Freddie Mac · OTC:FMCC
Freddie Mac — Corporate Update (November 2003)
13 slides from Freddie Mac's corporate update, Nov 21, 2003
Slide 1: Freddie Mac Restatement Results
Freddie Mac ® We Open Doors Freddie Mac Restatement Results November 21, 2003 NOTE: For further information regarding Freddie Mac’s restatement, see the company’s press release dated November 21, 2003, and accompanying appendices, available at www.freddiemac.com.
Slide 2: Annual Restatement Results: Previously Reported Vs. Restated
Annual Restatement Results: Previously Reported Vs. Restated Cumulative increase to after-tax net income of $5.0 billion. Restatement adjustments resulted in net increases (decreases) of $1.1 billion, ($1.0) billion, and $4.3 billion for 2000, 2001 and 2002, respectively (periods prior to 2000 have
Slide 3: Estimated Regulatory Minimum Capital Surplus As Reported To OFHEO
Estimated Regulatory Minimum Capital Surplus As Reported To OFHEO (1) OFHEO is the authoritative source for our capital classifications. The following are management’s estimates as reported to OFHEO. 2000 2001 2002 $ Millions Year-End 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Prior Reported Minimum $202 $606 $567 $40
Slide 4: Changes In Interest-Rate Risk Estimates
Changes In Interest-Rate Risk Estimates Management believes the errors identified in connection with the restatement do not significantly impact Freddie Mac’s interest-rate risk position as previously reported in the company’s monthly interest-rate risk sensitivity estimates. Estimated Estimated Mon
Slide 5: Changes In Fair Value
Changes In Fair Value At December 31, 2002, the fair value of net assets was $22.9 billion, a $4.6 billion increase from December 31, 2001, as restated. Among the primary contributors to the increase in 2002 fair value balance sheet net assets were core spread income (defined as the option- adjusted
Slide 6: Summary Of Corrections And Accounting Changes
Summary Of Corrections And Accounting Changes Net Cumulative Income (Expense) Impact Title of Category Description of Correction Through 12/31/02 $ Billions 1 Security Freddie Mac has concluded that a majority of its securities were erroneously classified under SFAS 115. $1.7 Classification These co
Slide 7: Reconciliation Of Net Interest Income
Reconciliation Of Net Interest Income (Previously Reported Vs. Restated) $ Millions 2000 2001 2002 Total 1. Net interest income ("NII"), as previously reported $2,838 $5,480 $6,777 $15,095 Corrections and other changes related to: 2. Reclassification of guarantee income on retained PCs into NII 587
Slide 8: Reconciliation Of Management And Guarantee Income
Reconciliation Of Management And Guarantee Income (Previously Reported Vs. Restated) $ Millions 2000 2001 2002 Total 1. Management and guarantee income, as previously reported $1,489 $1,639 $1,911 $5,039 Corrections related to: 2. Reclassification of guarantee fee income on retained PCs out (587) (7
Slide 9: Reconciliation Of Derivative Gains (Losses)
Reconciliation Of Derivative Gains (Losses) (Previously Reported Vs. Restated) $ Millions 2000 2001 2002 Total 1. Derivative gains (losses), as previously reported $- ($157) $270 $113 2. Corrections related to accounting for derivative instruments 1,483 (1,700) 5,671 5,454 3. Derivative gains (losse
Slide 10: The Restatement Resulted In A $31 Billion Increase To The Balance Sheet
The Restatement Resulted In A $31 Billion Increase To The Balance Sheet As Of December 31, 2002 $ Billions As restated As reported Primary Adjustments 1. Retained Portfolio $589.7 $583.3 Reclass of securities from held-to-maturity (amortized cost) to AFS or trading (fair value) and accounting for de
Slide 11: Trends In Restated Net Interest Income And Yield
Trends In Restated Net Interest Income And Yield Changes in the balance and composition of the company’s assets, liabilities and derivatives, and changes in the yields or costs associated with those instruments are key drivers of net interest income and net interest yield. Quarterly FTE Annual FTE $
Slide 12: Trends In Restated Management And Guarantee Income
Trends In Restated Management And Guarantee Income Changes in management and guarantee income are driven by changes in the average balance of outstanding PCs, which increased in both 2001 and 2002, and guarantee fee rates, which generally remained constant in 2001 while declining in 2002. Quarterly
Slide 13: Trends In Restated Derivative Gains (Losses)
Trends In Restated Derivative Gains (Losses) Derivative gains (losses) represent the change in the fair value of derivatives not included in an accounting hedge relationship. Derivatives not in accounting hedge relationships increase the volatility of reported net income because the change in their