FHLB of San Francisco Sees Net Income Rise

The Federal Home Loan Bank of San Francisco had net income of $303 million for the second quarter of 2009, up from $233 million for the same period last year, as it benefited from $168 million in net gains associated with derivatives, hedged items and financial instruments carried at fair value. However, FHLB-SF also took a non-credit impairment charge of $1.2 billion and a credit impairment charge of $88 million related to non-agency mortgage-backed securities in its held-to-maturity portfolio. The impairment was due to a lack of liquidity in the MBS market affecting the valuation of the securities. As of June 30, 2009, FHLB-SF had a regulatory capital-to-assets ratio of 6.1%, well above its 4% regulatory requirement, and its risk-based capital was $14.6 billion, also well above the $8.2 billion regulatory requirement.