UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | October 27, 2011 |
Federal Home Loan Bank of Pittsburgh
__________________________________________
(Exact name of registrant as specified in its charter)
| Federally Chartered Corporation | 000-51395 | 25-6001324 |
|
_____________________ (State or other jurisdiction |
_____________ (Commission |
______________ (I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
| 601 Grant Street, Pittsburgh, Pennsylvania | 15219 | |
|
_________________________________ (Address of principal executive offices) |
___________ (Zip Code) |
| Registrant’s telephone number, including area code: | 412-288-3400 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 27, 2011 the Federal Home Loan Bank of Pittsburgh (the "Bank") issued a press release and a letter to members to report the Bank’s financial results for the quarter ended September 30, 2011 and announce a partial excess stock repurchase on October 28, 2011. Attached as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K are copies of the related press release and member letter.
Item 7.01 Regulation FD Disclosure.
The information set forth under Item 2.02 is also furnished pursuant to this Item 7.01. The information being furnished pursuant to Item 2.02 and Item 7.01 of this Current Report on Form 8-K and the information contained in Exhibit 99.1 and Exhibit 99.2 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated October 27, 2011 issued by the Bank
99.2 Letter to members dated October 27, 2011 issued by the Bank
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Federal Home Loan Bank of Pittsburgh | ||||
| October 27, 2011 | By: |
Kristina K. Williams
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| Name: Kristina K. Williams | ||||
| Title: Chief Operating Officer and Chief Financial Officer | ||||
Exhibit Index
| Exhibit No. | Description | |
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99.1
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Press release dated October 27, 2011 issued by the Bank | |
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99.2
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Letter to members dated October 27, 2011 issued by the Bank |
Press Release
Contact: Terri McKay, FHLBank Pittsburgh: 412-288-2830; cell 412-523-8511 tmckay@fhlb-pgh.com
FHLBANK PITTSBURGH ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
PITTSBURGH, October 27, 2011 – The Federal Home Loan Bank of Pittsburgh (FHLBank) today announced unaudited financial results for third quarter 2011. The Bank recorded net income of $11.9 million. On October 28, 2011, the Bank will repurchase excess capital stock consistent with its practice in past quarters.
Operating Results
For the third quarter of 2011, net income was $11.9 million, down 74% compared to $45.1 million in
third quarter 2010. This decrease was driven by lower net interest income and losses on derivatives
and hedging activities in the current period as well as nonrecurring gains on sale of
available-for-sale (AFS) securities in the prior period. The Bank incurred net other-than-temporary
impairment (OTTI) credit losses on its private-label mortgage-backed securities (MBS) portfolio of
$(6.2) million for third quarter 2011 compared to $(7.0) million for third quarter 2010.
For the nine months ended September 30, 2011, net income was $27.1 million compared to a net loss of $(13.2) million for the same prior-year period primarily due to lower net OTTI credit losses partially offset by lower net interest income year-over-year, as well as nonrecurring gains on sale of AFS securities in the prior year. For the nine months ended September 30, 2011 and 2010, net OTTI credit losses were $(37.5) million and $(145.3) million, respectively.
“We are pleased the Bank has continued to be profitable and able to repurchase capital stock, particularly during a period of excess liquidity among our members and sustained low interest rates,” said Winthrop Watson, President and Chief Executive Officer.
more
more601 Grant Street • Pittsburgh, PA 15219-4455 • 412-288-3400 • www.fhlb-pgh.com
| FHLBank Pittsburgh Reports Third Quarter Results – page two |
The Bank actively monitors the credit quality of its MBS. It is not possible to predict the magnitude of additional OTTI charges in the future because that will depend on many factors, including economic, financial market and housing market conditions as well as the actual and projected performance of the loan collateral underlying the Bank’s MBS. If delinquency and/or loss rates on mortgages and/or home equity loans continue to increase, and/or there is a further decline in residential real estate values, the Bank could experience reduced yields or further losses on these investment securities.
The vast majority of the securities in the Bank’s private-label MBS portfolio were AAA-rated at the time of purchase. Based on the performance of certain securities, among other information, it appears that the underwriting standards represented in the offering materials for these securities were not followed. As a result, the Bank owns certain private-label MBS, which it otherwise would not have owned, on which it has recognized losses. The Bank has filed lawsuits against certain issuers, underwriters and rating agencies related to these misrepresentations.
For the quarter ended September 30, 2011, net interest income was $37.5 million, a decrease of $13.1 million, or 26%, from $50.6 million for third quarter 2010. For the nine months ended September 30, 2011, net interest income was $112.7 million, a decrease of $56.0 million, or 33%, from $168.7 million for the same prior-year period. These declines were driven by both a shrinking balance sheet as well as net interest margin compression. Net interest margin compression was due to run-off of higher yielding mortgage assets and changes in the composition of the Bank’s balance sheet. The net interest margin decreased 5 basis points quarter-over-quarter to 30 basis points and decreased 8 basis points year-over-year to 29 basis points.
Balance Sheet Highlights
Total loans to members, also called advances, decreased $3.9 billion, or 13%, to $25.8 billion at
September 30, 2011 compared to $29.7 billion at December 31, 2010. Demand for advances has declined
steadily since late 2008 primarily due to members being able to fund loans with increased customer
deposit balances and continued low loan demand from members’ customers in the current economy.
more
| FHLBank Pittsburgh Reports Third Quarter Results – page three |
At September 30, 2011, total assets were $46.8 billion, a decrease of $6.6 billion, or 12%, from $53.4 billion at December 31, 2010. Total capital at September 30, 2011 was $3.8 billion, a decrease of $389.8 million from $4.2 billion at December 31, 2010. The decrease in total capital from year-end 2010 was due to the partial excess capital stock repurchases in February, April and July 2011. The portion of OTTI losses reported as noncredit losses in accumulated other comprehensive income (loss) (AOCI) improved to $(140.4) million at September 30, 2011 from $(222.5) million at December 31, 2010. This improvement was due to paydowns and price appreciation in the private-label MBS portfolio as well as the reclassification of certain noncredit losses to credit losses during the first nine months of 2011. Total retained earnings were $424.4 million at September 30, 2011, an increase of $27.1 million from $397.3 million at December 31, 2010. This included $2.4 million of restricted retained earnings at September 30, 2011. At September 30, 2011, FHLBank Pittsburgh had total regulatory capital of $4.0 billion and remained in compliance with all regulatory capital requirements.
The Bank will repurchase excess capital stock tomorrow, October 28, 2011. The amount of excess capital stock to be repurchased from any member will be the lesser of five percent of the member’s total capital stock outstanding or its excess capital stock outstanding. Decisions regarding any future repurchases of excess capital stock will be made on a quarterly basis.
On December 23, 2008, the Bank’s management and Board of Directors announced the suspension of both dividend payments and the repurchase of excess capital stock until such time as it becomes prudent to reinstate either or both. While the repurchase of excess capital stock suspension has been partially lifted again this quarter with the limited repurchase on October 28, 2011, the dividend suspension remains in effect and, therefore, no dividends were declared or paid in the third quarter of 2011. The Bank will continue to monitor the condition of its private-label residential MBS portfolio, its overall financial performance and retained earnings, developments in the mortgage and credit markets, and other relevant information as the basis for determining the status of dividends and excess capital stock repurchases in future quarters.
FHLBank Pittsburgh Reports Third Quarter 2011 Results – page four
Detailed financial information regarding the third quarter 2011 results will be available in FHLBank Pittsburgh’s third quarter 2011 Form 10-Q filing, which the Bank anticipates filing on November 8, 2011. Detailed financial information regarding 2010 is available in the 2010 Form 10-K, which can be accessed through FHLBank Pittsburgh’s website at www.fhlb-pgh.com.
FHLBank Pittsburgh is a wholesale bank that serves the housing finance and community and economic development needs of its owner-members. FHLBank Pittsburgh provides reliable access to low-cost funds, competitive pricing in the purchase of mortgage loans, correspondent banking, technical assistance, affordable housing grants and other programs so members can better serve their own communities. FHLBank Pittsburgh is privately capitalized and funded and does not use taxpayer dollars. At September 30, 2011, it had 300 members in its district of Delaware, Pennsylvania and West Virginia and approximately $47 billion in assets. FHLBank Pittsburgh is one of twelve Banks in the Federal Home Loan Bank System, established by Congress in 1932 to support the residential mortgage and community development activities of local financial institutions.
This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Actual performance or events may differ materially from that expected or implied in forward-looking statements because of many factors. Such factors may include, but are not limited to, general economic conditions (including effects on, among other things, mortgage-backed securities), the Bank’s ability to maintain adequate capital levels (including meeting applicable regulatory capital requirements), changes in our membership profile, demand for advances, changes in projected business volumes, business and capital plan adjustments and amendments, regulatory actions or approvals, competitive pressure from alternative member funding sources, government actions and programs in response to the credit crisis, accounting adjustments or requirements, interest-rate volatility, our ability to appropriately manage our cost of funds, the cost-effectiveness of our funding, hedging and asset-liability management activities, shifts in demand for our products and consolidated obligations, and changes in the System’s debt rating or the Bank’s rating. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. FHLBank Pittsburgh does not undertake to update any forward-looking statements made in this announcement.
more
FHLBank Pittsburgh Reports Third Quarter Results – page five
Unaudited Condensed Statements of Condition and Operations
(in millions)
| Statement of Condition | September 30, 2011 | December 31, 2010 | ||||||
ASSETS: |
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Investments (1) |
$ | 16,526.3 | $ | 18,751.7 | ||||
Advances |
25,838.6 | 29,708.4 | ||||||
Mortgage loans held for portfolio, net |
4,031.2 | 4,483.0 | ||||||
All other assets |
432.6 | 443.6 | ||||||
Total assets |
$ | 46,828.7 | $ | 53,386.7 | ||||
LIABILITIES: |
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Consolidated obligations, net |
$ | 41,123.1 | $ | 47,211.4 | ||||
All other liabilities |
1,934.5 | 2,014.4 | ||||||
Total liabilities |
43,057.6 | 49,225.8 | ||||||
CAPITAL: |
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Total capital stock |
3,483.7 | 3,986.9 | ||||||
Retained earnings |
424.4 | 397.3 | ||||||
Accumulated other comprehensive loss |
(137.0 | ) | (223.3 | ) | ||||
Total capital |
3,771.1 | 4,160.9 | ||||||
Total liabilities and capital |
$ | 46,828.7 | $ | 53,386.7 | ||||
| (1) Includes held-to-maturity securities, available-for-sale |
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| securities, trading securities, interest-bearing deposits, Federal funds sold |
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| and securities purchased under agreement to resell. |
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| For the three months | For the nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| Statement of Operations | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total interest income |
$ | 187.1 | $ | 245.4 | $ | 589.2 | $ | 736.8 | ||||||||
Total interest expense |
149.6 | 194.8 | 476.5 | 568.1 | ||||||||||||
Net interest income |
37.5 | 50.6 | 112.7 | 168.7 | ||||||||||||
Provision (benefit) for credit losses |
2.4 | (1.3 | ) | 6.4 | (2.7 | ) | ||||||||||
Total OTTI losses |
(0.1 | ) | — | (3.2 | ) | (22.6 | ) | |||||||||
Portion of OTTI losses recognized in
other comprehensive loss |
(6.1 | ) | (7.0 | ) | (34.3 | ) | (122.7 | ) | ||||||||
Net OTTI losses |
(6.2 | ) | (7.0 | ) | (37.5 | ) | (145.3 | ) | ||||||||
All other income (loss) |
(1.1 | ) | 16.0 | 11.5 | 7.8 | |||||||||||
All other expense |
14.1 | 15.8 | 46.0 | 47.1 | ||||||||||||
Income (loss) before assessments |
13.7 | 45.1 | 34.3 | (13.2 | ) | |||||||||||
Affordable Housing Program |
1.8 | — | 3.5 | — | ||||||||||||
REFCORP |
— | — | 3.7 | — | ||||||||||||
Total assessments |
1.8 | — | 7.2 | — | ||||||||||||
Net income (loss) |
$ | 11.9 | $ | 45.1 | $ | 27.1 | $ | (13.2 | ) | |||||||
Member News
11-50
October 27, 2011
To: All members
In the attached news release, FHLBank Pittsburgh today reported third quarter 2011 net income of $11.9 million and announced a partial repurchase of excess capital stock for tomorrow, October 28, 2011. We are pleased that the Bank is able to repurchase excess capital stock again this quarter.
The amount to be repurchased from any member will be the lesser of the amount of the member’s excess capital stock or five percent of the member’s total capital stock, based on shares outstanding at close of business today, October 27. Members who do not have excess capital stock will not participate in the repurchase. The capital stock repurchase amount will be credited to members’ DDA accounts tomorrow, Friday, October 28, 2011.
If you have questions regarding the capital stock repurchase, please contact your relationship manager.
Tomorrow’s limited repurchase of excess capital stock does not signal that similar repurchases will occur automatically going forward; rather, decisions on any future excess capital stock repurchases will be made on a quarterly basis. We will continue to monitor the condition of our private-label MBS portfolio, our overall financial performance and retained earnings position, developments in the mortgage and credit markets, and other relevant information as the basis for determining the status of any excess capital stock repurchases or dividends in future quarters.
Sincerely,
Winthrop Watson