FHLBank Boston Announces 2022 Third Quarter Results and Dividend

The Bank's board of directors has declared a dividend equal to an annual yield of 5.16%, the daily average of the Secured Overnight Financing Rate for the third quarter of 2022 plus 300 basis points. The dividend, based on average stock outstanding for the third quarter of 2022, will be paid on November 2, 2022. As always, dividends remain at the discretion of the board.

"Earnings were strong in the third quarter due to a sustained increase in the demand for advances by members and an overall increase in rates,” said President and CEO Timothy J. Barrett. “FHLBank Boston’s balance sheet growth reflects increased engagement with all our members to help meet their evolving liquidity and funding needs especially given the challenges posed by higher interest rates and uncertain economic conditions. We are pleased that our strong net income bolsters our ability to support the critical Affordable Housing Program our members rely upon to support housing development throughout New England."

The Bank’s overall results of operations are influenced by the economy, financial markets and, in particular, by members' demand for advances. During the third quarter of 2022, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to between 300 and 325 basis points and signaled its intentions to raise the target range further. Long term rates and rate volatility rose sharply during the quarter reflecting concerns over high inflation and economic uncertainty. Additionally, the Bank experienced a continuing increase in demand for advances from our members during the quarter ended September 30, 2022.

Net income for the quarter ending September 30, 2022, was $60.0 million, compared with net income of $16.5 million for the same period in 2021, primarily the result of a $32.0 million increase in net interest income after provision for credit losses and a decrease of $11.2 million in net losses on trading securities. These results led to a $6.7 million statutory contribution to the Bank's Affordable Housing Program for the quarter.

Net interest income after provision for credit losses for the three months ended September 30, 2022, was $83.1 million, compared with $51.1 million for the same period in 2021. The $32.0 million increase in net interest income after provision for credit losses was driven by growth in our advances and investments portfolios, growth in capital, as well as an increase in yields in the quarter ended September 30, 2022 resulting from higher market interest rates. Net interest spread was 0.41% for the quarter ended September 30, 2022, a decrease of 15 basis points from the same period in 2021, and net interest margin was 0.58%, unchanged from the same period in 2021.

Total assets increased $26.3 billion, or 80.9%, to $58.9 billion at September 30, 2022, up from $32.5 billion at year-end 2021. During the nine months ended September 30, 2022, advances increased $21.3 billion, or 172.8%, to $33.7 billion, compared with $12.3 billion at year-end 2021. The significant increase in advances was concentrated in variable-rate advances and short-term fixed-rate advances, reflecting rising demand for wholesale funding at member institutions.

Total investments were $21.7 billion at September 30, 2022, up from $16.4 billion at December 31, 2021, with most of the increase concentrated in short term investments that support liquidity needs resulting from higher demand for advances. Investments in mortgage loans totaled $2.8 billion at September 30, 2022, a decrease of $299.5 million from year-end 2021 as paydowns continued to outpace new purchases in a challenging mortgage refinance market.

GAAP capital at September 30, 2022, was $3.1 billion, an increase of $598.5 million from $2.5 billion at year-end 2021. During the first nine months of 2022, capital stock increased by $764.1 million, primarily attributable to the increase in advances. Total retained earnings grew to $1.7 billion at September 30, 2022, an increase of $107.4 million, or 6.9%, from December 31, 2021. Of this amount, restricted retained earnings(1) totaled $388.6 million at September 30, 2022. During the quarter ended September 30, 2022, the Bank contributed $12.0 million of third quarter 2022 net income to restricted retained earnings. Accumulated other comprehensive loss totaled $244.1 million at September 30, 2022, a decrease of $273.0 million, from accumulated other comprehensive income of $29.0 million at December 31, 2021, mainly attributable to declines in value of available-for-sale investment securities as interest rates rose sharply during the first nine months of 2022.

The Bank was in compliance with all regulatory capital ratios at September 30, 2022, 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 June 30, 2022.

To read the entire release, go here.