ATLANTA, Feb. 23 2021 (GLOBE NEWSWIRE) — Federal Home Loan Bank of Atlanta (the Bank) today released preliminary unaudited financial highlights for the quarter and year ended December 31, 2020. All figures shown below below for 2020 are approximate through The Bank announces audited financial results in its Form 10-K filed with the Securities and Exchange Commission (SEC), which is expected to be filed on or about March 4, 2021.
Net income for the fourth quarter of 2020 was $35 million, a decrease of $62 million, compared to net income of $97 million for the fourth quarter of 2019. The decrease in net income for the fourth quarter was primarily due to a decrease in advance balances, as well as lower interest rates.
Net income for the year ended December 31, 2020 was $255 million, a decrease of $112 million, compared to net income of $367 million for 2019. The decrease in net income in 2020 is mainly attributable to the decrease in advance balances, as well as the decrease in interest rates. Additionally, in the first quarter of 2020, the Bank sold its portfolio of private label mortgage-backed investments and recorded an $85 million gain on the sale. The Bank made an additional voluntary contribution of $20 million to the pension plan in the first quarter of 2020, which reduced net income for the year.
Beginning in March 2020 and continuing through 2020, the global pandemic associated with COVID-19 impacted financial market conditions. In response to these market conditions, the Federal Open Market Committee lowered the federal funds target range from 0.00% to 0.25% during the second quarter. This target range was maintained for the rest of the year and market rates remained at historically low levels. In addition, the Federal Reserve has implemented a number of asset purchase programs to facilitate liquidity and support financial market stability. Additional fiscal stimulus through the CARES Act and other measures has further resulted in increased liquidity and deposit levels at member institutions of the Bank. Additional market liquidity resulting from monetary and fiscal stimulus, including increased deposit levels at Bank member institutions, has led to lower demand for advances from Bank members, which has impacted net income in 2020. Low market interest rates impacted the Bank’s income on interest-earning assets in 2020, resulting in lower net income. The Bank expects the current low market interest rate environment, along with the anticipated decline in demand, to continue for the foreseeable future, which should reduce the Bank’s net income for 2021.
Total assets as of December 31, 2020 were $92.3 billion, a decrease of $57.6 billion, or 38.4%, from December 31, 2019. Advances outstanding were $52.2 billion. billion as of December 31, 2020, a decrease of $45.0 billion, or 46.3%, from December 31, 2019, due to lower demand for cash, as noted above. Retained earnings remained strong at $2.2 billion as of December 31, 2020 and 2019. Share capital was $5.3 billion as of December 31, 2020, down $1.9 billion, or 26 .6%, compared to $7.2 billion.
The Bank’s performance in 2020 translated into a return on average equity (ROE) of 3.95%, compared to 5.09% for 2019. The ROE spread over the London Interbank Offered Rate (LIBOR ) three-month average increased to 330 basis points for 2020, compared to 276 basis points for 2019. The Bank currently forecasts the eventual replacement of the LIBOR benchmark interest rate, including the likelihood that the guaranteed overnight financing (SOFR) is the dominant replacement. For comparison purposes, the difference between the Bank’s ROE and the average SOFR was 359 basis points for 2020. As of December 31, 2020, the Bank was in compliance with its regulatory capital requirements.
As a financial institution, the Bank is part of the essential infrastructure of the country, has continuously operated its business and continued to be a reliable source of funding for our members. The Bank continues to operate in Phase 2 of its return-to-office plan, under which approximately 25% of Bank employees are working on-site. To date, the Bank has not experienced any significant operational difficulties or disruptions, but the possibility exists which could adversely affect the Bank’s ability to effectively conduct and manage its business. To date, no member of the Bank’s management team has been incapacitated or unable to perform their duties. The Bank’s Board of Directors regularly reviews the Bank’s succession plan in the event that a member of the management team is unable to attend.
Federal Home Loan Bank of Atlanta
(Preliminary and unaudited)
(in millions of dollars)
|As of December 31,|
|Mortgages held for the portfolio, net||218||296|
|Consolidated obligations, net||84,764||140,637|
|Total share capital||3,078||4,988|
|Accumulated other (loss) comprehensive income||(16||)||22|
|Capital to Assets Ratio (GAAP)||5.70||%||4.78||%|
|Capital/asset ratio (regulatory)||5.72||%||4.77||%|
|Quarter ended December 31||Years ended December 31|
|Operating results and performance ratios||2020||2019||2020||2019|
|Net interest income||$||69||$||141||$||333||$||535|
|Net impairment losses recognized in profit or loss||—||(6||)||—||(13||)|
|Standby letter of credit fees||3||6||19||24|
|Total non-interest expense||36||36||163||146|
|Evaluation of the Affordable Housing Program||3||11||28||41|
|Average return on assets||0.14||%||0.25||%||0.19||%||0.25||%|
|return on average equity||2.53||%||5.26||%||3.95||%||5.09||%|
Additional financial information regarding the Bank’s results of operations for the most recent quarter and year ended December 31, 2020 will be available on the Bank’s Form 10-K which the Bank expects to file on or about March 4, 2021. with the Securities and Exchange Commission and will be available at www.fhlbatl.com or www.sec.gov.
About Federal Home Loan Bank of Atlanta
FHLBank Atlanta offers competitively priced financing, community development grants, and other banking services to help member financial institutions make affordable home loans and provide economic development credit to neighborhoods and communities. The Bank’s members – its shareholders and customers – are commercial banks, credit unions, thrift institutions, community development financial institutions and insurance companies located in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and the District of Columbia. . FHLBank Atlanta is one of 11 district banks in the Federal Home Loan Bank System. Since 1990, the FHLBanks have provided approximately $6.6 billion in Affordable Housing Program funds, helping more than 957,000 households.
For more information visit our website at www.fhlbatl.com.
Certain of the statements made in this announcement are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, which include statements regarding the Bank’s beliefs, plans, objectives, goals , expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond the control of the Bank and which may cause the Bank’s actual results, performance or performance. that the achievements are materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Forward-looking statements may not be materialized due to various factors, including, without limitation: the impact of the COVID-19 pandemic on the Bank, its employees, members and counterparties, or on the markets capital and the U.S. economy, the impact of which is evolving and unknowable at this time and could include impacts on the Bank’s operations, liquidity, profitability, financial condition and results of operations, and dividend . Additional factors include legislative, regulatory and accounting actions, changes, approvals or requirements; completion of the Bank’s financial close procedures and final accounting adjustments for the last completed quarter; uncertainties related to the potential removal of LIBOR; future economic and market conditions (including the housing market); changes in demand for advances or consolidated obligations of the Bank and/or the FHLBank system; changes in interest rates; changes in prepayment periods, default rates, defaults and losses on mortgage-backed securities; the volatility of market prices, rates and indices which may affect the value of financial instruments; changes in credit ratings and/or derivative transaction terms; changes in product offerings; political, national and global events, including the impact and results of upcoming US national elections; disruptions to information systems; membership changes; and adverse developments or events affecting or involving other Federal Home Lending Banks or the FHLBank system generally. Other factors that could cause the Bank’s results to differ from these forward-looking statements are detailed in our filings with the Securities and Exchange Commission, which are available at www.sec.gov.
New factors may appear and it is impossible for us to predict the nature of each new factor or assess its potential impact on our business and financial condition. Given these uncertainties, we caution you not to place undue reliance on any forward-looking statements. These statements speak only as of the date on which they are made, and the Bank has no obligation and undertakes no obligation to publicly update, revise or correct any of the forward-looking statements after the date of this announcement, or after the respective dates on which such statements are otherwise made, whether as a result of new information, future events or otherwise, except as required by law.
CONTACT: Peter E. Garuccio
Federal Home Loan Bank of Atlanta