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FEDERAL HOME LOAN MORTGAGE CORP (FMCC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net income rose 11% year-over-year to $3.2B on net revenues up 18% to $6.3B; strength came from higher net interest income and a sharp jump in non-interest income, partially offset by a credit loss provision versus a benefit in the prior year .
  • Single-Family net revenues increased 9% YoY to $5.2B, but net income fell 4% YoY to $2.6B due to a shift to credit reserve build; Multifamily delivered a strong quarter with net revenues up 90% YoY to $1.1B and net income up 162% YoY to $0.7B .
  • New business activity accelerated: Single-Family $100B vs $73B in Q4 2023; Multifamily $30B vs $16B in Q4 2023, aided by lower mortgage rates in H2 2024 and competitive execution strategies .
  • S&P Global Wall Street consensus estimates for Q4 2024 revenue and EPS were unavailable at time of analysis due to data access limits; estimate comparison/beat-miss assessment cannot be provided (Values intended from S&P Global but unavailable).

What Went Well and What Went Wrong

What Went Well

  • Multifamily outperformance: net revenues $1.13B (+90% YoY) and net income $0.67B (+162% YoY), driven by favorable fair value changes, index lock activities, economic hedge impacts, and portfolio growth .
  • Non-interest income surged to $1.28B (+$674M YoY), a significant positive surprise primarily from net investment gains; consolidated net revenues increased 18% YoY to $6.33B .
  • CEO highlighted mission execution: “We delivered $411 billion of liquidity…helping 1.6 million families…” and net worth reached $60B, underpinning lower funding costs and balance sheet strength .

What Went Wrong

  • Credit costs turned adverse: consolidated provision for credit losses of $92M vs a $467M benefit in Q4 2023; Single-Family provision of $38M vs a $548M benefit prior year, reflecting reserve builds tied to new acquisitions .
  • Delinquencies ticked up: Single-Family serious delinquency rate rose to 0.59% from 0.54% in Q3 and 0.55% in Q4 2023; Multifamily delinquency rose to 0.40% from 0.28% prior year, driven by floating-rate loans including small-balance loans in their floating period .
  • Common EPS remains constrained by conservatorship capital mechanics; Q4 2024 net income per common share was $0.01 (vs $(0.05) in Q4 2023), with senior preferred allocations absorbing most earnings .

Financial Results

Consolidated performance vs prior periods and YoY

MetricQ4 2023Q3 2024Q4 2024
Net Revenues ($USD Billions)$5.37 $5.84 $6.33
Net Interest Income ($USD Billions)$4.77 $5.00 $5.05
Non-Interest Income ($USD Billions)$0.60 $0.84 $1.28
(Provision)/Benefit for Credit Losses ($USD Billions)$0.47 benefit $0.19 benefit $(0.09) provision
Non-Interest Expense ($USD Billions)$2.19 $2.18 $2.22
Net Income ($USD Billions)$2.91 $3.11 $3.22
Net Income per Common Share ($USD)$(0.05) $(0.02) $0.01

Segment breakdown

MetricQ4 2023Q3 2024Q4 2024
Single-Family Net Revenues ($USD Billions)$4.78 $5.06 $5.20
Single-Family Net Income ($USD Billions)$2.66 $2.57 $2.56
Multifamily Net Revenues ($USD Billions)$0.60 $0.78 $1.13
Multifamily Net Income ($USD Billions)$0.26 $0.53 $0.67

Key KPIs

KPIQ4 2023Q3 2024Q4 2024
Single-Family New Business Activity ($USD Billions)$73 $98 $100
Single-Family Serious Delinquency Rate (%)0.55 0.54 0.59
Percent of Single-Family Portfolio with Credit Enhancements (%)61 62 62
Multifamily New Business Activity ($USD Billions)$16 $15 $30
Multifamily Delinquency Rate (%)0.28 0.39 0.40
Total Mortgage Portfolio ($USD Trillions)$3.50 (approx; Q4 2023 supplement shows $3.571T at YE 2024; use Q4 2023 level from supplement narrative) $3.53 $3.60

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
U.S. House Price Growth Forecast (%)Next 12 months2.8% (Dec 2023 forecast) 2.7% Maintained/slightly lowered
U.S. House Price Growth Forecast (%)Subsequent 12 months2.0% (Dec 2023 forecast) 3.3% Raised
Senior Preferred Liquidation Preference ($USD Billions)3/31/2025$129.0 as of 12/31/2024 $132.2 as of 3/31/2025 (based on Q4 net worth increase) Will increase

Note: Freddie Mac did not provide explicit revenue, EPS, margin, OpEx, OI&E, or tax rate guidance for Q1 2025 or FY 2025 in the Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Credit Loss ProvisionCredit reserve build in Single-Family; consolidated provision $394M Consolidated benefit $191M; Single-Family benefit $99M Consolidated provision $92M; reserve builds in both segments Tightening vs Q3
House Price TrajectoryHPI up ~5.2% YoY; rates elevated HPI up ~3.6% YoY; 30-yr 6.08% at Q3-end CFO forecast: +2.7% next 12 months, +3.3% subsequent Moderating growth outlook
Single-Family Volume/MixNew business $85B; 53% first-time buyers New business $98B; 51% first-time buyers New business $100B; 52% first-time buyers Improving volumes
Multifamily Financing/DemandNew business down YoY; delinquency 0.38% New business +15% YoY; delinquency 0.39% New business $30B; delinquency 0.40% Demand improved; credit softens slightly
Non-Interest Income DriversMF non-interest down YoY; SF non-interest up (risk mgmt) Consolidated non-interest $0.84B; lower vs Q2 Consolidated non-interest $1.28B on net investment gains; MF fair value/hedge impacts Strengthened in Q4
Conservatorship/CapitalNet worth $53.2B; liquidation pref $123.1B Net worth $56.4B; liquidation pref $125.9B Net worth $59.6B; liquidation pref $129.0B rising to $132.2B Steady capital build

Management Commentary

  • CEO: “We delivered $411 billion of liquidity…helping 1.6 million families buy, refinance or rent a home… We also prepared tens of thousands of borrowers and renters for future success…” — Diana W. Reid, Chief Executive Officer .
  • CFO: “Net revenue for the fourth quarter totaled $6.3 billion… Non-interest income…was $1.3 billion… driven by higher net investment gains.” — Jim Whitlinger .
  • CFO on credit: “Provision for credit losses was an expense of $92 million… primarily driven by a reserve build… attributable to new acquisitions…” .
  • CFO outlook: “Our current forecast assumes house prices will grow by 2.7% over the next 12 months and 3.3% over the subsequent 12 months…” .
  • Mission/market support: Assistance programs for homeowners and renters affected by California wildfires, including up to 12 months forbearance for mortgages .

Q&A Highlights

  • The event consisted of prepared remarks; no analyst Q&A was included in the materials reviewed .
  • Clarifications provided in remarks: credit loss dynamics (reserve builds in both segments vs prior year release), drivers of non-interest income strength (net investment gains), and house price outlook trajectory .
  • Multifamily credit context: delinquency increase tied to floating-rate loans; 97% of delinquent loans had credit enhancement coverage, mitigating exposure .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 revenue and EPS were not retrievable due to data access limits at the time of request; therefore, beat/miss assessment versus Wall Street consensus is unavailable. If desired, we can re-run once access is restored to incorporate consensus (Values intended from S&P Global but unavailable).

Key Takeaways for Investors

  • Consolidated momentum with quality of earnings: net revenues up 18% YoY, non-interest income strength, and continued net worth build to $59.6B highlighting funding cost advantages and balance sheet resilience .
  • Single-Family volumes re-accelerated on lower rates in H2, but credit costs normalized (reserve builds) and serious delinquencies ticked up; watch hurricane-related delinquency normalization path .
  • Multifamily is the swing factor: outsized revenue and income growth driven by fair value/hedge and securitization mix; monitor floating-rate credit performance and delinquency trend (0.40%) despite high credit enhancement coverage (91%) .
  • Capital/conservatorship mechanics continue to limit common EPS optics; senior preferred liquidation preference will rise to $132.2B based on Q4 net worth addition, sustaining capital accumulation cadence .
  • Near-term trading lens: strong non-interest income and MF segment surprise support the print; absence of estimate comparison tempers beat/miss narratives. Credit headlines (SL delinquency uptick, MF floating-rate exposure) are the key risk watch items .
  • Medium-term thesis: rate trajectory and house price path (CFO forecast +2.7%/+3.3%) underpin core revenue drivers; continued CRT/credit enhancement coverage and net worth growth support structural risk profile improvements .

Citations: All figures and statements sourced from FMCC Q4 2024 8-K press release and supplement ; Q4 2024 earnings call prepared remarks ; and prior-quarter 8-Ks for Q3 2024 and Q2 2024 .