The Federal Home Loan Bank of Boston (FHLB) saw its net income jump $6.5 million, or 13.8 percent, to $53.3 million for the first quarter of 2013, up from $46.8 million for the first quarter of 2012.
"As our balance sheet grows stronger each quarter, we are pleased to provide a stable return on our members’ investment," President and Chief Executive Officer Edward A. Hjerpe III said in a statement. "Above all, we remain focused on our members and the solutions we offer to help them keep their communities resilient in all business cycles."
The bank’s board of directors also declared a dividend equal to an annual yield of 0.4 percent. The dividend, based on average stock outstanding for the first quarter of 2013, will be paid on May 2. In declaring the dividend, the board reiterated that it anticipates that it will continue to declare modest cash dividends through 2013 consistent with this dividend declaration, although a quarterly loss or a significant adverse event or trend would cause a dividend to be suspended.
The bank’s improved first quarter results led it to contribute a $5.9 million to the bank’s Affordable Housing Program for the quarter. Additionally, the bank’s first quarter 2013 income was significantly increased by $14.6 million in net prepayment fees from advances and investments.
One contributor to the bank’s improved results was a reduction in impairment charges on certain private-label MBS held by the bank. The losses on those MBS were $421,000 for the first quarter of 2013, compared with the $3.0 million recorded for such charges in the first quarter of 2012.
However, the bank increased its net other loss of $3.5 million, from net other income of $1.2 million in the first quarter of 2012 to a net other loss of $2.3 million in the first quarter of 2013. The change was due primarily to a $2.6 million expense on the early retirement of debt in the first quarter of 2013, a reduction in net gains on derivatives and hedging activities of $651,000, and an increase in the net unrealized losses on trading securities of $214,000.
Net interest income after provision for credit losses for the quarter ending March 31, was $77.4 million, compared with $69.5 million for the first quarter of 2012. Contributing to the $7.9 million increase was an increase in net prepayment fees of $10.3 million from $4.4 million in the first quarter of 2012 to $14.6 million in the first quarter of 2013.
In addition, $2.9 million of the bank’s interest income represented was due to improved returns from certain securities which were marked down as losses in prior quarters.
However, the bank’s overall asset level declined during the quarter, dropping $10.1 billion from $48.7 billion for the first quarter of 2012, to $38.6 billion for the first quarter of 2013.
