FHLB Des Moines Preliminary Reports 2021 Unaudited
DES MOINES, Iowa, Feb. 15, 2022 (GLOBE NEWSWIRE) —
2021 Financial Highlights
- Net income totaled $206 million, a decrease of $156 million from the prior year.
- Net interest income totaled $381 million, a decrease of $91 million from the prior year.
- Other income (loss) totaled $4 million, a decrease of $117 million from the prior year, primarily due to net gains on litigation settlements recorded in the prior year.
- Other expenses totaled $156 million, a decrease of $33 million from the prior year.
- Assets totaled $85.9 billion, a decrease of $1.8 billion from the previous year.
Fourth Quarter 2021 Financial Highlights
- Net income totaled $46 million, an increase of $12 million over the same period last year.
- Net interest income totaled $91 million, a decrease of $12 million compared to the same period last year.
- Other expenses totaled $43 million, a decrease of $27 million compared to the same period last year.
- Advances of $44.1 billion were outstanding to 548 members, housing associates and former members.
- Mortgages of $7.6 billion were outstanding, of which $492 million was purchased from 152 members during the fourth quarter.
- The Bank paid $43 million in cash dividends at an annualized rate of 6.00% on activity-based shares and 3.00% on member shares during the fourth quarter, compared to results of the third quarter of 2021.
- The Bank accrued $5 million during the quarter for its affordable housing program, bringing the year-to-date total to $23 million.
Discussion on 2021 financial results
Net revenue – The Bank recorded net income of $206 million in 2021 compared to $362 million in 2020.
Net interest income – The Bank recorded net interest income of $381 million in 2021, a decrease of $91 million from the prior year, primarily due to lower average advance balances, combined with lower interest rate and reduced prepayment activity. Prepayment fee revenue decreased by $28 million in 2021 compared to the prior year.
Other income (loss) – The Bank recorded other income (loss) of $4 million in 2021, a decrease of $117 million from the prior year, primarily due to net gains on litigation settlements of $120 million dollars recorded in 2020 as a result of settlements with defendants under the Bank’s private law. – mortgage-backed securities (MBS) litigation. In 2020, all remaining disputes regarding the Bank’s private label MBS originally filed were resolved.
Other expenses – Other expense totaled $156 million in 2021, a decrease of $33 million from the prior year, primarily due to lower pension expense and professional fees. The Bank made a discretionary contribution of $8 million at the end of 2021, compared to $32 million at the end of 2020. Professional fees decreased in 2021 due to the decrease in external resources to help the Bank achieve its technological and operational objectives.
Assets – The Bank’s total assets decreased to $85.9 billion as of December 31, 2021, from $87.7 billion as of December 31, 2020, primarily due to lower advances, partially offset by an increase in investments. Advances decreased by $2.4 billion primarily due to lower demand for advances from depository members resulting primarily from increased liquidity in capital markets and higher deposit levels from members . This decrease was partially offset by an increase in borrowing by insurance company members. Investments increased by $1.9 billion primarily due to an increase in money market investments, which are primarily held for liquidity purposes. This increase was partially offset by redemptions and/or maturities of US Treasury bonds and MBS.
Capital city – Total capital increased from $5.7 billion as of December 31, 2020 to $5.8 billion as of December 31, 2021. The Bank’s regulatory capital ratio increased to 6.74% as of December 31, 2021, from 6 .55% as of December 31, 2020, and was above the required regulatory capital ratio. minimum at each end of period. Regulatory capital includes all share capital, mandatorily redeemable share capital and retained earnings.
All numbers in this fourth quarter and full year 2021 earnings release are preliminary until the Bank announces audited financial results in its 2021 Form 10-K filed with the Securities and Exchange Commission (SEC). ), which is expected to be available at www.fhlbdm.com and www.sec.gov by March 31, 2022.
The Bank’s Board of Directors approved a dividend for the fourth quarter of 2021 at an annualized rate of 6.00% on activity-based shares and 3.00% on member shares, unchanged from the previous quarter. The dividend rate reflects the Bank’s philosophy of paying a consistent dividend at or above the current market rate for a highly rated investment, and at a rate that is sustainable given current and projected earnings in order to maintain an appropriate level of capital and retained earnings. Dividend payments totaling $43 million are expected to be paid on February 22, 2022. Future dividends are at the discretion of the Bank’s Board of Directors and may be affected by general economic and market conditions.
|Federal Home Loan Bank of Des Moines
(preliminary and unaudited)
|The 31st of December,|
|Condition Statements (in millions of dollars)||2021||2020|
|Cash and bank receivables||$||295||$||978|
|Mortgages held for the portfolio, net||7,578||8,242|
|Compulsory reimbursable share capital||29||52|
|Share Capital – Putable Class B||3,364||3,341|
|Accumulated other comprehensive income||84||48|
|Total regulatory capital1||5,783||5,744|
|Regulatory capital ratio||6.74||%||6.55||%|
|1 Total regulatory capital includes all share capital, mandatorily redeemable share capital and retained earnings. The regulatory capital ratio is calculated as regulatory capital as a percentage of end-of-period assets.|
|For the quarter ended||For the year ended|
|The 31st of December,||The 31st of December,|
|Results of operations (in millions of dollars)||2021||2020||2021||2020|
|Net interest income||$||91||$||103||$||381||$||472|
|Allowance (reversal) for credit losses on mortgage loans||—||(1||)||—||1|
|Other income (losses):|
|Net gains (losses) on trading securities||(8||)||(9||)||(38||)||17|
|Net gains (losses) on financial instruments held at fair value||1||—||1||—|
|Net gains (losses) on derivatives||4||4||14||(48||)|
|Gains on litigation settlements, net||—||—||—||120|
|Standby letter of credit fees||2||3||ten||12|
|Total other income (loss)||3||5||4||121|
|Total other expenses||43||70||156||189|
|Net profit before contributions||51||39||229||403|
|Affordable Housing Program Evaluations||5||5||23||41|
|Net interest spread||0.38||%||0.40||%||0.39||%||0.38||%|
|Net interest margin||0.42||0.46||0.44||0.45|
|Return on average equity (annualised)||3.09||2.37||3.48||5.88|
|Return on average capital stock (annualized)||5.27||4.02||5.92||9.33|
|Return on average assets (annualized)||0.21||0.15||0.23||0.34|
The selected financial data above is preliminary until the Bank announces the audited financial results in its 2021 Form 10-K which is expected to be filed with the SEC on or before March 31, 2022.
Statements in this announcement, including statements describing future objectives, projections, estimates or forecasts of the Bank’s operations, may be forward-looking statements. These statements can be identified by the use of forward-looking terminology, such as believe, project, expect, anticipate, estimate, intend, strategy, plan, could, should, may and will be or their negatives or other variations of these terms. By their nature, forward-looking statements involve risks or uncertainties, and actual results could differ materially from those expressed or implied or could affect the extent to which a particular objective, projection, estimate or prediction is achieved. Accordingly, you are cautioned not to place undue reliance on such statements. A detailed discussion of the most significant risks and uncertainties that could cause actual results and events to differ from these forward-looking statements can be found in the “Risk Factors” section of the Bank’s Annual Report on Form 10-K and reports. quarterly statements on Form 10-Q filed with the SEC. These forward-looking statements speak only as of the date they are made, and the Bank undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The Bank is a member-owned cooperative that provides financing solutions and liquidity to members to support mortgage lending, economic development and affordable housing in the communities they serve. The Bank is 100% owned by nearly 1,300 members, including commercial banks, thrift institutions, credit unions, insurance companies and community development financial institutions, and receives no taxpayer funding. . The Bank serves Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming and the US Pacific territories of American Samoa, Guam and the Commonwealth of the Northern Mariana Islands. . The Bank is one of eleven regional banks that make up the Federal Home Loan Bank System.