Freddie Mac 2011 Annual Report Download - page 111

Multifamily
The table below presents the Segment Earnings of our Multifamily segment.
Table 20 — Segment Earnings and Key Metrics — Multifamily
(1)
2011 2010 2009
Year Ended December 31,
(dollars in millions)
Segment Earnings:
Net interest income . ............................................................. $ 1,200 $ 1,114 $ 856
(Provision) benefit for credit losses . ................................................... 196 (99) (574)
Non-interest income (loss):
Management and guarantee income .................................................. 127 101 90
Net impairment of available-for-sale securities . . ......................................... (353) (96) (137)
Derivative gains (losses) . ........................................................ 3 6 (27)
Gains (losses) on sale of mortgage loans . .............................................. 383 343 156
Gains (losses) on mortgage loans recorded at fair value . .................................... (83) (283) (144)
Other non-interest income (loss) . ................................................... 125 177 (474)
Total non-interest income (loss) ................................................... 202 248 (536)
Non-interest expense:
Administrative expenses . ........................................................ (220) (212) (221)
REO operations income (expense) ................................................... 11 3 (20)
Other non-interest expense ........................................................ (69) (66) (18)
Total non-interest expense . . . ................................................... (278) (275) (259)
Segment Earnings (loss) before income tax benefit (expense) ................................... 1,320 988 (513)
Income tax benefit (expense) ........................................................ (1) (26) —
Segment Earnings (loss), net of taxes, including noncontrolling interest . . .......................... 1,319 962 (513)
Less: Net (income) loss — noncontrolling interest ......................................... — 3 2
Segment Earnings (loss), net of taxes . . . .............................................. 1,319 965 (511)
Total other comprehensive income, net of taxes . . . ......................................... 899 4,075 7,292
Total comprehensive income ........................................................ $ 2,218 $ 5,040 $ 6,781
Reconciliation to GAAP net income (loss):
Segment Earnings (loss), net of taxes .................................................. $ 1,319 $ 965 $ (511)
Credit guarantee-related adjustments
(2)
.................................................. — — 7
Fair value-related adjustments
(3)
...................................................... — — (3,761)
Tax-related adjustments
(3)
.......................................................... — — 1,313
Total reconciling items, net of taxes .................................................. — — (2,441)
Net income (loss) attributable to Freddie Mac . ......................................... $ 1,319 $ 965 $ (2,952)
Key metrics — Multifamily:
Balances and Volume:
Average balance of Multifamily loan portfolio............................................. $ 83,593 $ 83,163 $ 78,371
Average balance of Multifamily guarantee portfolio ......................................... $ 29,861 $ 21,787 $ 16,203
Average balance of Multifamily investment securities portfolio . . . ............................... $ 61,296 $ 61,332 $ 63,797
Multifamily new loan purchase and other guarantee commitment volume
(4)
.......................... $ 20,325 $ 14,800 $ 16,556
Multifamily units financed from new volume activity
(4)
....................................... 320,753 233,952 258,072
Multifamily Other Guarantee Transaction issuance
(4)
........................................ $ 11,722 $ 5,694 $ 1,979
Yield and Rate:
Net interest yield — Segment Earnings basis.............................................. 0.83% 0.77% 0.55%
Average Management and guarantee fee rate, in bps
(5)
....................................... 42.4 50.1 53.3
Credit:
Delinquency rate:
Credit-enhanced loans, at period end . . . .............................................. 0.52% 0.85% 1.03%
Non-credit-enhanced loans, at period end .............................................. 0.11% 0.12% 0.07%
Total delinquency rate, at period end
(6)
................................................. 0.22% 0.26% 0.20%
Allowance for loan losses and reserve for guarantee losses, at period end . .......................... $ 545 $ 828 $ 831
Allowance for loan losses and reserve for guarantee losses, in bps . ............................... 46.4 75.3 82.1
Credit losses, in bps
(7)
............................................................ 6.3 9.6 4.4
REO inventory, at net carrying value ................................................... $ 133 $ 107 $ 31
REO inventory, at period end (number of properties) ........................................ 20 14 5
(1) For reconciliations of Segment Earnings line items to the comparable line items in our consolidated financial statements prepared in accordance with
GAAP, see “NOTE 14: SEGMENT REPORTING — Table 14.2 — Segment Earnings and Reconciliation to GAAP Results.”
(2) Consists primarily of amortization and valuation adjustments pertaining to the guarantee assets and guarantee obligation, which were excluded from
segment earnings in 2009.
(3) Fair value-related adjustments in 2009 consist principally of the write-down of our investment in LIHTC partnerships in 2009. Tax-related
adjustments in 2009 consist of the establishment of a partial valuation allowance against our deferred tax assets that are not included in Multifamily
Segment Earnings.
(4) Excludes our guarantees issued under the HFA initiative.
(5) Represents Multifamily Segment Earnings — management and guarantee income, excluding prepayment and certain other fees, divided by the sum
of the average balance of the multifamily guarantee portfolio and the average balance of guarantees associated with the HFA initiative, excluding
certain bonds under the NIBP.
(6) See “RISK MANAGEMENT — Credit Risk — Mortgage Credit Risk — Multifamily Mortgage Credit Risk” for information on our reported
multifamily delinquency rate.
(7) Calculated as the amount of multifamily credit losses divided by the sum of the average carrying value of our multifamily loan portfolio and the
average balance of the multifamily guarantee portfolio, including multifamily HFA initiative guarantees.
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