A decrease in litigation settlement income impacted the Federal Home Loan Bank of Boston’s bottom line in the fourth quarter.
The bank posted net income of $34.5 million for the quarter and $149.8 million for the year ended Dec. 31, 2014, compared with $85.3 million and $212.3 million for the corresponding periods in 2013. The bank attributed the year-over-year declines to decreases in litigation settlement income and net prepayment fees.
The bank’s board of directors also declared a dividend equal to an annual yield of 1.74 percent, the approximate daily average three-month LIBOR yield for the fourth quarter of 2014 plus 150 basis points. That dividend, based on average stock outstanding for the fourth quarter of 2014, will be paid on March 3. The board expects to follow this formula for declaring cash dividends through 2015, though a quarterly loss or a significant, adverse event or trend would cause a dividend to be suspended.
"Over the course of 2014, the bank’s advances grew by $6 billion, or 22 percent," President and CEO Edward A. Hjerpe III said in a statement. "Our strengthened balance sheet has led to a greater dividend for members and the recent rescission of the excess stock repurchase moratorium."
Net interest income after provision for credit losses totaled $57.3 million in the quarter, compared with $60.2 million during the same period in 2013. The bank attributed the $2.8 million decrease to a $1.1 million decline in prepayment fees and a 13 basis point narrowing of its net interest spread. The results lead the bank to contribute $4 million to its Affordable Housing Program during the fourth quarter.
Average earning assets increased $12.2 billion, or about 30 percent, year-over-year to $52.5 billion in the fourth quarter, driven by a $7.1 billion increase in average advances balance and a $5.1 billion increase in investments balances. The bank specified in a statement that growth in those asset categories was concentrated mostly in low-margin, short-term maturities.
Total assets increased $10.5 billion to $55.1 billion at year-end 2014 from $44.6 billion at year-end 2013. Total investments increased $3.9 billion, or 30 percent, to $16.9 billion at the year’s end. That increase was concentrated in short-term money-market investments, which increased $3.2 million, and MBS, which increased $1.5 billion over the year.
Investments in mortgage loans totaled $3.5 billion at Dec. 31, an increase of $115.5 million from year-end 2013.
