|FOR IMMEDIATE RELEASE|
FEDERAL HOME LOAN BANK OF BOSTON ANNOUNCES 2020
THIRD QUARTER RESULTS, DECLARES DIVIDEND
BOSTON (October 30, 2020) - The Federal Home Loan Bank of Boston announced its preliminary, unaudited third quarter results for 2020, reporting net income of $53.6 million for the quarter. The Bank expects to file its quarterly report on Form 10-Q for the quarter ending September 30, 2020, 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 3.76%, the approximate daily average three-month LIBOR yield for the third quarter of 2020 plus 350 basis points. The dividend, based on average stock outstanding for the third quarter of 2020, will be paid on November 3, 2020. As previously announced, the board is reevaluating the Bank’s dividend strategy for 2021, in light of the pending cessation of LIBOR as the Bank’s current dividend benchmark rate, as well as the ongoing financial challenges resulting from the COVID-19 pandemic, near-zero interest rates and significantly lower advances balances and their impact on the Bank’s current and projected earnings. As always, dividends remain at the discretion of the board.
“The Bank’s financial performance was steady in the third quarter with net income increasing from the second quarter due to a gain on the sale of legacy private-label mortgage-backed securities,” said President and Chief Executive Officer Edward A. Hjerpe III. “Near-zero interest rates, significantly reduced advances demand due to extremely high member liquidity, and an economic recession have negatively impacted earnings. The Bank continues to fulfill its mission of providing liquidity and funding, as well as support for affordable housing and economic development, while returning to its members an attractive dividend, through the current challenging environment.”
Economy, Financial Markets, and Operational Status
The COVID-19 pandemic, which began to affect businesses and the economy in March 2020, continues, and interest rates remain historically low.
Generally, investor demand for high credit quality, fixed-income investments, including the Federal Home Loan Banks' (FHLBanks') consolidated obligations, continued to be strong relative to other investments, and the Bank continued to meet its funding needs during this time. However, the spreads between the yields of FHLBanks' consolidated obligations and like-term U.S. Treasury securities widened and fixed-income market conditions became more challenging.
The Bank’s overall results of operations are influenced by the economy and financial markets and, in particular, by members' demand for advances and the Bank's ability to maintain sufficient access to funding at relatively favorable costs. The Bank’s flexibility in utilizing various funding tools, in combination with a diverse investor base and its status as a government-sponsored enterprise, have helped provide reliable market access and demand for consolidated obligations throughout fluctuating market environments and regulatory changes affecting dealers of and investors in consolidated obligations. However, depository member institutions continue to report significant demand for deposits, which has reduced demand for our advances and other forms of wholesale funding.
The following information was filed by Federal Home Loan Bank Of Boston 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.