Federal Home Loan Bank of San Francisco announces second

SAN FRANCISCO, July 29 28, 2021 (GLOBE NEWSWIRE) — Federal Home Loan Bank of San Francisco (Bank) today announced its second quarter 2021 operating results. Second quarter 2021 net income was $55 million. , compared to net income of $88 million for the second quarter of 2020.

The decrease in net income of $33 million compared to the prior year period reflects a decrease in net interest income of $17 million, a decrease in other income/(loss) of $17 million and lower recovery of credit losses of $5 million. These decreases in net income were partially offset by a decrease in other expenses of $4 million and a reduction in the Affordable Housing Program valuation of $2 million, which reflected lower pre-assessment revenue.

The decrease in net interest income of $17 million primarily reflects a decrease in interest-earning assets, an increase in net losses on designated fair value hedges of $11 million and a decrease in prepayment charges of $4 million received on advances. These decreases in net interest income were partially offset by an improvement in interest rate spreads on interest-earning assets. The $17 million decrease in other income/(loss) was primarily due to an increase in net fair value losses associated with financial instruments carried at fair value, partially offset by a decrease in net fair value losses associated with derivatives eligible not serving as a hedge.

As of June 30, 2021, total assets were $54.2 billion, a decrease of $14.4 billion from $68.6 billion as of December 31, 2020. Advances decreased by 6, $8 billion, to $24.2 billion as of June 30, 2021, from $31.0 billion as of December 31 many members maintained large deposit and cash balances due to the continued impact of the COVID pandemic -19 on the economy and financial markets, including government intervention. In addition, total investments decreased by $6.8 billion to $28.4 billion as of June 30, 2021, from $35.2 billion as of December 31, 2020. Most of the Lower investments reflected a reduction in US Treasury securities and securities purchased under resale agreements, which was partially offset by an increase in fed funds sold as the Bank continued to manage its liquidity. Mortgage-backed securities (MBS) also contributed to the $1.5 billion decline in investments.

Accumulated other comprehensive income (AOCI) increased $164 million during the second quarter of 2021 to $394 million as of June 30, 2021 from $230 million as of December 31, 2020. The increase in AOCI during the second quarter of 2021 primarily reflects higher fair values ​​of MBS classified as available-for-sale.

As of June 30, 2021, the Bank was in compliance with all of its regulatory capital requirements. The Bank’s total regulatory capital ratio was 11.1%, exceeding the requirement of 4.0%. The Bank had $6.0 billion in permanent capital, exceeding its risk-based capital requirement by $1.1 billion. Total retained earnings as of June 30, 2021 was $3.8 billion.

Today, the Bank’s Board of Directors declared a quarterly cash dividend on outstanding capital stock during the second quarter of 2021 at an annualized rate of 6.00%. The quarterly dividend rate is consistent with the Bank’s dividend philosophy which strives to pay a quarterly dividend at a rate of between 5% and 7% annualized. The quarterly dividend will total $35 million. The Bank expects to pay the dividend on August 10, 2021.

Financial Highlights
(Unaudited)
(in millions of dollars)

Selected balance sheet items
at the end of the period
June 30, 2021 December 31, 2020
Total assets $ 54,244 $ 68,634
Advances 24,194 30,796
Mortgages held for the portfolio, net 1,301 1,935
Investments, net1 28,403 35,228
Consolidated bonds:
Obligations 28,839 44,408
Discount Notes 17,598 16,213
Capital stock – Class B – Putable 2,269 2,284
Unrestricted unrestricted earnings 3,004 2,919
Restricted retained earnings 761 761
Accumulated other comprehensive income 394 230
total capital 6,428 6,194
Other data selected at the end of the period June 30, 2021 December 31, 2020
Regulatory capital ratio2 11.13 % 8.69 %
Three months completed Semester completed
Selected operating results for the period June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net interest income $ 125 $ 142 $ 283 $ 191
Provision for/(Reversal of) credit losses (2 ) (7 ) (8 ) 32
Other income/(loss) (26 ) (9 ) (47 ) 9
Other expenses 39 43 78 79
Affordable Housing Program Evaluation 7 9 17 9
Net income/(loss) $ 55 $ 88 $ 149 $ 80
Three months completed Semester completed
Other data selected for the period June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net interest margin3 0.88 % 0.51 % 0.96 % 0.35 %
Operating expenses as a percentage of average assets 0.25 0.13 0.24 0.13
Average return on assets 0.38 0.32 0.50 0.15
return on average equity 3.45 5.66 4.72 2.47
Annualized dividend rate4 6.00 5.00 5.47 5.99
Average equity/average assets ratio 11.07 5.64 10.52 5.86
  1. Investments consist of fed funds sold, interest-bearing deposits, trading securities, available-for-sale securities, held-to-maturity securities and securities purchased under resale agreements.
  2. This ratio is calculated as regulatory capital divided by total assets. Regulatory capital includes retained earnings, Class B share capital and mandatorily redeemable share capital (which is classified as a liability), but excludes accumulated other comprehensive income/(loss). Total regulatory capital as of June 30, 2021 was $6.0 billion.
  3. Net interest margin is net interest income (annualized) divided by average interest-earning assets.
  4. Cash dividend declared, recorded and paid during the period on outstanding share capital during the previous quarter.

Federal Home Loan Bank of San Francisco
The Federal Home Loan Bank of San Francisco is a member-driven cooperative that helps local lenders in Arizona, California and Nevada build strong communities, create opportunity and change lives for the better. The tools and resources we provide to our member financial institutions (commercial banks, credit unions, industrial loan companies, thrifts, insurance companies and community development financial institutions) promote home ownership, expand access to quality housing, start or sustain small businesses, and revitalize entire neighborhoods. Together with our members and other partners, we make the communities we serve more vibrant and resilient.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to the Bank’s dividend philosophy and dividend rates. These statements are based on our current expectations and speak only as of the date hereof. These statements may use forward-looking words, such as “endeavour”, “will” and “expect”, or their negatives or other variations of these terms. The Bank cautions that, by their nature, forward-looking statements involve risks or uncertainties that actual results could differ materially from those expressed or implied by such forward-looking statements or could affect the extent to which any objective, projection , an estimate or prediction is made, including future dividends. These forward-looking statements involve risks and uncertainties, including, but not limited to, the application of accounting standards relating to, among other things, the amortization of discounts and premiums on financial assets, financial liabilities and certain fair value gains and losses; hedge accounting of derivatives and underlying financial instruments; fair values ​​of financial instruments, including marketable securities and derivatives; future operating results; provision for credit losses; and the impact of the COVID-19 pandemic. We undertake no obligation to publicly revise or update any forward-looking statements for any reason.

Contact:
Marie Long, (415) 616-2556
[email protected]

Bernadine J. Perkins