News Column

FHLBank Cincinnati Announces Second Quarter 2014 Results

July 29, 2014

Cincinnati, July 29, 2014 (GLOBE NEWSWIRE) -- FHLBANK CINCINNATI ANNOUNCES SECOND QUARTER 2014 RESULTS

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Federal Home Loan Bank of Cincinnati






Cincinnati, Ohio - The Federal Home Loan Bank of Cincinnati (FHLBank) today released unaudited financial results for the second quarter ended June 30, 2014. The FHLBank expects to file its second quarter 2014 Form 10-Q with the Securities and Exchange Commission on or about August 7, 2014.

Operating Results and Profitability

• For the second quarter, net income was $61 million and return on average equity (ROE) was 5.00 percent. This compares to net income of $62 million and ROE of 4.80 percent for the same period of 2013. For the first six months of 2014, net income was $118 million and ROE was 4.75 percent, compared to net income of $125 million and ROE of 5.13 percent for the same period of 2013.

• The lower net income and ROE in the year-to-date period resulted primarily from a $5 million larger reversal for credit losses on mortgage loans held for portfolio in 2013 and a $3 million increase in other expenses in 2014. ROE improved in the second quarter comparison primarily due to an approximate $500 million stock repurchase in February, the effect of which was not fully realized until the second quarter.

• The FHLBank contributed $7 million in the second quarter of 2014 and $13 million in the first six months of 2014 to the Affordable Housing Program pool of funds to be awarded to members in 2015.  

Balance Sheet Highlights

• Total assets at June 30, 2014 were $101.3 billion, which was a decrease of $1.9 billion (two percent) from year-end 2013. Mission Asset Activity - comprising major activities with members including Advances, Letters of Credit, and the Mortgage Purchase Program - was $91.9 billion at June 30, 2014, an increase of $6.6 billion (eight percent) from year-end 2013.

• The balance of investments at June 30, 2014 was $24.7 billion, an increase of $2.4 billion (11 percent) from year-end 2013, most of which came from an increase in liquidity investments as amounts held in cash and due from banks on December 31, 2013 were re-invested.

• Capital adequacy substantially exceeded all minimum regulatory requirements. On June 30, 2014, GAAP capital stood at $4.9 billion, a decrease of $0.5 billion (nine percent) from year-end 2013, which primarily resulted from our redemption/repurchase of excess stock in February 2014. The GAAP and regulatory capital ratios were 4.79 percent and 4.91 percent, respectively, at June 30, 2014. 

Dividend

The FHLBank paid its stockholders a cash dividend on June 19, 2014 at a 4.00 percent annualized rate, which was 3.77 percentage points above the second quarter average 3-month LIBOR. 

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The Federal Home Loan Bank of Cincinnati is a AA+ rated regional wholesale cooperative bank. The FHLBank raises private-sector capital from member-stockholders and, with 11 other FHLBanks in the FHLBank System, issues high-quality debt in the worldwide capital markets in order to provide members with competitive services (primarily Advances, a readily available, low-cost source of funds) and a competitive return on their capital investment through quarterly dividends. The FHLBank also funds community investment programs that help its members create affordable housing and promote community economic development. The FHLBank has 717 member-stockholders located in the Fifth FHLBank District of Kentucky, Ohio and Tennessee. The FHLBank System was chartered in 1932 by the U.S. Congress to promote housing finance. Each FHLBank is wholly owned by its member institution stockholders.

This news release may contain forward-looking statements that are subject to risks and uncertainties that could affect the FHLBank's financial condition and results of operations. These include, but are not limited to, the effects of economic and financial conditions, legislative or regulatory developments concerning the FHLBank System, financial pressures affecting other FHLBanks, competitive forces, and other risks detailed from time to time in the FHLBank's annual report on Form 10-K and other filings with the Securities and Exchange Commission. The forward-looking statements speak as of the date made and are not guarantees of future performance. Actual results or developments could differ materially from the expectations expressed or implied in the forward-looking statements, and the FHLBank undertakes no obligation to update any such statements.

The Federal Home Loan Bank of Cincinnati

Financial Highlights (unaudited)

Dollars in millions

SELECTED BALANCE SHEET ITEMS

 June 30, 2014 December 31, 2013 Percent Change
Total assets$101,258 $103,181 (2)%
Advances (principal)69,336 65,093 7 
Mortgage loans held for portfolio (principal)6,524 6,643 (2) 
Total investments24,735 22,364 11 
Consolidated Obligations:      
            Discount Notes35,390 38,210 (7) 
            Bonds59,653 58,163 3 
            Total Consolidated Obligations95,043 96,373 (1) 
Mandatorily redeemable capital stock112 116 (3) 
Capital stock4,215 4,698 (10) 
Total retained earnings647 621 4 
Total capital4,853 5,310 (9) 
Regulatory capital (1)4,974 5,435 (8) 
       
Capital-to-assets ratio (GAAP)4.79% 5.15%   
Capital-to-assets ratio (Regulatory) (1)4.91 5.27   


OPERATING RESULTS

 Three Months Ended June 30, Six Months Ended June 30,
 2014 2013 Percent Change (2) 2014 2013 Percent Change (2)
Total interest income$226 $224 1% $455 $441 3%
Total interest expense149 145 3  301 286 5 
Net interest income77 79 (3)  154 155 -- 
Reversal for credit losses(1) (4) 78  (1) (6) 86 
Other non-interest income7 2 NM  10 9 10 
Other expense17 16 6  34 31 10 
Affordable Housing Program assessments7 7 (2)  13 14 (6) 
Net income$61 $62 (2)  $118 $125 (6) 
              
Return on average equity5.00% 4.80%    4.75% 5.13%   
Return on average assets0.24 0.26    0.23 0.28   
Net interest margin0.30 0.34    0.31 0.35   
Annualized dividend rate4.00 4.25    4.00 4.25   
Average 3-month LIBOR0.23 0.28    0.23 0.28   


(1)     Regulatory capital includes capital stock, mandatorily redeemable capital stock (classified as a liability) and retained earnings.

(2)     Amounts used to calculate the change column are based on dollars in thousands. Accordingly, recalculations based upon the disclosed amounts (millions) may not produce the same results. Changes of 100% or greater are shown as "NM" (not meaningful).

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A photo accompanying this release is available at:

http://www.globenewswire.com/newsroom/prs/?pkgid=26774

CONTACT: John Byczkowski, FHLBank Cincinnati 513-852-7085 (office) or 513-382-7615 (cell)



Federal Home Loan Bank of Cincinnati logo

Source: Federal Home Loan Bank of Cincinnati


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