By a News Reporter-Staff News Editor at Investment Weekly News -- The Federal Home Loan Bank of Pittsburgh (FHLBank) announced unaudited financial results for the first quarter of 2014. The Bank recorded net income of $79.9 million, and the Board of Directors declared a dividend of 4.00 percent annualized, payable to the Bank's stockholders on April 30, 2014.
"First quarter performance was strong, even excluding the significant gain related to litigation settlements," said Winthrop Watson, president and chief executive officer. "We are pleased to make a substantial increase to the dividend and set aside more for affordable housing." Operating Results The Bank's net income totaled $79.9 million for the first quarter of 2014, an increase of $51.3 million compared to $28.6 million for the first quarter of 2013. This increase includes $36.6 million from the settlement of claims against certain defendants arising from investments the Bank made in private-label mortgage-backed securities (MBS) and is net of legal fees and expenses. The additional increase in net income was driven primarily by higher net interest income. For the first quarter of 2014, net interest income was $62.3 million compared to $45.4 million for the first quarter of 2013, primarily due to lower interest expense on consolidated obligation bonds. The provision (benefit) for credit losses was $(3.9) million for the first quarter of 2014 compared to $(0.1) million in the same period in 2013 due to a decrease in delinquencies, overall improvement in the housing market and a refinement of the allowance estimate methodology. First quarter 2014 performance allowed the Bank to set aside $8.9 million for affordable housing programs. Balance Sheet Highlights At March 31, 2014, total assets were $64.6 billion, a decrease from $70.7 billion at December 31, 2013, primarily due to decreased advances and short-term liquidity balances. Advances totaled $46.1 billion at March 31, 2014, compared to $50.2 billion at December 31, 2013. Short-term liquidity balances, which include cash and Federal funds sold, decreased to $4.0 billion at March 31, 2014, from $6.0 billion at December 31, 2013.
Total capital at March 31, 2014, was $3.5 billion, down from $3.7 billion at December 31, 2013. This decrease was primarily driven by monthly capital stock repurchases, partially offset by higher retained earnings. Total retained earnings at March 31, 2014, were $748.8 million, compared to $685.7 million at December 31, 2013. Total retained earnings at March 31, 2014, included $76.1 million of restricted retained earnings. At March 31, 2014, FHLBank Pittsburgh had total regulatory capital of $3.4 billion and remained in compliance with all regulatory capital requirements.
The Board of Directors declared a dividend equal to an annual yield of 4.00 percent. The dividend will be calculated on stockholders' average balances during the period January 1, 2014, to March 31, 2014, and credited to stockholders' accounts on Wednesday, April 30, 2014.
As previously reported, the vast majority of the securities in the Bank's private-label MBS portfolio were AAA-rated at the time of purchase. Based on the performance of certain securities, among other information, it appears that the underwriting standards represented in the offering materials for these securities were not followed. As a result, the Bank owns certain private-label MBS, which it otherwise would not have owned, on which it has recognized losses. In 2009, the Bank filed lawsuits against certain issuers, underwriters and rating agencies related to these misrepresentations. As set forth in the Bank's 2013 Annual Report on Form 10-K and noted above, the Bank has agreed with certain of its defendants to settle its claims against them arising out of these investments. The Bank's litigation continues against various other issuers, underwriters and credit rating agencies based on its investments in certain private-label MBS.
Detailed financial information regarding first quarter 2014 results will be available in FHLBank Pittsburgh's Quarterly Report on Form 10-Q, which the Bank anticipates filing around May 8, 2014. Detailed financial information regarding 2013 is available in the Bank's 2013 Annual Report on Form 10-K, which can be accessed through FHLBank Pittsburgh's website at www.fhlb-pgh.com or on the SEC's website at www.sec.gov. About FHLBank Pittsburgh FHLBank Pittsburgh is a wholesale bank that serves the housing finance and community and economic development needs of its owner-members. FHLBank Pittsburgh provides reliable access to low-cost funds, competitive pricing in the purchase of mortgage loans, correspondent banking, technical assistance, affordable housing grants and other programs so members can better serve their own communities. FHLBank Pittsburgh is privately capitalized and funded and does not use taxpayer dollars. At March 31, 2014, the Bank had 300 members in its district of Delaware, Pennsylvania and West Virginia and approximately $65 billion in assets. FHLBank Pittsburgh is one of 12 Banks in the Federal Home Loan Bank System, established by Congress in 1932 to support the residential mortgage and community development activities of local financial institutions.
Keywords for this news article include: Mortgage, Real Estate, Banking and Finance, Federal Home Loan Bank of Pittsburgh.
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