Market Overview

FHLBank Pittsburgh Announces Second Quarter Financial Results


The Federal Home Loan Bank of Pittsburgh today announced unaudited
financial results for the second quarter of 2018. The Bank recorded net
income of $91.6 million, and the Board of Directors declared dividends
of 6.75 percent annualized on activity stock and 3.50 percent annualized
on membership stock. Dividends are payable to the Bank's stockholders on
July 27, 2018.

"We are pleased to report another strong quarter for our cooperative,"
said Winthrop Watson, President and Chief Executive Officer. "Our
performance is driven by member activity, which reflects the relevance
of our products."

Highlights for second quarter of 2018 include:

  • Net income of $91.6 million
  • Net interest income of $117.1 million
  • Advances at $76.3 billion
  • Letters of credit at $18.6 billion
  • Retained earnings at $1.2 billion

Operating Results

The Bank's net income totaled $91.6 million for the second quarter of
2018, compared to $88.0 million for the second quarter of 2017. This
$3.6 million increase was driven primarily by higher net interest
income, partially offset by higher total other expense. Net interest
income was $117.1 million for the second quarter of 2018, compared to
$110.4 million in the second quarter of 2017. Interest income and
expense were impacted by the rising interest rate environment. Total
other expense increased $2.8 million in the second quarter of 2018,
compared to the second quarter of 2017, primarily due to higher
compensation and benefits. Second quarter 2018 performance allowed the
Bank to set aside $10.2 million for affordable housing programs.

For the six months ended June 30, 2018, net income was $170.5 million
compared to $174.8 million for the same prior-year period, a decrease of
$4.3 million. The decrease was primarily due to a decrease in total
other noninterest income, partially offset by higher net interest
income. Noninterest income was $9.3 million in the first six months of
2018, compared to $19.7 million in the same period of 2017. This $10.4
million decrease was primarily driven by net losses on trading
securities of $11.4 million in the first six months of 2018, compared to
net gains of $7.6 million in the same period in 2017, partially offset
by an increase in net gains on derivatives and hedging activities of
$8.1 million. Net interest income was $226.7 million for the first six
months of 2018, an increase of $8.0 million compared to $218.7 million
in the same period in 2017 and reflective of the rising interest rate
environment during the first half of 2018.

Balance Sheet Highlights

At June 30, 2018, total assets were $101.8 billion, compared with $99.7
billion at December 31, 2017. The increase was primarily due to an
increase in advances, which totaled $76.3 billion at June 30, 2018,
compared to $74.3 billion at year-end 2017.

Total capital at June 30, 2018, was $5.3 billion, compared to $4.9
billion at December 31, 2017. Total retained earnings at June 30, 2018,
were $1.2 billion, relatively unchanged from year-end 2017. Total
retained earnings at June 30, 2018, included $316.6 million of
restricted retained earnings, compared with $282.5 million of restricted
retained earnings at December 31, 2017. At June 30, 2018, FHLBank
Pittsburgh had total regulatory capital of $5.2 billion and remained in
compliance with all regulatory capital requirements.

The Board of Directors declared a dividend on subclass B2 (activity)
stock equal to an annual yield of 6.75 percent and a dividend on
subclass B1 (membership) stock equal to an annual yield of 3.50 percent.
These dividends will be calculated on stockholders' average balances
during the period April 1, 2018, to June 30, 2018, and credited to
stockholders' accounts on Friday, July 27, 2018.

Detailed financial information regarding second quarter 2018 results
will be available in FHLBank Pittsburgh's Quarterly Report on Form 10-Q,
which the Bank anticipates filing on August 8, 2018.

About FHLBank Pittsburgh

As an intermediary between global capital markets and local lenders,
FHLBank Pittsburgh provides readily available liquidity, as well as
affordable housing and community development opportunities, to member
financial institutions of all sizes in Delaware, Pennsylvania and West
Virginia. The Bank is one of 11 banks in the Federal Home Loan Bank
System, which was established by Congress in 1932 and serves as a
reliable source of funds for housing, jobs and economic growth in all
economic cycles.

Statements contained in this document, including statements describing
the objectives, projections, estimates, or predictions of the future of
the Federal Home Loan Bank of Pittsburgh (the Bank), may be
"forward-looking statements." These statements may use forward-looking
terms, such as "anticipates," "believes," "could," "estimates," "may,"
"should," "will," 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. These forward-looking
statements involve risks and uncertainties including, but not limited
to, the following: economic and market conditions, including, but not
limited to, real estate, credit and mortgage markets; volatility of
market prices, rates, and indices related to financial instruments;
political, legislative, regulatory, litigation, or judicial events or
actions; changes in assumptions used in the other-than-temporary
impairment (OTTI) process; risks related to mortgage-backed securities;
changes in the assumptions used in the allowance for credit losses;
changes in the Bank's capital structure; changes in the Bank's capital
requirements; membership changes; changes in the demand by Bank members
for Bank advances; an increase in advances' prepayments; competitive
forces, including the availability of other sources of funding for Bank
members; changes in investor demand for consolidated obligations and/or
the terms of interest rate exchange agreements and similar agreements;
changes in the Federal Home Loan Bank (FHLBank) System's debt rating or
the Bank's rating; the ability of the Bank to introduce new products and
services to meet market demand and to manage successfully the risks
associated with new products and services; the ability of each of the
other FHLBanks to repay the principal and interest on consolidated
obligations for which it is the primary obligor and with respect to
which the Bank has joint and several liability; applicable Bank policy
requirements for retained earnings and the ratio of the market value of
equity to par value of capital stock; the Bank's ability to maintain
adequate capital levels (including meeting applicable regulatory capital
requirements); business and capital plan adjustments and amendments;
technology and cyber-security risks; and timing and volume of market
activity. These uncertainties may cause our actual future results to be
materially different than those expressed in our forward-looking
statements. FHLBank Pittsburgh does not undertake to update any
forward-looking statements made in this announcement.

Unaudited Condensed Statements of Condition and Income

(in millions)

June 30, December 31,
Condensed Statement of Condition 2018 2017
Cash and due from banks $161.9 $3,415.0
Investments 20,752.4 17,757.1
Advances 76,340.0 74,279.8

Mortgage loans held for portfolio, net of allowance for credit
losses of $8.0 and $6.0, respectively



All other assets 388.5 288.0  
Total assets $101,814.3 $99,663.0  
Consolidated obligations, net $95,670.8 $93,727.0
All other liabilities 876.6 1,008.5  
Total liabilities 96,547.4 94,735.5
Capital stock 3,950.5 3,658.7
Retained earnings 1,215.7 1,157.9
Accumulated other comprehensive income 100.7 110.9  
Total capital 5,266.9 4,927.5  
Total liabilities and capital $101,814.3 $99,663.0  

Three months ended June 30,


Six months ended June 30,

Condensed Statement of Income 2018   2017 2018   2017
Total interest income $ 553.0 $ 348.5 $1,008.9 $ 657.8
Total interest expense 435.9   238.1   782.2   439.1  
Net interest income 117.1 110.4 226.7 218.7
Provision (benefit) for credit losses 0.4 (0.1 ) 2.8 (0.1 )
Gains (losses) on trading securities (2.7 ) 5.3 (11.4 ) 7.6

Gains (losses) on derivatives and hedging

4.1 (4.3 ) 8.2 0.1
All other income 6.2 6.0 12.5 12.0
All other expense 22.5   19.7   43.7   44.2  
Income before assessments 101.8 97.8 189.5 194.3

Affordable Housing Program assessment

10.2   9.8  




Net income $ 91.6   $ 88.0   $ 170.5   $ 174.8  

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