Federal Home Loan Bank Of Boston Announces 2024 First Quarter Results

The Federal Home Loan Bank of Boston announced its preliminary, unaudited first quarter financial results for 2024, reporting net income of $77.8 million for the quarter. The Bank expects to file its quarterly report on Form 10-Q for the quarter ending March 31, 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 8.40%, the daily average of the Secured Overnight Financing Rate for the first quarter of 2024 plus 300 basis points. The dividend, based on average stock outstanding for the first quarter of 2024, will be paid on May 2, 2024. As always, dividends remain at the discretion of the board.

“Higher interest rates and continued balance sheet strength led to a 36% increase in FHLBank Boston’s year-over-year net income in the first quarter,” said President and CEO Timothy J. Barrett. “The Bank was proud to set aside $11.0 million to support affordable housing development, down-payment assistance to income-eligible households, and low-cost loans for local small businesses throughout New England.”

First 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 first 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 became less 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 ending March 31, 2024, was $77.8 million, compared with net income of $57.2 million for the same period of 2023, primarily the result of an increase of $27.4 million in net interest income after provision for credit losses. These results led to an $8.7 million statutory contribution to the Bank’s Affordable Housing Program for the quarter. In addition, the Bank voluntarily contributed $2.3 million to our discretionary housing and community investment programs for the three months ending March 31, 2024.

Net interest income after provision for credit losses for the three months ended March 31, 2024, was $109.2 million, compared with $81.8 million for the same period in 2023. The $27.4 million increase in net interest income after provision for credit losses was primarily driven by growth in our average mortgage backed security portfolio and average mortgage loan portfolio, as well as an increase in yields in the quarter ended March 31, 2024, resulting from higher market interest rates compared to 2023. In addition, there was a $12.4 million favorable variance in net unrealized gains and losses on fair value hedge ineffectiveness attributable to an increase in intermediate-term interest rates during the quarter ended March 31, 2024, compared to a decrease in interest rates during the same period in 2023.

Net interest spread was 0.31% for the three months ended March 31, 2024, an increase of 14 basis points from the same period in 2023, and net interest margin was 0.67%, an increase of 20 basis points from the three months ended March 31, 2023. The increase in net interest spread and margin was primarily attributable to the favorable variance in net unrealized gains and losses on fair value hedge ineffectiveness and to net accretion of MBS premium. In addition, the increase in net interest margin benefited from higher market interest rates.

March 31, 2024 Balance-Sheet Highlights

Total assets decreased $1.1 billion, or 1.7%, to $66.0 billion at March 31, 2024, down from $67.1 billion at year-end 2023. Advances were $39.9 billion at March 31, 2024, a decrease of $2.1 billion, or 4.9%, from $42.0 billion at December 31, 2023. Total investments were $22.3 billion at March 31, 2024, an increase of $1.1 billion from $21.2 billion at the prior year end and mortgage loans totaled $3.1 billion at March 31, 2024, an increase of $87.1 million from year-end 2023 as mortgage sales to the Bank increased.

GAAP capital at March 31, 2024, was $3.6 billion, an increase of $28.7 million from $3.5 billion at year-end 2023. During 2024, capital stock decreased by $59.4 million, primarily attributable to the decrease in advances. Total retained earnings grew to $1.8 billion during 2024, an increase of $36.4 million, or 2.0%, from December 31, 2023. Of this amount, restricted retained earnings totaled $466.7 million at March 31, 2024. Accumulated other comprehensive loss totaled $242.9 million at March 31, 2024, an improvement of $51.6 million from accumulated other comprehensive loss as of December 31, 2023.

The Bank was in compliance with all regulatory capital ratios at March 31, 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 December 31, 2023.(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.