (1,970) (1,741) (1,840) (1,921)

3 Accrual of periodic cash settlements reclassified into net 

interest income (3)

(416) (434) (467) (429) (398)

4 Other reclassifications (4) (107) (326) (387) 57 (24)

5 Total reclassifications $ (2,458) $ (2,730) $ (2,595) $ (2,212) $ (2,343)

6 Adjusted Net Interest Income $ 1,188 $ 1,155 $ 1,200 $ 1,167 $ 1,146

Reconciliation of GAAP Guarantee Fee Income* to Adjusted Guarantee Fee Income

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

7 GAAP Guarantee Fee Income* $ 133 $ 146 $ 149 $ 158 $ 169

Reclassifications:

8 Guarantee fee income reclassified from net interest 

income (1)(2)

1,935 1,970 1,741 1,840 1,921

9 Temporary Payroll Tax Cut Continuation Act of 2011 

expense reclassified from other non-interest expense (5)

(293) (307) (321) (330) (339)

10 Total reclassifications 1,642 1,663 1,420 1,510 1,582

11 Adjusted Guarantee Fee Income $ 1,775 $ 1,809 $ 1,569 $ 1,668 $ 1,751

* 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 Third Quarter 2017 Financial Results

October 31, 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.

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

$401 million and $347 million for the three months ended 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 otherthan-temporary 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.