Freddie Mac (FMCC) Q4 2023 earnings summary

Executive summary

• Q4 2023 net revenues reached $5.4B, up 11% YoY, and net income was $2.9B, up 65% YoY.

• Total mortgage portfolio rose 2% YoY to $3.480T, with growth in Single-Family and Multifamily balances.

• Financed homes and rental units for 1.4 million households in 2023; enabled 375,000 first-time homebuyers and financed 447,000 rental units, 92% of eligible units affordable to low- to moderate-income families.

• Financed 955,000 mortgages in 2023; 56% of eligible loans were affordable to low- to moderate-income families, and first-time homebuyers represented 51% of purchase borrowers.

Financial highlights

• Higher net interest and non-interest income drove Q4 revenue growth; higher net revenues and a Single-Family credit reserve release supported net income growth.

• Q4 net interest income was $4.8B, up 4% YoY; non-interest income was $0.6B, up 147%, led by Multifamily guarantee income and net investment gains.

• FY 2023 net income was $10.5B, up 13% YoY; net revenues were $21.2B, down slightly, as higher net interest income was offset by lower non-interest income.

• FY 2023 net interest income was $18.5B, up 3%; non-interest income was $2.7B, down 18%, as prior-year Single-Family pipeline hedge gains did not recur.

• Benefit for credit losses was $0.5B in Q4 and $0.9B for FY 2023, primarily from Single-Family reserve releases as house prices improved; FY 2022 had a $1.8B provision.

Segment performance

• Single-Family Q4 net revenues were $4.8B, up 13%, and net income was $2.7B, up 80%; FY net revenues were $18.3B, down 3%, and net income was $9.0B, up 14%.

• Single-Family Q4 new business activity was $73B, including $65B of home purchases and $8B of refinances; average new-acquisition guarantee fee was 56 bps. FY activity was $300B, down 45%.

• Single-Family FY non-interest income fell 64% to $0.6B as prior-year securitization-pipeline hedge gains did not recur; non-interest expense rose 14% to $8.1B.

• Multifamily Q4 net revenues were $0.6B and net income was $0.3B, down 10%; FY net revenues rose 18% to $3.0B and net income rose 5% to $1.5B.

• Multifamily Q4 new business activity was $16B, down 45% YoY; weighted-average ODSCR was 1.27 and weighted-average OLTV was 59%. FY activity was $48B, down 34%.