Freddie Mac today reported 2003 net income of $4.9 billion, down 52 percent from $10.1 billion in 2002. Diluted earnings per common share were $6.79 for 2003, down from $14.18 for 2002.
The company said the net decrease for 2003 was driven primarily by a “substantial” decrease in total non-interest income. Non-interest income results continue to be affected by changes in unrealized gains and losses on certain financial instruments as well as interest rate volatility, the company said in a statement.
Freddie Mac financed homes for about six million families in 2003.
Other highlights of the 2003 financial results include:
- Net interest income was down slightly to $9.498 billion, compared to $9.525 billion in 2002.
- Non-interest income (loss) was ($259) million, compared to $7.1 billion in 2002.
- Non-interest expense was $2.1 billion, compared to $1.9 billion in 2002.
- Total stockholders’ equity increased by $232 million, or 0.7 percent.
- Fair value of net assets (net of tax effect) grew by $4.5 billion, or 20 percent.
- Total mortgage portfolio grew by $97.8 billion, or 7 percent, to $1.4 trillion.
- Retained portfolio grew by $78.2 billion, or 14 percent, to $645.5 billion.
The company said it plans to publish its 2003 annual report in late September and hold the related stockholders’ meeting in November. It plans to provide quarterly and full-year financial results for 2004 by March 31, 2005.
The company is just now releasing its 2003 results after having to restate its 2002 results last year because of serious accounting missteps. Last year, it reported a $5 billion understatement in its financial results for 2000, 2001 and 2002.
“The completion of our 2003 financial results in accordance with our announced timetable is another important step for Freddie Mac on our path to returning to timely reporting,” said Martin F. Baumann, executive VP of finance and chief financial officer. “We are making substantial progress overhauling Freddie Mac’s financial reporting and accounting systems, but this process is a challenging one and more hard work is in front of us. As part of this effort, we are devoting the full scope of our corporate resources to rebuilding our processes and systems to return to timely reporting as quickly as possible.”
Freddie Mac is a shareholder-owned corporation chartered by Congress to maintain a steady flow of mortgage funds to the nation’s housing market. The company buys mortgages, repackages some of them into securities and sells them to investors. The corporation, along with sister company Fannie Mae, own about half the nation’s mortgage debt.
Freddie Mac shares were trading on the NYSE at $62.97 this morning.
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