CINCINNATI, April 29,
2024 /PRNewswire/ -- The Federal Home Loan Bank of
Cincinnati (the FHLB) today
released unaudited financial results for the first quarter ended
March 31, 2024.
Overview
Throughout the first quarter of 2024, the FHLB successfully
delivered on its dual mission of providing access to critical
liquidity funding to member financial institutions and expanding
support for affordable housing and community investment. The FHLB
recognizes that funding in addition to the required 10 percent
statutory Affordable Housing Program (AHP) assessments is
beneficial to support affordable housing and community investment
needs. In the first quarter of 2024, $17
million was allocated to the required AHP and $16 million was provided to voluntary housing
programs. For 2024, the Board of Directors has committed to a
minimum of $38 million, or
approximately five percent of prior year income subject to
assessments, in voluntary housing contributions to support the
FHLB's Housing and Community Investment programs.
Operating Results
- For the first quarter, net income was $146 million and return on average equity (ROE)
was 9.30 percent. This compares to net income of $127 million and ROE of 8.03 percent for the same
period of 2023.
- Net income increased primarily because of higher average
interest rates, which increased the earnings generated from
investing the FHLB's capital, and higher spreads earned on
certain Advances driven by a shift in the composition of balances
from overnight to longer-term and floating rate products.
Additionally, net income increased because net losses due to
changes in market values on derivatives and related financial
instruments carried at fair value were lower in the first three
months of 2024 than the net losses in the same period of 2023.
Financial Condition Highlights
- Total assets at March 31, 2024
were $118.6 billion, a decrease of
$5.4 billion (four percent) from
year-end 2023.
- Mission Assets and Activities – comprising the major products
we offer to members including Advances, Letters of Credit
(off-balance sheet), and the Mortgage Purchase Program – were
$130.0 billion at March 31, 2024, an increase of $2.2 billion (two percent) from year-end 2023.
The growth in Mission Assets and Activities was driven primarily by
increases in Letters of Credit. Letters of Credit increased as
members continue to use them primarily to secure higher levels of
public unit deposits. The FHLB's business model is designed to
support significant changes in asset levels without having to
undergo material changes in staffing, operations, risk practices,
or general resource needs.
- Total investments at March 31,
2024 were $37.9 billion, a
decrease of $4.8 billion (11 percent)
from year-end 2023, which was primarily driven by a decline in
liquidity investments. Total investments included $18.9 billion of mortgage-backed securities (MBS)
issued by Fannie Mae, Freddie Mac or Ginnie
Mae and $19.0 billion of
liquidity investments. Liquidity investments can vary significantly
on a daily basis to support actual and anticipated borrowing needs
of members and in order to meet all current and anticipated
financial commitments.
- The FHLB exceeded all minimum regulatory capital and
liquidity requirements. On March 31, 2024, GAAP capital was
$6.3 billion, a decrease of
$0.1 billion (one percent) from
year-end 2023. The GAAP and regulatory capital-to-assets ratios
were 5.35 percent and 5.39 percent, respectively, at
March 31, 2024. Retained earnings were $1.7 billion at March 31, 2024, an increase
of two percent from year-end 2023.
Dividend
- The FHLB paid its stockholders a cash dividend on
March 21, 2024 at a 9.00 percent
annualized rate, which was 3.69 percentage points above the first
quarter average Secured Overnight Financing Rate.
Housing and Community Investment
- The FHLB is required to annually set aside a portion of
its profits for grants supporting affordable housing. These funds
assist members in serving very low-, low-, and moderate-income
households and community economic development. The FHLB's net
income for the first quarter of 2024 resulted in an accrual of
$17 million to the Affordable Housing
Program (AHP) pool of funds available. The AHP consists of a
competitive program and a homeownership program called Welcome
Home, which assists homebuyers with down payments and closing
costs.
- The FHLB's Board of Directors also affirmed its commitment
to affordable housing by approving voluntary housing contributions
of $16 million in the first three
months of 2024. These funds are in addition to the required AHP
contributions.
- The Carol M. Peterson (CMP) Housing Fund received
contributions of nearly $11 million
during the first three months of 2024. This program provides grants
to cover accessibility and emergency repairs for special needs and
elderly homeowners within the Fifth District.
- The Welcome Home program received funding through the
required AHP allocation plus an additional $5 million voluntary contribution in order to
help fulfill a record number of requests during the first three
months of 2024.
The FHLB expects to file its first quarter 2024 Form 10-Q with
the Securities and Exchange Commission on or about May 9,
2024.
About the FHLB
The FHLB is a AA+ rated wholesale cooperative bank owned by 610
member financial institutions, including commercial banks, thrifts,
credit unions, insurance companies and community development
financial institutions in Kentucky, Ohio and Tennessee. The FHLB provides members access to
products and services (primarily Advances, which are a readily
available, low-cost source of funds, purchases of certain mortgage
loans from members, and issuance of Letters of Credit to members)
and a competitive return through quarterly dividends on their
capital investment in the FHLB. The FHLB funds these products and
services by raising private-sector capital from member-stockholders
and, with the other Federal Home Loan Banks (FHLBanks) in the
FHLBank System, issuing high-quality debt in the global capital
markets. The FHLB also funds community investment programs that
help its members create affordable housing and promote community
economic development.
This news release may contain forward-looking statements that
are subject to risks and uncertainties that could affect the FHLB's
financial condition and results of operations. These include, but
are not limited to: the effects of economic, financial, and market
conditions; legislative or regulatory developments concerning the
FHLBank System; financial pressures affecting other FHLBanks;
pandemics; competitive forces; and other risks detailed from time
to time in the FHLB's annual report on Form 10-K and other filings
with the Securities and Exchange Commission. The forward-looking
statements speak as of the date made and are not guarantees of
future performance. Actual results or developments could differ
materially from the expectations expressed or implied in the
forward-looking statements, and the FHLB undertakes no obligation
to update any such statements.
Federal Home Loan
Bank of Cincinnati
Financial
Highlights (unaudited)
Dollars in
millions
SELECTED BALANCE
SHEET ITEMS
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Percent
Change (2)
|
Total assets
|
$ 118,594
|
|
$ 123,996
|
|
(4) %
|
Advances
(principal)
|
73,302
|
|
73,638
|
|
—
|
Mortgage loans held for
portfolio (principal)
|
7,023
|
|
6,960
|
|
1
|
Total
investments
|
37,872
|
|
42,641
|
|
(11)
|
Consolidated
Obligations
|
110,106
|
|
115,447
|
|
(5)
|
Mandatorily redeemable
capital stock
|
17
|
|
17
|
|
(2)
|
Capital
stock
|
4,679
|
|
4,846
|
|
(3)
|
Total retained
earnings
|
1,694
|
|
1,658
|
|
2
|
Total
capital
|
6,350
|
|
6,427
|
|
(1)
|
Regulatory capital
(1)
|
6,390
|
|
6,521
|
|
(2)
|
|
|
|
|
|
|
Capital-to-assets ratio
(GAAP)
|
5.35 %
|
|
5.18 %
|
|
|
Capital-to-assets ratio
(Regulatory) (1)
|
5.39
|
|
5.26
|
|
|
OPERATING
RESULTS
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Percent
Change (2)
|
Total interest
income
|
$
1,669
|
|
$
1,381
|
|
21
|
%
|
Total interest
expense
|
1,468
|
|
1,201
|
|
22
|
|
Net interest
income
|
201
|
|
180
|
|
11
|
|
Non-interest income
(loss)
|
7
|
|
(11)
|
|
172
|
|
Non-interest
expense
|
45
|
|
28
|
|
61
|
|
Affordable Housing
Program assessments
|
17
|
|
14
|
|
15
|
|
Net income
|
$ 146
|
|
$ 127
|
|
15
|
|
|
|
|
|
|
|
|
Return on average
equity
|
9.30 %
|
|
8.03 %
|
|
|
|
Return on average
assets
|
0.48
|
|
0.42
|
|
|
|
Annualized dividend
rate
|
9.00
|
|
6.00
|
|
|
|
(1)
|
Regulatory capital
includes capital stock, mandatorily redeemable capital stock
(classified as a liability) and retained earnings.
|
(2)
|
Amounts used to
calculate the percent change column are based on dollars in
thousands. Accordingly, recalculations based upon the disclosed
amounts (millions) may not produce the same results.
|
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SOURCE Federal Home Loan Bank of Cincinnati