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CHFA finance committee reports revenue gains, but rising bond costs lift interest expense
Summary
At its Oct. 31 meeting the Connecticut Housing Finance Authority’s Finance/Audit Committee heard that year‑to‑date mortgage and investment interest revenue was $21 million above budget through September while bond interest expense exceeded budget by $11.9 million; the committee approved prior minutes and heard portfolio and swap updates.
Allison Murphy, Director of Financial Reporting and Control for the Connecticut Housing Finance Authority, told the Finance/Audit Committee on Oct. 31 that mortgage loan and investment interest revenue was $21,000,000 above budget through September and $27,600,000 higher than a year earlier. Murphy said fees and other income were $7,100,000 above budget through September and that bond interest expense was $11,900,000 over budget for the same period, which contributed to an overall change in net position that was $11,500,000 above target.
The revenue gains reflect higher interest income in the current elevated rate environment, Murphy said; administrative expenses were $5,400,000 below budget through September but $134,000 higher than the prior year. Excluding salaries and benefits of $22,200,000, current year‑to‑date expenses were $287,000 lower than last year.
John Chilson, CHFA’s Senior Director of Portfolio Management, summarized single‑family and multifamily portfolio activity. He reported the mortgage‑backed security portfolio balance ended September at $3,250,000,000, an $82,000,000 increase from August, and said the whole‑loan portfolio declined by 33 loans (about $5,000,000) to a carrying balance of $1,100,000,000. Chilson said the whole‑loan delinquency rate was 5.2%, nine basis points below the state average, and that the carrying balance for loans in foreclosure declined $2,700,000 to $11,000,000 with 22 fewer foreclosures year‑over‑year.
Chilson also reported recent program lending: the Authority funded 90 Downpayment Assistance loans totaling $1,000,000 (average loan $11,600) and 155 Time To Own loans totaling approximately $5,000,000 (average loan $31,400).
On multifamily lending, Chilson said two loan closings in September increased the portfolio to 593 loans totaling $1,400,000,000; there were seven permanent loan delinquencies, unchanged from the prior month, and the overall multifamily delinquency rate remained below one half of 1 percent.
Ningyan Li, Capital Markets Operations Manager, presented the third‑quarter investment and swap reports. Li reported the Authority’s investment portfolio book value increased by $265,000,000 to $4,430,000,000 and program assets rose by $199,000,000 to $3,100,000,000. Quarter‑over‑quarter the weighted yield to maturity edged down from 4.27% to 4.24%.
On the swap book, Li said there was no material change from the prior quarter: the total hedging position was $878,000,000 notional across 41 swaps with eight counterparties, the weighted pay rate remained 2.934%, and the mark‑to‑market value decreased from $49,000,000 to $24,000,000.
Procedural actions: Committee Chair Sarah Sanders requested a motion to approve the Sept. 26, 2024 Finance/Audit Committee minutes. Jerry Abrahams moved to approve, Timothy Hodges seconded, and the committee voted unanimously to adopt the minutes. Later, Hazim Taib introduced representatives from Wells Fargo — Nicholas Fluehr of Wells Fargo Securities, LLC, and Mara Holly of Wells Fargo Bank — who were present to update the board on an agreement discussed at the Sept. Board meeting with the Office of the Comptroller of the Currency.
The committee adjourned at 9:41 a.m. after a motion to adjourn by Timothy Hodges.
