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Federal Home Loan Bank of Boston Reports Strong Financial Results for 2024

On February 14, 2025, the Federal Home Loan Bank of Boston announced its preliminary unaudited fourth-quarter and annual financial results for 2024, showcasing a remarkable net income of $82.1 million for the fourth quarter and $290.5 million for the entire year. This financial robustness has also led to the declaration of a dividend, reflecting an annual yield of 7.74%. This yield corresponds to the daily average of the Secured Overnight Financing Rate for the last quarter of 2024 plus an additional 300 basis points, and the payout is expected to happen on March 4, 2025.

Timothy J. Barrett, President and CEO, expressed pride over the engagement with member financial institutions throughout the year, noting the provision of reliable liquidity and innovative programs tailored to the specific needs of the communities they serve. The increase in advances and net interest income has significantly contributed to the strong financial performance recorded in 2024, allowing the Bank to allocate over $35 million to the Affordable Housing Program along with an additional $24.9 million for initiatives aimed at assisting lower- and moderate-income homebuyers, as well as supporting job creation and community development throughout New England.

Fourth Quarter Highlights

During the fourth quarter of 2024, the overall operational results were shaped by economic shifts, interest rates, and the demand from member institutions for advances. Notably, the Federal Open Market Committee lowered the target range for the federal funds rate by 50 basis points, now set between 425 and 450 basis points. Additionally, a significant shift occurred in December 2024, as the yield curve normalized, marking the end of inversion that had persisted for 25 months.

Comparatively, net income for the last quarter of 2024 showed an increase of $30.6 million from the $51.5 million earned during the same period in 2023. This leap was primarily due to an increase in net interest income after provisions for credit losses amounting to $46.0 million. However, this was partially counteracted by a rise in other expenses of $8.4 million. Key contributions included a statutory contribution of $9.1 million to the Affordable Housing Program and a voluntary contribution of $915,000, alongside an $8.2 million amount directed to discretionary housing and community investment programs for that quarter.

The bank generated a net interest income of $125.6 million after accounting for credit losses, a notable rise from the $79.6 million recorded in the same quarter of 2023. The spike in net interest income was significantly credited to a favorable $21.8 million variance in unrealized gains and losses as well as a $12.2 million increase in mortgage-backed security net accretion, attributed to the audience of increasing intermediate and long-term interest rates observed during the last quarter of 2024. Moreover, increases in average advances, mortgage-backed securities, and mortgage loan portfolios bolstered income, although these gains faced some hit from declining short-term interest rates compared to the previous year.

Evidently, the net interest spread rose to 0.40%, reflecting a 28-basis points increase over the same quarter of 2023, while the net interest margin reached 0.70%, up by 21 basis points. These improvements underscored the enhancements in net income driven by rising intermediate and long-term interest rates during the quarter.

Full Year Overview

For the entire year, net income rose by $33.2 million from $257.3 million in 2023 to $290.5 million in 2024. This ascent primarily stemmed from a $58.1 million increase in net interest income after making necessary credit loss provisions, yet it faced counters from a $12.0 million rise in discretionary program expenses and a $4.1 million increment in compensation costs.

The net interest income for the full year ended December 31, 2024, totaled $433.3 million, compared to $375.2 million in 2023. The noteworthy increment in net income was substantially driven by favorable variances in unrealized gains and enhanced portfolios in mortgage-backed securities and loans.

The Federal Home Loan Bank of Boston operates as a wholesale bank dedicated to serving the housing finance in New England. Its essential mission revolves around providing consistent funding and liquidity to its member financial institutions, while delivering competitively priced financial products, community development support, and resources focused on aiding lower-income households.

For further inquiries, Adam Coldwell is available at 617-292-9774 or through email at [email protected].

Overall, the Federal Home Loan Bank of Boston’s 2024 results underscore a year of growth, reflecting robust financial health and a commitment to community support through housing and development initiatives.