Federal Home Loan Bank of Indianapolis Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow

fhlbi-20200331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-51404

FEDERAL HOME LOAN BANK OF INDIANAPOLIS

(Exact name of registrant as specified in its charter)


Federally Chartered Corporation						35-6001443
(State or other jurisdiction of incorporation)						(IRS employer identification number)

8250 Woodfield Crossing Blvd. Indianapolis, IN						46240
(Address of principal executive offices)						(Zip code)

(317) 465-0200

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


o Large accelerated filer	o Accelerated filer	o Emerging growth company
x Non-accelerated Filer	o Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes x No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


			Shares outstanding as of April 30, 2020
Class B Stock, par value $100			24,795,645


Table of Contents			Page
		Number

	Special Note Regarding Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS (unaudited)

	Statements of Condition as of March 31, 2020 and December 31, 2019	4

	Statements of Income for the Three Months Ended March 31, 2020 and 2019	5

	Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019	6

	Statements of Capital for the Three Months Ended March 31, 2019 and 2020	7

	Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	8

	Notes to Financial Statements:
	Note 1 - Summary of Significant Accounting Policies	10
	Note 2 - Recently Adopted and Issued Accounting Guidance	12
	Note 3 - Investments	13
	Note 4 - Advances	17
	Note 5 - Mortgage Loans Held for Portfolio	18
	Note 6 - Derivatives and Hedging Activities	21
	Note 7 - Consolidated Obligations	25
	Note 8 - Affordable Housing Program	27
	Note 9 - Capital	27
	Note 10 - Accumulated Other Comprehensive Income	28
	Note 11 - Segment Information	29
	Note 12 - Estimated Fair Values	30
	Note 13 - Commitments and Contingencies	33
	Note 14 - Related Party and Other Transactions	34

	Defined Terms	35

Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Presentation	37
	Executive Summary	37
	Selected Financial Data	40
	Results of Operations and Changes in Financial Condition	41
	Operating Segments	45
	Analysis of Financial Condition	46
	Liquidity and Capital Resources	53
	Off-Balance Sheet Arrangements	55
	Critical Accounting Policies and Estimates	55
	Recent Accounting and Regulatory Developments	56
	Risk Management	58
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	63
Item 4.	CONTROLS AND PROCEDURES	64

PART II.	OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	64
Item 1A.	RISK FACTORS	65
Item 6.	EXHIBITS	66

As used in this Form 10-Q, unless the context otherwise requires, the terms "we," "us," "our," and the "Bank" refer to the Federal Home Loan Bank of Indianapolis or its management. We use acronyms and terms throughout that are defined herein or in the Defined Terms in Part I Item 1.

Special Note Regarding Forward-Looking Statements

Statements in this Form 10-Q, including statements describing our objectives, projections, estimates or predictions, may be considered to be "forward-looking statements." These statements may use forward-looking terminology, such as "anticipates," "believes," "could," "estimates," "may," "should," "expects," "will," or their negatives or other variations on these terms. We caution that, by their nature, forward-looking statements involve risk or uncertainty and that actual results either could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the following:

•economic and market conditions, including the timing and volume of market activity, inflation or deflation, changes in the value of global currencies, and changes in the financial condition of market participants;

•volatility of market prices, interest rates, and indices or the availability of suitable interest rate indices, or other factors, resulting from the effects of, and changes in, various monetary or fiscal policies and regulations, including those determined by the FRB and the FDIC, or a decline in liquidity in the financial markets, that could affect the value of investments or collateral we hold as security for the obligations of our members and counterparties;

•changes in demand for our advances and purchases of mortgage loans resulting from:

◦changes in our members' deposit flows and credit demands;

◦changes in products or services we are able to provide;

◦federal or state regulatory developments impacting suitability or eligibility of membership classes;

◦membership changes, including, but not limited to, mergers, acquisitions and consolidations of charters;

◦changes in the general level of housing activity in the United States and particularly our district states of Michigan and Indiana, the level of refinancing activity and consumer product preferences; and

◦competitive forces, including, without limitation, other sources of funding available to our members;

•changes in mortgage asset prepayment patterns, delinquency rates and housing values or improper or inadequate mortgage originations and mortgage servicing;

•ability to introduce and successfully manage new products and services, including new types of collateral securing advances;

•political events, including federal government shutdowns, administrative, legislative, regulatory, or other developments, national or international health crises (such as the COVID-19 pandemic) and the responses of governments and financial markets to such crises, changes in international political structures and alliances, and judicial rulings that affect us, our status as a secured creditor, our members (or certain classes of members), prospective members, counterparties, GSEs generally, one or more of the FHLBanks and/or investors in the consolidated obligations of the FHLBanks;

•ability to access the capital markets and raise capital market funding on acceptable terms;

•changes in our credit ratings or the credit ratings of the other FHLBanks and the FHLBank System;

•changes in the level of government guarantees provided to other United States and international financial institutions;

•dealer commitment to supporting the issuance of our consolidated obligations;

•ability of one or more of the FHLBanks to repay its portion of the consolidated obligations, or otherwise meet its financial obligations;

•ability to attract and retain skilled personnel;

•ability to develop, implement and support technology and information systems sufficient to manage our business effectively;

•nonperformance of counterparties to uncleared and cleared derivative transactions;

•changes in terms of derivative agreements and similar agreements;

•loss arising from natural disasters, acts of war or acts of terrorism;

•changes in or differing interpretations of accounting guidance; and

•other risk factors identified in our filings with the SEC.

Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, additional disclosures may be made through reports filed with the SEC in the future, including our Forms 10-K, 10-Q and 8-K.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Federal Home Loan Bank of Indianapolis

Statements of Condition

(Unaudited, $ amounts in thousands, except par value)


	March 31, 2020		December 31, 2019
Assets:
Cash and due from banks	$	4,685,426	$	220,294
Interest-bearing deposits (Note 3)	85		809,141
Securities purchased under agreements to resell (Note 3)	3,400,000		1,500,000
Federal funds sold (Note 3)	—		2,550,000

Trading securities (Note 3)	5,831,089		5,016,649
Available-for-sale securities, amortized cost of $9,920,371 and $8,394,665 (Note 3)	9,861,353		8,484,478
Held-to-maturity securities, net (estimated fair values of $4,780,664 and $5,216,206) (Note 3)	4,794,773		5,216,401

Advances (Note 4)	38,926,612		32,480,108
Mortgage loans held for portfolio, net (Note 5)	10,649,223		10,815,037
Accrued interest receivable	130,259		131,822
Premises, software, and equipment, net	35,636		36,549
Derivative assets, net (Note 6)	306,882		208,008
Other assets	44,503		42,288

Total assets	$	78,665,841	$	67,510,775

Liabilities:
Deposits	$	2,821,496	$	960,304
Consolidated obligations (Note 7):
Discount notes	29,652,551		17,676,793
Bonds	42,079,465		44,715,224
Total consolidated obligations, net	71,732,016		62,392,017
Accrued interest payable	136,470		178,981
Affordable Housing Program payable (Note 8)	39,423		38,084
Derivative liabilities, net (Note 6)	14,277		3,206
Mandatorily redeemable capital stock (Note 9)	323,125		322,902
Other liabilities	457,656		458,521

Total liabilities	75,524,463		64,354,015

Commitments and contingencies (Note 13)

Capital (Note 9):
Capital stock (putable at par value of $100 per share):
Class B-1 issued and outstanding shares: 20,979,193 and 19,737,727, respectively	2,097,919		1,973,773
Class B-2 issued and outstanding shares: 3,028 and 3,028, respectively	303		303
Total capital stock	2,098,222		1,974,076
Retained earnings:
Unrestricted	867,141		864,454
Restricted	256,763		250,854
Total retained earnings	1,123,904		1,115,308
Total accumulated other comprehensive income (loss) (Note 10)	(80,748)		67,376

Total capital	3,141,378		3,156,760

Total liabilities and capital	$	78,665,841	$	67,510,775

The accompanying notes are an integral part of these financial statements.

Federal Home Loan Bank of Indianapolis

Statements of Income

(Unaudited, $ amounts in thousands)


	Three Months Ended March 31,

	2020		2019
Interest Income:
Advances	$	169,625	$	211,754
Interest-bearing deposits	4,718		4,266
Securities purchased under agreements to resell	9,833		19,814
Federal funds sold	9,290		20,381

Trading securities	23,796		2,801
Available-for-sale securities	36,803		49,481
Held-to-maturity securities	29,133		40,884

Mortgage loans held for portfolio	82,021		96,253

Total interest income	365,219		445,634

Interest Expense:
Consolidated obligation discount notes	72,514		119,374
Consolidated obligation bonds	223,852		263,009
Deposits	2,735		2,994
Mandatorily redeemable capital stock	2,967		2,718

Total interest expense	302,068		388,095

Net interest income	63,151		57,539
Provision for (reversal of) credit losses	(3)		54

Net interest income after provision for credit losses	63,154		57,485

Other Income:





Net gains on trading securities	49,833		4,071
Net losses on derivatives and hedging activities	(50,950)		(3,422)
Service fees	160		193
Standby letters of credit fees	156		159

Other, net	(3,578)		2,015
Total other income (loss)	(4,379)		3,016

Other Expenses:
Compensation and benefits	14,385		14,133
Other operating expenses	7,309		5,974
Federal Housing Finance Agency	1,168		996
Office of Finance	1,274		1,136
Other	1,480		1,088
Total other expenses	25,616		23,327

Income before assessments	33,159		37,174

Affordable Housing Program assessments	3,613		3,989

Net income	$	29,546	$	33,185

The accompanying notes are an integral part of these financial statements.

Federal Home Loan Bank of Indianapolis

Statements of Comprehensive Income

(Unaudited, $ amounts in thousands)


	Three Months Ended March 31,

	2020		2019

Net income	$	29,546	$	33,185

Other Comprehensive Income:

Net change in unrealized gains (losses) on available-for-sale securities	(148,831)		26,905



















Pension benefits, net	707		347

Total other comprehensive income (loss)	(148,124)		27,252

Total comprehensive income (loss)	$	(118,578)	$	60,437

The accompanying notes are an integral part of these financial statements.

Federal Home Loan Bank of Indianapolis

Statements of Capital

Three Months Ended March 31, 2019 and 2020

(Unaudited, $ amounts and shares in thousands)


	Capital Stock					Retained Earnings								Accumulated Other Comprehensive Income (Loss)	Total Capital
	Shares	Par Value		Unrestricted		Restricted		Total

Balance, December 31, 2018	19,310	$	1,930,952	$	855,311	$	222,499	$	1,077,810	$	41,687	$	3,050,449

Total comprehensive income				26,548		6,637		33,185		27,252		60,437

Proceeds from issuance of capital stock	564	56,487										56,487



Shares reclassified to mandatorily redeemable capital stock, net	(21)	(2,109)										(2,109)



Cash dividends on capital stock (5.50% annualized)				(26,545)		—		(26,545)				(26,545)

Balance, March 31, 2019	19,853	$	1,985,330	$	855,314	$	229,136	$	1,084,450	$	68,939	$	3,138,719


Balance, December 31, 2019	19,741	$	1,974,076	$	864,454	$	250,854	$	1,115,308	$	67,376	$	3,156,760

Total comprehensive income (loss)				23,637		5,909		29,546		(148,124)		(118,578)

Proceeds from issuance of capital stock	1,243	124,378										124,378



Shares reclassified to mandatorily redeemable capital stock, net	(2)	(232)										(232)



Cash dividends on capital stock (4.25% annualized)				(20,950)		—		(20,950)				(20,950)

Balance, March 31, 2020	20,982	$	2,098,222	$	867,141	$	256,763	$	1,123,904	$	(80,748)	$

10-Q	2020-03-31	Filed 2020-05-12
10-K	2019-12-31	Filed 2020-03-10
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-12
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-03-08
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-03-09
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-10
10-Q	2017-03-31	Filed 2017-05-11
10-K	2016-12-31	Filed 2017-03-10
10-Q	2016-09-30	Filed 2016-11-10
10-Q	2016-06-30	Filed 2016-08-11
10-Q	2016-03-31	Filed 2016-05-11
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-13
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-03-14
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-03-15
10-Q	2012-09-30	Filed 2012-11-09
10-Q	2012-06-30	Filed 2012-08-10
10-Q	2012-03-31	Filed 2012-05-11
10-K	2011-12-31	Filed 2012-03-20
10-Q	2011-09-30	Filed 2011-11-10
10-Q	2011-06-30	Filed 2011-08-10
10-Q	2011-03-31	Filed 2011-05-12
10-K	2010-12-31	Filed 2011-03-18
10-Q	2010-09-30	Filed 2010-11-10
10-Q	2010-06-30	Filed 2010-08-11
10-Q	2010-03-31	Filed 2010-05-12
10-K	2009-12-31	Filed 2010-03-19

EX-31.1	ex311march312020.htm
EX-31.2	ex312march312020.htm
EX-31.3	ex313march312020.htm
EX-32	ex32sec1350march312020.htm

8-K	2020-06-22
8-K	2020-06-17
8-K	2020-06-16
8-K	2020-06-10
8-K	2020-06-09
8-K	2020-06-05
8-K	2020-05-27
8-K	2020-05-22
8-K	2020-05-20
8-K	2020-05-20
8-K	2020-05-19
8-K	2020-05-12
8-K	2020-05-06
8-K	2020-04-29
8-K	2020-04-29
8-K	2020-04-21
8-K	2020-04-15
8-K	2020-04-13
8-K	2020-04-09
8-K	2020-04-08
8-K	2020-04-07
8-K	2020-04-03
8-K	2020-03-30
8-K	2020-03-25
8-K	2020-03-18
8-K	2020-03-16
8-K	2020-03-11
8-K	2020-03-10
8-K	2020-03-04
8-K	2020-03-02
8-K	2020-02-26
8-K	2020-02-24
8-K	2020-02-20
8-K	2020-02-20
8-K	2020-02-14
8-K	2020-02-12
8-K	2020-02-10
8-K	2020-02-05
8-K	2020-02-03
8-K	2020-01-29
8-K	2020-01-27
8-K	2020-01-24
8-K	2020-01-23
8-K	2020-01-21
8-K	2020-01-15
8-K	2020-01-14
8-K	2020-01-08
8-K	2020-01-07
8-K	2020-01-06
8-K	2020-01-03
8-K	2019-12-27
8-K	2019-12-18
8-K	2019-12-11
8-K	2019-12-09
8-K	2019-12-04
8-K	2019-12-02
8-K	2019-11-26
8-K	2019-11-25
8-K	2019-11-21
8-K	2019-11-19
8-K	2019-11-14
8-K	2019-11-07
8-K	2019-11-04
8-K	2019-10-30
8-K	2019-10-28
8-K	2019-10-24
8-K	2019-10-23
8-K	2019-10-21
8-K	2019-10-16
8-K	2019-10-11
8-K	2019-10-10
8-K	2019-10-10
8-K	2019-10-09
8-K	2019-10-07
8-K	2019-10-03
8-K	2019-09-30
8-K	2019-09-27
8-K	2019-09-25
8-K	2019-09-24
8-K	2019-09-18
8-K	2019-09-16
8-K	2019-09-11
8-K	2019-09-09
8-K	2019-09-09
8-K	2019-09-04
8-K	2019-09-03
8-K	2019-08-28
8-K	2019-08-26
8-K	2019-08-21
8-K	2019-08-19
8-K	2019-08-14
8-K	2019-08-12
8-K	2019-08-07
8-K	2019-08-05
8-K	2019-07-31
8-K	2019-07-29
8-K	2019-07-25
8-K	2019-07-24
8-K	2019-07-22
8-K	2019-07-17
8-K	2019-07-15
8-K	2019-07-10
8-K	2019-07-08
8-K	2019-07-01
8-K	2019-06-26
8-K	2019-06-24
8-K	2019-06-19
8-K	2019-06-17
8-K	2019-06-12
8-K	2019-06-10
8-K	2019-06-05
8-K	2019-05-29
8-K	2019-05-22
8-K	2019-05-20
8-K	2019-05-15
8-K	2019-05-08
8-K	2019-05-06
8-K	2019-05-01
8-K	2019-04-30
8-K	2019-04-25
8-K	2019-04-24
8-K	2019-04-22
8-K	2019-04-18
8-K	2019-04-15
8-K	2019-04-10
8-K	2019-04-04
8-K	2019-04-01
8-K	2019-03-27
8-K	2019-03-25
8-K	2019-03-21
8-K	2019-03-18
8-K	2019-03-13
8-K	2019-03-11
8-K	2019-03-06
8-K	2019-03-05
8-K	2019-02-27
8-K	2019-02-19
8-K	2019-02-15
8-K	2019-02-13
8-K	2019-02-11
8-K	2019-02-07
8-K	2019-02-05
8-K	2019-01-30
8-K	2019-01-23
8-K	2019-01-22
8-K	2019-01-16
8-K	2019-01-14
8-K	2019-01-11
8-K	2019-01-10
8-K	2019-01-02
8-K	2018-12-26
8-K	2018-12-21
8-K	2018-12-12
8-K	2018-12-10
8-K	2018-12-07
8-K	2018-12-03
8-K	2018-12-03
8-K	2018-11-29
8-K	2018-11-20
8-K	2018-11-16
8-K	2018-11-14
8-K	2018-11-09
8-K	2018-11-07
8-K	2018-10-31
8-K	2018-10-29
8-K	2018-10-25
8-K	2018-10-24
8-K	2018-10-22
8-K	2018-10-17
8-K	2018-10-16
8-K	2018-10-12
8-K	2018-10-11
8-K	2018-10-04
8-K	2018-10-02
8-K	2018-09-27
8-K	2018-09-25
8-K	2018-09-19
8-K	2018-09-18
8-K	2018-09-18
8-K	2018-09-11
8-K	2018-09-06
8-K	2018-09-04
8-K	2018-08-29
8-K	2018-08-28
8-K	2018-08-23
8-K	2018-08-20
8-K	2018-08-15
8-K	2018-08-13
8-K	2018-08-08
8-K	2018-08-07
8-K	2018-08-01
8-K	2018-07-26
8-K	2018-07-25
8-K	2018-07-24
8-K	2018-07-18
8-K	2018-07-16
8-K	2018-07-02
8-K	2018-06-28
8-K	2018-06-25
8-K	2018-06-20
8-K	2018-06-18
8-K	2018-06-13
8-K	2018-06-12
8-K	2018-06-07
8-K	2018-06-04
8-K	2018-05-30
8-K	2018-05-29
8-K	2018-05-24
8-K	2018-05-21
8-K	2018-05-17
8-K	2018-05-07
8-K	2018-05-02
8-K	2018-04-30
8-K	2018-04-26
8-K	2018-04-26
8-K	2018-04-24
8-K	2018-04-18
8-K	2018-04-11
8-K	2018-04-04
8-K	2018-04-02
8-K	2018-03-27
8-K	2018-03-21
8-K	2018-03-19
8-K	2018-03-14
8-K	2018-03-12
8-K	2018-03-07
8-K	2018-03-06
8-K	2018-02-28
8-K	2018-02-26
8-K	2018-02-23
8-K	2018-02-22
8-K	2018-02-20
8-K	2018-02-16
8-K	2018-02-14
8-K	2018-02-12
8-K	2018-02-07
8-K	2018-02-07
8-K	2018-02-01
8-K	2018-01-29
8-K	2018-01-25
8-K	2018-01-23
8-K	2018-01-17
8-K	2018-01-11
8-K	2018-01-08
8-K	2018-01-03

FHLBI 10Q Quarterly Report

Federal Home Loan Bank of Indianapolis Earnings 2020-03-31