Attached files
| file | filename |
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| 8-K - FORM 8-K - Federal Home Loan Bank of Pittsburgh | d198000d8k.htm |
 Member
Audio/Web Conference
August 2, 2016 Exhibit 99.1 |
 Cautionary
Statement Regarding Forward- Looking Information
2 Statements contained in these slides, including statements describing the objectives, projections, estimates, or predictions of the
future of 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 Federal Home Loan Bank of Pittsburgh (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 quarterly 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 Bank’s capital structure; changes in the Bank’s 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 FHLBank System’s debt rating or
the Bank’s 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
Bank’s ability to maintain adequate capital levels (including
meeting applicable regulatory capital requirements); business and capital plan adjustments and amendments; technology risks; and timing and volume of market activity. We do not undertake to update any forward-looking information. Some of the data
set forth herein is unaudited.
|
 Over/ 2016 2015 (Under) Net interest income 175.0 $ 156.6 $ 18.4 $ Provision (benefit) for credit losses 0.4 (0.2) 0.6 Realized gains from sales of AFS securities 12.7 - 12.7 Gain on litigation settlement, net 0.5 15.3 (14.8) All other income (loss) (11.0) 31.9 (42.9) Other expenses 39.6 35.4 4.2 Income before assessment 137.2 168.6 (31.4) AHP 13.7 16.9 (3.2) Net income 123.5 $ 151.7 $ (28.2) $ Net interest margin (bps) 39 37 2 Six months ended June 30, Financial Highlights – Statement of Income (in millions) 3 |
 Quarterly
Net Income 2Qtr 16
1Qtr 16 4Qtr 15 3Qtr 15 2Qtr 15 Income before assessment 74.4 $ 62.8 $ 60.4 $ 55.9 $ 89.6 $ AHP 7.4 6.3 6.0 5.6 9.0 GAAP Net income 67.0 56.5 54.4 50.3 80.6 Adjustments: Derivative and hedging activity (16.4) (35.6) 7.3 (25.4) 29.1 Net gains (losses) on trading securities 10.9 17.3 (3.8) 8.7 (10.1) Realized gains from sales of AFS securities - 12.7 - - - Gain on litigation settlement, net 0.5 - - - - Net prepayment fees on advances 20.7 0.1 0.4 1.8 0.2 Subtotal - adjustments 15.7 (5.5) 3.9 (14.9) 19.2 AHP (1) 1.6 (0.6) 0.4 (1.5) 1.9 Adjusted Net Income 52.9 $ 61.4 $ 50.9 $ 63.7 $ 63.3 $ (in millions) (1) GAAP preassessment income is reduced by the 10% AHP charge, so the subtotal adjustments are as well. 4 |
 Financial
Highlights – Selected Balance Sheet
2016 2015 Amount Average: Total assets 91,650 $ 85,984 $ 5,666 $ 7 % Advances 68,029 62,642 5,387 9 Total investments 19,132 18,674 458 2 June 30, Dec 31, 2016 2015 Amount Spot: Advances 66,336 $ 74,505 $ (8,169) $ (11) % Capital stock 3,232 3,540 (308) (9) Retained earnings 925 881 44 5 Percent Over/(Under) Over/(Under) Percent Six months ended June 30, (in millions) (in millions) 5 |
 (in
millions) June 30,
Dec 31, 2016 2015 Permanent capital 4,163 $ 4,427 $ Excess permanent capital over RBC requirement 3,462 $ 3,606 $ Capital ratio (4% minimum) 4.8% 4.6% Leverage ratio (5% minimum) 7.2% 6.9% Market value/capital stock (MV/CS) 128.9% 127.9% Capital Requirements 6 |
 Membership Update Kris Williams 7 |
 Year-to-Date Highlights
• First six months of 2016 were strong in product usage • MPF ® fundings of $194 million in the second quarter – up 62% from second quarter 2015 and the highest in the past 5 years • Advances declined 11% from year-end due to prepayments and maturity of short-term borrowings; however, we experienced a 40% increase in usage from our insurance company members • First Front Door committed $7.9 million in grant funding to help 1,582 homebuyers purchase their first home – biggest funding round ever 8 |
 It’s
Your Co-op •
You are both shareholder and customer
• Your activity affects the vibrancy of the Bank • Reward as shareholder: attractive, reliable dividend, especially on activity stock • Reward as customer: products that enhance your business and community 9 |
 Membership Value Proposition
• Vibrant Bank • Stock Value • Financial Return • Strong Capitalization • Reliable Access to Liquidity • Products and Services That Help Your Business and Communities Thrive • Outstanding Customer Service 10 Shareholder Return on Investment Customer Product & Service Usage Value of Membership |
 Vibrant
Bank •
FHLBank vibrancy is driven
by member activity with the
Bank • Advances have seen significant growth in the last five years • Total advances declined from year end; however, it is not uncommon for the Bank to experience variances in the overall portfolio driven by member needs • Other key product usage such as the Mortgage Partnership Finance ® (MPF ® ) Program and letters of credit has also progressed positively "Mortgage Partnership Finance” and "MPF" are registered trademarks of the Federal Home Loan Bank of Chicago
11 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 FHLBank Pittsburgh Advances vs. Assets Advances Assets |
 Stock
Value PAR
• FHLBank stock always trades at par – therefore, our goal is to maintain a market value above par at all times • The decline in the market value from a high in 2014 was primarily due to advance growth • When market value is above par and a new advance is executed, the purchase of capital stock at par reduces the total market value of the FHLBank 12 50% 100% 150% Market Value/Capital Stock Market Value/Capital Stock |
 Financial Return • Both net income and return on equity improved significantly over the past five years • The 2014 results benefited from large litigation gains, whereas the strong performance in 2015 and 2016 reflects member activity • Activity-based dividend remains strong at 5% in 2016 • Management and the Board recognize that a consistent, predictable dividend is desirable Membership Activity 13 * Excludes the special dividend of 2.5% paid in February 2015 that was based upon average member capital for the full year of 2014 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% Quarterly Dividend Rate* Return on Equity |
 Strong
Capitalization •
Total capital consists primarily
of your capital stock and
retained earnings • The Bank exceeds all regulatory capital requirements • Retained earnings have grown substantially over the past five years • The Bank has exceeded its internally developed retained earnings target since 2012 • Additional accumulation of retained earnings is expected; we view retained earnings as risk-absorbing capital 14 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 RBC Requirement Total Capital $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 Retained Earnings Target Retained Earnings |
 Access
to Liquidity •
Attractive advance pricing
depends on the FHLBank’s
ability to raise attractively priced
funding in the capital markets
• When compared to Treasuries, FHLBank funding levels are very attractive • The attractiveness is evident in the term part of the curve at three years and out - an excellent time to term out advances • FHLBank floating-rate funding is currently not pricing as well relative to LIBOR due to market changes in swap spreads 15 60 50 40 30 20 10 0 3 Month 2 Year 3 Year 5 Year 7 Year 10 Year 3 Month 2 Year 3 Year 5 Year 7 Year 10 Year 60 40 20 0 -20 -40 5 Yr. Avg. (6/30/11-6/30/16) 5 Yr. Avg. (6/30/11-6/30/16) 6/30/2016 06/30/2016 FHLB Bullet Funding versus Treasuries FHLB Bullet Funding versus LIBOR |
 Products
and Services 16
Maximum Membership Value Advances and Bank Services Letters of Credit Mortgage Partnership Finance ® (MPF ® ) Program Participation Community Investment Product Offerings |
 Outstanding Customer Service
17 |
 Member
Audio/Web Conference
August 2, 2016 18 |