Second Quarter
2024 Highlights
- Net income of $230 million
- Affordable Housing Program (AHP)
assessments of $26 million
- Advances totaled $104.8 billion
- Mortgage loans held for portfolio,
net totaled $10.8 billion
- Letters of credit totaled $17.9
billion
- Retained earnings totaled $3.4
billion
Dividend
The Board of Directors approved a second quarter 2024 dividend
to be paid at an annualized rate of 9.50 percent on average
activity-based stock, an increase of 0.25 percent from the prior
quarter, and 6.00 percent on average membership stock, unchanged
from the prior quarter. The Federal Home Loan Bank of Des Moines
(the Bank) expects to make dividend payments totaling $141 million
on August 12, 2024.
Affordable Housing and Community Impact
The Bank’s housing and community development programs are
central to its mission by providing reliable liquidity and funding
to help its members build strong communities and support their
affordable housing needs. The Bank contributes 10 percent of its
net income each year to its AHP, an annual grant program that
supports the creation, preservation, or purchase of affordable
housing. This program includes a competitive AHP and two down
payment products called Home$tart and the Native American
Homeownership Initiative. During the second quarter of 2024, the
Bank accrued AHP assessments of $26 million and disbursed $12
million of AHP funds through this program. The Bank also recorded a
$6 million voluntary AHP contribution during the second quarter of
2024.
In addition to its AHP, the Bank offers its members other
voluntary programs to enhance their community lending and
partnerships. During the second quarter of 2024, the Bank launched
a new program, Mortgage Rate Relief (MRR), which will provide
approximately $25 million in subsidy to those seeking affordable
homeownership. MRR is designed to make homeownership attainable for
borrowers at or below 80 percent of the area median income, by
providing them an interest rate that is approximately two
percentage points lower than the current market rate. During the
second quarter of 2024, the Bank funded $34 million of loans under
this program and recorded $3 million in subsidy expense.
Financial Results Discussion
Net Income - For the three and six months ended
June 30, 2024, the Bank recorded net income of $230 million
and $504 million compared to $250 million and $441 million for the
same periods in 2023.
Net Interest Income - For the three and six
months ended June 30, 2024, the Bank recorded net interest
income of $319 million and $668 million, a decrease of $18 million
and an increase of $49 million when compared to the same periods in
2023. The decline during the three months ended June 30, 2024
was primarily due to a decrease in market value adjustments on the
Bank’s fair value hedge relationships, along with lower average
advance balances, partially offset by higher asset-liability
spreads resulting from higher-yielding mortgage-backed security
(MBS) purchases.
Net interest income during the six months ended June 30,
2024 increased primarily due to higher asset-liability spreads
resulting from higher-yielding MBS purchases and increased
longer-term advances. In addition, net interest income increased
during the six months ended June 30, 2024 primarily due to
higher short-term interest rates, which improved earnings on
invested capital.
Other Income (Loss) - For the three and six
months ended June 30, 2024, the Bank recorded other losses of
$9 million and $5 million, an improvement of $8 million and $27
million when compared to the same periods in 2023 primarily due to
net gains on litigation settlements recorded during the three and
six months ended June 30, 2024. Other (income) loss was also
affected by changes in fair value on the Bank’s trading securities,
fair value option instruments, and economic derivatives.
Other Expense - For the three and six months
ended June 30, 2024, the Bank recorded other expense of $55
million and $105 million, an increase of $14 million and $9 million
when compared to the same periods in 2023. The increase during the
three months ended June 30, 2024 was primarily driven by
discretionary community and housing contributions of $9 million
recorded in 2024. The increase during the six months ended
June 30, 2024 was primarily due to increased transaction costs
resulting from higher volumes of certain discount notes.
Assets - The Bank’s total assets decreased to
$164.8 billion at June 30, 2024, from $184.4 billion at
December 31, 2023, driven primarily by a decline in advances.
Advances decreased $17.7 billion due mainly to a decline in
borrowings by certain large depository institution members, offset
in part by an increase in borrowings by insurance companies.
Capital - Total capital decreased to $9.6
billion at June 30, 2024 from $9.8 billion at
December 31, 2023, primarily due to a decrease in
activity-based capital stock resulting from a decline in advance
balances.
|
Federal Home Loan Bank of Des
MoinesFinancial Highlights
(preliminary and unaudited)Dollars in
millions |
Selected Balance Sheet
Items |
June 30,2024 |
|
December 31,2023 |
Advances |
$ |
104,784 |
|
|
$ |
122,530 |
|
Investments |
|
47,415 |
|
|
|
49,828 |
|
Mortgage loans held for
portfolio, net |
|
10,810 |
|
|
|
9,967 |
|
Total assets |
|
164,821 |
|
|
|
184,406 |
|
Consolidated obligations |
|
152,831 |
|
|
|
171,498 |
|
Capital stock - Class B
putable |
|
6,185 |
|
|
|
6,873 |
|
Retained earnings |
|
3,359 |
|
|
|
3,138 |
|
Total capital |
|
9,563 |
|
|
|
9,831 |
|
Total regulatory capital1 |
|
9,554 |
|
|
|
10,023 |
|
Regulatory capital ratio |
|
5.80 |
% |
|
|
5.44 |
% |
1 |
Total regulatory capital includes capital stock, mandatorily
redeemable capital stock, and retained earnings. The regulatory
capital ratio is calculated as regulatory capital as a percentage
of period end assets. |
|
|
For the Three Months Ended |
|
For the Six Months
Ended |
|
June 30, |
|
June 30, |
Operating Results |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net interest income |
$ |
319 |
|
|
$ |
337 |
|
|
$ |
668 |
|
|
$ |
619 |
|
Provision (reversal) for
credit losses on mortgage loans |
|
(1 |
) |
|
|
1 |
|
|
|
(2 |
) |
|
|
1 |
|
Other income (loss) |
|
(9 |
) |
|
|
(17 |
) |
|
|
(5 |
) |
|
|
(32 |
) |
Other expense |
|
55 |
|
|
|
41 |
|
|
|
105 |
|
|
|
96 |
|
Affordable Housing Program
assessments |
|
26 |
|
|
|
28 |
|
|
|
56 |
|
|
|
49 |
|
Net income |
$ |
230 |
|
|
$ |
250 |
|
|
$ |
504 |
|
|
$ |
441 |
|
Performance
Ratios |
|
|
|
|
|
|
|
Net interest spread |
|
0.45 |
% |
|
|
0.43 |
% |
|
|
0.45 |
% |
|
|
0.42 |
% |
Net interest margin |
|
0.75 |
|
|
|
0.72 |
|
|
|
0.74 |
|
|
|
0.69 |
|
Return on average equity
(annualized) |
|
9.57 |
|
|
|
10.98 |
|
|
|
10.47 |
|
|
|
9.75 |
|
Return on average assets
(annualized) |
|
0.53 |
|
|
|
0.53 |
|
|
|
0.55 |
|
|
|
0.49 |
|
|
The financial results reported in this earnings release for the
second quarter of 2024 are preliminary until the Bank announces
unaudited financial results in its Second Quarter 2024 Form 10-Q
filed with the Securities and Exchange Commission, expected to be
available next month at www.fhlbdm.com and www.sec.gov.
The Bank is a member-owned cooperative whose mission is to be a
reliable provider of funding, liquidity, and services for its
members so that they can meet the housing, business, and economic
development needs of the communities they serve. The Bank is wholly
owned by over 1,250 members, including commercial banks, savings
institutions, credit unions, insurance companies, and community
development financial institutions. The Bank serves Alaska, Hawaii,
Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon,
South Dakota, Utah, Washington, Wyoming, and the U.S. Pacific
territories of American Samoa, Guam, and the Commonwealth of the
Northern Mariana Islands. The Bank is one of 11 regional banks that
make up the Federal Home Loan Bank System.
Statements contained in this announcement, including statements
describing the objectives, projections, estimates, or future
predictions in the Bank’s operations, may be forward-looking
statements. These statements may be identified by the use of
forward-looking terminology, such as believes, projects, expects,
anticipates, estimates, intends, strategy, plan, could, should,
may, 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. As a result, you are cautioned not to place undue
reliance on such statements. A detailed discussion of the more
important risks and uncertainties that could cause actual results
and events to differ from such forward-looking statements can be
found in the “Risk Factors” section of the Bank’s Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC.
These forward-looking statements apply only as of the date they are
made, and the Bank undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Contact: Julie
DeVader515.412.2172jdevader@fhlbdm.com