DES MOINES, Iowa, Aug. 12, 2009 (GLOBE NEWSWIRE) -- The Federal Home Loan Bank of Des Moines filed its unaudited quarterly report with the Securities and Exchange Commission today which includes financial results for the second quarter ended June 30, 2009.
Balance Sheet Highlights
The Bank's total assets decreased 2 percent to $67.0 billion at June 30, 2009 from $68.1 billion at December 31, 2008. The decrease in total assets was primarily due to decreased advances and a sale of mortgage loans and was partially offset by an increase in investments.
The Bank's advances portfolio decreased 11 percent to $37.2 billion at June 30, 2009 from $41.9 billion at December 31, 2008. The decrease is primarily due to the availability of more attractive alternative funding options for member banks including deposits from their retail and business customers. The Bank expects this downward trend in advance balances to continue throughout 2009.
On June 24, 2009, in an effort to reduce its sensitivity to changes in interest rates, the Bank sold $2.1 billion of mortgage loans to FHLBank of Chicago, which immediately resold the loans to Fannie Mae. The Bank used the proceeds from the mortgage loan sale to pay off maturing discount notes, purchase investments to replace the mortgage loans, and extinguish longer term debt previously used to fund the mortgage loans.
Investment balances increased $6.2 billion or 40 percent to $21.6 billion at June 30, 2009 compared with $15.4 billion at December 31, 2008. During the first six months of 2009, the Bank purchased investments to improve investment income and to replace mortgage loans sold.
At June 30, 2009, the Bank's consolidated obligations totaled $61.6 billion compared with $62.8 billion at December 31, 2008. Consolidated obligations, which include discount notes and bonds, are the primary source of funds used to support advances, mortgage loans and investments.
Total capital at June 30, 2009, was $3.3 billion compared to $3.0 billion at December 31, 2008. The increase in total capital was primarily due to an increase in excess capital stock as a result of FHLB Des Moines discontinuing its practice to voluntarily repurchase excess capital stock which began in the fourth quarter of 2008. Excess capital stock totaled $451.7 million at June 30, 2009. Retained earnings increased $55.4 million to $437.4 million at June 30, 2009 compared with $382.0 million at December 31, 2008.
Operating Results
Net income was $75.9 million and $70.0 million for the three months and six months ended June 30, 2009 compared with $47.9 million and $79.3 million, respectively, in the same periods of 2008. During the three and six months ended June 30, 2009, the Bank's net income was impacted by several items, including:
* Net interest income of $63.1 million and $72.4 million for the
three and six months ended June 30, 2009 compared with net
interest income of $73.0 million and $137.7 million for the same
periods last year. The net interest margin was 0.35% in the
second quarter of 2009 compared with 0.42% during the same period
of 2008.
* Net gain on the sale of mortgage loans of approximately $1.8
million.
* Net gains on derivative and hedging activities increased during
the three and six months ended June 30, 2009 primarily due to the
Bank's activity with U.S. Treasury obligations and the related
interest rate swaps. The Bank recorded a net gain of $33.0
million consisting of a $75.8 million gain recorded in net gain
(loss) on derivatives and hedging activities and a $42.8 million
loss on sale of the securities recorded in other income (loss).
* Unrealized and realized gains on Temporary Liquidity Guarantee
Program (TLGP) securities accounted for as trading securities
totaled $33.7 million and $53.8 million for the three and six
months ended June 30, 2009.
* Extinguishment of debt with a par value of $354.7 million and
$586.5 million during the three and six months ended June 30,
2009. The net loss on early extinguishment of debt, including
basis adjustment amortization and accretion, totaled $38.4
million and $46.7 million for the three and six months ended June
30, 2009.
* Amortization of basis adjustments on called debt. During the
three and six months ended June 30, 2009, the Bank called
approximately $0.2 billion and $2.0 billion of higher cost par
value bonds. As a result, the Bank recorded net basis adjustment
amortization of $2.5 million and $12.2 million on the bonds
during the three and six months ended June 30, 2009.
The Bank has never recorded other-than-temporary impairment losses on its investment securities. At June 30, 2009, approximately 99 percent or $8.9 billion of the Bank's MBS were agency securities guaranteed by a government-sponsored enterprise. The remaining $0.1 billion or 1 percent was private-label MBS.
Dividend
On August 11, 2009, the Board of Directors approved a second quarter 2009 dividend at an annualized rate of 2.0 percent. The dividend to be paid represents approximately 19 percent of net income for the three months ended June 30, 2009 and is based on the average capital stock balance held by FHLB Des Moines members during the second quarter. This dividend rate compares with the average Federal funds rate of 0.18% and the average 3 month LIBOR rate of 0.84% for the second quarter of 2009. The dividend will be credited to stockholders' accounts on August 18, 2009.
Additional financial information concerning the Bank's results of operations for the most recently completed quarter is available in the Bank's 10-Q Quarterly Report filed today with the Securities and Exchange Commission and available at www.fhlbdm.com or http://www.sec.gov/.
Federal Home Loan Bank of Des Moines
Financial Highlights (unaudited)
Statements of Condition
(dollars in millions) June 30, Dec. 31, June 30,
2009 2008 2008
------- ------- -------
Advances $37,165 $41,897 $46,002
Mortgage loans, net 8,120 10,685 10,583
Investments 21,576 15,369 14,047
Total Assets 67,032 68,129 70,838
Capital Stock - Class B
Putable 2,923 2,781 3,016
Retained Earnings 437 382 388
Capital-to-Assets Ratio
(GAAP) 4.98% 4.43% 4.72%
Capital-to-Assets Ratio
(Regulatory) 5.03% 4.66% 4.87%
For the quarter Six months
ended ended
Operating Results and June 30, June 30,
Performance Ratios ---------------- ----------------
(dollars in millions) 2009 2008 2009 2008
------- ------- ------- -------
Net Interest Income $ 63.1 $ 73.0 $ 72.4 $ 137.7
Net Income $ 75.9 $ 47.9 $ 70.0 $ 79.3
Return on Average Assets 0.42% 0.27% 0.19% 0.24%
Return on Average Capital Stock 10.49% 6.37% 4.92% 5.59%
Return on Average Total Capital 9.40% 5.79% 4.44% 5.03%
Net Interest Margin 0.35% 0.42% 0.20% 0.42%
Operating Expenses to Average
Assets 0.06% 0.06% 0.06% 0.06%
The selected financial data above should be read in conjunction with
the financial statements and notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operation" included in
the Bank's 10-Q Quarterly Report filed on August 12, 2009 with the
Securities and Exchange Commission.
Statements contained in this announcement, including statements describing the objectives, projections, estimates or future predictions in our operations, may be forward-looking statements. These statements may be identified by the use of forward-looking terminology, such as anticipates, believes, could, estimate, may, should and will or their negatives or other variations on these terms. By their nature forward-looking statements involve risk or uncertainty 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 realized.
FHLB Des Moines is a wholesale cooperative bank that provides low-cost, short- and long-term funding and community lending to more than 1,200 members, including commercial banks, saving institutions, credit unions and insurance companies. The Bank is wholly owned by its members and receives no taxpayer funding. FHLB Des Moines serves Iowa, Minnesota, Missouri, North Dakota and South Dakota and is one of twelve regional Banks that make up the Federal Home Loan Bank System.