Federal Home Loan Bank of San Francisco Announces Third Quarter 2020 Operating Results
SAN FRANCISCO, October 29, 2020 — The Federal Home Loan Bank of San Francisco (Bank) today announced that its net income for the third quarter of 2020 was $161 million, compared with net income of $61 million for the third quarter of 2019.
The $100 million increase in net income relative to the prior-year period primarily reflected the Bank's receipt of disgorgement proceeds in connection with a Securities and Exchange Commission enforcement action, in the amount of $85 million, in the third quarter of 2020. The increase also reflected a $35 million increase in net interest income, from $112 million for the third quarter of 2019 to $147 million for the third quarter of 2020. The increase in net interest income was primarily attributable to an increase of $25 million in net fair value gains on designated fair value hedges, from a loss of $11 million for the third quarter of 2019 to a gain of $14 million for the third quarter of 2020, as well as higher spreads on interest-earning assets. These gains were partially offset by an increase in net fair value losses associated with derivatives and financial instruments carried at fair value for the third quarter of 2020 and an $11 million increase in the Affordable Housing Program assessment, which reflected the increase in pre-assessment net income.
Total assets decreased $30.9 billion during the first nine months of 2020, to $75.9 billion at September 30, 2020, from $106.8 billion at December 31, 2019. Total advances decreased $27.7 billion, to $37.7 billion at September 30, 2020, from $65.4 billion at December 31, 2019. The decrease in advances primarily reflected reduced member liquidity needs related to the impact of the COVID-19 pandemic on the economy and on our members. In addition, investments decreased $2.4 billion, to $35.2 billion at September 30, 2020, from $37.6 billion at December 31, 2019.
Accumulated other comprehensive income/(loss) (AOCI) decreased by $138 million during the first nine months of 2020, to $136 million at September 30, 2020, from $274 million at December 31, 2019. The decrease in AOCI during the first nine months of 2020 primarily reflected lower fair values of mortgage-backed securities classified as available-for-sale.
As of September 30, 2020, the Bank was in compliance with all of its regulatory capital requirements. The Bank’s total regulatory capital ratio was 8.0%, exceeding the 4.0% requirement. The Bank had $6.1 billion in permanent capital, exceeding its risk-based capital requirement of $1.4 billion. Total retained earnings as of September 30, 2020, were $3.6 billion.
Today, the Bank’s Board of Directors declared a quarterly cash dividend on the capital stock outstanding during the third quarter of 2020 at an annualized rate of 5.00%. 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 $33 million, including a de minimis amount in dividends on mandatorily redeemable capital stock that will be reflected as interest expense in the fourth quarter of 2020. The Bank expects to pay the dividend on November 12, 2020. As a result of the COVID-19 pandemic and the measures taken to contain the spread of the virus, U.S. and global economies face great challenges and ongoing uncertainty. To preserve capital in this uncertain environment, the Bank’s Board of Directors has decided to pay a quarterly dividend rate at the low end of the range stated in the Bank's dividend philosophy.
The following information was filed by Federal Home Loan Bank Of San Francisco on Friday, October 30, 2020 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.