trending Market Intelligence /marketintelligence/en/news-insights/trending/TFu2Faj13s6zs-Y2E1ZoOw2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us
In This List

Freddie Mac says Q1 results 'dominated' by $2B negative market-related items

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

StreetTalk – Episode 70: Banks' Liquidity Conundrum Could Fuel M&A Activity


Freddie Mac says Q1 results 'dominated' by $2B negative market-related items

FreddieMac reported a first-quarter net loss of $354 million, compared toincome of $2.16 billion in the fourth quarter of 2015.

The company posted a comprehensive loss of $200 million,versus income of $1.64 billion in the linked quarter.

The company noted that its results were"dominated" by negative market-related items — an after-tax estimatedfair value loss of $1.4 billion driven by measurement differences between thecompany's derivatives, which are measured at fair value, and certain hedgedassets and liabilities, which are not; and an after-tax estimated fair valueloss of $600 million as a result of the impact of spread widening on certainmortgage loans and mortgage-related securities measured at fair value.

Derivative losses for the most recent quarter totaled $4.56billion, versus gains of $744 million in the 2015 fourth quarter.

As a result of the comprehensive loss, Freddie Mac's totalequity declined to $1.0 billion at March 31. Due to the positive total equity,the company will not request a draw from the U.S. Treasury Department. Thecompany also does not have a dividend obligation in June because its net worthof $1.0 billion at March 31 was less than the applicable capital reserve amountfor 2016 of $1.2 billion. The applicable capital reserve amount will be reducedby $600 million each year until it reaches zero on Jan. 1, 2018, Freddie Macsaid.

Aggregate cash dividends paid to Treasury totaled $98.2billion as of March 31, $26.9 billion more than cumulative cash draws of $71.3billion received from Treasury through March 31. Treasury maintains aliquidation preference of $72.3 billion on Freddie Mac's senior preferred stockas of Dec. 31, 2015.