The Federal Home Loan Bank of San Francisco (Bank) today announced
its unaudited first quarter 2024 operating results. Net income for
the first quarter of 2024 was $124 million, a decrease of $71
million compared with net income of $195 million for the first
quarter of 2023. Net income for the first quarter of 2023 included
$43 million of net income resulting from higher advance prepayments
relative to the first quarter of 2024, which is not expected to
occur at similar levels in the future, net of third-party payments
to unwind interest rate swaps at fair value.
“The Federal Home Loan Bank of San Francisco
continues to be a critical engine of economic vitality across our
three-state region,” said Teresa Bryce Bazemore, president and
chief executive officer. “In the first quarter of 2024, we remained
an important provider of on-demand, low-cost liquidity to our
member institutions, supporting community lending and economic
health. Investing in a range of mandatory and voluntary affordable
housing programs remains core to our mission and we are currently
working with our members to engage in impactful affordable housing
and economic development initiatives for the competitive 2024 grant
cycle.”
The $71 million decrease in net income relative to
the prior-year period was primarily attributable to a decrease in
net interest income of $137 million, partially offset by an
improvement in other income/(loss) of $62 million.
- The $137 million decrease in net
interest income was primarily attributable to $93 million in net
advance prepayment fees in the prior-year period, which were
significantly lower in the first quarter of 2024. The decrease in
net interest income compared to the prior-year period was also
attributable to lower average balances of interest-earning assets
and higher costs of interest-bearing liabilities, partially offset
by higher yields on interest-earning assets and lower average
balances of interest-bearing liabilities.
- The $62 million improvement in
other income/(loss) was primarily driven by $45 million in net
realized losses recognized in the prior-year period from
derivatives economically hedging prepaid advances, along with $30
million of income recognized in the first quarter of 2024 in
connection with the termination of a long-term funding arrangement
entered into with a member borrower in 2017.
At March 31, 2024, total assets were $88.0
billion, a decrease of $4.8 billion from $92.8 billion at
December 31, 2023. Advances decreased by $4.4 billion to $56.9
billion at March 31, 2024, from $61.3 billion at
December 31, 2023. Investments at March 31, 2024, were
$29.9 billion, a net decrease of $398 million from
$30.3 billion at December 31, 2023, attributable to
decreases of $293 million in short-term investments and $105
million in mortgage-backed securities.
Consistent with the Bank's community programs, the
Bank allocated $63.4 million, or 10% of the Bank’s 2023 earnings,
to its 2024 Affordable Housing Program (AHP), an annual statutory
grant program that supports the creation, preservation, or purchase
of affordable housing. This program includes the AHP General Fund
which awards grants to projects located in the Bank’s three-state
district such as the new AHP Nevada Targeted Fund that is in its
second year and will award grants to qualified projects in Nevada,
and the Workforce Initiative Subsidy for Homeownership (WISH)
Program of which $13 million has been set aside. The WISH Program
enables the Bank's members to deliver $4-to-$1 matching grants up
to $30,806 to eligible low- and moderate-income first-time
homebuyers for downpayments and closing costs to help them purchase
a home.
As part of the Bank's ongoing commitment to
contribute up to 15% in total of annual income to affordable
housing and community economic development programs and initiatives
that strengthen the communities the Bank serves in partnership with
its members, the Bank has voluntarily allocated 5% of its 2023
earnings, which amounts to $32 million to affordable housing and
economic development programs, in addition to its annual AHP
contribution. As a part of this commitment, the Bank’s board has
approved a renewal of the successful Middle-Income Downpayment
Assistance program that was piloted in 2023 with $10 million in
grant funding and designed to help aspiring homebuyers who make up
the “missing middle” in the Bank’s high-cost district become
homeowners. Because of the enthusiastic response of the Bank’s
members to this voluntary program, the board has doubled its
funding for this program in 2024 to $20 million as allocated from
the Bank’s 2023 earnings, to provide grants of up to $50,000 to
each eligible homebuyer in their pipeline. Also, the board has
approved a voluntary contribution of $4 million to the Access to
Housing and Economic Assistance for Development grant program,
which is entering its 20th year of boosting innovative initiatives
aimed at advancing economic development opportunities in
underserved communities.
As of March 31, 2024, the Bank exceeded all
regulatory capital requirements. The Bank exceeded its 4.0%
regulatory requirement with a regulatory capital ratio of 8.4% at
March 31, 2024. The increase in the regulatory capital ratio
from 8.0% at December 31, 2023, mainly resulted from the
decrease in total assets during the first quarter of 2024. The Bank
also exceeded its risk-based capital requirement of $1.1 billion
with $7.4 billion in permanent capital. Total retained earnings
increased to $4.4 billion at March 31, 2024, from $4.3 billion
at December 31, 2023.
Today, the Bank’s board of directors declared a
quarterly cash dividend on the average capital stock outstanding
during the first quarter of 2024 at an annualized rate of 8.75%.
The quarterly dividend rate is consistent with the Bank's dividend
philosophy of endeavoring to pay a quarterly dividend rate that is
equal to or greater than the current market rate for highly rated
investments and that is sustainable under current and projected
earnings while maintaining appropriate levels of capital. The
quarterly dividend will total $66 million, and the Bank expects to
pay the dividend on May 9, 2024.
Financial
Highlights(Unaudited)(Dollars in millions)
Selected Balance Sheet Items at
Period End |
|
Mar 31, 2024 |
|
|
|
Dec 31, 2023 |
|
|
Total Assets |
$ |
88,026 |
|
|
$ |
92,828 |
|
|
Advances |
|
56,912 |
|
|
|
61,335 |
|
|
Mortgage Loans Held for Portfolio, Net |
|
742 |
|
|
|
754 |
|
|
Investments, Net1 |
|
29,896 |
|
|
|
30,294 |
|
|
Consolidated Obligations: |
|
|
|
|
|
|
|
|
Bonds |
|
64,405 |
|
|
|
64,297 |
|
|
Discount Notes |
|
14,378 |
|
|
|
19,187 |
|
|
Mandatorily Redeemable Capital Stock |
|
666 |
|
|
|
706 |
|
|
Capital Stock – Class B – Putable |
|
2,392 |
|
|
|
2,450 |
|
|
Retained Earnings |
|
4,361 |
|
|
|
4,290 |
|
|
Accumulated Other Comprehensive Income/(Loss) |
|
27 |
|
|
|
(72 |
) |
|
Total Capital |
|
6,780 |
|
|
|
6,668 |
|
|
|
|
|
|
|
|
|
|
|
Selected Other Data at Period End |
|
Mar 31, 2024 |
|
|
|
Dec 31, 2023 |
|
|
Regulatory Capital Ratio2 |
|
8.43 |
% |
|
|
8.02 |
% |
|
|
|
|
|
Three Months Ended |
|
|
Selected Operating Results for the Period |
|
Mar 31, 2024 |
|
|
|
Mar 31, 2023 |
|
|
Net Interest Income |
$ |
150 |
|
|
$ |
287 |
|
|
Provision for/(Reversal of) Credit Losses |
|
(4 |
) |
|
|
(1 |
) |
|
Other Income/(Loss) |
|
36 |
|
|
|
(26 |
) |
|
Other Expense |
|
50 |
|
|
|
45 |
|
|
Affordable Housing Program Assessment |
|
16 |
|
|
|
22 |
|
|
Net Income/(Loss) |
$ |
124 |
|
|
$ |
195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Selected Other Data for the Period |
|
Mar 31, 2024 |
|
|
|
Mar 31, 2023 |
|
|
Net Interest Margin3 |
|
0.69 |
% |
|
|
0.88 |
% |
|
Return on Average Assets |
|
0.56 |
|
|
|
0.60 |
|
|
Return on Average Equity |
|
7.49 |
|
|
|
10.14 |
|
|
Annualized Dividend Rate4 |
|
8.75 |
|
|
|
7.00 |
|
|
Average Equity to Average Assets Ratio |
|
7.52 |
|
|
|
5.93 |
|
|
|
|
- Investments consist of federal funds sold, interest-bearing
deposits, trading securities, available-for-sale securities,
held-to-maturity securities, and securities purchased under
agreements to resell.
- The regulatory capital ratio is calculated as regulatory
capital divided by total assets. Regulatory capital includes
retained earnings, Class B capital stock, and mandatorily
redeemable capital stock (which is classified as a liability) but
excludes accumulated other comprehensive income/(loss). Total
regulatory capital as of March 31, 2024, and December 31,
2023, was $7.4 billion.
- Net interest margin is calculated as net interest income
(annualized) divided by average interest-earning assets.
- Cash dividends are declared, recorded, and paid during the
period, on the average capital stock outstanding during the
previous quarter.
Federal Home Loan Bank of San
Francisco The Federal Home Loan Bank of San Francisco is a
member-driven cooperative helping local lenders in Arizona,
California, and Nevada build strong communities, create
opportunity, and change lives for the better. The tools and
resources we provide to our member financial
institutions–commercial banks, credit unions, industrial loan
companies, savings institutions, insurance companies, and community
development financial institutions propel homeownership, finance
affordable housing, drive economic vitality, and revitalize whole
neighborhoods. Together with our members and other partners, we are
making the communities we serve more vibrant, equitable, and
resilient.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995 This press
release contains forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including statements related to the Bank’s
dividend philosophy and dividend rates. These statements are based
on our current expectations and speak only as of the date hereof.
These statements may use forward-looking terms, such as
“endeavoring,” “will,” and “expects,” or their negatives or other
variations on these terms. The Bank cautions that by their nature,
forward-looking statements involve risk or uncertainty and that
actual results could differ materially from those expressed or
implied in these forward-looking statements or could affect the
extent to which a particular objective, projection, estimate, or
prediction is realized, including future dividends. These
forward-looking statements involve risks and uncertainties
including, but not limited to, the Risk Factors set forth in our
Annual Report on Form 10-K and other periodic and current reports
that we may file with the Securities and Exchange Commission, as
well as regulatory and accounting rule adjustments or requirements;
the application of accounting standards relating to, among other
things, certain fair value gains and losses; hedge accounting of
derivatives and underlying financial instruments; the fair values
of financial instruments; the allowance for credit losses; future
operating results; the withdrawal of one or more large members;
high inflation and interest rates that may adversely affect our
members and their customers; and our ability to pay a quarterly
dividend rate that is equal to or greater than similar current
rates for highly rated investments. We undertake no obligation to
revise or update publicly any forward-looking statements for any
reason.
Contact: Tom Flannigan, (415)
616-2695flannigt@fhlbsf.com