In This Article:
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Federal Home Loan Mortgage Corp (FMCC) reported its strongest earnings since 2021, with a full year net income of $11.9 billion, marking a 13% increase from the prior year.
-
The company's net worth reached nearly $60 billion, reflecting a 25% year-over-year growth, enhancing its financial stability.
-
FMCC supported the housing market by acquiring over 1 million loans from more than 1,000 lenders, packaging them into mortgage-backed securities (MBS) totaling over $411 billion, an 18% increase from 2023.
-
The company financed 52% of primary home purchases for first-time home buyers and ensured 53% of all home loans were affordable for low and moderate-income families.
-
Non-interest income surged by 55% year-over-year to $4.2 billion, driven by higher revenues from loan purchase and securitization activities and lower realized losses on sales of available-for-sale securities.
Negative Points
-
Provision for credit losses was an expense of $0.5 billion for the full year 2024, primarily due to a credit reserve build in the single-family segment.
-
The serious delinquency rate in the single-family portfolio increased to 59 basis points, up from 55 basis points at the end of 2023, mainly due to recent hurricanes.
-
The multi-family delinquency rate rose to 40 basis points from 28 basis points at the end of 2023, driven by an increase in delinquent floating rate loans.
-
The average net guarantee fee rate on new business decreased by 1 basis point from 2023, potentially impacting future revenue streams.
-
Despite strong financial performance, the company faced challenges with credit loss provisions due to new acquisitions and economic uncertainties affecting loan performance.
Q & A Highlights
Q: Can you elaborate on the factors driving the increase in net income for 2024? A: James Whitlinger, Executive VP & CFO, explained that the increase in net income was primarily driven by higher net revenues, which rose due to continued mortgage portfolio growth and lower funding costs. Additionally, there was a significant increase in non-interest income, primarily from higher revenues from loan purchase and securitization activities, and lower realized losses on sales of available-for-sale securities.
Q: What were the main contributors to the growth in the single-family mortgage portfolio? A: James Whitlinger noted that the single-family mortgage portfolio grew by 2% year over year, driven by increased refinance and purchase activity. The portfolio's credit characteristics remained strong, with a weighted average loan-to-value ratio of 52% and a credit score of 755.