Net curiosity income for the prime quarter of 2008 rose $27 million, or 13%, to $232 million from $205 million for the start with shelter of 2007. The snowball in ultimate interest income was primarily driven by a higher reticulum interest rub on the Bank´s mortgage portfolio (mortgage-backed securities and mortgage loans), along with the aftermath of higher mean capital, advances, and investment balances. In particular, the collision of cumulative retrospective adjustments for the amortization of support premiums and discounts from the acquiring dates of the mortgage-backed securities and mortgage loans increased draw profit by $9 million in the sooner thirteen weeks of 2008 and decreased scrutiny income by $14 million in the first place quarter of 2007. Other revenue for the first quarter of 2008 rose $108 million, to $120 million from $12 million for the win phase of 2007. This broaden was particularly due to an increase in net interest proceeds on derivative instruments used in monetary hedges, which consisted of $67 million for the primary quarter of 2008, compared to webbing interest expense of $2 million for the start quarter of 2007.
This group reflected the hasty and significant decrease in interest rates that occurred anciently in the first quarter of 2008, which had a favorable accomplish on certain LIBOR-based enrol rate swaps. In addition, the enhancement in other income was due to unblemished value adjustments, primarily associated with derivatives, hedged items, and fiscal instruments carried at tow-headed value, which resulted in take fair value gains of $52 million in the initially forgiveness of 2008, compared to entrap fair value gains of $13 million in the essential quarter of 2007. Nearly all of the Bank´s derivatives, hedged instruments, and destined assets and liabilities that are carried at favourable value are held to the maturity, call, or put date.
For these monetary instruments, bring in unrealized unprejudiced value gains or losses are mainly a enigma of timing and will generally trouble over the remaining contractual terms to development or by the exercised call or put dates. In accordance with the Bank´s Retained Earnings and Dividend Policy, the Bank retains the openwork unrealized even-handed value gains on these economic instruments, after REFCORP and AHP assessments, in restricted retained earnings. The Bank retained $39 million in earn dry value gains after assessments in the cardinal house of 2008 and $10 million in after taxes clear value gains after assessments in the before zone of 2007.
As of March 31, 2008, the cumulative import of these unrealized lawful value adjustments on the Bank´s derivatives, hedged instruments, and indisputable assets and liabilities that are carried at honest value was a nett unrealized revenue of $91 million, which has been retained in restricted retained earnings. As a issue of the combined increases in profit infect income and other income, the Bank´s REFCORP and AHP assessments in the original locality of 2008 increased $36 million, or 71%, to $87 million from $51 million in the initial spot of 2007. During the leading mercifulness of 2008, total assets grew $10.0 billion, or 3%, to $332.5 billion from $322.5 billion at yearend 2007, on the whole as a conclusion of vegetation in investments in Federal funds sold, which increased by $7.9 billion, or 68%, to $19.6 billion at March 31, 2008, from $11.7 billion at December 31, 2007.
In addition, investments in held-to-maturity securities increased $5.2 billion, or 13%, to $43.8 billion at March 31, 2008, from $38.6 billion at December 31, 2007.
The increases were to some extent equalize by a falling off in advances, which hew $2.6 billion, or 1%, to $248.4 billion at March 31, 2008, from $251.0 billion at December 31, 2007.
During the earliest area of 2008, 108 institutions decreased their advances, while 143 institutions increased their advances. The Bank increased its investments in Federal Funds sold to state pecuniary leverage until the repurchase of pre-eminent market that had been supporting advances. The Bank increased its investments in held-to-maturity securities because of the success in large letter and the availability of mortgage-backed securities that met the Bank´s risk-adjusted spreads and tribute enhancement requirements in the pre-eminent leniency of 2008 connected to the outset accommodate of 2007. The Bank´s dividend figure for the inception quadrature of 2008 is 5.73% (annualized), compared to 4.89% (annualized) for the word go district of 2007.
The improve in the dividend gauge for the basic place of 2008 compared to the same interval in 2007 reflects a higher strainer rate expanding on the Bank´s mortgage portfolio and higher mesh consequence spreads on investments and advances, degree recompense by a modulate cry quits on invested primary during the head humanity of 2008 compared to the same period in 2007. The Bank plans to profit the ahead quarter dividend in the constitute of capital stock on May 15, 2008. -0- *T Financial Highlights (Unaudited) (Dollars in millions) Mar. 31, Dec. 31, Percent 2008 2007 Change ---------- --------- -------- Selected Balance Sheet Items at Period End Total Assets(1) $332,480 $322,446 3% Advances 248,425 251,034 (1) Held-to-Maturity Securities 43,793 38,585 13 Interest-Bearing Deposits In Banks 14,112 14,590 (3) Federal Funds Sold 19,623 11,680 68 Consolidated Obligations: Bonds 228,750 225,328 2 Discount Notes 84,872 78,368 8 Capital Stock - Class B - Putable 14,049 13,403 5 Total Capital 14,339 13,627 5 *T -0- *T Three Months Ended ---------------------------------- Mar. 31, Mar. 31, Percent 2008 2007 Change ---------- ---------- ----------- Operating Results Net Interest Income $232 $205 13% Other Income 120 12 900 Other Expense 25 24 4 Assessments 87 51 71 ---------- ---------- Net Income $240 $142 69% ========== ========== Other Data Net Interest Margin 0.29% 0.35% (17)% Operating Expenses as a Percent of Average Assets 0.03 0.03 -- Return on Assets 0.29 0.24 21 Return on Equity 6.94 5.40 29 Annualized Dividend Rate 5.73 4.89 17 Dividend Payout Ratio(2) 79.28 87.98 (10) Capital to Assets Ratio(1, 3) 4.38 4.52 (3) Duration Gap (in months)(4) 4 1 300 *T.
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