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FREDDIE MAC ANNOUNCES RECORD EARNINGS FOR 1993

 -- 1993 net income of $786 million
 -- 1993 earnings per common share up 24 percent
 -- $229 billion purchase volume in 1993 exceeds previous record
 MCLEAN, Va., Jan. 18 /PRNewswire/ -- Freddie Mac (NYSE: FRE) today announced record net income of $786 million for 1993, a 26 percent increase over $622 million for 1992. Earnings per common share for 1993 were $4.07, a 24 percent increase over 1992 earnings per common share of $3.29.
 Freddie Mac's revenues reached a record $2.013 billion in 1993, an increase of $326 million, or 19 percent, from $1.687 billion in 1992.
 In the fourth quarter of 1993, Freddie Mac's net income was $204 million, a 32 percent increase over fourth quarter 1992 net income of $155 million. Third quarter 1993 net income was $200 million.
 Earnings per common share for the fourth quarter of 1993 were $1.04, a 30 percent increase over fourth quarter 1992 earnings per common share of $0.80. Third quarter earnings per common share were $1.03.
 Freddie Mac's revenues reached $521 million in the fourth quarter of 1993, an increase of $100 million, or 24 percent, over the $421 million in revenues reported in the fourth quarter of 1992. Revenues were $510 million in the third quarter of 1993.
 "Freddie Mac's outstanding 1993 results demonstrated the effectiveness of our business strategies, and the importance of our role in the American housing finance system," said Leland C. Brendsel, chairman and CEO. "We achieved record business volumes, financing housing for 2.5 million American families. This marked our twelfth consecutive year of returns on common equity in excess of 20 percent and going forward, we expect solid financial performance to continue over the next several years."
 Revenue Performance
 John Gibbons, acting chief financial officer, said the $326 million increase in revenues in 1993 as compared to 1992 resulted from:
 -- A $328 million, or 40 percent, increase in the net return on the retained mortgage and investment portfolios to $1.144 billion in 1993 from $816 million in 1992. The rise was due to a 56 percent increase in the average retained and investment portfolio balances, partly offset by a 19 basis point decrease in spreads.
 -- A $97 million, or 10 percent, increase in management and guarantee fee income to $1.033 billion for 1993 from $936 million in 1992. This increase primarily reflects a 12 percent rise in the average balance of the sold portfolio.
 -- A $72 million increase in other income, net, reflecting higher levels of REMIC fees, due in part to a REMIC fee reporting change adopted in 1993.
 -- A $171 million increase in net float loss to $292 million in 1993, from a net float loss of $121 million in 1992. The larger float loss was due to an increase in prepayment rates and a significant reduction in short-term reinvestment rates. Net float benefit or loss is the difference between interest earned and interest paid on mortgage payments received but not yet paid to investors.
 "The 19 percent increase in total revenues was driven by robust growth in our servicing portfolio, strong performance from our retained portfolio and a substantial increase in fee income," Gibbons noted. "Adding to our strong revenue performance, operating expenses were flat for the past three quarters."
 The $100 million increase in revenues in the fourth quarter of 1993 as compared to fourth quarter 1992 resulted from:
 -- A $94 million, or 41 percent, increase in the net return on the retained mortgage and investment portfolios, which totaled $324 million in fourth quarter 1993, compared with $230 million in the fourth quarter of 1992. The gain was primarily due to a 63 percent increase in the average retained and investment portfolio balances. The impact of higher balances was partly offset by a 24 basis point decrease in spread that resulted from lengthening the average maturity of debt financing the retained portfolio. Retained mortgage and investment portfolio income was $300 million in the third quarter of 1993.
 -- A $19 million, or 8 percent, increase in management and guarantee fee income, which totaled $268 million in fourth quarter 1993, compared with $249
million in the fourth quarter of 1992. This increase primarily reflects an 8 percent rise in the average balance of the sold portfolio. Management and guarantee fee income was $239 million in the third quarter of 1993.
 -- A $23 million increase in other income, net, reflecting higher levels of REMIC fees, due in part to a REMIC fee reporting change adopted in 1993.
 -- A $36 million increase in net float loss to $107 million in the fourth quarter of 1993, compared to a net float loss of $71 million in the fourth quarter of 1992 and $70 million in the third quarter of 1993. The larger float loss was due to record levels of prepayments and continuing low short-term reinvestment rates.
 Credit Performance
 Freddie Mac implemented a new industry accounting standard for foreclosed assets in the fourth quarter of 1992. Certain foreclosure and REO-related costs that previously were charged against loan loss reserves and reflected as mortgage charge-offs are now reported as REO operations expense in the income statement. 1992 credit information in the comparisons below are presented on a comparable basis to reflect this new standard.
 In 1993, total mortgage charge-offs were $326 million, compared to $248 million for 1992.
 Single-family charge-offs for 1993 were $258 million, compared to $158 million in 1992. The increase in charge-offs resulted primarily from weak economic conditions in the Northeast and California. In the fourth quarter of 1993, single-family charge-offs were $73 million, compared to $72 million in third quarter 1993 and $53 million in fourth quarter 1992.
 As a percentage of the number of mortgages serviced, Freddie Mac's single-family delinquency rate (90 days or greater) rose slightly to 0.61 percent at November 30, 1993, from 0.60 percent at September 30, 1993, but declined from 0.64 percent at December 31, 1992. Single- family REO balances increased to $623 million at December 31, 1993, from $565 million at September 30, 1993, and $373 million at December 31, 1992.
 Multifamily charge-offs decreased to $68 million in 1993 from $90 million in 1992. In the fourth quarter of 1993, multifamily charge- offs were $13 million, compared to $8 million in the third quarter of 1993 and $23 million in the fourth quarter of 1992.
 As a percentage of the unpaid principal balance of multifamily mortgages serviced, Freddie Mac's multifamily delinquencies (60 days or greater) increased to 3.59 percent at November 30, 1993, from 3.42 percent at September 30, 1993, but declined from 4.45 percent at December 31, 1992. Multifamily REO balances decreased to $370 million at December 31, 1993, from $372 million at September 30, 1993, and $390 million at December 31, 1992.
 Total credit-related expenses (consisting of mortgage loss provision and REO operations expense) were $524 million for 1993, compared to $457 million in 1992. Fourth quarter total credit-related expenses were $131 million, compared to $143 million in the third quarter of 1993 and $105 million in the fourth quarter of 1992.
 Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide a continuous flow of funds to mortgage lenders. By supplying lenders with the money to make mortgages and packaging the mortgages into marketable securities, Freddie Mac sustains a stable mortgage credit system and reduces the mortgage rate paid by home buyers. Over the years, the corporation has helped finance one in six American homes.
 FEDERAL HOME LOAN MORTGAGE CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (unaudited)
 (dollars in millions)
 Dec. 31, Sept. 30, Dec. 31,
 1993 1993 1992
 Assets
 Mortgages:
 Retained mortgage portfolio $ 54,090 $ 45,788 $ 31,718
 Mortgages financed by
 multiclass debt securities 922 1,070 1,947
 Total 55,012 46,858 33,665
 Unamortized purchase premiums,
 discounts and fees 462 383 (36)
 Reserve for losses
 on retained mortgages (206) (181) (106)
 Total mortgages, net 55,268 47,060 33,523
 Cash and cash equivalents 3,216 10,906 6,453
 Investments 14,489 12,235 8,482
 Mortgage securities purchased
 under agreements to resell 4,198 6,680 4,060
 Accounts receivable
 and other assets 5,051 3,907 5,502
 Unamortized mortgage sales
 discount, premium and fees 665 780 719
 Real estate owned, net 993 937 763
 Total $ 83,880 $ 82,505 $ 59,502
 Liabilities and Stockholders' Equity
 Debt securities, net:
 Notes and bonds payable:
 Due within one year $ 19,332 $ 25,720 $ 12,589
 Due after one year 28,122 24,257 13,867
 Total 47,454 49,977 26,456
 Multiclass debt securities:
 Due within one year 128 187 265
 Due after one year 928 1,071 1,452
 Total 1,056 1,258 1,717
 Total debt securities, net 48,510 51,235 28,173
 Principal and interest due
 to Mortgage Participation
 Certificate (PC) investors 27,584 23,751 24,676
 Other liabilities 1,312 1,175 946
 Total 77,406 76,161 53,795
 Reserve for losses
 on sold mortgages 554 590 679
 Contingencies:
 Single-class Mortgage
 Participation Certificates 174,907 186,998 190,484
 Multiclass Mortgage
 Participation Certificates 264,122 243,091 217,030
 Less -- Underlying mortgages
 sold (439,029) (430,089) (407,514)
 -- -- --
 Subordinated borrowings 1,483 1,467 1,458
 Stockholders' equity 4,437 4,287 3,570
 Total $ 83,880 $ 82,505 $ 59,502
 FEDERAL HOME LOAN MORTGAGE CORPORATION
 CONSOLIDATED STATEMENTS OF INCOME
 (unaudited)
 (dollars in millions, except per share amounts)
 Quarter Ended
 Dec. 31, Sept. 30, Dec. 31,
 1993 1993 1992
 Interest and discount on mortgages:
 Retained mortgage portfolio $ 941 $ 835 $ 623
 Mortgages financed by
 multiclass debt securities 24 29 60
 Total 965 864 683
 Interest on investments
 and mortgage securities purchased
 under agreements to resell 358 279 255
 Management and guarantee income 268 239 249
 Total 1,591 1,382 1,187
 Interest expense on debt securities:
 Short-term notes and bonds (273) (205) (160)
 Long-term notes and bonds (455) (395) (281)
 Multiclass debt securities (30) (34) (57)
 Total (758) (634) (498)
 Interest expense due to
 security program cycles (348) (279) (281)
 Total (1,106) (913) (779)
 Net interest margin on portfolio 485 469 408
 Provision for mortgage losses (75) (75) (101)
 Net interest margin after provision
 for mortgage losses 410 394 307
 Administrative expenses (91) (91) (94)
 REO operations expense (56) (68) (4)
 Other income, net 36 41 13
 Income before income taxes,
 extraordinary item and cumulative
 effect of change in
 accounting principle 299 276 222
 Provision for income taxes (95) (76) (67)
 Income before extraordinary item
 and cumulative effect of change
 in accounting principle 204 200 155
 Extraordinary loss on retirement
 of debt, net of taxes -- -- --
 Cumulative effect of change
 in accounting principle -- -- --
 Net income $ 204 $ 200 $ 155
 Earnings per common share $ 1.04 $ 1.03 $ 0.80
 Weighted average shares outstanding
 (thousands) 180,515 180,551 180,311
 CONSOLIDATED STATEMENTS OF INCOME -- CONTINUED
 (unaudited)
 (dollars in millions, except per share amounts)
 Twelve Months Ended
 Dec. 31, Dec. 31,
 1993 1992
 Interest and discount on mortgages:
 Retained mortgage portfolio $ 3,164 $ 2,276
 Mortgages financed by
 multiclass debt securities 132 332
 Total 3,296 2,608
 Interest on investments
 and mortgage securities purchased
 under agreements to resell 1,127 917
 Management and guarantee income 1,033 936
 Total 5,456 4,461
 Interest expense on debt securities:
 Short-term notes and bonds (858) (640)
 Long-term notes and bonds (1,497) (998)
 Multiclass debt securities (144) (319)
 Total (2,499) (1,957)
 Interest expense due to
 security program cycles (1,072) (873)
 Total (3,571) (2,830)
 Net interest margin on portfolio 1,885 1,631
 Provision for mortgage losses (300) (425)
 Net interest margin after provision
 for mortgage losses 1,585 1,206
 Administrative expenses (361) (329)
 REO operations expense (224) (32)
 Other income, net 128 56
 Income before income taxes,
 extraordinary item and cumulative
 effect of change in
 accounting principle 1,128 901
 Provision for income taxes (342) (279)
 Income before extraordinary item
 and cumulative effect of change
 in accounting principle 786 622
 Extraordinary loss on retirement
 of debt, net of taxes (20) --
 Cumulative effect of change
 in accounting principle 20 --
 Net income $ 786 $ 622
 Earnings per common share $ 4.07 $ 3.29
 Weighted average shares outstanding
 (thousands) 180,421 180,165
 -0- 1/18/94
 /CONTACT: Doug Robinson of Freddie Mac, 703-903-2423/
 (FRE)


CO: Freddie Mac ST: Virginia IN: FIN SU: ERN

DC-DS -- DC001 -- 2610 01/18/94 09:40 EST
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