Subscribe AtMarch 31 2009 $60 million 0
By Admin
AtMarch 31 2009, $60 million (0.73 percent) of conventional principal was 60 daysor more delinquent, well below the comparable national average of 3.12 percent.We have multiple layers of credit enhancements on our mortgage notes whichprotect us against losses down to approximately a 50 percent loan-to-valueratio.The balance of investments was $34.6 billion at March 31, 2009, a decrease oftwo percent from year-end 2008. Total investments included $11.9 billion ofmortgage-backed securities and $22.7 billion of short-term money marketinstruments. The latter are generally held for liquidity purposes and increasedin the second half of 2008 and into 2009 as we stood ready to support ourmembers' funding needs.At March 31, 2009, 98 percent of our mortgage-backed securities were issued byFannie Mae or Freddie Mac, and now are effectively guaranteed by the UnitedStates government, while only 2 percent ($280 million) of the holdings were inprivate-label mortgage-backed securities. Our private-label mortgage-backedsecurities are comprised of high-quality residential mortgage loans issued andpurchased in 2003. The underlying collateral has a de minimis level ofdelinquencies and foreclosures as reflected in the average serious delinquencyrate (loans at least 60 days past due) of 0.37 percent of total principal, whiletheir average credit enhancement stood at 6.8 percent.
All of our private-labelmortgage-backed securities were rated AAA/Aaa at March 31, 2009.We have never experienced a credit related loss on, nor have we ever establisheda loss reserve for any asset. In addition we have not taken an impairment chargeon any investment. Based on our analysis of exposures and application of GAAP wecontinue to believe that no loss reserves are required for our Advances ormortgage assets, nor do we consider any of our investments to beother-than-temporarily impaired.Debt and LiquidityThe severe disruptions in the financial and credit markets, including but notlimited to the U.S. government actions placing Fannie Mae and Freddie Mac intoconservatorship, have affected the FHLBank System's funding costs and our debtand liquidity management, though to a lesser degree in 2009 than in the latterhalf of 2008. Relative to the second half of 2008, our funding spreadsassociated with issuing long-term debt have improved and are less volatile whencompared to LIBOR and U.S Treasuries. We have been able to replace debt as ithas matured and, as discussed earlier, debt that we called, all at morefavorable interest costs.Capital Stock and Retained EarningsWe continued to maintain strong compliance with all of our regulatory capitaladequacy requirements as reflected in our regulatory capital to assets ratio of4.87 percent (the minimum requirement is 4.00 percent).
Capital stock was $4.0billion on March 31, 2009, an increase of less than one percent or approximately$36 million from year-end 2008. Regulatory capital stock - which includes bothcapital stock and mandatorily redeemable capital stock - increased $24 million,also less than one percent, from 2008 year-end On March 31, 2009, we paid a4.50 percent dividend rate. Retained earnings grew $39 million (12 percent) fromyear-end 2008 to $365 million on March 31, 2009.The Federal Home Loan Bank of Cincinnati is a triple-A rated regional wholesalecooperative bank. We raise private-sector capital from our member-stockholdersand, with other FHLBanks, issue high-quality debt in the worldwide capitalmarkets. We provide members with competitive services (primarily Advances, areadily available, low-cost source of funds) and a competitive return on theirFHLBank capital investment through quarterly dividends. We also fund communityinvestment programs that help our members create affordable housing and promotecommunity economic development.