Des Moines, Iowa: The Federal Home Loan Bank of Des Moines reported net income of $121.0 million for 2014 compared to $109.8 million in 2013. The primary drivers of the Bank’s net income in 2014 were net interest income, a reversal for credit losses on mortgage loans, and other (loss) income.
Net interest income totaled $250.7 million in 2014 compared to $213.1 million in 2013. The increase was primarily due to an increase in interest income resulting from higher advance and mortgage-backed security (MBS) volumes. The Bank’s net interest margin was 0.30 percent during 2014 compared with 0.39 percent in 2013.
The decrease was primarily due to reduced yields on the Bank’s interest-earning assets driven by the low interest rate environment and higher average volumes of advances and money-market investments that generate lower margins when compared to the Bank’s other interest-earning assets. The decline was partially offset by lower yields paid on the Bank’s interest-bearing liabilities as a result of the Bank’s increased utilization of discount notes to fund the increase in advances and the low interest rate environment.
In 2014 and 2013, the Bank recorded reversals for credit losses on its mortgage loans of $2.4 million and $5.9 million due primarily to reductions in loan delinquencies and improvements in housing markets. In addition, during 2013, the Bank began utilizing external property valuations rather than average loss severity rates on its individually evaluated mortgage loans, which resulted in losses that were lower than previously estimated.
