FHLBank Boston Announces 2025 Fourth Quarter and Annual Results
The Federal Home Loan Bank of Boston announced its preliminary, unaudited fourth quarter and annual financial results for 2025, reporting net income of $56.6 million for the quarter and $226.6 million for the year. The Bank expects to file its annual report on Form 10-K for the year ending December 31, 2025, with the U.S. Securities and Exchange Commission next month.
Financial Results
The Bank’s board of directors declared a dividend equal to an annual yield of 7.05%, the daily average of the Secured Overnight Financing Rate for the fourth quarter of 2025 plus 300 basis points. The dividend, based on average stock outstanding for the fourth quarter of 2025, will be paid on March 3, 2026. As always, dividends remain at the discretion of the board.
“The Bank’s financial performance in 2025 was strong. Member engagement grew while the Bank maintained strong capital and liquidity levels. Interest rates dropped over the year resulting in a reduction in net interest income as expected. We maintained our commitment to providing reliable liquidity and wholesale funding to our financial institution members and ensured that their communities benefited from our housing and community investment programs,” said President and CEO Timothy J. Barrett. “We were proud to contribute $32.6 million to the Affordable Housing Program in 2025, as well as an additional $31.4 million to our discretionary housing and community investment programs, which support affordable housing, affordable homeownership, and small businesses across New England.”
Fourth Quarter 2025 Operating Highlights
The Bank’s overall results of operations are influenced by the economy, interest rates and members’ demand for advances. During the fourth quarter of 2025, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate from a range of 400 to 425 basis points to a range of 350 to 375 basis points. As a result, the yield curve steepened during the quarter, reflecting declines in short-term interest rates while intermediate-term interest rates and long-term interest rates were relatively stable.
Net income decreased $25.5 million to $56.6 million for the quarter ended December 31, 2025, from $82.1 million for the same period of 2024. The decrease in net income was primarily due to a decrease of $40.0 million in net interest income after provision for credit losses, partially offset by a decrease of $8.8 million in discretionary housing and community investment programs(1) expense and voluntary affordable housing program contributions. These results led to a $6.3 million statutory contribution to the Bank’s Affordable Housing Program for the quarter.
Net interest income after provision for credit losses for the quarter ended December 31, 2025, was $85.6 million, compared with $125.6 million for the corresponding period in 2024. The $40.0 million decrease in net interest income after provision for credit losses was primarily driven by the following factors: a $5.4 billion decrease in average advances; a $63.8 million decrease in average capital; a $9.1 million unfavorable variance in net unrealized gains and losses on fair value hedge ineffectiveness as intermediate-term rates changed less in the fourth quarter of 2025 than they did during the same quarter one year ago; and the decrease in the average short-term interest rates during the quarter. Partially offsetting these decreases to net interest income after provision for credit losses was an increase of $687.1 million in average mortgage-backed securities and a $614.5 million increase in average mortgage loans.
Net interest spread was 0.24% for the three months ended December 31, 2025, a decrease of 16 basis points from the same period in 2024, and net interest margin was 0.49%, a decrease of 21 basis points from the three months ended December 31, 2024. The decreases in net interest spread and margin were primarily attributable to the decrease in net interest income after provision for credit losses discussed above.
December 31, 2025 Balance-Sheet Highlights
Total assets decreased $3.2 billion, or 4.4%, to $68.8 billion at December 31, 2025, down from $72.0 billion at year-end 2024. Advances totaled $38.8 billion at December 31, 2025, a decrease of $6.4 billion from year-end 2024. Total investments were $25.2 billion at December 31, 2025, an increase of $2.7 billion from $22.5 billion at the prior year end, driven primarily by growth in low-yielding short-term money market instruments held on our balance sheet to manage our liquidity position, and a $697.6 million increase in mortgage-backed securities. Mortgage loans totaled $4.3 billion at December 31, 2025, an increase of $606.6 million from year-end 2024 as mortgage sales to the Bank increased.
Total capital at December 31, 2025, was $3.8 billion, a decrease of $73.5 million from $3.9 billion at year-end 2024. During 2025, capital stock decreased by $258.6 million, primarily attributable to the decrease in advances. Total retained earnings grew to $2.0 billion during 2025, an increase of $63.3 million, or 3.3%, from December 31, 2024. Of this amount, restricted retained earnings totaled $554.6 million at December 31, 2025. Accumulated other comprehensive loss totaled $133.3 million at December 31, 2025, an improvement of $121.7 million from accumulated other comprehensive loss as of December 31, 2024.
The Bank was in compliance with all regulatory capital ratios at December 31, 2025, and based on the most recent information available was classified “adequately capitalized” by its regulator, the Federal Housing Finance Agency, at September 30, 2025.
2025 Annual Operating Highlights
Net income decreased $63.9 million to $226.6 million for the year ended December 31, 2025, from $290.5 million for 2024. The decrease in net income was primarily due to a decrease of $56.2 million in net interest income after provision for credit losses, and an increase of $11.1 million in discretionary housing and community investment programs(1) expense and voluntary affordable housing program contributions. These results led to a $25.2 million statutory contribution to the Bank’s Affordable Housing Program for the year. The Bank made a $31.4 million contribution to our discretionary housing and community investment programs, and a voluntary contribution of $7.4 million to the Affordable Housing Program for the year ended December 31, 2025.
Net interest income after provision for credit losses for the year ended December 31, 2025, was $377.1 million, compared with $433.3 million for 2024. The $56.2 million decrease in net interest income after provision for credit losses was primarily driven by lower short-term interest rates, partially offset by increases of $2.0 billion, $710.4 million and $609.4 million in our average advances, average mortgage-backed securities, and average mortgage loan portfolios, respectively.
Net interest spread was 0.24% for the year ended December 31, 2025, a decrease of five basis points from 2024, and net interest margin was 0.50%, a decrease of 13 basis points from the year ended December 31, 2024. The decrease in net interest spread and margin was primarily attributable to the decrease in net interest income after provision for credit losses discussed above.
