Nov. 6, 2009 (PR Newswire) -- MCLEAN, Va., Nov. 6 /PRNewswire-FirstCall/ --
Summary
-- Third quarter 2009 net loss was $5.0 billion. After the dividend
payment of $1.3 billion to the U.S. Department of the Treasury on the
senior preferred stock, net loss attributable to common stockholders was
$6.3 billion, or $1.94 per diluted common share, for the quarter.
-- Net worth at September 30, 2009 was $10.4 billion. The positive net
worth reflects an $8.5 billion gain in AOCI primarily driven by improved
values on the company's available-for-sale securities. As a result of
the positive net worth, no additional funding from the U.S. Department
of the Treasury was required under the terms of the Senior Preferred
Stock Purchase Agreement for the third quarter.
-- Third quarter 2009 results reflect:
-- Net interest income of $4.5 billion;
-- Net impairment of available-for-sale securities recognized in
earnings of $1.2 billion; and
-- Provision for credit losses of $7.6 billion.
-- During the third quarter of 2009, Freddie Mac continued to support the
housing market by:
-- Supporting the Obama Administration's Making Home Affordable program
- enabling more than 78,000 struggling borrowers (more than 88,000
outstanding as of September 30, 2009) to accept offers to modify
their loans under the Home Affordable Modification program and
approximately 69,000 borrowers (approximately 98,000 year-to-date as
of September 30, 2009) to lower their payments under the Freddie Mac
Relief Refinance Mortgage(SM);
-- Helping approximately 26,000 additional borrowers stay in their
homes or sell their properties through the company's long-standing,
traditional foreclosure prevention programs; and
-- Providing liquidity to the mortgage market by purchasing or
guaranteeing $125 billion in mortgage loans and mortgage-related
securities, including $91 billion in single-family refinance volume.
Freddie Mac (NYSE: FRE) today reported a net loss of $5.0 billion for the quarter ended September 30, 2009, compared to net income of $768 million for the quarter ended June 30, 2009. After the dividend payment of $1.3 billion on its senior preferred stock to the U.S. Department of the Treasury (Treasury), Freddie Mac reported a net loss attributable to common stockholders of $6.3 billion, or $1.94 per diluted common share, in the third quarter of 2009, compared to a net loss attributable to common stockholders of $374 million, or $0.11 per diluted common share, in the second quarter of 2009.
Freddie Mac had positive net worth of $10.4 billion at September 30, 2009, compared to positive net worth of $8.2 billion at June 30, 2009. As a result, no additional funding was required from Treasury under the terms of the Senior Preferred Stock Purchase Agreement (Purchase Agreement) for the third quarter. The improvement in positive net worth at September 30, 2009 was attributable to an $8.5 billion decrease in unrealized losses recorded in accumulated other comprehensive income (loss) (AOCI), primarily as a result of improved fair values on the company's available-for-sale (AFS) securities, partially offset by the third quarter 2009 net loss of $5.0 billion and the dividend payment of $1.3 billion to Treasury on the senior preferred stock.
"During this critical time for homeowners and the market, we continued to support the recovery of the housing market by providing a stable source of mortgage funding and helping people keep their homes," said Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr. "In the third quarter, we helped more than 100,000 borrowers avoid foreclosure - a growing figure that includes more than 78,000 new loans that entered into HAMP trial periods. We expect this to continue, and we have strengthened our efforts to make MHA successful and to help families, our economy and our nation.
"We continued to see some positive housing market developments, including higher volumes of home sales and modest increases in house prices in certain areas of the country," Haldeman said. "However, we believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results.
"Going forward, I'm especially pleased that we've completed a senior management team that is highly seasoned, highly respected and intensely focused on serving our mission and strengthening our company," Haldeman added. "In September, Bruce Witherell - a veteran Wall Street manager and leader - joined us as our chief operating officer. In October, Ross Kari - an executive with substantial housing finance experience in both the GSE and private sectors - became our chief financial officer. Our leadership team, working with our board of directors and our highly skilled employees, is committed to doing everything we can to serve our broad mission and speed the recovery of the U.S. housing market."
GAAP Results
Third quarter 2009 results were driven primarily by $7.5 billion in credit-related expenses reflecting the challenging economic conditions during the third quarter, as well as $1.2 billion of net impairment of AFS securities recognized in earnings. These results were partially offset by $4.5 billion in net interest income mainly due to lower funding costs.
Three Months Ended
September 30, June 30, September 30,
($ in millions) 2009 2009(1) 2008(1)
---- ---- ----
Net interest income $4,462 $4,255 $1,844
Management and guarantee
income 800 710 832
Other non-interest
income (loss) (2) (1,882) 2,505 (12,235)
------- ----- --------
Total revenues 3,380 7,470 (9,559)
----- ----- -------
Administrative expenses (433) (383) (308)
Credit-related expenses (7,481) (5,208) (6,035)
Losses on loans purchased (531) (1,199) (252)
Other non-interest expense (97) (97) (1,171)
---- ---- -------
Total expenses (8,542) (6,887) (7,766)
------- ------- -------
Income (loss) before income
tax benefit (expense) (5,162) 583 (17,325)
Income tax benefit (expense) 149 184 (7,970)
--- --- -------
Net income (loss) $(5,013) $767 $(25,295)
Less: Net (income) loss
attributable to
noncontrolling interest 1 1 -
--- --- ---
Net income (loss)
attributable to Freddie Mac $(5,012) $768 $(25,295)
======= ==== ========
Senior preferred stock
dividends declared $(1,294) $(1,149) $-
======= ======= ==
Total equity (deficit) / GAAP
net worth (at period end) $10,406 $8,232 $(13,698)
======= ====== ========
AOCI, net of taxes (at
period end) $(26,355) $(34,815) $(25,634)
======== ======== ========
(1) Certain amounts in prior periods have been reclassified to conform
to the current presentation.
(2) Three months ended September 30, 2009 includes $(1.2) billion of net
impairment of AFS securities recognized in earnings.
Net interest income for the third quarter of 2009 was $4.5 billion, compared to $4.3 billion for the second quarter of 2009. The increase was primarily driven by lower short-term and long-term funding costs.
