BOSTON, July 19,
2024 /PRNewswire/ -- The Federal Home Loan Bank of
Boston announced its preliminary,
unaudited second quarter results for 2024, reporting net income of
$70.2 million for the quarter. The
Bank expects to file its quarterly report on Form 10-Q for the
quarter ending June 30, 2024, with
the U.S. Securities and Exchange Commission next month.
The Bank's board of directors has declared a dividend equal to
an annual yield of 8.41%, the daily average of the Secured
Overnight Financing Rate for the second quarter of 2024 plus 300
basis points. The dividend, based on average stock outstanding for
the second quarter of 2024, will be paid on August 2, 2024. As
always, dividends remain at the discretion of the board.
"FHLBank Boston had strong and steady financial performance
during the second quarter. Our engagement with members continues to
be impactful in areas of liquidity and residential mortgage
acquisitions and the income resulting from those activities enabled
us to triple year-over-year voluntary contributions to
discretionary housing and community investment programs," said
President and CEO Timothy J.
Barrett. "These programs make homeownership more affordable
for lower income homebuyers and make business loans less expensive
for small businesses that create and preserve jobs throughout New
England."
Second Quarter 2024 Operating Highlights
The Bank's overall results of operations are influenced by the
economy, interest rates and members' demand for advances. During
the second quarter of 2024, the Federal Open Market Committee
(FOMC) maintained the target range for the federal funds rate
between 525 and 550 basis points. During the quarter, the
yield curve remained inverted with a modest increase in long-term
interest rates reflecting continued strength in economic
conditions. Market expectations of Federal Reserve rate cuts were
pushed back to later in 2024.
Net income for the three months ended June 30, 2024, was
$70.2 million, compared with net
income of $78.6 million for the same
period of 2023, primarily the result of an increase of $7.3 million in voluntary contributions to
housing and community investment
programs (5) from $2.5
million for three months ended June 30, 2023, to
$9.8 million for the same period in
2024. These results led to a $7.8
million statutory contribution to the Bank's Affordable
Housing Program for the quarter. In addition, the Bank made a
voluntary contribution of $1.3
million to the Affordable Housing Program for the quarter
ended June 30, 2024.
Net interest income after provision for credit losses for the
three months ended June 30, 2024, was $108.7 million, compared with $109.6 million for the same period in 2023.
The $1.0 million decrease in net interest income after
provision for credit losses was primarily driven by a $6.8 billion decline in average advances, a
$5.0 million unfavorable variance in
net unrealized gains and losses on fair value hedge ineffectiveness
attributable to a larger increase in intermediate-term interest
rates during the quarter ended June 30, 2023, compared to the
same period in 2024, and a $4.1
million decrease in mortgage backed security net accretion.
The decrease in net interest income after provision for credit
losses was partially offset by a $1.9
billion increase in our average mortgage backed securities
portfolio, a $499.5 million increase
in our average mortgage loan portfolio, and an increase in yields
in the quarter ended June 30, 2024, resulting from higher
market interest rates compared to the same period in 2023.
Net interest spread was 0.28% for the three months ended
June 30, 2024, an increase of one basis point from the same
period in 2023, and net interest margin was 0.63%, an increase of
four basis points from the three months ended June 30, 2023.
The increase in net interest spread and margin was primarily
attributable to higher market interest rates.
June 30, 2024 Balance-Sheet Highlights
Total assets increased $1.6
billion, or 2.4%, to $68.8
billion at June 30, 2024, up from $67.1 billion at year-end 2023. Advances were
$42.3 billion at June 30, 2024,
an increase of $335.8 million, or
0.8%, from $42.0 billion at
December 31, 2023. Total investments were $22.4 billion at June 30, 2024, an increase
of $1.3 billion from $21.2 billion at the prior year end, driven
primarily by growth in mortgage backed securities. Mortgage loans
totaled $3.3 billion at June 30,
2024, an increase of $286.2 million
from year-end 2023 as mortgage sales to the Bank increased.
Total capital at June 30, 2024, was $3.7 billion, an increase of $143.4 million from $3.5
billion at year-end 2023. During 2024, capital stock
increased by $51.8 million, primarily
attributable to the increase in advances. Total retained earnings
grew to $1.9 billion during 2024, an
increase of $65.5 million, or 3.7%,
from December 31, 2023. Of this amount, restricted retained
earnings(3) totaled $480.8
million at June 30, 2024. Accumulated other
comprehensive loss totaled $268.5
million at June 30, 2024, an improvement of
$26.0 million from accumulated other
comprehensive loss as of December 31, 2023.
The Bank was in compliance with all regulatory capital ratios at
June 30, 2024, and in the most recent information available
was classified "adequately capitalized" by its regulator, the
Federal Housing Finance Agency, based on the Bank's financial
information at March 31,
2024.(1)
About the Bank
The Federal Home Loan Bank of Boston is a cooperatively owned wholesale bank
for housing finance in the six New England states. Its mission is
to provide highly reliable wholesale funding and liquidity to its
member financial institutions in New England. The Bank also
develops and delivers competitively priced financial products,
services, and expertise that support housing finance, community
development, and economic growth, including programs targeted to
lower-income households.
Contact:
Adam Coldwell
617-292-9774
adam.coldwell@fhlbboston.com
|
Federal Home Loan
Bank of Boston
|
|
Balance Sheet
Highlights
|
|
(Dollars in
thousands)
|
|
(Unaudited)
|
|
|
|
6/30/2024
|
|
3/31/2024
|
|
12/31/2023
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
50,096
|
|
$
70,616
|
|
$
53,412
|
|
Advances
|
|
42,294,369
|
|
39,905,499
|
|
41,958,583
|
|
Investments
(2)
|
|
22,436,579
|
|
22,263,743
|
|
21,167,632
|
|
Mortgage loans held for
portfolio, net
|
|
3,345,541
|
|
3,146,391
|
|
3,059,331
|
|
Other assets
|
|
642,793
|
|
644,027
|
|
903,316
|
|
Total assets
|
|
$
68,769,378
|
|
$
66,030,276
|
|
$
67,142,274
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Consolidated
obligations, net
|
|
$
63,692,005
|
|
$
61,079,028
|
|
$
62,249,289
|
|
Deposits
|
|
891,137
|
|
921,774
|
|
922,879
|
|
Other
liabilities
|
|
504,270
|
|
462,187
|
|
431,492
|
|
|
|
|
|
|
|
|
CAPITAL
|
|
|
|
|
|
|
|
Class B capital
stock
|
|
2,094,276
|
|
1,983,103
|
|
2,042,453
|
|
Retained earnings -
unrestricted
|
|
1,375,438
|
|
1,360,373
|
|
1,339,546
|
|
Retained earnings -
restricted (3)
|
|
480,759
|
|
466,723
|
|
451,154
|
|
Total retained
earnings
|
|
1,856,197
|
|
1,827,096
|
|
1,790,700
|
|
Accumulated other
comprehensive loss
|
|
(268,507)
|
|
(242,912)
|
|
(294,539)
|
|
Total
capital
|
|
3,681,966
|
|
3,567,287
|
|
3,538,614
|
|
Total liabilities and
capital
|
|
$
68,769,378
|
|
$
66,030,276
|
|
$
67,142,274
|
|
|
|
|
|
|
|
|
Total regulatory
capital-to-assets ratio
|
|
5.8 %
|
|
5.8 %
|
|
5.7 %
|
|
Ratio of market value
of equity (MVE) to par value of capital stock
(4)
|
|
168 %
|
|
173 %
|
|
170 %
|
|
Income Statement
Highlights
|
|
(Dollars in
thousands)
|
|
(Unaudited)
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
6/30/2024
|
|
3/31/2024
|
|
6/30/2023
|
|
6/30/2024
|
|
6/30/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
|
$ 933,331
|
|
$ 891,303
|
|
$ 937,094
|
|
$
1,824,634
|
|
$
1,740,018
|
|
Total interest
expense
|
|
825,076
|
|
781,461
|
|
827,467
|
|
1,606,537
|
|
1,548,470
|
|
Net interest
income
|
|
108,255
|
|
109,842
|
|
109,627
|
|
218,097
|
|
191,548
|
|
Net interest income
after provision for credit losses
|
|
108,655
|
|
109,242
|
|
109,628
|
|
217,897
|
|
191,455
|
|
Other income
|
|
3,212
|
|
2,608
|
|
3,640
|
|
5,820
|
|
8,004
|
|
Operating
expense
|
|
19,316
|
|
19,680
|
|
17,753
|
|
38,996
|
|
35,835
|
|
Federal Housing Finance
Agency and Office of Finance
|
|
2,323
|
|
2,263
|
|
2,630
|
|
4,586
|
|
5,373
|
|
AHP voluntary
contribution
|
|
1,345
|
|
—
|
|
2,000
|
|
1,345
|
|
2,000
|
|
Discretionary housing
and community investment programs (5)
|
|
9,802
|
|
2,304
|
|
2,480
|
|
12,106
|
|
3,252
|
|
Other
expense
|
|
1,092
|
|
1,093
|
|
1,095
|
|
2,185
|
|
2,127
|
|
AHP
assessment
|
|
7,809
|
|
8,664
|
|
8,742
|
|
16,473
|
|
15,117
|
|
Net income
|
|
$
70,180
|
|
$
77,846
|
|
$
78,568
|
|
$ 148,026
|
|
$ 135,755
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Ratios: (6)
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
0.40 %
|
|
0.47 %
|
|
0.42 %
|
|
0.43 %
|
|
0.37 %
|
|
Return on average
equity (7)
|
|
7.75 %
|
|
8.94 %
|
|
8.44 %
|
|
8.35 %
|
|
7.50 %
|
|
Net interest
spread
|
|
0.28 %
|
|
0.31 %
|
|
0.27 %
|
|
0.29 %
|
|
0.22 %
|
|
Net interest
margin
|
|
0.63 %
|
|
0.67 %
|
|
0.59 %
|
|
0.65 %
|
|
0.53 %
|
|
|
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(1)
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For additional
information on the Bank's capital requirements, see Item 7 —
Management's Discussion and Analysis of Financial Condition and
Results of Operations — Liquidity and Capital Resources — Capital
in the Annual Report on Form 10-K for the year ended December 31,
2023, filed with the SEC on March 15, 2024 (the 2023 Annual
Report).
|
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(2)
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Investments include
available-for-sale securities, held-to-maturity securities, trading
securities, interest-bearing deposits, securities purchased under
agreements to resell, and federal funds sold.
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(3)
|
The Bank's capital plan
and a joint capital enhancement agreement among all Federal Home
Loan Banks require the Bank to allocate a certain amount, generally
not less than 20% of each of quarterly net income and adjustments
to prior net income, to a restricted retained earnings account
until a total required allocation is met. Amounts in the restricted
retained earnings account are unavailable to be paid as dividends,
which may be paid from current net income and unrestricted retained
earnings. For additional information, see Item 5 — Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities in the 2023 Annual
Report.
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(4)
|
MVE equals the
difference between the theoretical market value of assets and the
theoretical market value of liabilities, and the ratio of MVE to
par value of Bank capital stock can be an indicator of future net
income to the extent that it demonstrates the impact of prior
interest-rate movements on the capacity of the current balance
sheet to generate net interest income. However, this ratio does not
always provide an accurate indication of future net income.
Accordingly, investors should not place undue reliance on this
ratio and are encouraged to read the Bank's discussion of MVE,
including discussion of the limitations of MVE as a metric, in Item
7A — Quantitative and Qualitative Disclosures About Market Risk —
Measurement of Market and Interest Rate Risk in the 2023 Annual
Report.
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(5)
|
We have certain
discretionary subsidized advance and grant programs, including our
Jobs for New England (JNE), Housing Our Workforce (HOW), and Lift
Up Homeownership programs. For additional information see Item 1 —
Business — Targeted Housing and Community Investment Programs in
the 2023 Annual Report.
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(6)
|
Yields for quarterly
periods are annualized.
|
|
(7)
|
Return on average
equity is net income divided by the total of the average daily
balance of outstanding Class B capital stock, accumulated
other comprehensive loss, and total retained earnings.
|
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This release, including the unaudited balance sheet highlights
and income statement highlights, uses forward-looking statements
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, which include statements
with respect to the Bank's plans, objectives, projections,
estimates, or predictions. These statements are based on the Bank's
expectations as of the date hereof. The words "preliminary,"
"expectations," "anticipates," "will," and similar statements and
their plural and negative forms are used in this notification to
identify some, but not all, of such forward-looking statements. For
example, statements about future declarations of dividends and
expectations for advances balances, mortgage-loan investments, and
net income are forward-looking statements, among other
forward-looking statements herein.
The Bank cautions that, by their nature, forward-looking
statements involve risks and uncertainties, including, but not
limited to, the application of accounting standards relating to,
among other things, the amortization and accretion of premiums and
discounts on financial assets, financial liabilities, and certain
fair value gains and losses; hedge accounting of derivatives and
underlying financial instruments; the fair values of financial
instruments, including investment securities and derivatives; the
allowance for credit losses on investment securities and mortgage
loans; instability in the credit and debt markets; economic
conditions (including the United
States' credit rating and its effect on the Bank); changes
in demand for advances or consolidated obligations of the Bank or
the Federal Home Loan Bank system; changes in interest rates;
volatility of market prices, rates, and indices that could affect
the value of financial instruments; the Bank's ability to execute
its business model and pay future dividends; and prepayment speeds
on mortgage assets. In addition, the Bank reserves the right to
change its plans for any programs for any reason, including but not
limited to, legislative or regulatory changes, changes in
membership, or changes at the discretion of the board of directors.
Accordingly, the Bank cautions that actual results could differ
materially from those expressed or implied in these forward-looking
statements or could impact the extent to which a particular plan,
objective, projection, estimate or prediction is realized, and you
are cautioned not to place undue reliance on such statements. The
Bank does not undertake to update any forward-looking statement
herein or that may be made from time to time on behalf of the
Bank.
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SOURCE Federal Home Loan Bank of Boston