Federal Home Loan Bank Of Cincinnati 10-Q Quarterly Report August 2021

Cincinnati, Ohio – The Federal Home Loan Bank of Cincinnati (the FHLB) today released unaudited financial results for the second quarter ended June 30, 2021.

Operating Results

▪Three-Months Comparison: For the three months ended June 30, 2021, net income was $0.3 million and return on average equity (ROE) was 0.03 percent. This compares to net income of $99 million and ROE of 7.12 percent for the same period of 2020. The decline in profitability in the second quarter of 2021 compared to the same period of 2020 was primarily driven by:

▪Advances. Average Advance balances declined 59 percent. Although Advances grew significantly during the onset of the COVID-19 pandemic as members sought additional liquidity, balances subsequently fell in 2020 and have remained low due to increased liquidity in the financial markets and increased deposit levels at member institutions. Additionally, Advance prepayment fees were lower due to a higher amount of member prepayments of Advances in the first half of 2020 as interest rates declined.

▪Mortgage Assets. The spreads earned on mortgage assets declined due to the accelerated payoff of higher-yielding mortgages at a faster pace than the associated debt funding them. The historically low long-term interest rates led to prepayments occurring faster than the purchases of new mortgage assets, which also resulted in the average balances of mortgage assets declining 30 percent.

▪Fair Value Adjustments. Unrealized losses on derivatives and instruments held at fair value were higher in the second quarter of 2021 in response to changes in interest rates.

▪Six-Months Comparison: For the first six months of 2021, net income was $19 million and ROE was 0.97 percent, compared to net income of $179 million and ROE of 7.04 percent for the same period of 2020. The decline in profitability in the first six months of 2021 compared to the same period of 2020 was primarily driven by the Advances and mortgage assets factors noted for the three-months comparison as well as the following:

▪Sales of Swaptions. The FHLB sold interest rate swaptions in the first quarter of 2020 in response to changes in interest rates, which resulted in net realized gains of approximately $69 million before assessments. The FHLB did not sell any interest rate swaptions in the first six months of 2021. Swaptions are used to hedge market risk exposure associated with holding fixed-rate mortgage assets and may be sold to offset the risk incurred due to changes in interest rates.

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The following information was filed by Federal Home Loan Bank Of Cincinnati on Thursday, July 29, 2021 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.

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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Federal Home Loan Bank Of Cincinnati provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32: Section 1350 Certification

CIK: 1326771
Form Type: 10-Q Quarterly Report
Accession Number: 0001326771-21-000087
Submitted to the SEC: Thu Aug 05 2021 1:51:55 PM EST
Accepted by the SEC: Thu Aug 05 2021
Period: Wednesday, June 30, 2021
Industry: Federal And Federally Sponsored Credit Agencies

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Federal Home Loan Bank Of Cincinnati (1326771) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, June 30, 2021

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