FHLB CINCINNATI ANNOUNCES THIRD QUARTER 2024 RESULTS
CINCINNATI, Oct. 29, 2024 /PRNewswire/ -- The Federal Home Loan Bank of Cincinnati (the FHLB) today released unaudited financial results for the third quarter ended September 30, 2024.
Overview
Throughout the first nine 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 $89 million to support affordable housing and community investment needs in the first nine months of 2024. Specifically, $51 million was allocated to the required Affordable Housing Program (AHP) and $38 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 at least 50 percent above the statutory AHP level for 2024.
Operating Results
For the third quarter, net income was $164 million and return on average equity (ROE) was 10.01 percent. This compares to net income of $170 million and ROE of 10.16 percent for the same period of 2023. For the first nine months of 2024, net income was $454 million and ROE was 9.46 percent, compared to net income of $515 million and ROE of 9.73 percent for the same period of 2023.
The decreases in net income in the three- and nine-months comparison periods were due in part to lower spreads earned on mortgage loans held for portfolio and the increased voluntary housing contributions noted above. Additionally, in the nine-months comparison period, net income was lower due to net market value changes related to interest rate swaps and associated financial instruments carried at fair value. These net market value changes resulted in net losses in the nine months ended September 30, 2024 compared to net gains in the nine months ended September 30, 2023.
Financial Condition Highlights
Total assets at September 30, 2024 were $127.8 billion, an increase of $3.8 billion (three 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 $134.8 billion at September 30, 2024, an increase of $7.0 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 September 30, 2024 were $39.8 billion, a decrease of $2.9 billion (seven percent) from year-end 2023, which was primarily driven by a decline in liquidity investments. Total investments included $19.2 billion of mortgage-backed securities (MBS) issued by Fannie Mae, Freddie Mac or Ginnie Mae and $20.6 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 September 30, 2024, GAAP capital was $6.6 billion, an increase of $0.2 billion (three percent) from year-end 2023. The GAAP and regulatory capital-to-assets ratios were 5.18 percent and 5.23 percent, respectively, at September 30, 2024. Retained earnings were $1.8 billion at September 30, 2024, an increase of eight percent from year-end 2023.
Dividend
The FHLB paid its stockholders a cash dividend on September 19, 2024 at a 9.00 percent annualized rate, which was 3.73 percentage points above the third 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. The FHLB's net income for the first nine months of 2024 resulted in an accrual of $51 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 total minimum voluntary housing contributions of $42 million for 2024, of which $38 million has been contributed in the first nine months of 2024. These funds are in addition to the required AHP contributions.
The Carol M. Peterson (CMP) Housing Fund was allocated over $15 million during the first nine 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 was funded through the required AHP allocation plus an additional $16 million voluntary contribution in order to help fulfill ...
