Federal Home Loan Bank of San Francisco Announces Annual and Quarterly Operating Results
SAN FRANCISCO, February 21, 2018 — The Federal Home Loan Bank of San Francisco today announced its 2017 operating results. Net income for 2017 was $376 million, compared with net income of $712 million for 2016. Net income for the fourth quarter of 2017 was $67 million, compared with net income of $127 million for the fourth quarter of 2016.
The $336 million decrease in net income for 2017 primarily reflected a $391 million decrease in gains on settlements relating to the Bank's private-label residential mortgage-backed securities (PLRMBS) litigation. The decrease in net income also reflected voluntary charitable contributions of $60 million made by the Bank during 2017 for the Quality Jobs Fund, a donor-advised fund established to support quality job growth and small business expansion, as well as voluntary contributions of $7 million to the Affordable Housing Program (AHP) to offset the impact on the AHP assessment of the expense related to the charitable contributions.
The $60 million decrease in net income for the fourth quarter of 2017 primarily reflected gains on settlements of $59 million (after netting certain legal fees and expenses) in the prior-year period relating to the Bank's PLRMBS litigation. The decrease in net income also reflected a voluntary charitable contribution of $10 million made by the Bank during the fourth quarter of 2017 for the Quality Jobs Fund, as well as a voluntary contribution of $1 million to the AHP to offset the impact on the AHP assessment of the expense related to the charitable contribution.
The $96 million increase in net interest income for 2017 and the $35 million increase in net interest income for the fourth quarter of 2017 relative to the prior-year periods reflected higher average balances of interest-earning assets, combined with higher spreads on those assets, and lower dividends paid on mandatorily redeemable capital stock, which are classified as interest expense.
During 2017, total assets increased $31.5 billion, to $123.4 billion at December 31, 2017, from $91.9 billion at December 31, 2016, primarily reflecting an increase in period end advance balances, which increased to $77.4 billion at December 31, 2017, from $49.8 billion at December 31, 2016. In addition, investments increased $2.6 billion, to $43.6 billion at December 31, 2017, from $41.0 billion at December 31, 2016, primarily reflecting an increase in Federal funds sold.
Accumulated other comprehensive income increased by $207 million during 2017, to $318 million at December 31, 2017, from $111 million at December 31, 2016, primarily as a result of improvement in the fair value of PLRMBS classified as available-for-sale.
As of December 31, 2017, the Bank was in compliance with all of its regulatory capital requirements. The Bank’s total regulatory capital ratio was 5.5%, exceeding the 4.0% requirement. The Bank had $6.8 billion in permanent capital, exceeding its risk-based capital requirement of $2.0 billion. Total retained earnings as of December 31, 2017, were $3.2 billion.
Today, the Bank’s Board of Directors declared a quarterly cash dividend on the capital stock outstanding during the fourth quarter of 2017 at an annualized rate of 7.00%. The quarterly dividend rate is consistent with the Bank's dividend philosophy of endeavoring to pay a quarterly dividend at a rate between 5% and 7% annualized. The quarterly dividend will total $59 million, including $6 million in dividends on mandatorily redeemable capital stock that will be reflected as interest expense in the first quarter of 2018. The Bank expects to pay the dividend on March 15, 2018.
The following information was filed by Federal Home Loan Bank Of San Francisco on Thursday, February 22, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.