Though credit quality is improving across the Home Loan Bank System, five of the six Home Loan banks that announced quarterly earnings Wednesday said that profits declined year over year primarily due to declines in loan volume. Only the Federal Home Loan Bank of Boston said its quarterly profit rose from the prior year, though that was largely a result of sharply lower impairment charge on mortgage-backed securities.
The Boston bank said its quarterly earnings climbed 174%, to $64.7 million, and its yearly profit rose 50%, to $159.6 million. However, its assets fell nearly 15% year over year as loan volume and investments in securities declined.
The Boston bank also announced Wednesday that it is planning a stock repurchase for the first time since a moratorium on buybacks was established in 2008. The bank intends to buy back $250 million of stock later this year.
"After nine consecutive profitable quarters and five consecutive quarters of dividend declarations, and retained earnings growth to nearly $400 million, we believe we are positioned to begin repurchasing excess shares from shareholders at a modes pace," Edward A. Hjerpe 3rd, the bank's president and chief executive, said in a news release.
The other banks that reported quarterly earnings Wednesday were the Home Loan banks of Des Moines, Dallas, Atlanta, Pittsburgh and Seattle. Several others reported full-year results, but did not break out quarterly numbers.
The Des Moines bank said its quarterly earnings fell 33%, to $33.3 million. It said advances were down because loan demand is weak at member banks. Plus many of the banks are flush with deposits.
The Des Moines bank, like several other Home Loan banks, said income was also affected by a decline in prepayments, for which the bank collects a penalty fees. Income from prepayments fell by $163 million in 2011, the bank said.
Among the other banks, the steepest quarterly drop was at the Pittsburgh bank, where earnings fell 49%, to $10.9 million. The Dallas bank said its net income fell 20% in the quarter, to $17.8 million; the Atlanta bank reported a 22% decline, to $63 million, and the Cincinnati bank said earnings fell 10%, to $40 million.
