CINCINNATI, July 29,
2024 /PRNewswire/ -- The Federal Home Loan Bank of
Cincinnati (the FHLB) today
released unaudited financial results for the second quarter ended
June 30, 2024.
Overview
Throughout the first six months of
2024, the FHLB successfully delivered on its dual
mission of providing access to ongoing liquidity funding to member
financial institutions and expanding support for affordable housing
and community investment. The FHLB also maintained strong
profitability, which enabled it to bolster capital adequacy by
increasing retained earnings, to pay a competitive dividend rate to
stockholders, and to make meaningful contributions to affordable
housing. Overall, the FHLB contributed $64
million to support affordable housing and community
investment needs in the first six months of
2024. Specifically, $32
million was allocated to the required Affordable Housing
Program (AHP) and $32 million was
provided through the FHLB's voluntary housing programs. The FHLB
recognizes that funding in addition to the required 10 percent
statutory AHP assessment is beneficial to affordable housing and
community investment and has voluntarily committed to increase its
support by 50 percent above the statutory AHP level
for 2024.
Operating Results
- For the second quarter, net income was $144 million and return on average equity (ROE)
was 9.05 percent. This compares to net income of $218 million and ROE of 10.71 percent for the
same period of 2023. For the first six months of 2024, net income
was $290 million and ROE was 9.17
percent, compared to net income of $345
million and ROE of 9.53 percent for the same period of
2023.
- The primary driver of the lower net income was net market value
changes related to interest rate swaps and associated financial
instruments carried at fair value. The net market value changes
resulted in net losses in the three and six months ended
June 30, 2024 compared to net gains
in the three and six months ended June 30,
2023. Additionally, in the three-months comparison period,
net income decreased due to lower average Advance balances as well
as lower average capital stock balances, which reduced the earnings
generated from investing the FHLB's capital. Average Advance and
capital stock balances were elevated during the second quarter of
2023 due to member demand for Advances given the turmoil in the
banking industry and financial markets.
Financial Condition Highlights
- Total assets at June 30, 2024
were $124.5 billion, an increase of
$0.5 billion (less than one 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
$134.2 billion at June 30, 2024, an increase of $6.4 billion (five percent) from year-end 2023.
The growth in Mission Assets and Activities from year-end 2023 was
driven primarily by an increase in Advances as members continue to
have a steady demand for liquidity. 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 June 30,
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 $18.6 billion of mortgage-backed securities (MBS)
issued by Fannie Mae, Freddie Mac or Ginnie
Mae and $19.3 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 June 30, 2024, GAAP
capital was $6.5 billion, an increase
of $0.1 billion (one percent) from
year-end 2023. The GAAP and regulatory capital-to-assets ratios
were 5.22 percent and 5.25 percent, respectively, at June 30, 2024. Retained earnings were
$1.7 billion at June 30, 2024, an increase of four percent from
year-end 2023.
Dividend
- The FHLB paid its stockholders a cash dividend on June 20, 2024 at a 9.00 percent annualized rate,
which was 3.68 percentage points above the second quarter average
Secured Overnight Financing Rate.
Housing and Community Investment
- Statutory AHP Assessments. The FHLB is required to
annually set aside 10 percent 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 six months of 2024
resulted in an accrual of $32 million
to the AHP pool of funds available. The AHP consists of a
competitive program, which supports the creation and preservation
of affordable housing and a homeownership program called Welcome
Home, which assists homebuyers with down payments and closing
costs.
- Voluntary Housing Contributions. The FHLB's Board of
Directors also affirmed its commitment to affordable housing by
approving voluntary housing contributions of $38 million for 2024, of which $32 million has been contributed in the first six
months of 2024. These funds are in addition to the required AHP
contributions.
- The Carol M. Peterson (CMP) Housing Fund received contributions
of nearly $15 million during the
first six 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 $16
million voluntary contribution in order to help fulfill a
record number of requests during the first six months of 2024.
- The Rise Up program received contributions of $1 million during the first six months of 2024.
This program offers grants of $25,000
for down payment, closing cost, and principal reduction assistance
for first-generation homebuyers who are looking to purchase their
first home in Franklin County,
Ohio.
The FHLB expects to file its second quarter 2024 Form 10-Q with
the Securities and Exchange Commission on or about August 8,
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
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Percent Change
(2)
|
Total assets
|
$ 124,533
|
|
$ 123,996
|
|
— %
|
Advances
(principal)
|
79,229
|
|
73,638
|
|
8
|
Mortgage loans held for
portfolio (principal)
|
7,043
|
|
6,960
|
|
1
|
Total
investments
|
37,866
|
|
42,641
|
|
(11)
|
Consolidated
Obligations
|
115,599
|
|
115,447
|
|
—
|
Mandatorily redeemable
capital stock
|
15
|
|
17
|
|
(13)
|
Capital
stock
|
4,791
|
|
4,846
|
|
(1)
|
Total retained
earnings
|
1,733
|
|
1,658
|
|
4
|
Total
capital
|
6,499
|
|
6,427
|
|
1
|
Regulatory capital
(1)
|
6,539
|
|
6,521
|
|
—
|
|
|
|
|
|
|
Capital-to-assets ratio
(GAAP)
|
5.22 %
|
|
5.18 %
|
|
|
Capital-to-assets ratio
(Regulatory) (1)
|
5.25
|
|
5.26
|
|
|
OPERATING
RESULTS
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
Percent
Change (2)
|
|
2024
|
|
2023
|
|
Percent
Change (2)
|
Total interest
income
|
$
1,673
|
|
$
2,114
|
|
(21)
|
%
|
|
$
3,342
|
|
$
3,496
|
|
(4)
|
%
|
Total interest
expense
|
1,472
|
|
1,867
|
|
(21)
|
|
|
2,940
|
|
3,069
|
|
(4)
|
|
Net interest
income
|
201
|
|
247
|
|
(19)
|
|
|
402
|
|
427
|
|
(6)
|
|
Non-interest income
(loss)
|
5
|
|
37
|
|
(87)
|
|
|
12
|
|
26
|
|
(54)
|
|
Non-interest
expense
|
46
|
|
42
|
|
10
|
|
|
92
|
|
70
|
|
31
|
|
Affordable Housing
Program assessments
|
16
|
|
24
|
|
(34)
|
|
|
32
|
|
38
|
|
(16)
|
|
Net income
|
$ 144
|
|
$ 218
|
|
(34)
|
|
|
$ 290
|
|
$ 345
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity
|
9.05 %
|
|
10.71 %
|
|
|
|
|
9.17 %
|
|
9.53 %
|
|
|
|
Return on average
assets
|
0.47
|
|
0.52
|
|
|
|
|
0.47
|
|
0.48
|
|
|
|
Annualized dividend
rate
|
9.00
|
|
7.25
|
|
|
|
|
9.00
|
|
6.62
|
|
|
|
|
|
(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