Freddie Mac 2014 Annual Report Download - page 242

237 Freddie Mac
Table 18.1 — Net Worth and Minimum Capital
December 31, 2014 December 31, 2013
(in millions)
GAAP net worth $ 2,651 $ 12,835
Core capital (deficit)(1)(2) $ (71,415) $ (59,495)
Less: Minimum capital requirement(1) 20,090 21,404
Minimum capital surplus (deficit)(1) $ (91,505) $ (80,899)
(1) Core capital and minimum capital figures for December 31, 2014 are estimates. FHFA is the authoritative source for our regulatory capital.
(2) Core capital excludes certain components of GAAP total equity (i.e., AOCI and the liquidation preference of the senior preferred stock) as these items
do not meet the statutory definition of core capital.
Following our entry into conservatorship and consistent with the objectives of conservatorship, we have focused our risk
and capital management on, among other things, maintaining a positive balance of GAAP equity in order to reduce the
likelihood that we will need to make additional draws on the Purchase Agreement with Treasury. The Purchase Agreement
provides that, if FHFA determines as of quarter end that our liabilities have exceeded our assets under GAAP, Treasury will
contribute funds to us in an amount at least equal to the difference between such liabilities and assets.
Under the GSE Act, FHFA must place us into receivership if FHFA determines in writing that our assets are and have
been less than our obligations for a period of 60 days. FHFA has notified us that the measurement period for any mandatory
receivership determination with respect to our assets and obligations would commence no earlier than the SEC public filing
deadline for our quarterly or annual financial statements and would continue for 60 calendar days after that date. FHFA has
advised us that, if, during that 60-day period, we receive funds from Treasury in an amount at least equal to the deficiency
amount under the Purchase Agreement, the Director of FHFA will not make a mandatory receivership determination. If funding
has been requested under the Purchase Agreement to address a deficit in our net worth, and Treasury is unable to provide us
with such funding within the 60-day period specified by FHFA, FHFA would be required to place us into receivership if our
assets remain less than our obligations during that 60-day period.
At December 31, 2014, our assets exceeded our liabilities under GAAP; therefore no draw is being requested from
Treasury under the Purchase Agreement. As of December 31, 2014, our aggregate funding received from Treasury under the
Purchase Agreement was $71.3 billion. This aggregate funding amount does not include the initial $1 billion liquidation
preference of senior preferred stock that we issued to Treasury in September 2008 as an initial commitment fee and for which
no cash was received. We paid quarterly dividends of $10.4 billion, $4.5 billion, $1.9 billion, and $2.8 billion on the senior
preferred stock in cash in March 2014, June 2014, September 2014, and December 31, 2014, respectively, at the direction of the
Conservator.
Subordinated Debt Commitment
In October 2000, we announced our adoption of a series of commitments designed to enhance market discipline, liquidity
and capital. In September 2005, we entered into a written agreement with FHFA that updated those commitments and set forth a
process for implementing them. FHFA, as Conservator of Freddie Mac, has suspended the requirements in the September 2005
agreement with respect to issuance, maintenance and reporting and disclosure of Freddie Mac subordinated debt during the
term of conservatorship and thereafter until directed otherwise.
NOTE 19: SELECTED FINANCIAL STATEMENT LINE ITEMS
The table below presents the significant components of other income (loss) on our consolidated statements of
comprehensive income.
Table 19.1 — Significant Components of Other Income (Loss) on Our Consolidated Statements of Comprehensive
Income
Year Ended December 31,
2014 2013 2012
(in millions)
Other income (loss):
Non-agency mortgage-related securities settlements(1) $ 6,084 $ 5,501 $ —
Gains (losses) on mortgage loans 731 (336) 1,010
Other 1,229 1,485 1,180
Total other income (loss) $ 8,044 $ 6,650 $ 2,190
(1) Settlement agreements primarily related to lawsuits regarding our investments in certain non-agency mortgage-related securities is a significant
component of other income in 2014 and 2013. For more information, see “NOTE 15: CONCENTRATION OF CREDIT AND OTHER RISKS — Non-
Agency Mortgage-Related Security Issuers.”
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