FHLBBoston - Federal Home Loan Bank of Boston

Federal Home Loan Bank of Boston Annual Report 2011
CON N ECTICUT
MAINE
MASSACH US ETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
LENDING
F O R
G R O W T H
A N D
J O B S
FHLBBoston
MISSION
The mission of the Federal Home Loan Bank of Boston is
to provide highly reliable wholesale funding and liquidity to its
member financial institutions in New England.
We deliver competitively priced financial products, services, and
expertise that support housing finance, community development,
and economic growth, including programs targeted to lowerincome households.
OUR MEMBERS LIVE in the communities they
serve and have a vested interest in keeping them
strong and vital. They work closely with locally
based businesses to learn their particular needs
and cycles inside and out, and are committed to
helping those organizations grow and achieve
new levels of profitability, even in these challenging times.
Our members rely on the Federal Home
Loan Bank of Boston to finance housing, but
they also know they can count on our resources
and expertise to support small business
expansion, job creation, and the well-being
of municipalities.
This year’s report takes a look at six members, one from each New England state in our
district, and how their current lending activities
play a pivotal role in their customers’ achievement and the lives of their communities.
We fulfill our mission through our members,
and are proud to be a part of their successes.
Introduction 1
Connecticut2
Maine4
Massachusetts6
New Hampshire
8
Rhode Island
10
Vermont12
Letter to Our Shareholders 15
2011 Board of Directors
20
2011 Management Committee and Officers
22
2011 Advisory Council 23
Selected Financial Data
24
1
CON N ECTICUT
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MASSACH USETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
National Breaker Services, LLC
The art of Switchgear Life Extenstion
for Utilities and Industry.
National Breaker Services, located in Middlebury, is
an industry leader in switchgear and circuit breaker
life extension. The sophisticated switchgear they produce and service, from 480 to 38,000 volts, plays a
major role in keeping our nation’s electrical grids running and in industrial and government facilities across
America. Their customer list is a Who’s Who of the
electrical power industry, and their on-site work
includes downtown Manhattan, the Hoover Dam,
and La Guardia Airport.
2
JAYNE D. KELLY, SENIOR VICE PRESIDENT, NAUGATUCK SAVINGS
BANK; JOE DURANTE, PRINCIPAL, AND KATHY ROMAIN, ASSISTANT
CONTROLLER, NATIONAL BREAKER SERVICES; AND KEVIN J. KING,
VICE PRESIDENT, NAUGATUCK SAVINGS BANK
NBS started in 1998 in a leased 6,000 square
foot facility. Through the years, as their reputation spread and demand for their services grew,
NBS recognized the need to expand just to keep
pace with their customer commitments and
high-quality standards.
Our member, Naugatuck Savings Bank,
tapped FHLB Boston for low-cost small business
funding that enabled National Breaker to
purchase its new 26,000 square foot facility last
year. The factory is designed to optimize work
flow and the overall fabrication and remanufacturing processes. The building is on 8.5 acres
and can easily expand beyond its current footprint as the company continues to grow.
Better still, six new employees have been
hired in the last several months, bringing their
total staff up to 20.
3
CON N ECTICUT
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MASSACH USETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
Allagash Brewing Company was launched in 1995 as a oneman, self-funded operation. Committed to producing quality,
Belgian-style ales, founder Rob Tod designed a small 15barrel brew house on the outskirts of Portland and sold his first
batch of Allagash White that summer, using wheat in addition
to barley along with orange peel, coriander, and other spices.
4
Allagash methodically introduced new products
and expanded its leased facility space. By 2006,
the business had added some commercial debt
and the staff had grown to seven. But they were
bursting at the seams and unable to meet the
rising demand for their ales in selected markets
nationwide.
Enter our member, Bath Savings. Geoff
Gattis, executive vice president, commercial
lending, quickly got up to speed about Allagash’s
finances and business strategy as well as the
vagaries of the brewing industry. He worked
with Rob to provide funding to expand his
capacity, constructing a larger facility and
ROB TOD, FOUNDER AND BREWER,
ALLAGASH BREWING COMPANY, AND
GEOFF GATTIS, EXECUTIVE VICE PRESIDENT,
BATH SAVINGS INSTITUTION
investing in highly specialized equipment and
plumbing.
That relationship continues to grow with
the help of FHLB Boston. Bath Savings provides
the working capital and line of credit needed
to grow this business in a highly competitive
environment. With 55,000 square feet of owned
and leased facilities, 43 employees, and 24-hour
operations, Rob and his crew now brew about
25,000 gallons, or 800 barrels, a week. Their
six year-round beers, seven yearly releases, and
specialized brews are highly sought after from
coast to coast. Allagash is also highly respected
for its corporate citizenship and philanthropy
at home.
Allagash began as New England’s original
Belgian-Style brewery and has grown into one of
the industry’s most distinguished and respected
brands, consistently winning gold, silver, and
bronze medals in international and domestic
competitions.
5
CON N ECTICUT
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MASSACH US ETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
Dave Daly launched Pridestar EMS
in 2006 with one ambulance and seven
employees. Six years later, Daly and Bryan
Shanley oversee a fleet of 50 vehicles and
a staff of more than 100 and provide chair
car services, and ambulance, specialtycare, and air-medical transportation.
6
BRYAN SHANLEY, EXECUTIVE VICE PRESIDENT, PRIDESTAR EMS; ROBERT DOLAN, VICE PRESIDENT,
THE LOWELL FIVE; AND DAVID DALY, CHIEF EXECUTIVE OFFICER, PRIDESTAR EMS
Like other industries, insurance is
a major cost driver of the business.
Health-care, vehicle, and workercompensation costs can dramatically
affect an organization’s liquidity
and ability to expand.
These rising costs prompted Daly
and Shanley to look for alternatives,
and after extensive analysis, they
agreed to join a captive insurance
company tailored specifically for their
industry. With the potential of greater
cost control and collective buying
power, the savings would allow
Pridestar to maintain its employment
base and even hire additional staff as
they continued to grow. All that stood
in the way was a letter of credit to
cover catastrophic events.
The Bank’s member, The Lowell
Five, has provided financial services for
Pridestar for the past five years and the
two have enjoyed a productive partner-
ship. Even though The Lowell Five had
the ability to offer the letter of credit
directly, the $738 million institution
was not large enough to be acceptable
to the captive group. Bob Dolan,
vice president of commercial lending
at The Lowell Five, approached us
to issue a standby letter of credit on
behalf of Pridestar. Within a week,
the letter of credit was issued.
Pridestar has already saved more
than $50,000 in its first year, and
anticipates even greater savings going
forward. They just closed on the
purchase of another ambulance company in Lawrence, Massachusetts, and
recently opened satellite operations
in southern New Hampshire.
7
Grafton County covers 1,747 square miles
across 38 towns, one city, and miles and miles
of national forest in rural New Hampshire.
It is home for about 90,000 residents,
and its mountains, lakes, and cultural centers
make the area a major year-round tourist
destination.
8
Aerial photos courtesy of Peter Kimball – The Bridge Weekly Sho-Case
CON N ECTICUT
MAINE
MASSACH USETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
As a practical matter, rural
counties perform a variety of
services that meet local needs
but are too expensive or
difficult for individual towns
to provide on their own. The
Grafton County Complex
includes a courthouse, sheriff’s
office, correctional facility,
dairy and agricultural farms,
135-bed nursing home, and
numerous administrative offices, all set on hundreds of bucolic
acres of timber, fields, and cropland. All told, some 435 full- and
part-time employees work in the complex, making it the largest
JAMES E. GRAHAM, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, WOODSVILLE
GUARANTY SAVINGS BANK; CAROL
ELLIOTT, TREASURER, GRAFTON COUNTY;
WENDY HAZLETT, CHIEF OPERATIONS
OFFICER, WOODSVILLE GUARANTY
SAVINGS BANK; AND JULIE L. CLOUGH,
EXECUTIVE DIRECTOR, GRAFTON
COUNTY COMMISSIONERS’ OFFICE
employer in the area.
With a 2012 budget of approximately $35 million and more
than $19 million to be raised in taxes, Grafton County seeks
to deposit those funds in a bank located in the county and get
a favorable rate, even with interest rates near all-time lows.
Community banks typically don’t feel comfortable pledging
the securities required to handle a deposit of that magnitude.
Member Woodsville Guaranty Savings Bank, however, recognized the ultimate benefit to the county and its taxpayers and
worked with FHLB Boston to come up with a solution: a municipal letter of credit. The result was a win-win for our member
and the county.
9
CON N ECTICUT
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MASSACH USETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
Wide World of Indoor Sports is a 98,000 square
foot complex in North Smithfield comprised
of five indoor fields
and training facilities.
They opened in 2009
with 139 school
and adult teams
signed up for their
first session. By the
following year, that
number had more than doubled.
Youth Leagues
10
Adult Leagues
Clinics
Camps
Tournaments
Rentals
DOUGLAS F. HANSON, VICE PRESIDENT,
BANKNEWPORT; DAN R. FAWCETT,
CO-OWNER, WIDE WORLD OF INDOOR
SPORTS; AND DENNIS H. MCNAMARA,
EXECUTIVE VICE PRESIDENT,
BANKNEWPORT
Teams came from three states in a 50-mile radius as WWIS
typically remained open until midnight in the colder months to
accommodate the training and competition needs of soccer,
lacrosse, and baseball leagues.
Some 90 full- and part-time jobs were created as a result,
and three businesses — a day care facility, restaurant, and sports
equipment shop — opened and thrived in the same complex.
The good news was that WWIS reached capacity in its second
year. The bad news was that 40 teams could not be accommodated and were turned away.
Sensing an opportunity to expand, co-owners Dan Fawcett
and Stephen Sangermano sought funding to construct a second
facility. BankNewport’s Leland Merrill, Doug Hanson, and
Dennis McNamara did their due diligence and recognized the
viability of the business concept and the owners’ proven success
and experience. BankNewport worked with FHLB Boston to
secure construction financing for WWIS South, a 93,000 square
foot facility in North Kingstown, as well as provide permanent
financing. Businesses are also interested in opening up new
storefronts adjacent to the new facility.
Even though the foundation has just been poured,
WWIS South is already at 75 percent capacity. The new facility
is scheduled to open in late 2012.
11
CON N ECTICUT
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MASSACH USETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
Since 1972, David Marvin
and his family have grown
Butternut Mountain Farm into what it is
today — a Vermont company known around
the world for producing award-winning maple
products. In fact, they process 60 percent of
the maple syrup in the state.
12
Butternut Mountain Farm’s relationship with our member Union Bank
began in 1995. Union has made it their
business to understand this unique
food-commodity industry, including its
cyclical nature and weather dependency. They remain engaged in all cycles,
from record-producing years to those
such as 2012, characterized by an
exceptionally early and short season.
Over the years, Butternut
Mountain Farm has diversified its
products, producing maple syrup and
sugar for many private-label retailers,
from over 350 Vermont farms, helping
to support farm families and create
more year-round jobs in the state,
throughout New England, and beyond.
As the business continues to grow,
Union Bank is working with Butternut
Mountain Farm to finance the construction of a new 30,000 square foot,
solar-powered facility, which will bring
their total capacity to 72,000 square
feet.
Union Bank is an active user of
FHLB Boston’s Community Development advances. Financing unique
food service providers, manufacturers,
and specialty uses. To keep up with the
demand, their staff has doubled in the
last five years, and with 71 employees,
they are a significant employer in rural
Morrisville. They also handle product
and important small businesses like
Butternut Mountain Farms is but one
example of Union Bank’s commitment
to its community.
DAVID MARVIN, PRESIDENT, BUTTERNUT MOUNTAIN FARM, AND DAVID S. SILVERMAN, PRESIDENT, UNION BANK
It takes 40 gallons of sap to
make one gallon of syrup.
13
CON N ECTICUT
MAINE
MASSACH US ETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
CON N ECTICUT
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MASSACH US ETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
Letter to Our Shareholders
EDWARD A. HJERPE III
NEARLY THREE YEARS AGO,
Bank System-wide Joint Capital Enhancement
the Bank’s board of directors,
Agreement requires each FHLBank to create a
management, and staff focused
restricted retained earnings account to further
our energies on strengthening
bolster the System’s financial soundness and protect
our balance sheet, preserving capital, and diligently
our members from potential future losses. Also,
working to return the organization to a position
unlike REFCorp assessments, allocations to our
where we could pay dividends, repurchase excess
restricted retained earnings account do not reduce
stock, and more fully fund the Affordable Hous-
net income, leading to higher contributions to the
ing Program.
Affordable Housing Program. As a result of our
It is gratifying that the Bank has achieved nine
profitability in the past nine quarters, retained
consecutive profitable quarters and five succes-
earnings grew to nearly $400 million, compared
sive quarters of dividend declarations. We accrued
with $249 million at year-end 2010.
$17.8 million in 2011 to fund the Affordable Hous-
It was a busy year in other respects as well.
ing Program. And this past quarter, we repurchased
In an effort to achieve greater operational efficien-
$250 million in excess capital stock, the first such
cy, we successfully completed two moves. We
repurchase since 2008.
co-located our data center to give the Bank greater
Our goal of building retained earnings receiv-
protection and flexibility and fortify our ability
ed an additional boost at the end of the second
to keep pace with technological enhancements
quarter as our REFCorp obligation was satisfied
well into the future. We also moved our offices to
years ahead of schedule and two quarters prior to
the Prudential Tower, adjacent to our former
our earlier expectations. The Federal Home Loan
headquarters, and expect meaningful cost savings
over the life of the lease.
15
FINANCIAL SUMMARY
$77.1 million in 2011, a $7.7 million improve-
Total assets at December 31, 2011, were $50.0
ment from the $84.8 million recorded in 2010.
billion, down from $58.6 billion at year-end 2010,
In addition, net prepayment fees of $30.1 million
mostly because of a decrease in investments and
from advances and investments contributed to the
advances. Average outstanding advances balances
$15.9 million increase in net interest income after
for the year as a whole decreased approximate-
(reduction of) provision for credit losses in 2011,
ly $7.8 billion to $25.4 billion, compared with
compared with net prepayment fees of $17.9 mil-
$33.2 billion for the previous year. At year-end
lion in 2010.
2011, 68.6 percent of our members were active
borrowers.
GAAP capital at December 31, 2011, was
$3.5 billion, an increase of $213.5 million from
Total mortgage loans were $3.1 billion at
$3.3 billion at year-end 2010. Accumulated
December 31, 2011, compared with $3.2 billion at
other comprehensive loss totaled $534.4 million
December 31, 2010, as purchase volumes remain-
at December 31, 2011, an improvement of
ed relatively low as compared to the repayment
$103.7 million from December 31, 2010.
of existing loans. In addition, 81 of 176 members
At December 31, 2011, the Bank’s total
approved to participate in the Bank’s Mortgage
regulatory capital-to-assets ratio was 8.5 percent,
Partnership Finance® (MPF®) program sold us
exceeding the 4.0 percent minimum regulatory
loans during 2011.
requirement, and permanent capital was
Net income for the year was $159.6 million,
$4.3 billion, exceeding our $876.5 million mini-
$53.0 million higher than the net income of
mum regulatory risk-based capital requirement.
$106.6 million for 2010. These results benefited
Additionally, our internal minimum capital require-
in part from the FHLBBanks’ early satisfaction
ment, which is the sum of the Bank’s 4.0 percent
of the REFCorp obligation. Credit-related, other-
minimum regulatory capital requirement plus
than-temporary impairment charges on certain
our retained earnings target, equaled $2.9 billion
private-label mortgage-backed securities were
at December 31, 2011, which was satisfied by
“Mortgage Partnership Finance,” “MPF,” and “eMPF” are registered trademarks of the Federal Home Loan Bank of Chicago.
16
our actual regulatory capital of $4.3 billion.
remained low. Members restructured $494.2 million
The ratio of the Bank’s market value of equity
in advances last year, and $1.5 billion have been
to its par value of capital stock was 95 percent at
restructured to date.
December 31, 2011, compared with 94 percent
at December 31, 2010.
HOUSING AND COMMUNITY INVESTMENT
As a result of 2010’s profitability, the Bank award-
MEMBER ENHANCEMENTS
ed $9.6 million in grants and subsidies to fund
We welcomed 12 new members in 2011. Members
32 initiatives in the 2011 Affordable Housing Pro-
look to us for ways to enhance the value of member-
gram. The awards will create or preserve 555 rental
ship, and we conducted a study to evaluate the
and ownership units for very low-, low-, and
effectiveness of our collateral policies and operations
moderate-income individuals and families. Twenty-
as they relate to member needs, business opportuni-
five of the awards will create or preserve 531 rental
ties, and protection against potential credit losses.
units, while seven awards will create 24 ownership
Last month, we unveiled the Products and Solutions
units. In addition, approximately 160 new home-
Guide, a redesigned, easy-to-use online member
buyers received more than $1.5 million in support
resource that includes descriptions of our products,
from the Equity Builder Program, with roughly 15
solutions, credit policies, and forms. We are current-
percent purchasing foreclosed or short-sale homes.
ly investigating the feasibility of expanding the range
of eligible collateral, determining the right level
cant catalytic effect of the AHP, which adds to the
of haircuts for certain types of collateral, refining
stock of affordable housing and provides an engine
our processes, and enhancing the level and quality
for economic activity and job creation throughout
of customer service. We are confident that these
the district. The study’s results conclude that
efforts position the Bank to meet your needs as the
approximately $196 million in AHP subsidies since
economy continues to improve.
the program’s inception in 1990 have contributed
Many of you also took advantage of our
advances restructure solution as interest rates
Our Multiplier Study underscored the signifi-
to nearly $2.8 billion in housing and over $5.4 billion in economic activity.
17
Community Development advances are avail-
REGULATORY AND LEGISLATIVE ISSUES
able for a range of eligible applications, including
A number of ideas are beginning to emerge about
housing, small business, job creation, and munici-
reforming housing GSEs. Adding to the recent spate
pal improvements. In 2011, we unveiled a redesign
of proposals was the FHFA’s Strategic Plan for
of the CDA program. The revisions provide deeper
Fannie Mae and Freddie Mac Conservatorships,
discounts for households at or below 115 percent
sent to Congress this past February. Its three main
of the area median income, and economic develop-
goals are to build infrastructure for a secondary
ment or mixed-use initiatives serving households
mortgage market, shrink the presence of GSEs
at or below 80 percent of the area median income.
in the marketplace, and prevent foreclosures and
In 2011, we disbursed $900 million in CDAs to
ensure credit for new and refinanced mortgages.
develop or preserve 3,812 housing units and
A couple of weeks later, the National Associ-
support 48 economic-development or mixed-use
ation of Home Builders released a report that out-
projects for households at or below 80 percent
lined a role for the FHLBanks in its proposal for
of the area median income.
reform. The report calls for the creation of home-
We value the assistance of our 14-member
finance entities that would purchase and securitize
Advisory Council. Its members, housing and devel-
mortgages. These entities could include FHLBanks,
opment professionals from the six New England
which were cited positively in the report.
states in our district, provide their perspectives
But on Capitol Hill, partisan politics and the
on policy, products, and services to best respond
upcoming presidential election point to gridlock
to our region’s unique housing and development
this year, with any progress on housing-finance or
needs. We appreciate their contributions under the
GSE reform unlikely. We continue to monitor other
leadership of Chair Rosemary Heard.
major legislative and regulatory initiatives, includ-
I encourage you to read The Clocktower Story,
ing the Financial Stability Oversight Council’s
this year’s Advisory Council Annual Report, which
proposed rulemaking on systemically important
explores the economic impact that one AHP-funded
financial institutions and the Dodd-Frank deriva-
development has had on the local economy.
tives regulation. As Washington’s attention turns
Housing and Community Investment figures represent the units and subsidy outstanding as of year-end 2011 net of deobligated AHP funds and including initiatives that were funded as alternates.
18
inevitably to GSE reform, we will keep you ap-
LENDING
prised of developments. In the meantime, the Bank
This year’s annual report recognizes and celebrates
will work to preserve our regional, self-capitalizing
our members who continue to lend to their custom-
business model and ability to serve as a reliable
ers and communities, even in these challenging
source of funding and financial services to our
times. As you can see by these representative exam-
members.
ples, their efforts have helped grow local businesses, expand facilities and workforces, and provide
BOARD OF DIRECTORS
communities with enhanced services. As a result,
Led by Jan Miller and Jay Malcynsky, our board
New England products, from maple syrup to
is comprised of accomplished professionals from
electrical breakers, are prized around the world.
member banks and independent experts who ap-
As a cooperative, we fulfill our mission through
ply their diverse experience and knowledge to the
our members, who rely on our funding and re-
Bank’s effective governance. Our strengthening
sources to help their communities thrive and grow.
balance sheet and consistent ability to meet our
We are fully committed to keeping the organization
members’ funding needs reflects their leadership
strong and stable, for that enables us to deliver
and hard work, and I personally appreciate their
value to our membership in every business cycle.
commitment to our success.
As always, we appreciate your support as we
Our thanks to Gerry Mulligan for his insights
continue our efforts to deliver high-quality business
and years of service as a board member, and we
solutions to support your needs and the local
look forward to working with Steve Crowe who
economies you serve throughout our district.
joined the board this year.
Sincerely,
The Management Committee would also
like to acknowledge the many contributions of
Earl Baucom, who will be retiring next month.
Edward A. Hjerpe III
President and Chief Executive Officer
April 13, 2012
19
Board of Directors
2011
ANDREW J. CALAMARE
CALAMARECARTY
CLANCY
Executive Vice President
The Co-operative Central Bank
Boston, Massachusetts
JOAN CARTY
President and Chief Executive Officer
Housing Development Fund
Stamford, Connecticut
PATRICK E. CLANCY
Plymouth, Massachusetts
STEVEN A. CLOSSON
CLOSSONCROSBY GOLDSMITH
Director
Androscoggin Savings Bank
Lewiston, Maine
PETER F. CROSBY
President and Chief Executive Officer
Passumpsic Savings Bank
St. Johnsbury, Vermont
JOHN H. GOLDSMITH
HURLEYLAVOIE
Director
Capitol Securities
Boston, Massachusetts
MACOMBER
CORNELIUS K. HURLEY
Director
Center for Finance, Law and Policy
Boston University
Boston, Massachusetts
A. JAMES LAVOIE
Trustee
Middlesex Savings Bank
Natick, Massachusetts
MALCYNSKYMcCARTHYMILLER
MULLIGANRAGONES TREANOR WILMAN
20
Committees
2011
MARK E. MACOMBER
EXECUTIVE COMMITTEE
PERSONNEL COMMITTEE
Director
Litchfield Bancorp
Director Emeritus
Connecticut Mutual Holding Company
Litchfield, Connecticut
Chair: Jan A. Miller
Vice Chair: Jay F. Malcynsky
Chair: Mark E. Macomber
Vice Chair: A. James Lavoie
Joan Carty
Steven A. Closson
Jay F. Malcynsky
JAY F. MALCYNSKY
Managing Partner
Gaffney Bennett & Associates
New Britain, Connecticut
KEVIN M. McCARTHY
President and Chief Executive Officer
Newport Federal Savings Bank
Newport, Rhode Island
JAN A. MILLER
President, Eastern Bank Corporation
Executive Vice President, Eastern Bank
Boston, Massachusetts
GERALD T. MULLIGAN
Director
Savings Bank Life Insurance Company
of Massachusetts
Woburn, Massachusetts
EMIL J. RAGONES
Executive in Residence
Accounting Management Solutions, Inc.
Waltham, Massachusetts
JOHN F. TREANOR
Director
The Washington Trust Company
Westerly, Rhode Island
KENNETH A. WILMAN JR.
President and Chief Executive Officer
Profile Bank, FSB
Rochester, New Hampshire
Committee Chairs:
Andrew J. Calamare
Patrick E. Clancy
Steven A. Closson
John H. Goldsmith
Cornelius K. Hurley
Mark E. Macomber
Kevin M. McCarthy
AUDIT COMMITTEE
Chair: Andrew J. Calamare
Vice Chair: Emil J. Ragones
Patrick E. Clancy
Gerald T. Mulligan
John F. Treanor
FINANCE COMMITTEE
Chair: Kevin M. McCarthy
Vice Chair: Cornelius K. Hurley
John H. Goldsmith
Mark E. Macomber
Emil J. Ragones
GOVERNANCE/GOVERNMENT
RELATIONS COMMITTEE
RISK COMMITTEE
Chair: John Goldsmith
Vice Chair: Peter F. Crosby
Cornelius K. Hurley
A. James Lavoie
Kenneth A. Wilman Jr.
AD HOC REMEDIATION
COMMITTEE
Chair: Cornelius K. Hurley
Andrew J. Calamare
Patrick E. Clancy
John H. Goldsmith
Jay F. Malcynsky
COUNCIL OF FEDERAL
HOME LOAN BANKS
Jan A. Miller
Jay F. Malcynsky
Edward A. Hjerpe III
Chair: Steven A. Closson
Vice Chair: Jay F. Malcynsky
Andrew J. Calamare
Gerald T. Mulligan
John F. Treanor
HOUSING & COMMUNITY
DEVELOPMENT COMMITTEE
Chair: Patrick E. Clancy
Vice Chair: Joan Carty
Peter F. Crosby
Kevin M. McCarthy
Kenneth A. Wilman Jr.
21
Management
Committee
2011
EDWARD A. HJERPE III
President
Chief Executive Officer
HJERPE BAUCOMELLIOTT NITKIEWICZ
EARL W. BAUCOM
Executive Vice President
Chief Operations Officer
M. SUSAN ELLIOTT
Executive Vice President
Chief Business Officer
FRANK NITKIEWICZ
Executive Vice President
Chief Financial Officer
AUTHUR BARRETTCOLLINS PRATT
JANELLE K. AUTHUR
Senior Vice President
Executive Director of
Human Resources
FIRST
VICE PRESIDENTS
Robert M. Abisla
Brian G. Donahue
Jack F. Henderson
Paul M. Peduto
Paul T. Pouliot
Kevin Whittaker
22
VICE PRESIDENTS
Michael Arbogast
William F. Dolan
Thomas E. Driscoll
Laura Glowick
D. Patrick Green
Wesley Howland
Katherine A. Judge
Robert W. Lanza
George E. Maroun
Kevin G. Martin
Stephen M. McHugh
Shawn R. Movsessian
Daniel B. Redmond
Allison J. Santoro
Edward Schultze
Brian Shanahan
Joanne M. Sullivan
Mark J. Sullivan
Newton H. Thompson
David M. Trant
Kenneth A. Willis
Mark S. Zelermyer
ASSISTANT
VICE PRESIDENTS
Gina M. Brown
Loughlin Cleary
William J. Evans
Paresh M. Fondeker
Cindy L. Foreman
Tong Han
Mary Ellen D. Jutras
Theresa Mahoney
Jane M. Moreau
Joan O’Brien
Kristen Saidla
Donna M. Salem
Dee Dee Schreitmueller
Shirley Seraphin
Patricia Tully
Mariya Vidanovic
Ling Zhang
ASSISTANT
CORPORATE
SECRETARY
Mary E. Noyes
TIMOTHY J. BARRETT
Senior Vice President
Treasurer
GEORGE H. COLLINS
Senior Vice President
Chief Risk Officer
CAROL HEMPFLING PRATT
Senior Vice President
General Counsel
Corporate Secretary
Advisory Council
2011
HEARD
CRUM
GALLAGHERIFFLAND
The Advisory Council of the Federal Home
Loan Bank of Boston advises the Bank and its
board of directors on the administration of its
special programs for housing and community
development.
Organized in 1990, the council is made up of
representatives of housing and community-development organizations throughout New England.
Each of the New England states is represented
on the council, which meets quarterly.
CALLAHANCHRISTON
JOHNSON
KOVEL
Not pictured
ROBERT W. TOURIGNY
Executive Director
NeighborWorks of
Greater Manchester
Manchester, New Hampshire
LAJOIE MCNEILRICH
SHEA
WILLIAMS
ROSEMARY M. HEARD
JOHN G. GALLAGHER
DENNIS J. LAJOIE
Chair of the Advisory Council
President and Chief Executive Officer
CATCH Neighborhood Housing
Concord, New Hampshire
Executive Director
Westbrook Housing
Westbrook, Maine
Chief Executive Officer
Community Concepts Finance
Corporation
Lewiston, Maine
ELIZABETH B. CRUM
Executive Director
Randolph Area Community
Development
Randolph, Vermont
JOSEPHINE MCNEIL
JEAN M. JOHNSON
DAVID B. RICH
Executive Director
House of Hope Community
Development Corporation
Warwick, Rhode Island
Executive Director
Supportive Housing Works
Bridgeport, Connecticut
DARA K. KOVEL
Executive Director
Olneyville Housing Corporation
Providence, Rhode Island
Vice Chair of the Advisory Council
Executive Director of Connecticut
Housing Coalition
Wethersfield, Connecticut
THOMAS CALLAHAN
Executive Director
Massachusetts Affordable Housing
Alliance
Boston, Massachusetts
DEAN J. CHRISTON
Executive Director
New Hampshire Housing Finance
Authority
Bedford, New Hampshire
JULIE M. IFFLAND
Chief Housing Officer
Connecticut Housing Finance
Authority
Rocky Hill, Connecticut
Executive Director
CAN-DO
Newton, Massachusetts
FRANK SHEA
RICHARD WILLIAMS
Executive Director
Vermont State Housing Authority
Montpelier, Vermont
23
Selected Financial Data
(dollars in thousands)
The following selected financial data for each of the five years ended December 31, 2011, 2010, 2009, 2008, and 2007, have been derived from the
Bank’s audited financial statements. This selected financial data should be read in conjunction with the Bank’s financial statements and the related notes
thereto appearing in the Bank’s 2011 Annual Report on Form 10-K.
December 31,
2011
2010
2009
2008
2007
STATEMENT OF CONDITION Total assets
$49,968,337
$58,647,301
$62,487,000
$80,353,167
$78,200,338
Investments(1) 21,379,54827,134,47520,947,46418,864,89917,862,559
Advances 25,194,89828,034,94937,591,46156,926,26755,679,740
Mortgage loans held for portfolio, net(2) 3,109,2233,245,9543,505,9754,153,5374,091,314
Deposits and other borrowings 654,246
745,521
772,457
611,070
713,126
Consolidated obligations: Bonds 29,879,46035,102,75035,409,14732,254,002
30,421,987
Discount notes 14,651,79318,524,84122,277,68542,472,26642,988,169
Total consolidated obligations 44,531,253 53,627,591 57,686,832 74,726,268 73,410,156
Mandatorily redeemable capital stock 227,429
90,077
90,896
93,406
31,808
Class B capital stock outstanding putable(3)3,625,3483,664,4253,643,1013,584,7203,163,793
Unrestricted retained earnings
375,158
249,191
142,606
(19,749) 225,922
Restricted retained earnings 22,939
—
—
—
—
Total retained earnings
(accumulated deficit)398,097249,191142,606 (19,749) 225,922
Accumulated other comprehensive
(loss) income (534,411) (638,111) (1,021,649) (134,746) (2,201)
Total capital3,489,0343,275,5052,764,0583,430,2253,387,514
Results of Operations Net interest income
$305,976
$297,583 $311,714 $332,667 $312,446
Provision for credit losses (831) 6,701
1,750
225
(9)
Net impairment losses on held-tomaturity securities recognized
in earnings (77,067) (84,762) (444,068) (381,745) —
Other income (loss) 23,841
(1,482) 7,421
(10,215) 11,137
Other expense 65,09959,56460,06856,30853,618
AHP and REFCorp assessments(4) 28,890
38,489 — —
71,740
Net income (loss) 159,592
106,585
(186,751) (115,826) 198,234
Other Information Dividends declared
$
10,686 $ —$ —$
129,845$
159,616
Dividend payout ratio(5)
6.70% N/AN/AN/A
80.52%
Weighted-average dividend rate(6)
0.30
N/A
N/A
3.86% 6.62
Return on average equity(7) 4.73
3.52% (6.49)% (3.17) 6.96
Return on average assets 0.30
0.17
(0.27) (0.14) 0.30
Net interest margin(8) 0.58 0.470.440.41
0.48
Average equity to average assets 6.41
4.81
4.09
4.42
4.35
Total regulatory capital ratio(9) 8.51 6.836.204.55
4.37
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Investments include available-for-sale securities, held-to-maturity securities, trading securities, interest-bearing deposits, securities purchased under agreements to resell and federal funds sold.
The allowance for credit losses amounted to $7.8 million, $8.7 million, $2.1 million, $350,000, and $125,000 for the years ended December 31, 2011, 2010, 2009, 2008, and 2007, respectively.
Capital stock is putable at the option of a member, subject to applicable restrictions.
The FHLBanks satisfied their obligation to REFCorp in the second quarter of 2011, as discussed under Item 1 — Business — Assessments — REFCorp Assessment, in the 10-K.
The dividend payout ratio for 2010, 2009, and 2008 is not meaningful.
Weighted-average dividend rate is the dividend amount declared divided by the average daily balance of capital stock eligible for dividends.
Return on average equity is net income divided by the total of the average daily balance of outstanding Class B capital stock, accumulated other comprehensive (loss) income and total retained
earnings (accumulated deficit).
(8) Net interest margin is net interest income before provision for credit losses as a percentage of average earning assets.
(9) Total regulatory capital ratio is capital stock (including mandatorily redeemable capital stock) plus total retained earnings as a percentage of total assets. See Item 8 — Financial Statements and
Supplementary Data — Notes to the Financial Statements — Note 17 — Capital, in the 10-K.
Please refer to the Federal Home Loan Bank of Boston’s 2011 Annual Report on Form 10-K for complete financial statements, including notes, management’s discussion and analysis of financial
condition and results of operations, and other information about the Bank’s operations.
The Federal Home Loan Bank of Boston’s 2011 Annual Report on Form 10-K is available on the Security and Exchange Commission’s web site, www.sec.gov.
24
CON N ECTICUT
MAINE
MASSACH US ETTS
NEW HAMPSHIRE
RHODE ISLAND
VERMONT
FHLBBoston
Federal Home Loan Bank of Boston
800 Boylston Street
Boston, Massachusetts 02199
www.fhlbboston.com