Freddie Mac 2014 Annual Report Download - page 80

75 Freddie Mac
Table 24 — Segment Earnings and Key Metrics — Multifamily
Year Ended December 31,
2014 2013 2012
(dollars in millions)
Segment Earnings:
Net interest income $ 948 $ 1,186 $ 1,291
Benefit for credit losses 55 218 123
Non-interest income:
Management and guarantee income 254 206 151
Gains (losses) on mortgage loans 870 (336) 1,010
Derivative gains 335 1,281 943
Other non-interest income 234 1,203 294
Total non-interest income 1,693 2,354 2,398
Non-interest expense:
Administrative expense (274) (257) (241)
REO operations income 9 16 3
Other non-interest expense (23) (24) (129)
Total non-interest expense (288) (265) (367)
Segment Earnings before income tax expense 2,408 3,493 3,445
Income tax expense (772) (443) (454)
Segment Earnings, net of taxes 1,636 3,050 2,991
Total other comprehensive income (loss), net of taxes (177) (1,595) 1,090
Total comprehensive income $ 1,459 $ 1,455 $ 4,081
Key metrics:
New Business Activity:
Multifamily new business activity $ 28,336 $ 25,872 $ 28,774
Multifamily units financed from new business activity 413,367 387,940 435,653
Securitization Activity:(1)
Multifamily securitization transactions — guaranteed portion $ 19,219 $ 24,554 $ 17,922
Multifamily securitization transactions — unguaranteed portion(2) $ 3,152 $ 4,588 $ 3,281
Average subordination, at issuance 14.1% 15.7% 15.5%
K Certificate guarantees:
Average guarantee fee rate, in bps 21.0 19.7 19.0
Average K Certificate guaranteed UPB $ 67,025 $ 49,197 $ 28,154
Credit:
Multifamily mortgage portfolio delinquency rate (at period end):
K Certificates 0.01% 0.07% 0.07%
All other 0.07% 0.11% 0.25%
Total 0.04% 0.09% 0.19%
REO inventory, at period end (number of properties) — 1 6
(1) Consists primarily of K Certificate transactions.
(2) Represents subordinated securities (i.e., CMBS), which are not issued or guaranteed by us.
Comprehensive income for our Multifamily segment was $1.5 billion for both 2014 and 2013, and $4.1 billion in 2012.
Comprehensive income for the segment consists of Segment Earnings and other comprehensive income or loss. Total other
comprehensive loss of $0.2 billion recognized in 2014 for our Multifamily segment was primarily due to fair value losses on
available-for-sale securities. Total other comprehensive loss of $1.6 billion recognized in 2013 for our Multifamily segment
was primarily related to the realization of fair value gains (recognized in Segment Earnings other non-interest income) that
were previously deferred in AOCI associated with certain available-for-sale securities that were sold during 2013.
Segment Earnings for our Multifamily segment was $1.6 billion in 2014, compared to $3.1 billion in 2013 and $3.0
billion in 2012. The decline in 2014 compared to 2013 was primarily due to decreased net interest income, a lower benefit for
credit losses and lower non-interest income. Segment Earnings for our Multifamily segment remained relatively unchanged in
2013 compared to 2012.
In 2014, we continued to provide liquidity to the multifamily market and support affordable rental housing by acquiring
and securitizing multifamily mortgages. Our total new business activity increased from $25.9 billion in 2013 to $28.3 billion in
2014. In order to expand liquidity and affordable housing in the multifamily mortgage market, we began purchasing mortgage
loans of manufactured housing communities as well as smaller balance loans in 2014. Over 90% of the loans purchased in 2014
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