FHLB CINCINNATI ANNOUNCES FIRST QUARTER 2025 RESULTS

CINCINNATI, April 29, 2025 /PRNewswire/ -- The Federal Home Loan Bank of Cincinnati (the FHLB) today released unaudited financial results for the first quarter ended March 31, 2025.

Overview

Throughout the first quarter of 2025, the FHLB successfully delivered on its dual mission of providing ongoing access to liquidity funding for member financial institutions and expanding support for affordable housing and community investment. The FHLB also maintained strong profitability, which enabled it to pay a competitive return to stockholders, make meaningful contributions to affordable housing and grow capital by increasing retained earnings.

Operating Results

• For the first quarter of 2025, net income was $145 million and ROE was 8.76 percent. This compares to net income of $146 million and ROE of 9.30 percent for the same period of 2024.
• The slight decrease in net income was primarily due to lower average interest rates, which decreased the earnings generated from investing the FHLB's capital, and lower spreads earned on mortgage loans held for portfolio. However, these factors were partially offset by net gains on derivatives and related financial instruments carried at fair value in the first three months of 2025 compared to net losses in the same period of 2024, as well as higher average Advance balances.

Financial Condition Highlights

• Total assets at March 31, 2025 were $133.4 billion, an increase of $1.1 billion (one percent) from year-end 2024.
• Mission Assets and Activities – comprising the major products we offer to members including Advances, Letters of Credit (off-balance sheet), and the Mortgage Purchase Program – were $131.1 billion at March 31, 2025, a decrease of $4.5 billion (three percent) from year-end 2024. The decrease in Mission Assets and Activities from year-end 2024 was driven primarily by a decrease in Letters of Credit. The FHLB's business model is designed to support significant changes in mission asset and activity levels without having to undergo material changes in staffing, operations, risk practices, or general resource needs.
• Total investments at March 31, 2025 were $47.4 billion, an increase of $2.2 billion (five percent) from year-end 2024, which was primarily driven by an increase in liquidity investments. Total investments included $19.6 billion of mortgage-backed securities (MBS) issued by Fannie Mae, Freddie Mac or Ginnie Mae and $27.8 billion of liquidity investments. Liquidity investments can vary significantly on a daily basis to support actual and anticipated borrowing needs of members and to meet all current and anticipated financial commitments.
• On March 31, 2025, GAAP capital was $6.9 billion, an increase of $0.1 billion (two percent) from year-end 2024. The GAAP and regulatory capital-to-assets ratios were 5.16 percent and 5.21 percent, respectively, at March 31, 2025. Both ratios exceeded the regulatory required minimum of four percent. Retained earnings were $1.9 billion at March 31, 2025, an increase of $41 million (two percent) from year-end 2024. The current amount of retained earnings exceeds the FHLB's minimum policy requirements in order to protect its capital stock against impairment risk and provide for dividend stability.

Dividend

• The FHLB paid its stockholders a cash dividend on March 20, 2025 at a 9.00 percent annualized rate, which was 4.67 percentage points above the first quarter average Secured Overnight Financing Rate.

Housing and Community Investment

• Statutory Affordable Housing Program (AHP) Assessments. The FHLB is required to annually set aside 10 percent of its profits to support affordable housing. These funds assist members in serving very low-, low-, and moderate-income households. The FHLB's net income for the first quarter of 2025 resulted in an accrual of $16 million to the AHP pool of funds, which will be awarded to members in 2026 through the AHP offerings. The AHP consists of a competitive program, which supports the creation and preservation of affordable housing, and a homeownership program called Welcome Home, which assists homebuyers with down payments and closing costs.
• Voluntary Housing Contributions. In addition to the statutory AHP assessment, the Board of Directors may elect to make voluntary contributions to the AHP or other housing and community investment activities. In 2025, the FHLB is committed to making voluntary contributions of $36 million, representing five percent of 2024 earnings. In the first three months of 2025, the FHLB partially fulfilled its commitment by contributing $10 million to the Carol M. Peterson Housing fund, which provides grants to cover accessibility and emergency repairs for special needs and elderly homeowners within our district. The FHLB has also committed to making a $4 million supplemental voluntary AHP contribution in 2025 to ensure the amount of total AHP contributions equals what it would have been absent any voluntary housing contributions, which reduce net income before assessments and statutory AHP assessments. In the first three months of 2025, the FHLB made a $1 million supplemental voluntary AHP contribution.

The FHLB expects to file its first quarter 2025 Form 10-Q with the Securities and Exchange Commission on or about May 8, 2025.

About the FHLB

The FHLB is a AA+ rated wholesale cooperative bank owned by 603 member financial institutions, including commercial banks, thrifts, credit unions, insurance companies and community development financial institutions in Kentucky, Ohio and Tennessee. The FHLB provides members access to products and services (primarily Advances, which are a readily available, low-cost source of funds, purchases of certain mortgage loans from members, and issuance of Letters of Credit to members) and a competitive return through quarterly dividends on their capital investment in the FHLB. The FHLB funds these products and services by raising private-sector capital from member-stockholders and, with the other Federal Home Loan Banks (FHLBanks) in the FHLBank System, issuing high-quality debt in the global capital markets. The FHLB also funds community investment programs that help its members create affordable housing and promote community economic development.

This news release may contain forward-looking statements that are subject to risks and uncertainties that could affect the FHLB's financial condition and results of operations. These include, but are not limited to: the effects of economic, financial, and market conditions; legislative or regulatory developments concerning the FHLBank System; financial pressures affecting other FHLBanks; pandemics; competitive forces; and other risks detailed from time to time in the FHLB's annual report on Form 10-K and other filings with the Securities and Exchange Commission. The forward-looking statements speak as of the date made and are not guarantees of future performance. Actual results or developments could differ materially from the expectations expressed or implied in the forward-looking statements, and the FHLB undertakes no obligation to update any such statements.

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SOURCE Federal Home Loan Bank of Cincinnati