CONGRESS

SUPERVISION AND OVERSIGHT
District 11 • The Federal Home Loan Bank of San Francisco 30
At year-end, the FHLBank of San Francisco was the
sixth largest FHLBank, with assets of $85.7 billion.
Its balance sheet consisted of 59.4 percent advances,
0.8 percent mortgages, and 39.6 percent cash and
investments. MBS investments totaled $16.0 billion, of
which $6.9 billion were private-label MBS. Approximately
91.6 percent of private-label MBS were below investmentgrade.
Roughly $24.8 billion of advances had a remaining
maturity of less than one year. Advances have declined
to $50.9 billion from a peak of $262 billion at September
30, 2008. Funding through consolidated obligations
totaled $79.5 billion and comprised 34.8 percent discount
notes and 65.2 percent bonds. Consolidated obligations
with a remaining maturity of less than one year totaled
$29.1 billion.
The FHLBank reported net income of $638 million for the
year, the highest among the FHLBanks. Income included
$459 million from a first quarter 2015 private-label MBS
settlement. Return on assets of 0.76 percent was the highest
in the FHLBank System. Net interest income totaled
$476 million. Interest income on MBS totaled $556 million
and represented 61.0 percent of total interest income.
The Bank’s net interest spread of 0.54 percent was the
second highest in the FHLBank System but was a decrease
from 0.61 percent in 2014. Its yield on advances of 0.58
percent was the fourth highest, and its cost of funds on
consolidated obligations of 0.48 percent was the seventh
highest. Operating expenses of $138 million were the
highest of any FHLBank in nominal terms and ranked
third when compared to total assets at 0.16 percent.
Dividends on mandatorily redeemable capital stock of
$65 million were included in interest expense and negatively
affected profitability performance indicators.
The FHLBank’s regulatory capital ratio was 6.26 percent,
which was the second highest in the FHLBank System. Its
retained earnings were the second highest of any FHLBank
in nominal terms at $2.6 billion but second lowest when
compared to required risk-based capital at 97.9 percent.
The FHLBank’s market value of equity was 199.5 percent
of the par value of its member capital stock. Mandatorily
redeemable capital stock totaled $488 million, the highest
among all the FHLBanks.
The FHLBank had 339 members at year-end 2015: 194
commercial banks, 13 thrifts, 119 credit unions, 7 insurance
companies, and 6 community development financial
institutions. The FHLBank’s ten largest borrowers held 74
percent of total advances.
At the time of its February 2015 examination, FHFA concluded
the FHLBank’s overall condition and operations
were satisfactory with a strong liquidity position. Issues
identified during the examination were generally of moderate
regulatory concern and correctable with reasonable
efforts. The examination determined that risk from the
FHLBank’s substantial legacy private-label MBS portfolio
merited continued attention, though the risk was declining
with the size of the portfolio. In addition, the examination
identified shortcomings in the FHLBank’s support
for the durability of margin requirements for commercial
real estate and multifamily loan collateral for advances,
measurement of operational risk, and process for suspicious
activity reporting.
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This summary reflects conclusions made at the time of FHFA’s 2015 examination of the FHLBank of San Francisco supplemented by year-end financial information.
REPORT TO CONGRESS • 2015 41