Federal Home Loan Bank of Boston Announces Second Quarter 2022 Financial Results and Declares Dividend

Federal Home Loan Bank of Boston announced its preliminary unaudited financial results for the second quarter of 2022, reporting net income of $41.0 million for the quarter. The Bank expects to file its Quarterly Report on Form 10-Q for the quarter ending June 30, 2022 with the United States Securities and Exchange Commission next month.

The Bank’s board of directors declared a dividend equal to an annual yield of 3.72%, the daily average of the guaranteed overnight rate for the second quarter of 2022 plus 300 basis points. The dividend, based on the average stock outstanding for the second quarter of 2022, will be paid on August 2, 2022. As always, dividends remain at the discretion of the Board of Directors.

“Advance activity increased in the second quarter as demand for wholesale funding from our members increased significantly. The Bank recorded year-over-year gains in net income, net interest income and net interest spread,” said FHLBank Boston President and CEO Timothy J. Barrett. “The Bank’s balance sheet remains strong, and we continue to focus on providing liquidity and financing to our members and supporting affordable housing and economic development.

Second Quarter 2022 Operational Highlights

The Bank’s overall operating results are influenced by the economy, financial markets and, in particular, demand for member advances. During the second quarter of 2022, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to between 150 and 175 basis points. In addition, the Bank experienced a sharp increase in demand for advances from our members during the quarter ended June 30, 2022.

Net income for the quarter ending June 30, 2022 was $41.0 million, compared to net income of $6.2 million for the same period in 2021, the result of an increase of 26 $.3 million in net interest income after provision for credit losses and a decrease of $14.3 million. million in net unrealized losses on trading securities. These results resulted in a statutory contribution of $4.6 million to the Bank’s Affordable Housing Program for the quarter. In addition, the Bank made a voluntary contribution of $5.5 million to the Affordable Housing Program for the quarter ending June 30, 2022.

Net interest income after provision for credit losses for the three months ended June 30, 2022 was $69.4 million, compared to $43.1 million for the same period in 2021. The increase of $26.3 million in net interest income after allowance for credit losses is attributable to growth in our advances and investment portfolios, as well as an increase in yields during the quarter ended June 30, 2022 Accordingly, the net interest spread was 0.52% for the quarter ended June 30, 2022, an increase of 8 basis points from the same period in 2021, and the net interest margin was 0.60%, an increase of 12 basis points compared to the same period in 2021.

June 30, 2022 Balance Sheet Highlights

Total assets increased by $29.5 billion, or 90.7%, to $62.1 billion as of June 30, 2022, up from $32.5 billion at the end of fiscal 2021. During the six months ended June 30, 2022, advances increased $18.0 billion, or 145.7%, to $30.3. billion, compared to $12.3 billion at the end of 2021. The significant increase in advances was concentrated in variable rate advances and short-term fixed rate advances, reflecting the growing demand for financing from bulk of member institutions.

Total investments were $28.3 billion as of June 30, 2022, up from $16.4 billion as of December 31, 2021, with most of the increase concentrated in short-term investments that meet the liquidity needs resulting from an increased demand for advances. Mortgage investment totaled $2.9 billion as of June 30, 2022, down $222.8 million from year-end 2021 as repayments continued to outpace new purchases in a market difficult mortgage refinancing.

GAAP capital at June 30, 2022 was $2.9 billion, an increase of $417.0 million from $2.5 billion at the end of fiscal 2021. of 2022, the share capital increased by $603.6 million, mainly due to the increase in advances. Total retained earnings reached $1.6 billion at June 30, 2022, an increase of $58.8 million, or 3.8%, from December 31, 2021. Of this amount, retained earnings allocated totaled $376.6 million as of June 30, 2022. Due to the increase in the average balance of the consolidated obligations during the three months ended June 30, 2022, we paid $8.2 million of net income from the second quarter 2022 to retained earnings. Accumulated other comprehensive income totaled $216.4 million as of June 30, 2022, a decrease of $245.4 million from accumulated other comprehensive income of $29.0 million as of December 31, 2021 , mainly attributable to write-downs on investment securities as interest rates rose sharply in the first half of 2022.

The Bank was in compliance with all regulatory capital ratios as of June 30, 2022, and in the most recent information available, it was rated “sufficiently capitalized” by its regulator, the Federal Housing Finance Agency, based on information financial statements of the Bank as of March 31, 2022. .

Bernadine J. Perkins