Q4 2024 Earnings Summary
- Robust Earnings Growth: Freddie Mac's full-year net income increased by 13% to $11.9 billion, showcasing strong profitability and financial performance.
- Significant Net Worth Expansion: The company's net worth rose by 25% to $59.6 billion, reflecting enhanced financial strength and a solid capital position.
- Strong Performance in Multifamily Segment: The multifamily business reported net income of $2.5 billion, up 67% from the prior year, driven by a 38% increase in net revenues, signaling successful growth in this segment.
- Rising Delinquency Rates: The multifamily delinquency rate increased to 40 basis points at the end of 2024, up from 28 basis points at the end of 2023. Similarly, the single-family serious delinquency rate rose to 59 basis points as of December 31, 2024, up from 55 basis points at the end of 2023. This upward trend in delinquencies could indicate increasing credit risk for Freddie Mac.
- Increased Provision for Credit Losses: In the single-family segment, there was a provision for credit losses expense of $374 million for 2024, a significant change from a benefit for credit losses of $1.2 billion in 2023. This shift from a benefit to an expense suggests deteriorating credit conditions and may impact profitability.
- Slowing House Price Appreciation: House prices increased by 4% in 2024, compared to a 6.8% increase in 2023. The deceleration in house price growth could affect Freddie Mac's collateral values and future earnings potential.
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Net Income | Q1: $2.8B, +39% YoY. Q2: $2.8B, -6% YoY. Q3: $3.1B, +16% YoY. | Q4: $3.2B, +11% YoY; full-year 2024: $11.9B, +13% from prior year. | Consistent growth mentioned every quarter; sentiment remains positive due to higher revenues. |
Net Worth | Q1: $50.5B, +29% YoY. Q2: $53B, +27% YoY. Q3: $56B, +26% YoY. | Q4: $59.6B, +25% from 2023. | Steady increases cited each period; remains a positive indicator of financial strength. |
Single-Family Mortgage Performance | Q1: Net income $1.9B, strong credit metrics ; Q2: Portfolio $3.1T, 2% growth ; Q3: Net income $2.6B, strong purchase activity. | Q4: Full-year net income $9.4B (+4% YoY), portfolio $3.1T, serious delinquency 59 bps. | Recurring topic; slight concern over delinquency uptick, but overall solid performance. |
Multifamily Mortgage Performance | Q1: Net income $821M, +$503M YoY ; Q2: Net income $481M, -15% YoY ; Q3: Net income $532M, +47% YoY. | Q4: Full-year net income $2.5B, +67% YoY; portfolio $467B, delinquency 40 bps. | Consistently addressed; higher net income signals improvement, though delinquency has risen slightly. |
House Price Forecast | Q1: +0.2% next 12 mos ; Q2: +0.6% next 12 mos ; Q3: Flat next 12 mos. | Q4: +2.7% next 12 mos, slight upward revision. | Evolving outlook each quarter; now more optimistic about price growth. |
Delinquency Rates | Q1: SF 52 bps, MF 34 bps ; Q2: SF 50 bps, MF 38 bps ; Q3: SF 54 bps, MF 39 bps. | Q4: SF 59 bps, MF 40 bps. | Gradual rise in both SF and MF delinquencies; bearish concern about natural disaster impacts on SF. |
Provision for Credit Losses | Q1: $181M total; modest builds in both segments. Q2: $394M; driven by new acquisitions. Q3: $191M benefit (credit reserve release). | Q4: $92M expense in Q4; $0.5B full-year, driven by reserve builds in SF. | Fluctuating quarter to quarter; Q4 signals higher reserves again in SF. |
Affordable Housing | Q1: 52% of new SF purchase loans to first-time buyers , 61% of MF units affordable to low-income. Q2: 53% of SF purchases affordable; 65% of MF units affordable. Q3: 51% of SF purchases first-time buyers; 68% of MF units at ≤80% AMI. | Q4: 65% of MF business was mission-driven affordable; 53% of all home loans financed were affordable. | Ongoing focus; increasing share of affordable MF deals; positive social impact. |
New Business Activity | Q1: $62B total. Q2: SF $85B, MF $11B. Q3: SF $98B, MF $15B. | Q4: SF $346B full-year, +15% YoY; MF $65B full-year, +35% YoY. | Consistent growth across segments; refinance and mission-driven MF notable in 2024. |
Credit Risk | Q1: SF allowance 20 bps, MF delinquency rising ; Q2: SF delinquency 50 bps, MF coverage 95% ; Q3: SF & MF both show reserve releases. | Q4: Reserve build in SF from new acquisitions, MF allowance partly offset by improved loss estimates. | Managed exposure with credit enhancements; slight caution due to new acquisitions and increased MF delinquencies. |
Research analysts covering FEDERAL HOME LOAN MORTGAGE.