FHLBank Boston Announces 2024 Fourth Quarter Results and Annual Results, Declares Dividend

The Bank's board of directors has declared a dividend equal to an annual yield of 7.74%, the daily average of the Secured Overnight Financing Rate for the fourth quarter of 2024 plus 300 basis points. The dividend, based on average stock outstanding for the fourth quarter of 2024, will be paid on March 4, 2025. As always, dividends remain at the discretion of the board.

“The Bank was proud to engage with member financial institutions throughout the year by providing reliable liquidity and funding along with innovative programs to help them meet the unique needs of the communities they serve,” said President and CEO Timothy J. Barrett. “An increase in advances and net interest income contributed to our strong financial performance in 2024, which enabled us to allocate more than $35 million for the Affordable Housing Program and an additional $24.9 million for programs that help lower- and moderate-income homebuyers and support job creation and community development throughout New England.”

The Bank’s overall results of operations are influenced by the economy, interest rates and members' demand for advances. During the fourth quarter of 2024, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate by 50 basis points, to between 425 and 450 basis points. In December 2024, the difference between 10-year and 3-month U.S. Treasury yields became positive after being negative, or inverted, for 25 consecutive months.

Net income for the three months ended December 31, 2024, was $82.1 million, an increase of $30.6 million compared with net income of $51.5 million for the same period of 2023, primarily the result of an increase in net interest income after provision for credit losses of $46.0 million, partially offset by an increase in other expense of $8.4 million. These results led to a $9.1 million statutory contribution to the Bank's Affordable Housing Program for the quarter. In addition, the Bank made a voluntary contribution of $915,000 to the Affordable Housing Program and an $8.2 million contribution to our discretionary housing and community investment programs for the quarter ended December 31, 2024.

Net interest income after provision for credit losses for the quarter ended December 31, 2024, was $125.6 million, compared with $79.6 million for the same period in 2023. The $46.0 million increase in net interest income after provision for credit losses was primarily driven by a $21.8 million favorable variance in net unrealized gains and losses on fair value hedge ineffectiveness, and a $12.2 million increase in mortgage-backed security net accretion, both attributable to an increase in intermediate- and long-term interest rates during the quarter ended December 31, 2024, due to yield curve steepening, compared to a decrease in intermediate- and long-term interest rates during the same period in 2023. In addition, the Bank had increases of $3.5 billion, $1.8 billion and $615.2 million in our average advances, average mortgage-backed securities, and average mortgage loan portfolios, respectively. These positive factors were partially offset by the negative impact of a decrease in short-term interest rates compared to the same period of 2023. 

Net interest spread was 0.40% for the three months ended December 31, 2024, an increase of 28 basis points from the same period in 2023, and net interest margin was 0.70%, an increase of 21 basis points from the three months ended December 31, 2023. The increase in net interest spread and margin was primarily attributable to the  improvement in net interest income after provision for credit losses discussed above, resulting from increases in intermediate- and long-term interest rates during the quarter.

Total assets increased $4.9 billion, or 7.2%, to $72.0 billion at December 31, 2024, up from $67.1 billion at year-end 2023. Advances totaled $45.2 billion at December 31, 2024, an increase of $3.2 billion from year-end 2023. Total investments were $22.5 billion at December 31, 2024, an increase of $1.3 billion from $21.2 billion at the prior year end, driven primarily by growth in mortgage-backed securities. Mortgage loans totaled $3.7 billion at December 31, 2024, an increase of $619.8 million from year-end 2023 as mortgage sales to the Bank increased. 

Total capital at December 31, 2024, was $3.9 billion, an increase of $314.2 million from $3.5 billion at year-end 2023. During 2024, capital stock increased by $152.7 million, primarily attributable to the increase in advances. Total retained earnings grew to $1.9 billion during 2024, an increase of $122.0 million, or 6.8%, from December 31, 2023. Of this amount, restricted retained earnings totaled $509.2 million at December 31, 2024. Accumulated other comprehensive loss totaled $255.0 million at December 31, 2024, an improvement of $39.5 million from accumulated other comprehensive loss as of December 31, 2023.

The Bank was in compliance with all regulatory capital ratios at December 31, 2024, and in the most recent information available was classified “adequately capitalized” by its regulator, the Federal Housing Finance Agency, based on the Bank's financial information at September 30, 2024.

Net income increased $33.2 million to $290.5 million for the year ended December 31, 2024, from $257.3 million for 2023. The increase in net income was primarily due to an increase of $58.1 million in net interest income after provision for credit losses, partially offset by a $12.0 million increase in expenses related to our discretionary housing and community investment programs, and a $4.1 million increase in compensation and benefits expense.

Net interest income after provision for credit losses for the year ended December 31, 2024, was $433.3 million, compared with $375.2 million for 2023. The $58.1 million increase in net interest income after provision for credit losses was primarily driven by a $19.9 million favorable variance in net unrealized gains and losses on fair value hedge ineffectiveness, attributable to net increases in intermediate- and long-term interest rates during the year ended December 31, 2024, that were greater than the net increases in intermediate- and long-term interest rates during 2023, and increases of $2.0 billion and $511.1 million in our average mortgage-backed securities and average mortgage loan portfolios, respectively.

Net interest spread was 0.29% for the year ended December 31, 2024, an increase of 8 basis points from the same period in 2023, and net interest margin was 0.63%, an increase of 8 basis points from the year ended December 31, 2023. The increase in net interest spread and margin was primarily attributable to the improvements in net interest income after provision for credit losses discussed above, resulting from net increases in intermediate- and long-term interest rates during the year. 

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