SAN FRANCISCO, April 25, 2024 (GLOBE NEWSWIRE) -- The Federal Home Loan Bank of San Francisco (Bank) today announced its unaudited first quarter 2024 operating results. Net income for the first quarter of 2024 was $124 million, a decrease of $71 million compared with net income of $195 million for the first quarter of 2023. Net income for the first quarter of 2023 included $43 million of net income resulting from higher advance prepayments relative to the first quarter of 2024, which is not expected to occur at similar levels in the future, net of third-party payments to unwind interest rate swaps at fair value. "The Federal Home Loan Bank of San Francisco continues to be a critical engine of economic vitality across our three-state region," said Teresa Bryce Bazemore, president and chief executive officer. "In the first quarter of 2024, we remained an important provider of on-demand, low-cost liquidity to our member institutions, supporting community lending and economic health. Investing in a range of mandatory and voluntary affordable housing programs remains core to our mission and we are currently working with our members to engage in impactful affordable housing and economic development initiatives for the competitive 2024 grant cycle." The $71 million decrease in net income relative to the prior-year period was primarily attributable to a decrease in net interest income of $137 million, partially offset by an improvement in other income/(loss) of $62 million. The $137 million decrease in net interest income was primarily attributable to $93 million in net advance prepayment fees in the prior-year period, which were significantly lower in the first quarter of 2024. The decrease in net interest income compared to the prior-year period was also attributable to lower average balances of interest-earning assets and higher costs of interest-bearing liabilities, partially offset by higher yields on interest-earning assets and lower average balances of interest-bearing liabilities. The $62 million improvement in other income/(loss) was primarily driven by $45 million in net realized losses recognized in the prior-year period from derivatives economically hedging prepaid advances, along with $30 million of income recognized in the first quarter of 2024 in connection with the termination of a long-term funding arrangement entered into with a member borrower in 2017. At March 31, 2024, total assets were $88.0 billion, a decrease of $4.8 billion from $92.8 billion at December 31, 2023. Advances decreased by $4.4 billion to $56.9 billion at March 31, 2024, from $61.3 billion at December 31, 2023. Investments at March 31, 2024, were $29.9 billion, a net decrease of $398 million from $30.3 billion at December 31, 2023, attributable to decreases of $293 million in short-term investments and $105 million in mortgage-backed securities. Consistent with the Bank's community programs, the Bank allocated $63.4 million, or 10% of the Bank's 2023 earnings, to its 2024 Affordable Housing Program (AHP), an annual statutory grant program that supports the creation, preservation, or purchase of affordable housing. This program includes the AHP General Fund which awards grants to projects located in the Bank's three-state district such as the new AHP Nevada Targeted Fund that is in its second year and will award grants to qualified projects in Nevada, and the Workforce Initiative Subsidy for Homeownership (WISH) Program of which $13 million has been set aside. The WISH Program enables the Bank's members to deliver $4-to-$1 matching grants up to $30,806 to eligible low- and moderate-income first-time homebuyers for downpayments and closing costs to help them purchase a home. As part of the Bank's ongoing commitment to contribute up to 15% in total of annual income to affordable housing and community economic development programs and initiatives that strengthen the communities the Bank serves in partnership with its members, the Bank has voluntarily allocated 5% of its 2023 earnings, which amounts to $32 million to affordable housing and economic development programs, in addition to its annual AHP contribution. As a part of this commitment, the Bank's board has approved a renewal of the successful Middle-Income Downpayment Assistance program that was piloted in 2023 with $10 million in grant funding and designed to help aspiring homebuyers who make up the "missing middle" in the Bank's high-cost district become homeowners. Because of the enthusiastic response of the Bank's members to this voluntary program, the board has doubled its funding for this program in 2024 to $20 million as allocated from the Bank's 2023 earnings, to provide grants of up to $50,000 to each eligible homebuyer in their pipeline. Also, the board has approved a voluntary contribution of $4 million to the Access to Housing and Economic Assistance for Development grant program, which is entering its 20th year of boosting innovative initiatives aimed at advancing economic development opportunities in underserved communities. As of March 31, 2024, the Bank exceeded all regulatory capital requirements. The Bank exceeded its 4.0% regulatory requirement with a regulatory capital ratio of 8.4% at March 31, 2024. The increase in the regulatory capital ratio from 8.0% at December 31, 2023, mainly resulted from the decrease in total assets during the first quarter of 2024. The Bank also exceeded its risk-based capital requirement of $1.1 billion with $7.4 billion in permanent capital. Total retained earnings increased to $4.4 billion at March 31, 2024, from $4.3 billion at December 31, 2023. Today, the Bank's board of directors declared a quarterly cash dividend on the average capital stock outstanding during the first quarter of 2024 at an annualized rate of 8.75%. The quarterly dividend rate is consistent with the Bank's dividend philosophy of endeavoring to pay a quarterly dividend rate that is equal to or greater than the current market rate for highly rated investments and that is sustainable under current and projected earnings while maintaining appropriate levels of capital. The quarterly dividend will total $66 million, and the Bank expects to pay the dividend on May 9, 2024. Financial Highlights(Unaudited)(Dollars in millions) Selected Balance Sheet Items at Period End   Mar 31, 2024       Dec 31, 2023     Total Assets $ 88,026     $ 92,828     Advances   56,912       61,335     Mortgage Loans Held for Portfolio, Net   742       754     Investments, Net1