FHLBBoston - Federal Home Loan Bank of Boston

FHLBBoston
“In the middle
of difficulty lies
opportunity.”
Albert Einstein
Federal Home Loan Bank of Boston
2012 Annual Report
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 lower-income households.
Introduction 1
Letter to Our Shareholders 14
2012 Board of Directors
20
2012 Management Committee and Officers
22
2012 Advisory Council 23
Selected Financial Data
24
New Englanders
are a hardy bunch.
No matter the challenge, we take it as a matter of pride as well as practicality to lean into the task at hand and see it through
to a successful conclusion.
We do much more than simply persevere, however. We adapt, developing thoughtful and creative approaches to issues
and situations as they evolve. Like a seedling poking through concrete on a city sidewalk, we don’t give up. We see opportunity in every obstacle.
That’s what New Englanders are all about — even when the odds are overwhelming.
F ede r al home loan ban k of boston 2012 A nn ual Re p o r t
1
Nothing in
recent memory
captures the
New England
spirit of
resilience
like the
2004 Red Sox.
2
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t After losing the first three games of the American League Championship Series, the Sox were well on their way to losing
the fourth and final game to the New York Yankees, before turning things around and ultimately winning the next four games
in dramatic fashion. Defying probability, they went on to beat St. Louis in four straight to earn their first World Series trophy
in 86 years.
That’s what New Englanders are all about — even in the face of uncertainty and upheaval.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
3
Like you, we have
managed through
some challenging
times.
In the past five years we have dealt with the credit crisis, the collapse
of the housing market, and an economy in a freefall unmatched since the
Great Depression. At the height of the crisis, the Bank did what it was
designed to do and provided liquidity to members at unprecedented levels.
As time passed, and the historic activity gave way to reduced
demand for advances, we were faced with significant financial challenges.
Working together, the Bank’s board of directors, management, and staff
resolved to strengthen our balance sheet, preserve our capital, and return
to a position where we could pay dividends, repurchase excess stock, and
more fully fund the Affordable Housing Program — all without sacrificing
the quality and level of service to our members.
We took difficult and important steps to assure our stakeholders that
we would be here when they needed us. We reduced operating expenses.
We implemented organizational and operational changes. We created
new business solutions to meet evolving member needs.
4
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Our sound business model, hard work, and improving market conditions have lead to consistent profitability since the fourth
quarter of 2009, steady quarterly dividend payouts since the first quarter of 2011, a record $207.1 million in annual net
income in 2012, and a year-end retained earnings balance of $587.6 million — an all-time high, greater than accumulated
other comprehensive loss on our balance sheet. We repurchased a modest amount of excess stock in 2012 and 2013, and
based on our 2012 financial results, have committed $21.5 million for the AHP in 2013.
We’ve taken serious hits, but we are resilient, we adapted, and we are here to stay. Members count on us for credit,
in good times and bad, and we are well positioned to help them and their communities thrive well into the future.
That’s what New Englanders are all about. That’s what the Federal Home Loan Bank of Boston is all about. And that’s
what our members are all about, too.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
5
In recent years, the region has been pounded by severe winter storms, tornados, an earthquake, hurricanes, and a superstorm — all of which wreaked havoc inland and along our coast.
In June 2011, a rare tornado with wind gusts of 160 mph devastated the central Massachusetts town of Monson,
population 8,500. Within 24 hours, a portable generator put member Monson Savings Bank’s ATM back in service — the only
light on Main Street. The next morning, the bank was up and running as the community rallied together. Even competitors
asked if the bank needed anything. Members worked with their borrowers who were coping with the aftermath of destruction.
Employees and others volunteered their time to clear debris, clean out houses, and do what they could to help. Now, nearly
two years later, the positive spirit still continues, and helping others is the norm. And with that characteristic New England
fortitude, Monson Savings Bank, town officials, businesses, residents, and professionals have embarked on an initiative to
develop a master plan for Main Street and the future of downtown Monson.
Remnants of a Bethany Road home blown away by the tornado that devastated Monson.
Courtesy of The Republican by David Molnar
Out of devastation
opportunity to
6
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Merchants Bank employees drying money after hurricane irene.
Almost three months later, Hurricane Irene left seven feet of water in a branch of Merchants Bank in Wilmington, Vermont.
Another member, People’s United Bank, located down the street on higher ground, offered Merchants Bank a conference
room to use as temporary quarters so they could respond to their customers’ immediate needs. That’s what communities do.
Weeks later, Merchants was operating out of a trailer until a new branch – also on higher ground – was ready to open.
In the meantime, they helped municipalities meet their short-term funding needs to deal with widespread emergencies. They
reached out to all retail and business customers to see how they were impacted by the storm, and determine what they could
do to help them. Staff gave their time and energy to help restore the community. And, in a new twist on money laundering,
the Bank invested in irons and hair dryers to dry out the currency that had been underwater before returning it to the Fed.
comes the
make things better.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
7
Disasters like
these test
one’s mettle.
How you
react to
adversity
tells a lot
about your
character.
Being prepared for the
the difference between
business as usual.
8
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t FHLB Boston staff at disaster-recovery site during a back bay power outage.
worst can make
disruption and
In 2012, we were forced to evacuate our headquarters in the Back Bay three times because of power outages and extreme
weather conditions, but our members never lost access to liquidity. Whether operating from our disaster-recovery site or
in partnership with our sister Federal Home Loan Bank in Topeka, we ensured that our members did not miss a beat as the
flow of advances continued uninterrupted.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
9
FHLB Boston and
our members don’t
man-made disasters
10
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Through our Affordable Housing Program and other targeted funding solutions, we assist
members who strive to turn blight into growth. For decades, we have supported initiatives
like Monterey Place, which transformed one of New Haven’s most distressed neighborhoods
into a vibrant mixed-income development of single-family homes, duplexes, and townhouses,
just blocks away from Yale University. Monterey Place is only one of 1,029 initiatives funded
by the AHP, resulting in more than 24,000 units of safe, decent, and affordable housing
created, rehabilitated, or preserved in the region.
Monterey Place, before (above) and after (left) infusion of affordable housing program funds.
wait for natural or
to help communities.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
11
The Bank –
like the six-state
region we serve
– is focused on
the future.
Each day, we do our best to:
■ successfully compete in the wholesale funding market and meet members’ funding
needs for housing, community development, and economic growth;
■ build retained earnings and manage risk to provide our shareholders a stable return
on their investment;
■ advocate the interests of our stakeholders on policy matters and legislative and
regulatory initiatives; and
■ grow strong and agile to respond quickly and effectively to emerging risks and
opportunities while upholding our commitment to efficient and effective operations.
We are looking ahead with great enthusiasm to these challenges. We embrace
change as an opportunity to bounce forward, not back, as we shape our future for the
betterment of the region. That’s what New Englanders are all about.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
13
Letter to Our Shareholders
Edward A. Hjerpe III
I
don’t have to tell you that economic growth in our region and beyond has been rather anemic
since the credit crisis and the collapse of the housing market. Historically low interest rates, record
high Dow Jones industrial averages, persistent unemployment, and prevailing indecision about
the future of housing and the secondary mortgage market all have ramifications for consumers,
originators, servicers, sellers, and investors — in short, our business and yours. As if uncertain
local, regional, and global economies weren’t enough, a changing regulatory landscape and the growing
needs of the communities we serve make these times even more challenging.
We are fortunate that our member base is among the strongest in the nation, with only one FDIC-
insured bank failure in the last 20 years. Members continue to be flush with deposits, which directly affects
the demand for our advances. Many of you prepaid advances this past year, and just as we expanded to
meet your funding requirements during the credit squeeze, we have been contracting in response to your
needs and activities. That is how the Federal Home Loan Banks are designed to work.
As our asset size and makeup change along with business cycles, we remain singularly focused on
fulfilling our core purpose and maintaining our value in the midst of unforeseen shocks and surprises.
Our first priority has always been to provide reliable, low-cost liquidity when you need it. To ensure our ability
to supply that funding well into the future, we continue to preserve capital, build retained earnings, and run
our operations as efficiently as possible, all the while developing new solutions to meet your short- and
long-term needs to keep us all resilient in the face of disruption.
14
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Financial Summary
In keeping with our recent trend of balance-sheet contraction, given the economic environment, total assets
at December 31, 2012, were $40.2 billion, down from $50.0 billion at year-end 2011. Average advances
outstanding for the year as a whole decreased $1.6 billion to $23.8 billion, compared with $25.4 billion the
previous year. At year-end 2012, 67 percent of you were active borrowers. Mortgage loans outstanding
totaled $3.5 billion at December 31, 2012, an increase of $369.7 million from year-end 2011. In addition,
91 of the 191 members approved to participate in our Mortgage Partnership Finance® (MPF®) program
were active participants in the program as of December 31, 2012.
The Bank earned an all-time record $207.1 million in net income in 2012, compared with $159.6
million the year before. Net income was significantly boosted by $66.3 million in prepayment fees from
advances and investments, compared with $30.1 million in 2011. In addition, credit-related other-thantemporary impairment charges on certain private-label MBS were $7.2 million for 2012, compared with the
$77.1 million recorded for such charges in 2011. The charges were attributable to projected incremental
credit losses on the collateral underlying certain private-label MBS with a combined par value of $345.0
million at December 31, 2012.
GAAP capital at December 31, 2012, was $3.6 billion, an increase of $77.1 million from $3.5 billion
at year-end 2011. Total retained earnings at December 31, 2012, grew to a record $587.6 million, an
increase of $189.5 million from December 31, 2011, while restricted retained earnings totaled $64.4 million
at December 31, 2012. Accumulated other comprehensive loss totaled $476.6 million at December 31,
2012, an improvement of $57.8 million from December 31, 2011.
At December 31, 2012, the Bank’s total regulatory capital-to-assets ratio was 10.6 percent, exceed-
ing the 4.0 percent minimum regulatory requirement, and permanent capital was $4.3 billion, exceeding
our $719.2 million minimum regulatory risk-based capital requirement. The Bank’s internal minimum capital
requirement, which is the sum of the Bank’s 4.0 percent minimum regulatory capital requirement plus its
“Mortgage Partnership Finance,” “MPF,” and “eMPF” are registered trademarks of the Federal Home Loan Bank of Chicago.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
15
retained earnings target, equaled $2.5 billion at December 31, 2012, which was more than satisfied by the
Bank’s actual regulatory capital of $4.3 billion. The ratio of the Bank’s market value of equity to its par value
of capital stock was 108 percent at December 31, 2012, compared with 95 percent at December 31,
2011. Additionally, we repurchased $250 million of excess capital in 2012 and an additional $300 million
earlier this month.
Focus on Members
We conducted a member survey late last year to gauge your level of satisfaction with our performance,
staff, and other aspects of membership. Ninety-seven percent of respondents were either very satisfied or
satisfied with staff responsiveness and helpfulness, along with our ability to supply funding in all economic
environments. As your cooperative, we continually look for ways to add value to your membership, from
developing new solutions to meet your evolving needs to expanding your borrowing capacity and making
it easier to do business with us.
The past year, we encouraged members to consider long-term advances to take advantage of excep-
tionally low rates, and you took down $1.9 billion. Members also continued to restructure advances as
another way to benefit from the low-rate environment. We introduced two fixed-term, floating-rate solutions:
the Curve Flattener, which provides protection from a flattening yield curve, and the Curve Steepener,
which offers protection from a steepening yield curve.
In response to member requests, we worked hard to expand the range of eligible collateral, adjust
the haircuts for certain types, and, where possible, streamline the process of determining eligibility. We also
made it possible for qualifying members to expand their borrowing capacity by listing residential loan
collateral with the Bank instead of completing the qualified collateral report.
We believe that communication is a two-way street. It is not only a priority for us to keep you informed
about the Bank, but it is equally important for us to hear your voice and understand your needs so we can
better meet them through a variety of business solutions. To those ends, we held member outreach meetings
in the district, invited members to our offices for information exchanges with our staff, conducted two
Member Advisory Panel sessions, and held numerous webinars and seminars throughout the year.
16
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t We also revamped our website to make it easier to navigate and more fully utilize its multimedia capabilities.
We launched our Products and Solutions Guide as a one-stop online member resource for information
related to advances and credit. In addition, we instituted a biweekly survey of member CEOs and CFOs,
posing questions on economic outlook, member activity, and even predictions on the Final Four and
Superbowl results.
Finally, our enhanced business continuity and disaster-recovery programs underwent unexpected,
real-life testing three times in 2012, as power outages and severe weather conditions forced us to evacuate
our headquarters in Boston’s Back Bay. Depending on the instance, we were able to successfully operate
remotely from our disaster-recovery facility or work with the Federal Home Loan Bank of Topeka, with whom
we have a reciprocal back-up relationship. In all cases, members never lost access to liquidity.
Housing and Community Investment
We were gratified to award $14.2 million in Affordable Housing Program grants and subsidies to support
48 affordable housing initiatives in the six New England states. The funds were awarded through member
financial institutions to projects that will create or preserve more than 1,000 units of affordable rental and
ownership housing for households earning at or below 80 percent of area median income. Besides providing safe, decent, and affordable homes, these initiatives will create jobs and boost economic development
throughout the region. Also, through the Equity Builder Program, we disbursed $2.1 million to 219 new
homebuyers for down-payment, closing-cost, homeowner-counseling, and rehabilitation assistance.
Members continue to take advantage of our other targeted funding programs as well. Community
Development advances offer readily available low-cost funding for eligible housing, small business and
job creation, and municipal improvements. In 2012, members accessed more than $570 million in CDAs
to help finance 4,425 units of housing and 58 economic-development or mixed-use initiatives.
Our board, management, and staff appreciate the input of the Advisory Council, which is comprised
of 14 housing and development professionals from the six New England states. The Council’s perspectives
on affordable housing and community development help inform the range of targeted products and services
we offer and ensure they address our district’s needs. I am grateful for their service this past year, led by
Chair Betsy Crum.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
17
Regulatory and Legislative Issues
The 2012 presidential campaign was notable for its lack of attention to housing, one of the historical drivers
of economic recovery. With new leadership in the House Financial Services Committee and several new
members on the Senate Banking Committee, we expect housing finance and the reform of housing government-sponsored enterprises to once again be the subject of hearings in 2013, as new members take the
opportunity to highlight their views. A Republican majority in the House and a Democratic majority in the
Senate, however, may be a recipe for slow or little progress.
I was honored to present testimony before the Bipartisan Policy Center’s Housing Commission
regional meeting last summer and highlighted the important role played by the Federal Home Loan Banks.
The Commission recently released its blueprint for the future of housing, and included recommendations
to increase private investment in the housing market; maintain a smaller governmental role; gradually wind
down Fannie Mae and Freddie Mac; and refocus federal housing assistance on low- and very low-income
households. This bipartisan plan may have some traction in the debate.
Earlier this year, the Finance Agency followed up on its white paper issued last fall that proposed a
framework for a new securitization platform. The agency announced its intention to form a new company for
this purpose, privatized or folded into the government, but separate from Fannie Mae and Freddie Mac.
Much depends on the future of these two GSEs.
Among the other issues we follow are the Basel III regulatory capital reforms, which could affect
members’ ability to take down advances; the Financial Stability Oversight Council’s rulings on systemically
important financial institutions; and Dodd-Frank derivatives regulation. We will keep you informed of developments that could have an impact on our operations.
18
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Board of Directors
The Bank’s ability to adapt and be agile starts with our board. Together, they marshal their individual and
collective expertise and experience to lead us as we strengthen our balance sheet and keep the lines of
communication open with our membership. These New Englanders do not hesitate to roll up their sleeves
and do what needs to be done to ensure our long-term stability and anticipate opportunities to improve
and grow.
I very much appreciate the guidance and dedication of Jan Miller and Jay Malcynsky, our chair and
vice chair, along with the chairs of each of our board committees, listed on page 20. In addition, I am thankful
for the many contributions that Kevin McCarthy, outgoing director, made during his nine years of service.
The Management Committee and the Bank would also like to acknowledge Janelle Authur and her
service to the Bank. Janelle retired this month after serving more than seven years as the Bank’s executive
director of Human Resources.
Eighty Years of Resilience
We have seen much change since 1932, the year we were established by Congress. As a cooperative,
we are committed to providing the funding solutions you need, whether in times of stability or uncertainty,
recession or prosperity. As our balance sheet grows stronger, we are reminded that financial results tell only
a part of the story. As New Englanders, we know that change is inevitable and look for ways to harness it
to develop new approaches that will make us, our members, and the communities we serve stronger, more
resilient, and agile. We are excited about the possibilities, and look forward to serving you.
As always, we thank you for your support.
Edward A. Hjerpe III
President and Chief Executive Officer
March 29, 2013
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
19
2012 Board of Directors
Andrew J. Calamare
Executive Vice President
The Co-operative Central Bank
Boston, Massachusetts
Kevin M. McCarthy
President and Chief Executive Officer
Newport Federal Savings Bank
Newport, Rhode Island
Joan Carty
President and Chief Executive Officer
Housing Development Fund
Stamford, Connecticut
Jan A. Miller (Chair)
President
Eastern Bank Corporation
Executive Vice President
Eastern Bank
Boston, Massachusetts
Patrick E. Clancy
Plymouth, Massachusetts
Steven A. Closson
Director
Androscoggin Savings Bank
Lewiston, Maine
Peter F. Crosby
President and Chief Executive Officer
Passumpsic Savings Bank
St. Johnsbury, Vermont
Stephen G. Crowe
President and Chief Executive Officer
MountainOne Financial Partners
Williamstown, Massachusetts
John H. Goldsmith
Director
Capitol Securities
Boston, Massachusetts
Cornelius K. Hurley
Director
Center for Finance, Law and Policy
Boston University
Boston, Massachusetts
A. James Lavoie
Trustee
Middlesex Savings Bank
Natick, Massachusetts
Mark E. Macomber
Director
Litchfield Bancorp
Director Emeritus
Connecticut Mutual Holding
Company
Litchfield, Connecticut
Jay F. Malcynsky (Vice Chair)
Managing Partner
Gaffney Bennett & Associates
New Britain, Connecticut
20
Emil J. Ragones
Executive in Residence
Accounting Management Solutions,
Inc.
Sudbury, 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
EXECUTIVE COMMITTEE
Chair: Jan A. Miller
Vice Chair: Jay F. Malcynsky
Committee Chairs:
Andrew J. Calamare
Joan Carty
Steven A. Closson
John H. Goldsmith
Cornelius K. Hurley
Mark E. Macomber
Kevin McCarthy
AUDIT COMMITTEE
Chair: Andrew J. Calamare
Vice Chair: Emil J. Ragones
Stephen G. Crowe
A. James Lavoie
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
Chair: Steven A. Closson
Vice Chair: Jay F. Malcynsky
Andrew J. Calamare
Stephen G. Crowe
John F. Treanor
HOUSING & COMMUNITY
DEVELOPMENT COMMITTEE
Chair: Joan Carty
Vice Chair: Patrick E. Clancy
Peter F. Crosby
Kevin M. McCarthy
Kenneth A. Wilman Jr.
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t PERSONNEL COMMITTEE
Chair: Mark E. Macomber
Vice Chair: A. James Lavoie
Joan Carty
Steven A. Closson
Jay F. Malcynsky
RISK COMMITTEE
Chair: John H. Goldsmith
Vice Chair: Peter F. Crosby
Patrick E. Clancy
Cornelius K. Hurley
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
Andrew J. Calamare
Joan CartyPatrick E. Clancy Steven A. Closson
Peter F. Crosby
Stephen G. Crowe
John H. Goldsmith Cornelius K. Hurley A. James Lavoie
Mark E. Macomber
Jay F. MalcynskyKevin M. McCarthy
Jan A. Miller
Emil J. Ragones
John F. Treanor Kenneth A. Wilman Jr. Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
21
2012 Management Committee
Edward A. Hjerpe III
President
Chief Executive Officer
M. Susan Elliott
Executive Vice President
Chief Business Officer
Frank Nitkiewicz
Executive Vice President
Chief Financial Officer
Edward A. Hjerpe III
M. Susan Elliott
Janelle K. Authur
Senior Vice President
Executive Director of Human Resources
Timothy J. Barrett
Senior Vice President
Treasurer
Michael C. Clifton
Senior Vice President
Chief Information Officer
George H. Collins
Senior Vice President
Chief Risk Officer
Carol Hempfling Pratt
Senior Vice President
General Counsel
Corporate Secretary
Frank Nitkiewicz
Janelle K. Authur
Timothy J. Barrett
Michael C. Clifton
George H. Collins
Carol Hempfling Pratt
22
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t Senior Vice President
Robert M. Abisla
First
Vice Presidents
Brian G. Donahue
Ana C. Dyer
Jack F. Henderson
Paul T. Pouliot
Kenneth A. Willis
Vice Presidents
Michael R. Arbogast
William F. Dolan
Paresh Fondeker
D. Patrick Green
Wesley Howland
Jason Hwang
Katherine A. Judge
Robert W. Lanza
George E. Maroun
Kevin G. Martin
Stephen M. McHugh
William McHugh
Shawn R. Movsessian
Daniel B. Redmond
Allison J. Santoro
Edward Schultze
Brian Shannahan
Joanne M. Sullivan
Mark J. Sullivan
Newton H. Thompson
David M. Trant
Mark S. Zelermyer
Assistant
Vice Presidents
Kamal Ayad
Melissa Benson
Linda Berman
Gina M. Brown
Loughlin Cleary
William J. Evans
Cindy Foreman
Laura Glowick
Tong Han
Mary Ellen D. Jutras
Matthew MacVicar
Matthew McDermod
Theresa Mahoney
Jane M. Moreau
Maria Nichols
Joan O’Brien
Kristen Saidla
Donna M. Salem
Shirley Seraphin
Patricia Tully
Mariya Vidanovic
Keith R. Walsh
Paul Willoughby
Assistant
Corporate
Secretary
Mary E. Noyes
2012 Advisory Council
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.
Thomas Callahan
Executive Director
Massachusetts Affordable Housing Alliance
Boston, Massachusetts
Thomas Callahan
Dean J. Christon
Elizabeth B. Crum
Dean J. Christon
Executive Director
New Hampshire Housing Finance Authority
Bedford, New Hampshire
Elizabeth B. Crum
Chair of the Advisory Council
Executive Director of Connecticut Housing Coalition
Wethersfield, Connecticut
John G. Gallagher
Executive Director
Maine State Housing Authority
Augusta, Maine
John G. GallagherRosemary M. Heard
Julie M. Iffland
Rosemary M. Heard
President and Chief Executive Officer
CATCH Neighborhood Housing
Concord, New Hampshire
Julie M. Iffland
Executive Director
Randolph Area Community Development
Randolph, Vermont
Jean M. Johnson
Executive Director
House of Hope Community Development Corporation
Warwick, Rhode Island
Jean M. Johnson
Dara K. Kovel
Dennis J. Lajoie
Dara K. Kovel
Vice Chair of the Advisory Council
Chief Housing Officer
Connecticut Housing Finance Authority
Rocky Hill, Connecticut
Dennis J. Lajoie
Chief Executive Officer
Community Concepts Finance Corporation
Lewiston, Maine
Josephine McNeil
Executive Director
CAN-DO
Newton, Massachusetts
Josephine McNeil
David B. Rich
Frank Shea
David B. Rich
Executive Director
Supportive Housing Works
Bridgeport, Connecticut
Frank Shea
Executive Director
Olneyville Housing Corporation
Providence, Rhode Island
Robert W. Tourigny
Executive Director
NeighborWorks of Greater Manchester
Manchester, New Hampshire
Richard Williams
Executive Director
Vermont State Housing Authority
Montpelier, Vermont
Robert W. Tourigny
Richard Williams
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t
23
Selected Financial Data (dollars in thousands)
The following selected financial data for each of the five years ended December 31, 2012, 2011, 2010, 2009, and 2008, have been
derived from our audited financial statements. The selected financial data should be read in conjunction with the Bank’s financial statements and the related notes thereto appearing in the Bank’s 2012 Annual Report on Form 10-K.
December 31,
2012
2011
2010
2009
2008
Statement of Condition Total assets
$
40,209,017 $
49,968,337$
58,647,301$
62,487,000$
80,353,167
Investments(1)
15,554,057
21,379,548
27,134,475
20,947,464
18,864,899
Advances
20,789,704
25,194,898
28,034,949
37,591,461
56,926,267
Mortgage loans held for portfolio, net(2)
3,478,896
3,109,223
3,245,954
3,505,975
4,153,537
Deposits and other borrowings
594,968
654,246
745,521
772,457
611,070
Consolidated obligations:
Bonds
26,119,848
29,879,460
35,102,750
35,409,147
32,254,002
Discount notes
8,639,048
14,651,793
18,524,841
22,277,685
42,472,266
Total consolidated obligations
34,758,896
44,531,253
53,627,591
57,686,832
74,726,268
Mandatorily redeemable capital stock
215,863
227,429
90,077
90,896
93,406
Class B capital stock outstanding-putable(3)
3,455,165
3,625,348
3,664,425
3,643,101
3,584,720
Unrestricted retained earnings
523,203
375,158
249,191
142,606
(19,749)
Restricted retained earnings
64,351
22,939
—
— —
Total retained earnings (accumulated deficit)
587,554
398,097
249,191
142,606
(19,749)
Accumulated other comprehensive loss
(476,620)
(534,411)
(638,111) (1,021,649) (134,746)
Total capital
3,566,099
3,489,034
3,275,505
2,764,058
3,430,225
Results of Operations
Net interest income
$
312,448
$
305,976
$
297,583
$
311,714
$ 332,667
(Reduction of) provision for credit losses
(3,127)
(831)
6,701
1,750
225
Net impairment losses on held-to-maturity
securities recognized in earnings
(7,173)
(77,067)
(84,762)
(444,068)
(381,745)
Other (loss) income
(14,935)
23,841
(1,482)
7,421
(10,215)
Other expense
63,283
65,099
59,564
60,068
56,308
AHP and REFCorp assessments(4)
23,122
28,890
38,489
— —
Net income (loss)
207,062
159,592
106,585
(186,751) (115,826)
Other Information
Dividends declared
$
17,605 $
10,686$
—$
—$
129,845
Dividend payout ratio(5)
8.50% 6.70%N/A N/A N/A
Weighted-average dividend rate(6) 0.50
0.30 N/A N/A3.86%
Return on average equity(7)
6.03
4.73
3.52% (6.49)%(3.17)
Return on average assets
0.45
0.30
0.17
(0.27)
(0.14)
Net interest margin(8)
0.68
0.58 0.47 0.440.41
Average equity to average assets
7.39
6.41
4.81
4.09
4.42
Total regulatory capital ratio(9)
10.59
8.51 6.83 6.204.55
1 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.
2 The allowance for credit losses amounted to $4.4 million, $7.8 million, $8.7 million, $2.1 million, and $350,000 for the years ended December 31, 2012, 2011, 2010, 2009,
and 2008, respectively.
3 Capital stock is putable at the option of a member, subject to applicable restrictions.
4 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.
5 The dividend payout ratio for 2010, 2009, and 2008 is not meaningful.
6 Weighted-average dividend rate is the dividend amount declared divided by the average daily balance of capital stock eligible for dividends.
7 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 16 — Capital, in the 10-K.
Please refer to the Federal Home Loan Bank of Boston’s 2012 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 2012 Annual Report on Form 10-K is available on the Security and Exchange Commission’s web site, www.sec.gov.
24
Fed er a l h o me loa n ba nk o f bos to n 2012 A nn ua l R ep o r t FHLBBoston
Federal Home Loan Bank of Boston
800 Boylston Street
Boston, Massachusetts 02199
www.fhlbboston.com
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