Freddie Mac Announces Record Earnings for First Quarter 2001

First Quarter 2001 Operating Earnings Per Share Up 19 Percent



Apr 24, 2001, 01:00 ET from Freddie Mac

    MCLEAN, Va., April 24 /PRNewswire Interactive News Release/ -- Freddie Mac
 (NYSE:   FRE) today announced operating earnings for first quarter 2001 of $719
 million, compared to $608 million for the same period a year ago and $663
 million for fourth quarter 2000.  Diluted operating earnings per common share
 were $0.96 for first quarter 2001, a 19 percent increase over first quarter
 2000 diluted earnings per common share of $0.81.
     Freddie Mac's operating earnings and operating earnings per share exclude
 certain accounting effects resulting from the corporation's adoption of SFAS
 133, "Accounting for Derivative Instruments and Hedging Activities," on
 January 1, 2001.  Reported net income and earnings per share for first quarter
 2001, which include these derivative accounting effects, were $837 million and
 $1.13, respectively.
     "Freddie Mac continued to deliver outstanding results in the first
 quarter, with 19 percent operating earnings growth and near record purchase
 volume," said Leland C. Brendsel, Chairman and Chief Executive Officer.
 "Freddie Mac ended the quarter with rock-solid financial strength, well
 protected from economic volatility and positioned to produce strong high-
 quality earnings growth in 2001."
     Brendsel added, "Last week, Freddie Mac completed implementation of six
 voluntary commitments we made last October that keep us on the vanguard of
 best practices in capital management and information disclosure.  We want to
 leave no doubt about our capacity to finance housing for America's families
 for generations to come."
     "Outstanding portfolio growth, stable margins and continued credit
 strength contributed to our excellent first quarter results," remarked David
 W. Glenn, Vice Chairman and President.  "With the addition of over $35 billion
 of quality mortgage assets, our retained portfolio surpassed $400 billion
 during the first quarter."  Glenn added, "We issued nearly $730 million of
 preferred stock during the first quarter, providing us with the flexibility to
 respond to the quarter's tremendous growth opportunities."
 
     Highlights for first quarter 2001 include:
 
     *  New business purchase volume of $81 billion, up 125 percent from $36
        billion for first quarter 2000.
 
     *  Net retained portfolio growth of $35 billion, representing 36 percent
        annualized growth.
 
     *  Record retained portfolio purchase commitments of $53 billion.
 
     *  Operating revenue growth of 17 percent compared to first quarter 2000.
 
     *  Credit losses of $22 million, representing annualized losses of 1.0
        basis point of the average total mortgage portfolio.
 
     *  Issuance of nearly $730 million of preferred stock to support growth
        opportunities.
 
     Business Volumes
 
     New business purchase volume (which excludes purchases of Freddie Mac PCs
 for the retained portfolio) totaled $81 billion in first quarter 2001,
 compared to $36 billion for first quarter 2000 and $70 billion for fourth
 quarter 2000.  Freddie Mac's total mortgage portfolio grew at a 13 percent
 annualized rate from $962 billion at December 31, 2000 to $994 billion at
 March 31, 2001.
     The retained portfolio grew at a 36 percent annualized rate, increasing
 from $386 billion at December 31, 2000 to $421 billion at March 31, 2001.
 This growth was driven by record retained portfolio purchase commitments of
 $53 billion for first quarter 2001.
 
     Operating Revenues
 
     Freddie Mac's operating revenues reached $1.247 billion in first quarter
 2001, a 17 percent increase over $1.066 billion for first quarter 2000, and up
 from $1.159 billion for fourth quarter 2000.  Operating revenues include
 operating net interest income (defined below) but exclude SFAS 133-related
 changes in derivative market values, which are reported on Freddie Mac's
 Income Statement as "Fair Value Gains (Losses)."  Reported revenues for first
 quarter 2001 were $1.421 billion.
 
     Operating Net Interest Margin
 
     Operating net interest income reflects adjustments to reported net
 interest income to exclude certain accounting effects associated with Freddie
 Mac's adoption of SFAS 133.  These adjustments include the recognition of
 straight-line amortization expense on purchased option premiums.  Operating
 net interest income totaled $819 million in first quarter 2001, compared to
 $667 million for first quarter 2000 and $738 million for fourth quarter 2000.
 The increase in operating net interest income from fourth quarter 2000 was
 driven by a $34 billion, or 9 percent, increase in the average balance of the
 retained portfolio.  Reported net interest income for first quarter 2001 was
 $976 million.
     On a fully taxable equivalent (FTE) basis, operating net interest yield on
 earning assets was 0.75 percent in first quarter 2001, compared to 0.79
 percent for first quarter 2000 and 0.75 percent for fourth quarter 2000.
 
     Guarantee Fees
 
     Management and guarantee fee income totaled $392 million in first quarter
 2001, compared to $366 million for first quarter 2000 and $383 million for
 fourth quarter 2000.  During first quarter 2001, the average balance of Total
 PCs increased by $25 billion, or 3 percent from fourth quarter 2000, while the
 average guarantee fee rate was 19.0 basis points, compared to 19.4 basis
 points for the same quarter a year ago and 19.1 basis points for fourth
 quarter 2000.
 
     Other Income, Net
 
     In first quarter 2001, Other income, net, totaled $36 million, compared to
 $33 million for first quarter 2000 and $38 million for fourth quarter 2000.
 Other income, net, which generally includes resecuritization fees and gains
 and losses related to certain investment activities, may fluctuate from period
 to period.
 
     Credit
 
     First quarter 2001 credit-related expenses (the provision for mortgage
 losses plus REO operations expense) totaled $24 million, down from $31 million
 for first quarter 2000 and $25 million for fourth quarter 2000.  The provision
 for mortgage losses was $10 million for first quarter 2001, unchanged from
 both first quarter 2000 and fourth quarter 2000.
     In first quarter 2001, mortgage charge-offs were $8 million, compared to
 $7 million for first quarter 2000 and $6 million for fourth quarter 2000.
 First quarter 2001 single-family charge-offs were $8 million, unchanged from
 both first quarter 2000 and fourth quarter 2000.  Multifamily recoveries were
 negligible in first quarter 2001, compared to $1 million for first quarter
 2000 and $2 million for fourth quarter 2000.
     Annualized first quarter 2001 credit losses (charge-offs plus REO
 operations expense) were 1.0 basis point of the average total mortgage
 portfolio (excluding non-Freddie Mac mortgage securities), compared to 1.4
 basis points in first quarter 2000 and unchanged from fourth quarter 2000.
     At March 31, 2001, total REO balances were $355 million, compared to $423
 million at March 31, 2000 and $348 million at December 31, 2000.  Single-
 family REO balances were $352 million at March 31, 2001, compared to $423
 million at March 31, 2000 and $346 million at December 31, 2000.  Multifamily
 REO balances were $3 million at March 31, 2001, up from $2 million at December
 31, 2000.  There was no multifamily REO balance at March 31, 2000.
 
     Administrative Expenses
 
     First quarter 2001 administrative expenses totaled $190 million, compared
 to $169 million for first quarter 2000 and $184 million for fourth quarter
 2000.  Annualized administrative expenses represented 7.8 basis points of the
 average total mortgage portfolio in first quarter 2001, unchanged from the
 same period a year ago and compared to 7.9 basis points in fourth quarter
 2000.
 
     Capital
 
     The corporation's total capital (regulatory core capital plus the reserve
 for mortgage losses) totaled $16.557 billion at March 31, 2001, compared to
 $13.914 billion at March 31, 2000 and $15.165 billion at December 31, 2000.
 In first quarter 2001, Freddie Mac issued $325 million of variable-rate
 preferred stock with an initial rate of 4.817%, $230 million of variable-rate
 preferred stock with an initial rate of 4.50% and $173 million of 5.81%
 preferred stock.
 
     Business Outlook
 
     Given strong first quarter 2001 results and the interest-rate environment,
 the corporation has revised its outlook relative to retained portfolio growth
 and operating net interest margin.  Freddie Mac now anticipates net retained
 portfolio growth of $70 billion to $85 billion in 2001.  In addition, the
 corporation believes that its average operating net interest yield for 2001
 will be roughly comparable to 2000's average of 0.77 percent.
 
     Effect of New Accounting Standard
 
     On January 1, 2001, Freddie Mac implemented SFAS 133, which required the
 corporation to recognize on balance sheet all derivatives as either assets or
 liabilities measured at their fair value.  The adoption of SFAS 133 resulted
 in a cumulative net after-tax increase to net income of $5 million ($0.01 per
 diluted share).  This cumulative impact is not included in Freddie Mac's
 operating earnings and operating earnings per share.  The adoption of SFAS 133
 also resulted in a $2.5 billion after-tax reduction to the "Accumulated Other
 Comprehensive Income, Net of Taxes" (AOCI) component of stockholders' equity.
 This adjustment to AOCI has no effect on Freddie Mac's regulatory core
 capital.
 
     Voluntary Commitments
 
     With the introduction of its monthly interest-rate disclosure earlier this
 month, Freddie Mac has completed implementation of the six voluntary
 commitments made in October 2000 to enhance its risk management, capital, and
 disclosure practices.  Further information about these commitments is
 available in Freddie Mac's Information Statement dated March 26, 2001 and on
 the shareholders' page of Freddie Mac's web site at
 http://www.freddiemac.com .
 
     Conference Call
 
     Freddie Mac will host a conference call discussing the corporation's first
 quarter 2001 results today at 5 p.m. eastern time.  The conference call will
 be web cast live on Freddie Mac's web site at http://www.freddiemac.com .
     A telephone recording of this conference call will be available
 continuously beginning at 11:00 p.m. eastern time Tuesday, April 24, 2001
 until midnight Monday, May 7, 2001.  To access this recording, call
 800-475-6701 and use access code 581437.
 
                                *    *    *    *
 
     Freddie Mac's quarterly announcements of earnings results sometimes
 contain forward-looking statements pertaining to management's current
 expectations as to Freddie Mac's future business plans, results of operations
 and/or financial condition.  Management's expectations for the corporation's
 future necessarily involve a number of assumptions and estimates, and various
 factors could cause actual results to differ materially from these
 expectations.  These assumptions and factors are discussed in the
 corporation's Annual Report to Shareholders and its Information Statement and
 quarterly Information Statement Supplements.
     Freddie Mac is a stockholder-owned corporation established by Congress in
 support of homeownership and rental housing.  Freddie Mac purchases single-
 family and multifamily residential mortgages and mortgage-related securities,
 which it finances primarily by issuing mortgage passthrough securities and
 debt instruments in the capital markets.  Over the years, Freddie Mac has
 opened doors for one in six homebuyers in America.
     Freddie Mac's earnings releases and other financial disclosures are
 available on the Shareholders' page of our World Wide Web site.
 
                                    FREDDIE MAC
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                    (unaudited)
                  (dollars in millions, except per share amounts)
 
 
                                                Quarters Ended
                                      March 31,     December 31,     March 31,
                                        2001            2000          2000
     Net interest income
      on earning assets                 $976            $738          $667
     Management and guarantee income     392             383           366
     Fair value gains (losses)            17               -             -
     Other income, net                    36              38            33
       Total revenues                  1,421           1,159         1,066
 
     Provision for mortgage losses       (10)            (10)          (10)
     REO operations expense              (14)            (15)          (21)
     Administrative expenses            (190)           (184)         (169)
     Housing tax credit partnerships     (32)            (26)          (26)
       Total non-interest expense       (246)           (235)         (226)
 
     Income before income taxes and
      cumulative effect of change
      in accounting principle          1,175             924           840
     Income taxes                       (343)           (261)         (232)
     Income before cumulative effect
      of change in accounting
      principle, net of taxes            832             663           608
     Cumulative effect of change
      in accounting principle,
      net of taxes                         5               -             -
        Net income                     $ 837           $ 663          $608
        Preferred stock dividends        (47)            (45)          (45)
        Net income available
         to common stockholders        $ 790           $ 618          $563
 
     Basic earnings per common share
      before cumulative effect of
      change in accounting principle   $1.13           $0.89         $0.81
     Cumulative effect of change
      in accounting principle,
      net of taxes                     $0.01             $ -           $ -
     Basic earnings per common share
      after cumulative effect of
      change in accounting principle   $1.14           $0.89         $0.81
 
     Diluted earnings per common share
      before cumulative effect of
      change in accounting principle   $1.12           $0.89         $0.81
     Cumulative effect of change in
      accounting principle,
      net of taxes                     $0.01             $ -           $ -
     Diluted earnings per common share
      after cumulative effect of
      change in accounting principle   $1.13           $0.89        $ 0.81
 
     Weighted average common shares
      outstanding (thousands)
         Basic                       693,073         692,278       695,239
         Diluted                     696,670         695,870       698,084
 
 
                                  FREDDIE MAC
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (unaudited)
                             (dollars in millions)
 
 
 
                                           March 31, December 31, March 31,
                                             2001       2000       2000
      Assets
      Mortgages, net                         $59,779   $58,906   $56,670
      Guaranteed mortgage securities (GMS)   363,729   327,054   277,603
      Purchase and sale premiums, discounts
       and deferred fees                      (1,754)     (843)     (603)
            Retained portfolio, net          421,754   385,117   333,670
 
      Cash and cash equivalents                  608       366        31
      Investments                             49,447    48,206    48,327
      Other assets                            26,030    25,608    24,040
          Total assets                      $497,839  $459,297  $406,068
 
      Liabilities and stockholders' equity
      Debt securities, net
           Due within one year              $195,735  $183,576  $181,323
           Due after one year                263,475   243,178   196,613
              Total debt securities, net     459,210   426,754   377,936
 
      Other liabilities                       23,680    17,561    16,102
 
      Guarantees
         Total Mortgage Participation
          Certificates (Total PCs)           833,616   822,310   757,106
         Less--Underlying mortgages         (833,616) (822,310) (757,106)
              Total guarantees, net                -         -         -
      Subordinated borrowings                  2,128       145       138
      Stockholders' equity                    12,821    14,837    11,892
         Total liabilities and
          stockholders' equity              $497,839  $459,297  $406,068
 
 
                                    FREDDIE MAC
       CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    (unaudited)
                               (dollars in millions)
 
                                                     Quarters Ended
                                             March 31,  December 31,  March 31,
                                               2001        2000         2000
 
     Stockholders' equity at beginning of
      period                                  $14,837     $13,192     $11,525
 
     Net income                                   837         663         608
     Accumulated other comprehensive
      income, net of taxes: (1)
          Cumulative effect of change in
           accounting principle                (2,450)        -           -
          Change in net unrealized gain
           (loss) on certain
            investments reported at fair
             value                                818       1,130         (81)
          Change in net (loss) on certain
           derivative contracts                (1,774)        -           -
     Other comprehensive income                (2,569)      1,793         527
 
     Cash dividends declared                     (186)       (164)       (163)
     Common stock issuances, net                   12          16           3
     Preferred stock issuances, net               727         -           -
     Stockholders' equity at end of period    $12,821     $14,837     $11,892
 
     (1) These figures represent changes in balances for the periods presented.
         The ending balance of "Accumulated other comprehensive income, net of
         taxes" was $(2,950) million, $456 million and $(1,247) million as of
         March 31, 2001, December 31, 2000 and March 31, 2000, respectively,
         and is excluded from Freddie Mac's core capital.
 
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SOURCE Freddie Mac
    MCLEAN, Va., April 24 /PRNewswire Interactive News Release/ -- Freddie Mac
 (NYSE:   FRE) today announced operating earnings for first quarter 2001 of $719
 million, compared to $608 million for the same period a year ago and $663
 million for fourth quarter 2000.  Diluted operating earnings per common share
 were $0.96 for first quarter 2001, a 19 percent increase over first quarter
 2000 diluted earnings per common share of $0.81.
     Freddie Mac's operating earnings and operating earnings per share exclude
 certain accounting effects resulting from the corporation's adoption of SFAS
 133, "Accounting for Derivative Instruments and Hedging Activities," on
 January 1, 2001.  Reported net income and earnings per share for first quarter
 2001, which include these derivative accounting effects, were $837 million and
 $1.13, respectively.
     "Freddie Mac continued to deliver outstanding results in the first
 quarter, with 19 percent operating earnings growth and near record purchase
 volume," said Leland C. Brendsel, Chairman and Chief Executive Officer.
 "Freddie Mac ended the quarter with rock-solid financial strength, well
 protected from economic volatility and positioned to produce strong high-
 quality earnings growth in 2001."
     Brendsel added, "Last week, Freddie Mac completed implementation of six
 voluntary commitments we made last October that keep us on the vanguard of
 best practices in capital management and information disclosure.  We want to
 leave no doubt about our capacity to finance housing for America's families
 for generations to come."
     "Outstanding portfolio growth, stable margins and continued credit
 strength contributed to our excellent first quarter results," remarked David
 W. Glenn, Vice Chairman and President.  "With the addition of over $35 billion
 of quality mortgage assets, our retained portfolio surpassed $400 billion
 during the first quarter."  Glenn added, "We issued nearly $730 million of
 preferred stock during the first quarter, providing us with the flexibility to
 respond to the quarter's tremendous growth opportunities."
 
     Highlights for first quarter 2001 include:
 
     *  New business purchase volume of $81 billion, up 125 percent from $36
        billion for first quarter 2000.
 
     *  Net retained portfolio growth of $35 billion, representing 36 percent
        annualized growth.
 
     *  Record retained portfolio purchase commitments of $53 billion.
 
     *  Operating revenue growth of 17 percent compared to first quarter 2000.
 
     *  Credit losses of $22 million, representing annualized losses of 1.0
        basis point of the average total mortgage portfolio.
 
     *  Issuance of nearly $730 million of preferred stock to support growth
        opportunities.
 
     Business Volumes
 
     New business purchase volume (which excludes purchases of Freddie Mac PCs
 for the retained portfolio) totaled $81 billion in first quarter 2001,
 compared to $36 billion for first quarter 2000 and $70 billion for fourth
 quarter 2000.  Freddie Mac's total mortgage portfolio grew at a 13 percent
 annualized rate from $962 billion at December 31, 2000 to $994 billion at
 March 31, 2001.
     The retained portfolio grew at a 36 percent annualized rate, increasing
 from $386 billion at December 31, 2000 to $421 billion at March 31, 2001.
 This growth was driven by record retained portfolio purchase commitments of
 $53 billion for first quarter 2001.
 
     Operating Revenues
 
     Freddie Mac's operating revenues reached $1.247 billion in first quarter
 2001, a 17 percent increase over $1.066 billion for first quarter 2000, and up
 from $1.159 billion for fourth quarter 2000.  Operating revenues include
 operating net interest income (defined below) but exclude SFAS 133-related
 changes in derivative market values, which are reported on Freddie Mac's
 Income Statement as "Fair Value Gains (Losses)."  Reported revenues for first
 quarter 2001 were $1.421 billion.
 
     Operating Net Interest Margin
 
     Operating net interest income reflects adjustments to reported net
 interest income to exclude certain accounting effects associated with Freddie
 Mac's adoption of SFAS 133.  These adjustments include the recognition of
 straight-line amortization expense on purchased option premiums.  Operating
 net interest income totaled $819 million in first quarter 2001, compared to
 $667 million for first quarter 2000 and $738 million for fourth quarter 2000.
 The increase in operating net interest income from fourth quarter 2000 was
 driven by a $34 billion, or 9 percent, increase in the average balance of the
 retained portfolio.  Reported net interest income for first quarter 2001 was
 $976 million.
     On a fully taxable equivalent (FTE) basis, operating net interest yield on
 earning assets was 0.75 percent in first quarter 2001, compared to 0.79
 percent for first quarter 2000 and 0.75 percent for fourth quarter 2000.
 
     Guarantee Fees
 
     Management and guarantee fee income totaled $392 million in first quarter
 2001, compared to $366 million for first quarter 2000 and $383 million for
 fourth quarter 2000.  During first quarter 2001, the average balance of Total
 PCs increased by $25 billion, or 3 percent from fourth quarter 2000, while the
 average guarantee fee rate was 19.0 basis points, compared to 19.4 basis
 points for the same quarter a year ago and 19.1 basis points for fourth
 quarter 2000.
 
     Other Income, Net
 
     In first quarter 2001, Other income, net, totaled $36 million, compared to
 $33 million for first quarter 2000 and $38 million for fourth quarter 2000.
 Other income, net, which generally includes resecuritization fees and gains
 and losses related to certain investment activities, may fluctuate from period
 to period.
 
     Credit
 
     First quarter 2001 credit-related expenses (the provision for mortgage
 losses plus REO operations expense) totaled $24 million, down from $31 million
 for first quarter 2000 and $25 million for fourth quarter 2000.  The provision
 for mortgage losses was $10 million for first quarter 2001, unchanged from
 both first quarter 2000 and fourth quarter 2000.
     In first quarter 2001, mortgage charge-offs were $8 million, compared to
 $7 million for first quarter 2000 and $6 million for fourth quarter 2000.
 First quarter 2001 single-family charge-offs were $8 million, unchanged from
 both first quarter 2000 and fourth quarter 2000.  Multifamily recoveries were
 negligible in first quarter 2001, compared to $1 million for first quarter
 2000 and $2 million for fourth quarter 2000.
     Annualized first quarter 2001 credit losses (charge-offs plus REO
 operations expense) were 1.0 basis point of the average total mortgage
 portfolio (excluding non-Freddie Mac mortgage securities), compared to 1.4
 basis points in first quarter 2000 and unchanged from fourth quarter 2000.
     At March 31, 2001, total REO balances were $355 million, compared to $423
 million at March 31, 2000 and $348 million at December 31, 2000.  Single-
 family REO balances were $352 million at March 31, 2001, compared to $423
 million at March 31, 2000 and $346 million at December 31, 2000.  Multifamily
 REO balances were $3 million at March 31, 2001, up from $2 million at December
 31, 2000.  There was no multifamily REO balance at March 31, 2000.
 
     Administrative Expenses
 
     First quarter 2001 administrative expenses totaled $190 million, compared
 to $169 million for first quarter 2000 and $184 million for fourth quarter
 2000.  Annualized administrative expenses represented 7.8 basis points of the
 average total mortgage portfolio in first quarter 2001, unchanged from the
 same period a year ago and compared to 7.9 basis points in fourth quarter
 2000.
 
     Capital
 
     The corporation's total capital (regulatory core capital plus the reserve
 for mortgage losses) totaled $16.557 billion at March 31, 2001, compared to
 $13.914 billion at March 31, 2000 and $15.165 billion at December 31, 2000.
 In first quarter 2001, Freddie Mac issued $325 million of variable-rate
 preferred stock with an initial rate of 4.817%, $230 million of variable-rate
 preferred stock with an initial rate of 4.50% and $173 million of 5.81%
 preferred stock.
 
     Business Outlook
 
     Given strong first quarter 2001 results and the interest-rate environment,
 the corporation has revised its outlook relative to retained portfolio growth
 and operating net interest margin.  Freddie Mac now anticipates net retained
 portfolio growth of $70 billion to $85 billion in 2001.  In addition, the
 corporation believes that its average operating net interest yield for 2001
 will be roughly comparable to 2000's average of 0.77 percent.
 
     Effect of New Accounting Standard
 
     On January 1, 2001, Freddie Mac implemented SFAS 133, which required the
 corporation to recognize on balance sheet all derivatives as either assets or
 liabilities measured at their fair value.  The adoption of SFAS 133 resulted
 in a cumulative net after-tax increase to net income of $5 million ($0.01 per
 diluted share).  This cumulative impact is not included in Freddie Mac's
 operating earnings and operating earnings per share.  The adoption of SFAS 133
 also resulted in a $2.5 billion after-tax reduction to the "Accumulated Other
 Comprehensive Income, Net of Taxes" (AOCI) component of stockholders' equity.
 This adjustment to AOCI has no effect on Freddie Mac's regulatory core
 capital.
 
     Voluntary Commitments
 
     With the introduction of its monthly interest-rate disclosure earlier this
 month, Freddie Mac has completed implementation of the six voluntary
 commitments made in October 2000 to enhance its risk management, capital, and
 disclosure practices.  Further information about these commitments is
 available in Freddie Mac's Information Statement dated March 26, 2001 and on
 the shareholders' page of Freddie Mac's web site at
 http://www.freddiemac.com .
 
     Conference Call
 
     Freddie Mac will host a conference call discussing the corporation's first
 quarter 2001 results today at 5 p.m. eastern time.  The conference call will
 be web cast live on Freddie Mac's web site at http://www.freddiemac.com .
     A telephone recording of this conference call will be available
 continuously beginning at 11:00 p.m. eastern time Tuesday, April 24, 2001
 until midnight Monday, May 7, 2001.  To access this recording, call
 800-475-6701 and use access code 581437.
 
                                *    *    *    *
 
     Freddie Mac's quarterly announcements of earnings results sometimes
 contain forward-looking statements pertaining to management's current
 expectations as to Freddie Mac's future business plans, results of operations
 and/or financial condition.  Management's expectations for the corporation's
 future necessarily involve a number of assumptions and estimates, and various
 factors could cause actual results to differ materially from these
 expectations.  These assumptions and factors are discussed in the
 corporation's Annual Report to Shareholders and its Information Statement and
 quarterly Information Statement Supplements.
     Freddie Mac is a stockholder-owned corporation established by Congress in
 support of homeownership and rental housing.  Freddie Mac purchases single-
 family and multifamily residential mortgages and mortgage-related securities,
 which it finances primarily by issuing mortgage passthrough securities and
 debt instruments in the capital markets.  Over the years, Freddie Mac has
 opened doors for one in six homebuyers in America.
     Freddie Mac's earnings releases and other financial disclosures are
 available on the Shareholders' page of our World Wide Web site.
 
                                    FREDDIE MAC
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                    (unaudited)
                  (dollars in millions, except per share amounts)
 
 
                                                Quarters Ended
                                      March 31,     December 31,     March 31,
                                        2001            2000          2000
     Net interest income
      on earning assets                 $976            $738          $667
     Management and guarantee income     392             383           366
     Fair value gains (losses)            17               -             -
     Other income, net                    36              38            33
       Total revenues                  1,421           1,159         1,066
 
     Provision for mortgage losses       (10)            (10)          (10)
     REO operations expense              (14)            (15)          (21)
     Administrative expenses            (190)           (184)         (169)
     Housing tax credit partnerships     (32)            (26)          (26)
       Total non-interest expense       (246)           (235)         (226)
 
     Income before income taxes and
      cumulative effect of change
      in accounting principle          1,175             924           840
     Income taxes                       (343)           (261)         (232)
     Income before cumulative effect
      of change in accounting
      principle, net of taxes            832             663           608
     Cumulative effect of change
      in accounting principle,
      net of taxes                         5               -             -
        Net income                     $ 837           $ 663          $608
        Preferred stock dividends        (47)            (45)          (45)
        Net income available
         to common stockholders        $ 790           $ 618          $563
 
     Basic earnings per common share
      before cumulative effect of
      change in accounting principle   $1.13           $0.89         $0.81
     Cumulative effect of change
      in accounting principle,
      net of taxes                     $0.01             $ -           $ -
     Basic earnings per common share
      after cumulative effect of
      change in accounting principle   $1.14           $0.89         $0.81
 
     Diluted earnings per common share
      before cumulative effect of
      change in accounting principle   $1.12           $0.89         $0.81
     Cumulative effect of change in
      accounting principle,
      net of taxes                     $0.01             $ -           $ -
     Diluted earnings per common share
      after cumulative effect of
      change in accounting principle   $1.13           $0.89        $ 0.81
 
     Weighted average common shares
      outstanding (thousands)
         Basic                       693,073         692,278       695,239
         Diluted                     696,670         695,870       698,084
 
 
                                  FREDDIE MAC
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (unaudited)
                             (dollars in millions)
 
 
 
                                           March 31, December 31, March 31,
                                             2001       2000       2000
      Assets
      Mortgages, net                         $59,779   $58,906   $56,670
      Guaranteed mortgage securities (GMS)   363,729   327,054   277,603
      Purchase and sale premiums, discounts
       and deferred fees                      (1,754)     (843)     (603)
            Retained portfolio, net          421,754   385,117   333,670
 
      Cash and cash equivalents                  608       366        31
      Investments                             49,447    48,206    48,327
      Other assets                            26,030    25,608    24,040
          Total assets                      $497,839  $459,297  $406,068
 
      Liabilities and stockholders' equity
      Debt securities, net
           Due within one year              $195,735  $183,576  $181,323
           Due after one year                263,475   243,178   196,613
              Total debt securities, net     459,210   426,754   377,936
 
      Other liabilities                       23,680    17,561    16,102
 
      Guarantees
         Total Mortgage Participation
          Certificates (Total PCs)           833,616   822,310   757,106
         Less--Underlying mortgages         (833,616) (822,310) (757,106)
              Total guarantees, net                -         -         -
      Subordinated borrowings                  2,128       145       138
      Stockholders' equity                    12,821    14,837    11,892
         Total liabilities and
          stockholders' equity              $497,839  $459,297  $406,068
 
 
                                    FREDDIE MAC
       CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    (unaudited)
                               (dollars in millions)
 
                                                     Quarters Ended
                                             March 31,  December 31,  March 31,
                                               2001        2000         2000
 
     Stockholders' equity at beginning of
      period                                  $14,837     $13,192     $11,525
 
     Net income                                   837         663         608
     Accumulated other comprehensive
      income, net of taxes: (1)
          Cumulative effect of change in
           accounting principle                (2,450)        -           -
          Change in net unrealized gain
           (loss) on certain
            investments reported at fair
             value                                818       1,130         (81)
          Change in net (loss) on certain
           derivative contracts                (1,774)        -           -
     Other comprehensive income                (2,569)      1,793         527
 
     Cash dividends declared                     (186)       (164)       (163)
     Common stock issuances, net                   12          16           3
     Preferred stock issuances, net               727         -           -
     Stockholders' equity at end of period    $12,821     $14,837     $11,892
 
     (1) These figures represent changes in balances for the periods presented.
         The ending balance of "Accumulated other comprehensive income, net of
         taxes" was $(2,950) million, $456 million and $(1,247) million as of
         March 31, 2001, December 31, 2000 and March 31, 2000, respectively,
         and is excluded from Freddie Mac's core capital.
 
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 SOURCE  Freddie Mac

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