FOR IMMEDIATE RELEASE
FEDERAL HOME LOAN BANK OF BOSTON ANNOUNCES 2018
SECOND QUARTER RESULTS, DECLARES DIVIDEND
BOSTON (July 26, 2018) - The Federal Home Loan Bank of Boston announced its preliminary, unaudited second quarter financial results for 2018, reporting net income of $53.3 million for the quarter. The Bank expects to file its quarterly report on Form 10-Q for the quarter ending June 30, 2018, with the U.S. Securities and Exchange Commission next month.
The Bank's board of directors also declared a dividend equal to an annual yield of 5.87 percent, the approximate daily average three-month LIBOR yield for the second quarter of 2018 plus 350 basis points. The dividend, based on average stock outstanding for the second quarter of 2018, will be paid on August 2, 2018. The board expects to follow this formula for declaring cash dividends through 2018, though a quarterly loss or a significant, adverse event or trend could cause a dividend to be suspended or reduced.
“The Bank continued its steady performance in the second quarter, recording strong net income and increased net interest income and net interest spread over the prior year,” said President and Chief Executive Officer Edward A. Hjerpe III. “The balance sheet of the Bank remains strong with increased total assets and advances, allowing the continued payment of an attractive dividend of three-month LIBOR plus 350 basis points.”
Second Quarter 2018 Operating Highlights
Net income for the quarter ending June 30, 2018, was $53.3 million, compared with net income of $39.4 million for the same period in 2017. The improvement in net income for the quarter was primarily due to a $14.8 million increase in net interest income after provision for credit losses. These results led to a $6.0 million contribution to the Bank's Affordable Housing Program for the quarter.
Net interest income after provision for credit losses for the quarter ending June 30, 2018, was $78.8 million, compared with $63.9 million for the same period in 2017. The $14.8 million improvement was mainly a result of a higher interest rate environment, which enabled the Bank to earn higher income on capital, as well as a higher net interest spread; and a $2.5 billion increase in average earning assets. Included in net interest income after provision for credit losses is accretion of significant improvement in projected cash flows(1) associated with previously impaired private-label mortgage backed securities, which totaled $8.2 million in the second quarter of 2018, compared to $8.5 million in the second quarter of 2017.
Net interest spread was 0.39 percent for the quarter ending June 30, 2018, a three basis point increase from the same period in 2017, and net interest margin was 0.51 percent, an eight basis point increase from the same period in 2017. The increase in net interest spread reflects a 75 basis point increase in the average yield on earning assets and a 72 basis point increase in the average yield on interest-bearing liabilities. The expansion of net interest spread and net interest margin was primarily attributable to higher interest rates
The following information was filed by Federal Home Loan Bank Of Boston on Thursday, July 26, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.