BOSTON
,
Feb. 24, 2023
/PRNewswire/ — The Federal Home Loan Bank of
Boston
announced its preliminary, unaudited fourth quarter and annual financial results for 2022, reporting net income of
$55.4 million
for the quarter and
$184.2 million
for the year. The Bank expects to file its annual report on Form 10-K for the year ending
December 31, 2022
, 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 6.67%, the daily average of the Secured Overnight Financing Rate for the fourth quarter of 2022 plus 300 basis points. The dividend, based on average stock outstanding for the fourth quarter of 2022, will be paid on March 2, 2023. As always, dividends remain at the discretion of the board.
“The Bank’s strong financial performance in 2022 was driven in part by growth in our advances activity and higher market interest rates,” said FHLBank Boston President and CEO
Timothy J. Barrett
. “We continue to provide value to all our members so they can meet the unique needs of the communities they serve. We are pleased to set aside
$26 million
for our Affordable Housing Program and once again make critical contributions to support homeownership through our Housing Our Workforce program while also promoting job creation and preservation through our Jobs for New England program.”
Fourth Quarter 2022 Operating Highlights
The Bank’s overall results of operations are influenced by the economy, financial markets and, in particular, by members’ demand for advances. During the fourth quarter of 2022, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to between 425 and 450 basis points and anticipates that ongoing increases in the target range will be appropriate given elevated, but decelerating, rates of inflation. Long-term interest rates were relatively stable while short- and intermediate-term rates rose, resulting in an inverted yield curve during the quarter reflecting concerns over a potential economic downturn. Additionally, the Bank experienced a continuing increase in demand for advances from our members during the quarter ended December 31, 2022.
Net income for the quarter ending December 31, 2022, was
$55.4 million
, compared with net income of
$25.9 million
for the same period in 2021. The increase in net income for the quarter was primarily due to an increase of
$14.4 million
in net interest income after provision for credit losses, an improvement of
$6.2 million
in net gains and losses on trading securities, and a
$5.3 million
decrease in losses on early extinguishment of debt.
Net interest income after provision for credit losses for the three months ended December 31, 2022, was
$70.8 million
, compared with
$56.4 million
for the same period in 2021. The $14.4 million increase in net interest income after provision for credit losses was driven by growth in our advances and investments portfolios, growth in capital, as well as an increase in yields in the quarter ended December 31, 2022 resulting from higher market interest rates. These favorable impacts were partially offset by a decrease of
$16.7 million
of prepayment fee income
(1)
and an increase of
$13.9 million
of net unrealized losses on fair value hedges. Net interest spread was 0.19% for the quarter ended December 31, 2022, a decrease of 45 basis points from the same period in 2021, and net interest margin was 0.45%, a decrease of 21 basis points from the same period in 2021.
December 31, 2022
Balance-Sheet Highlights
Total assets increased
$30.4 billion
, or 93.3 percent, to
$62.9 billion
at December 31, 2022, up from
$32.5 billion
at year-end 2021. During the year ended December 31, 2022, advances increased
$29.3 billion
, or 237.1%, to
$41.6 billion
, compared with
$12.3 billion
at year-end 2021. The significant increase in advances was concentrated in variable-rate advances and short-term fixed-rate advances, reflecting rising demand for wholesale funding at member institutions.
Total investments were
$17.9 billion
at December 31, 2022, up from
$16.4 billion
at the prior year end, with most of the increase concentrated in short term investments that support liquidity needs resulting from higher demand for advances. Mortgage loans totaled
$2.8 billion
at December 31, 2022, a decrease of
$361.7 million
from year-end 2021 as paydowns continued to outpace new purchases because mortgage refinance activity has declined significantly and home sales have slowed.
GAAP capital at December 31, 2022, was
$3.4 billion
, an increase of
$884.3 million
from
$2.5 billion
at year-end 2021. During 2022, capital stock increased by
$1.1 billion
, primarily attributable to the increase in advances. Total retained earnings grew to
$1.7 billion
during 2022, an increase of
$142.2 million
, or 9.2%, from December 31, 2021. Of this amount, restricted retained earnings
(4)
totaled
$399.7 million
at December 31, 2022. Accumulated other comprehensive loss totaled
$306.4 million
at December 31, 2022, a decrease of
$335.4 million
from accumulated other comprehensive income as of December 31, 2021, mainly attributable to declines in value of available-for-sale investment securities as interest rates rose sharply during 2022.
The Bank was in compliance with all regulatory capital ratios at December 31, 2022, 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
September 30, 2022
.
(2)
2022
Annual Operating Highlights
Net income for the year ending December 31, 2022, was
$184.2 million
, compared with net income of
$69.5 million
for 2021, the result of an increase of
$70.1 million
in net interest income after provision for credit losses, an improvement of
$46.0 million
in net losses on trading securities, and a
$11.5 million
decrease in losses on early extinguishment of debt. These results led to a
$20.5 million
statutory contribution to the Bank’s Affordable Housing Program for the year. In addition, the Bank made a voluntary contribution of
$5.5 million
to the Affordable Housing Program.
Net interest income after provision for credit losses for the year ended December 31, 2022, was
$282.3 million
, compared with
$212.2 million
for 2021. The $70.1 million increase in net interest income after provision for credit losses was driven by growth in our advances and investments portfolios, growth in capital, an increase in yields in the year ended December 31, 2022, resulting from higher market interest rates and an increase of
$22.2 million
of net unrealized gains on fair value hedges, partially offset by a decrease of
$30.7 million
of prepayment fee income. Net interest spread was 0.42% for the year ended December 31, 2022, a decrease of 15 basis points from the same period in 2021, and net interest margin was 0.57%, a decrease of three basis points from 2021.
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
[email protected]
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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,” “expects,” “will,” “continue,” 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 effects on, among other things, mortgage-backed securities); 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 expected discontinuance of LIBOR and the adverse consequences it could have for market participants, including the Bank; 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.
View original content:
https://www.prnewswire.com/news-releases/federal-home-loan-bank-of-boston-announces-2022-fourth-quarter-and-annual-results-declares-dividend-301755795.html
SOURCE Federal Home Loan Bank of
Boston
link
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