Freddie Mac 2014 Annual Report Download - page 74

69 Freddie Mac
Segment Earnings — Results
Single-Family Guarantee
The table below presents the Segment Earnings of our Single-family Guarantee segment.
Table 22 — Segment Earnings and Key Metrics — Single-Family Guarantee
Year Ended December 31,
2014 2013 2012
(dollars in millions)
Segment Earnings:
Net interest income (expense)(1) $ (111) $ 320 $ (147)
(Provision) benefit for credit losses (982) 1,409 (3,168)
Non-interest income:
Management and guarantee income 5,172 4,930 4,389
Other non-interest income 712 1,162 931
Total non-interest income 5,884 6,092 5,320
Non-interest expense:
Administrative expense (1,170) (1,025) (890)
REO operations (expense) income (205) 124 (62)
Temporary Payroll Tax Cut Continuation Act of 2011 expense (775) (533) (108)
Other non-interest expense (191) (179) (285)
Total non-interest expense (2,341) (1,613) (1,345)
Segment adjustments (303) (694) (832)
Segment Earnings before income tax (expense) benefit 2,147 5,514 (172)
Income tax (expense) benefit (600) 282 8
Segment Earnings (loss), net of taxes 1,547 5,796 (164)
Total other comprehensive income (loss), net of taxes (10) 49 (63)
Total comprehensive income (loss) $ 1,537 $ 5,845 $ (227)
Key metrics:
Balances and Volume (in billions, except rate):
Average balance of single-family credit guarantee portfolio and HFA guarantees $ 1,655 $ 1,644 $ 1,692
Issuance — Single-family credit guarantees(2) $ 260 $ 435 $ 446
Fixed-rate products — Percentage of purchases 94% 96% 96%
Liquidation rate — Single-family credit guarantees(3) 15% 28% 33%
Average Management and Guarantee Rate (in bps)
Segment Earnings management and guarantee income(4) 31.2 30.0 25.9
Guarantee fee charged on new acquisitions(5) 57.4 51.4 38.3
Credit:
Serious delinquency rate, at end of period 1.88% 2.39% 3.25%
REO inventory, at end of period (number of properties) 25,768 47,307 49,071
Single-family credit losses, in bps 23.4 28.8 68.3
Market:
Single-family mortgage debt outstanding (total U.S. market, in billions)(6) $ 9,855 $ 9,887 $ 9,983
(1) Includes interest expense associated with our STACR debt notes that we began issuing in July 2013.
(2) Includes conversions of previously issued other guarantee commitments into Freddie Mac mortgage-related securities.
(3) Calculated based on principal repayments relating to loans underlying Freddie Mac mortgage-related securities and other guarantee commitments,
including those related to our removal of seriously delinquent and modified mortgage loans and balloon/reset mortgage loans from PC pools. Also
includes terminations of other guarantee commitments.
(4) Calculated based on the contractual management and guarantee fee rate as well as amortization of delivery and other upfront fees (using the original
contractual maturity date of the related loans) for the entire single-family credit guarantee portfolio.
(5) Represents the estimated average rate of management and guarantee fees for new acquisitions during the period assuming amortization of delivery fees
using the estimated life of the related loans rather than the original contractual maturity date of the related loans.
(6) Source: Federal Reserve Financial Accounts of the United States of America dated December 11, 2014. The outstanding amounts reflect the balances as
of September 30, 2014.
Segment Earnings (loss) for the Single-family Guarantee segment is largely driven by management and guarantee fee
income and the (provision) benefit for credit losses. Segment Earnings (loss) for our Single-family Guarantee segment was $1.5
billion in 2014 compared to $5.8 billion in 2013, and $(0.2) billion in 2012. The decline in 2014 compared to 2013 was
primarily due to: (a) changes in our provision for credit losses in 2014; and (b) an income tax expense in 2014, compared to an
income tax benefit in 2013. The improvement in 2013 compared to 2012 was primarily due to changes in our provision for
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