Federal Home Loan Bank of Atlanta released preliminary unaudited financial highlights for the quarter ended March 31, 2020. All numbers reported below for the first quarter of 2020 are approximate until the Bank announces unaudited financial results in its Form 10-Q filing with the Securities and Exchange Commission (SEC), which is expected to be filed on or about May 8, 2020.

Net income for the first quarter of 2020 was $108 million, an increase of $7 million compared to net income of $101 million for the first quarter of 2019. The increase in net income was primarily due to an $85 million gain from the sale of the Bank’s private-label mortgage-backed securities investment portfolio during the first quarter of 2020. Partially offsetting this increase was a decrease in net interest income during the first quarter of 2020 and an increase in noninterest expense due to an additional voluntary $20 million retirement plan contribution during the first quarter of 2020.

Net interest income for the first quarter of 2020 was $85 million, a decrease of $59 million compared to the first quarter of 2019. Conditions in the financial markets deteriorated during the first quarter of 2020 primarily due to the global pandemic associated with COVID-19. In response to these market conditions, the Federal Open Market Committee lowered the target range for federal funds from 1.50 percent to 1.75 percent to a target range of 0.00 percent to 0.25 percent. In the weeks before and after the Federal Reserve’s cut in the federal funds target rate, market interest rates declined significantly. Additionally, the Federal Reserve implemented a number of asset purchase programs to provide additional liquidity to the financial markets and the Bank continued to meet its funding needs. The decrease in market interest rates impacted the Bank’s net interest income during the first quarter of 2020 resulting in narrower spreads on interest-earning assets and increased losses from derivative and hedging activities.

Total assets as of March 31, 2020 were $189.4 billion, an increase of $39.5 billion, or 26.4 percent, from December 31, 2019. Advances outstanding were $137.0 billion as of March 31, 2020, an increase of $39.9 billion, or 41.0 percent, from December 31, 2019. The increase in advances was the result of increased demand for liquidity from the Bank’s members as a result of market conditions, which demand the Bank continued to meet. Given the uncertainty in the market and the potential impact to the U.S. economy of the COVID-19 pandemic, it is uncertain whether this increased advance demand will continue and if so, for how long. Retained earnings were $2.2 billion as of March 31, 2020, an increase of $32 million, or 1.47 percent, from December 31, 2019. Capital stock was $6.7 billion as of March 31, 2020, an increase of $1.7 billion, or 33.4 percent, from December 31, 2019.

The Bank's first quarter 2020 performance resulted in an annualized return on average equity (ROE) of 5.97 percent as compared to 5.72 percent for the first quarter of 2019. The ROE spread to average three-month London Interbank Offered Rate (LIBOR) increased to 444 basis points for the first quarter of 2020, as compared to 303 basis points for the first quarter of 2019. The Bank is currently planning for the eventual replacement of the LIBOR benchmark interest rate, including the possibility of the Secured Overnight Financing Rate (SOFR) as the dominant replacement. For comparative purposes, the Bank’s ROE spread to average SOFR for the first quarter of 2020 was 474 basis points. As of March 31, 2020, the Bank was in compliance with its regulatory capital requirements.

Operational Status

Both the State of Georgia and the City of Atlanta, where the Bank is located, have issued shelter-in-place orders as a result of the COVID-19 pandemic. As a financial institution, the Bank is part of the nation’s critical infrastructure, has continually operated its business, and has continued to serve as a reliable source of funding for our members. Beginning March 16, 2020, most of the Bank’s employees began working remotely, with operationally critical employees working on site at our offices. At this time, the Bank cannot predict when its full employee base will return to work in our offices or the potential impact of the COVID-19 pandemic to our members, counterparties, vendors, and other third parties upon which we rely to conduct our business. To date, the Bank has not experienced significant operational difficulties or disruptions, however their possibility exists, which could impair the Bank’s ability to conduct and manage its business effectively.