Freddie Mac 2014 Annual Report Download - page 59

54 Freddie Mac
As a result of the solid market fundamentals and continuing strong portfolio performance, we expect our credit losses and
delinquency rates to remain low in the near term. We expect the performance of the multifamily market to continue to be solid
in the near term and believe the long-term outlook for the multifamily market continues to be favorable.
CONSOLIDATED RESULTS OF OPERATIONS
You should read this discussion of our consolidated results of operations in conjunction with our consolidated financial
statements, including the accompanying notes. Also see “CRITICAL ACCOUNTING POLICIES AND ESTIMATES” for
information concerning certain significant accounting policies and estimates applied in determining our reported results of
operations.
Table 8 — Summary Consolidated Statements of Comprehensive Income
Year Ended December 31, Variance
2014 2013 2012 2014 vs. 2013 2013 vs. 2012
(in millions)
Net interest income $ 14,263 $ 16,468 $ 17,611 $ (2,205) $ (1,143)
(Provision) benefit for credit losses (58) 2,465 (1,890) (2,523) 4,355
Net interest income after (provision) benefit for credit
losses 14,205 18,933 15,721 (4,728) 3,212
Non-interest income (loss):
Gains (losses) on extinguishment of debt securities
of consolidated trusts (451) 314 (58) (765) 372
Gains (losses) on retirement of other debt 29 132 (77) (103) 209
Derivative gains (losses) (8,291) 2,632 (2,448) (10,923) 5,080
Net impairment of available-for-sale securities
recognized in earnings (938) (1,510) (2,168) 572 658
Other gains (losses) on investment securities
recognized in earnings 1,494 301 (1,522) 1,193 1,823
Other income (loss) 8,044 6,650 2,190 1,394 4,460
Total non-interest income (loss) (113) 8,519 (4,083) (8,632) 12,602
Non-interest expense:
Administrative expense (1,881) (1,805) (1,561) (76) (244)
REO operations (expense) income (196) 140 (59) (336) 199
Temporary Payroll Tax Cut Continuation Act of
2011 expense (775) (533) (108) (242) (425)
Other (expense) income (238) 109 (465) (347) 574
Total non-interest expense (3,090) (2,089) (2,193) (1,001) 104
Income before income tax (expense) benefit 11,002 25,363 9,445 (14,361) 15,918
Income tax (expense) benefit (3,312) 23,305 1,537 (26,617) 21,768
Net income 7,690 48,668 10,982 (40,978) 37,686
Other comprehensive income (loss), net of taxes and
reclassification adjustments 1,736 2,932 5,057 (1,196) (2,125)
Comprehensive income $ 9,426 $ 51,600 $ 16,039 $ (42,174) $ 35,561
Net Interest Income
Net interest income represents the difference between interest income (which includes income from guarantee fees) and
interest expense and is a primary source of our revenue. The table below summarizes our net interest income and net interest
yield and shows the extent to which changes in annual results are attributable to changes in interest rates or changes in volumes
of our interest-earning assets and interest-bearing liabilities, based on their amortized cost. We present average balance sheet
information because we believe end-of-period balances are not representative of activity throughout the periods presented. For
most components of the average balances, a daily weighted average balance was calculated. When daily average balance
information was not available, a simple monthly average balance was calculated.
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