UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 26, 2018
Federal Home Loan Bank of Pittsburgh
(Exact name of registrant as specified in its charter)
Federally Chartered Corporation | 000-51395 | 25-6001324 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
601 Grant Street, Pittsburgh, Pennsylvania | 15219 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: 412-288-3400
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On July 26, 2018 the Federal Home Loan Bank of Pittsburgh (the Bank) issued: (1) a press release to report the Banks financial results for the quarter and six months ending June 30, 2018 and announce the Boards declaration of a dividend and (2) a member letter regarding the financial results and dividend. Attached as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K are copies of the related press release and member letter.
Item 7.01 Regulation FD Disclosure
The information set forth under Item 2.02 is also furnished pursuant to this Item 7.01. The information being furnished pursuant to Item 2.02 and Item 7.01 of this Current Report on Form 8-K and the information contained in Exhibits 99.1 and 99.2 shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
99.1 | Press release dated July 26, 2018 issued by the Federal Home Loan Bank of Pittsburgh | |
99.2 | Letter to Members dated July 26, 2018 issued by the Federal Home Loan Bank of Pittsburgh |
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Federal Home Loan Bank of Pittsburgh | ||||||
Date: July 26, 2018 | By: | /s/ Edward V. Weller | ||||
Edward V. Weller | ||||||
Chief Accounting Officer |
Exhibit 99.1
Press Release
FOR IMMEDIATE RELEASE
Contact: Kathryn Leary, FHLBank Pittsburgh, 412-288-5496, kathryn.leary@fhlb-pgh.com
FHLBank Pittsburgh Announces Second Quarter Financial Results
PITTSBURGH, July 26, 2018 The Federal Home Loan Bank of Pittsburgh today announced unaudited financial results for the second quarter of 2018. The Bank recorded net income of $91.6 million, and the Board of Directors declared dividends of 6.75 percent annualized on activity stock and 3.50 percent annualized on membership stock. Dividends are payable to the Banks stockholders on July 27, 2018.
We are pleased to report another strong quarter for our cooperative, said Winthrop Watson, President and Chief Executive Officer. Our performance is driven by member activity, which reflects the relevance of our products.
Highlights for second quarter of 2018 include:
| Net income of $91.6 million |
| Net interest income of $117.1 million |
| Advances at $76.3 billion |
| Letters of credit at $18.6 billion |
| Retained earnings at $1.2 billion |
Operating Results
The Banks net income totaled $91.6 million for the second quarter of 2018, compared to $88.0 million for the second quarter of 2017. This $3.6 million increase was driven primarily by higher net interest income, partially offset by higher total other expense. Net interest income was $117.1 million for the second quarter of 2018, compared to $110.4 million in the second quarter of 2017. Interest income and expense were impacted by the rising interest rate environment. Total other expense increased $2.8 million in the second quarter of 2018, compared to the second quarter of 2017, primarily due to higher compensation and benefits. Second quarter 2018 performance allowed the Bank to set aside $10.2 million for affordable housing programs.
For the six months ended June 30, 2018, net income was $170.5 million compared to $174.8 million for the same prior-year period, a decrease of $4.3 million. The decrease was primarily due to a decrease in total other noninterest income, partially offset by higher net interest income. Noninterest income was $9.3 million in the first six months of 2018, compared to $19.7 million in the same period of 2017. This $10.4 million decrease was primarily driven by net losses on trading securities of $11.4 million in the first six months of 2018, compared to net gains of $7.6 million in the same period in 2017, partially offset by an increase in net gains on derivatives and hedging activities of $8.1 million. Net interest income was $226.7 million for the first six months of 2018, an increase of $8.0 million compared to $218.7 million in the same period in 2017 and reflective of the rising interest rate environment during the first half of 2018.
Balance Sheet Highlights
At June 30, 2018, total assets were $101.8 billion, compared with $99.7 billion at December 31, 2017. The increase was primarily due to an increase in advances, which totaled $76.3 billion at June 30, 2018, compared to $74.3 billion at year-end 2017.
Total capital at June 30, 2018, was $5.3 billion, compared to $4.9 billion at December 31, 2017. Total retained earnings at June 30, 2018, were $1.2 billion, relatively unchanged from year-end 2017. Total retained earnings at June 30, 2018, included $316.6 million of restricted retained earnings, compared with $282.5 million of restricted retained earnings at December 31, 2017. At June 30, 2018, FHLBank Pittsburgh had total regulatory capital of $5.2 billion and remained in compliance with all regulatory capital requirements.
The Board of Directors declared a dividend on subclass B2 (activity) stock equal to an annual yield of 6.75 percent and a dividend on subclass B1 (membership) stock equal to an annual yield of 3.50 percent. These dividends will be calculated on stockholders average balances during the period April 1, 2018, to June 30, 2018, and credited to stockholders accounts on Friday, July 27, 2018.
Detailed financial information regarding second quarter 2018 results will be available in FHLBank Pittsburghs Quarterly Report on Form 10-Q, which the Bank anticipates filing on August 8, 2018.
About FHLBank Pittsburgh
As an intermediary between global capital markets and local lenders, FHLBank Pittsburgh provides readily available liquidity, as well as affordable housing and community development opportunities, to member financial institutions of all sizes in Delaware, Pennsylvania and West Virginia. The Bank is one of 11 banks in the Federal Home Loan Bank System, which was established by Congress in 1932 and serves as a reliable source of funds for housing, jobs and economic growth in all economic cycles.
Statements contained in this document, including statements describing the objectives, projections, estimates, or predictions of the future of the Federal Home Loan Bank of Pittsburgh (the Bank), may be forward-looking statements. These statements may use forward-looking terms, such as anticipates, believes, could, estimates, may, should, will, or their negatives or other variations on these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the following: economic and market conditions, including, but not limited to, real estate, credit and mortgage markets; volatility of market prices, rates, and indices related to financial instruments; political, legislative, regulatory, litigation, or judicial events or actions; changes in assumptions used in the other-than-temporary impairment (OTTI) process; risks related to mortgage-backed securities; changes in the assumptions used in the allowance for credit losses; changes in the Banks capital structure; changes in the Banks capital requirements; membership changes; changes in the demand by Bank members for Bank advances; an increase in advances prepayments; competitive forces, including the availability of other sources of funding for Bank members; changes in investor demand for consolidated obligations and/or the terms of interest rate exchange agreements and similar agreements; changes in the Federal Home Loan Bank (FHLBank) Systems debt rating or the Banks rating; the ability of the Bank to introduce new products and services to meet market demand and to manage successfully the risks associated with new products and services; the ability of each of the other FHLBanks to repay the principal and interest on consolidated obligations for which it is the primary obligor and with respect to which the Bank has joint and several liability; applicable Bank policy requirements for retained earnings and the ratio of the market value of equity to par value of capital stock; the Banks ability to maintain adequate capital levels (including meeting applicable regulatory capital requirements); business and capital plan adjustments and amendments; technology and cyber-security risks; and timing and volume of market activity. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. FHLBank Pittsburgh does not undertake to update any forward-looking statements made in this announcement.
Unaudited Condensed Statements of Condition and Income
(in millions)
Condensed Statement of Condition |
June 30, 2018 |
December 31, 2017 |
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ASSETS: |
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Cash and due from banks |
$ | 161.9 | $ | 3,415.0 | ||||
Investments |
20,752.4 | 17,757.1 | ||||||
Advances |
76,340.0 | 74,279.8 | ||||||
Mortgage loans held for portfolio, net of allowance for credit losses of $8.0 and $6.0, respectively |
4,171.5 | 3,923.1 | ||||||
All other assets |
388.5 | 288.0 | ||||||
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Total assets |
$ | 101,814.3 | $ | 99,663.0 | ||||
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LIABILITIES: |
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Consolidated obligations, net |
$ | 95,670.8 | $ | 93,727.0 | ||||
All other liabilities |
876.6 | 1,008.5 | ||||||
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Total liabilities |
96,547.4 | 94,735.5 | ||||||
CAPITAL: |
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Capital stock |
3,950.5 | 3,658.7 | ||||||
Retained earnings |
1,215.7 | 1,157.9 | ||||||
Accumulated other comprehensive income |
100.7 | 110.9 | ||||||
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Total capital |
5,266.9 | 4,927.5 | ||||||
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Total liabilities and capital |
$ | 101,814.3 | $ | 99,663.0 | ||||
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Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Condensed Statement of Income |
2018 | 2017 | 2018 | 2017 | ||||||||||||
Total interest income |
$ | 553.0 | $ | 348.5 | $ | 1,008.9 | $ | 657.8 | ||||||||
Total interest expense |
435.9 | 238.1 | 782.2 | 439.1 | ||||||||||||
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Net interest income |
117.1 | 110.4 | 226.7 | 218.7 | ||||||||||||
Provision (benefit) for credit losses |
0.4 | (0.1 | ) | 2.8 | (0.1 | ) | ||||||||||
Gains (losses) on trading securities |
(2.7 | ) | 5.3 | (11.4 | ) | 7.6 | ||||||||||
Gains (losses) on derivatives and hedging |
4.1 | (4.3 | ) | 8.2 | 0.1 | |||||||||||
All other income |
6.2 | 6.0 | 12.5 | 12.0 | ||||||||||||
All other expense |
22.5 | 19.7 | 43.7 | 44.2 | ||||||||||||
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Income before assessments |
101.8 | 97.8 | 189.5 | 194.3 | ||||||||||||
Affordable Housing Program assessment |
10.2 | 9.8 | 19.0 | 19.5 | ||||||||||||
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Net income |
$ | 91.6 | $ | 88.0 | $ | 170.5 | $ | 174.8 | ||||||||
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# # #
Exhibit 99.2
From the President
July 26, 2018
TO: All Members
SUBJECT: Second Quarter 2018 Financial Results and Payment of Dividends
I am pleased to advise you of the following announcements in the attached news release:
| Net income of $91.6 million |
| Net interest income of $117.1 million |
| Advances at $76.3 billion |
| Letters of credit at $18.6 billion |
| Retained earnings at $1.2 billion |
These results reflect the relevance of the co-op to our membership and allow us to set aside a meaningful contribution to affordable housing programs.
Dividend Payments
The Board of Directors declared quarterly dividends of 6.75 percent annualized on subclass B2 (activity) stock and 3.50 percent annualized on subclass B1 (membership) stock. These dividends will be calculated on your average capital stock held during the period April 1 to June 30, 2018, and will be credited to your Demand Deposit Account (DDA) tomorrow, July 27.
To estimate the amount of your dividend payment, please check the capital stock dividend calculator on Bank4Banks®.
As a reminder, our quarterly conference call is scheduled for Tuesday, July 31, at 9 a.m. You will have an opportunity to ask questions on the call. If you have not yet registered, you may do so by clicking here.
Sincerely,
Winthrop Watson
President and Chief Executive Officer
Bank4Banks is a registered trademark of the Federal Home Loan Bank of Pittsburgh. |
18-78 |
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