Federal Home Loan Bank of Topeka Earnings 2019-09-30

FHLBT 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
CNHC		12,949	11,626	877	0	149	771	5,714	0%	7.4	1%
RMES		1	1	0	0	-0	-0	-0		0.5	-13%
TCT		210	12	13	0	11	11	-200	0%	-18.3	5%
VDI		1,766	1,288	779	0	465	632	222	0%	0.4	26%
POYE		0	0	0	0	-0	-0	-0		0.0	-1,973%
SCTF		0	0	0	0	-0	-0	-0		3.0	-33%
SEK		302,033	283,794	0	0	0	0	-0			0%
DAVEY		570	398	1,095	98	32	97	161	9%	1.7	6%
SLDV		25	6	2	0	13	19	-1	0%	-0.0	53%
MBCC		216	243	112	0	-7	10	215	0%	21.5	-3%

10-Q 1 fhlbt0930201910q.htm 10-Q Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

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

For the transition period from ________ to ________

Commission File Number 000-52004

FEDERAL HOME LOAN BANK OF TOPEKA

(Exact name of registrant as specified in its charter)



Federally chartered corporation		48-0561319
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
500 SW Wanamaker Road Topeka, KS		66606
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 785.233.0507

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	N/A	N/A

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 requirements for the past 90 days. x Yes ¨ 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 ¨ No

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

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer x Smaller reporting company ¨

Emerging growth 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 Act). ¨ Yes x No

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



	Shares outstanding as of
	November 5, 2019
Class A Stock, par value $100 per share	4,619,118
Class B Stock, par value $100 per share	11,780,620

.FEDERAL HOME LOAN BANK OF TOPEKA

TABLE OF CONTENTS




PART I	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Statements of Condition	6
	Statements of Income	8
	Statements of Comprehensive Income	10
	Statements of Capital	11
	Statements of Cash Flows	13
	Notes to Financial Statements	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Executive Level Overview	53
	Financial Market Trends	56
	Critical Accounting Policies and Estimates	57
	Results of Operations	58
	Financial Condition	73
	Liquidity and Capital Resources	88
	Risk Management	92
	Recently Issued Accounting Standards	98
	Legislative and Regulatory Developments	99
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	99
Item 4.	Controls and Procedures	105
Part II	OTHER INFORMATION	105
Item 1.	Legal Proceedings	105
Item 1A.	Risk Factors	105
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105
Item 3.	Defaults Upon Senior Securities	105
Item 4.	Mine Safety Disclosures	105
Item 5.	Other Information	105
Item 6.	Exhibits	106

Important Notice about Information in this Quarterly Report

In this quarterly report, unless the context suggests otherwise, references to the “FHLBank,” “FHLBank Topeka,” “we,” “us” and “our” mean the Federal Home Loan Bank of Topeka, and “FHLBanks” mean all the Federal Home Loan Banks, including the FHLBank Topeka.

The information contained in this quarterly report is accurate only as of the date of this quarterly report and as of the dates specified herein.

The product and service names used in this quarterly report are the property of the FHLBank, and in some cases, the other FHLBanks. Where the context suggests otherwise, the products, services and company names mentioned in this quarterly report are the property of their respective owners.

Special Cautionary Notice Regarding Forward-looking Statements

The information in this Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements describing the objectives, projections, estimates or future predictions of the FHLBank’s operations. These statements may be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “is likely,” “could,” “estimate,” “expect,” “will,” “intend,” “probable,” “project,” “should,” or their negatives or other variations of these terms. The FHLBank cautions that by their nature forward-looking statements involve risks or uncertainties and that actual results may differ materially from those expressed in any forward-looking statements as a result of such risks and uncertainties, including but not limited to:


•	Governmental actions, including legislative, regulatory, judicial or other developments that affect the FHLBank; its members, counterparties or investors; housing government-sponsored enterprises (GSE); or the FHLBank System in general;


•	Changes in the FHLBank’s capital structure;


•	Changes in economic and market conditions, including conditions in our district and the U.S. and global economy, as well as the mortgage, housing and capital markets;


•	The upcoming discontinuance of the London Interbank Offered Rate (LIBOR) and the related effect on the FHLBank's LIBOR-based financial products, investments, and contracts;


•	Changes in demand for FHLBank products and services or consolidated obligations of the FHLBank System;


•	Effects of derivative accounting treatment and other accounting rule requirements, or changes in such requirements;


•	The effects of amortization/accretion;


•	Gains/losses on derivatives or on trading investments and the ability to enter into effective derivative instruments on acceptable terms;


•	Volatility of market prices, changes in interest rates and indices and the timing and volume of market activity;


•	Membership changes, including changes resulting from member failures or mergers, changes due to member eligibility, or changes in the principal place of business of members;


•	Our ability to declare dividends or to pay dividends at rates consistent with past practices;


•	Soundness of other financial institutions, including FHLBank members, non-member borrowers, counterparties, and the other FHLBanks;


•	Changes in the value or liquidity of collateral underlying advances to FHLBank members or non-member borrowers or collateral pledged by reverse repurchase and derivative counterparties;


•	Competitive forces, including competition for loan demand, purchases of mortgage loans and access to funding;


•	The ability of the FHLBank to introduce new products and services to meet market demand and to manage successfully the risks associated with all products and services;


•	The ability of the FHLBank to keep pace with technological changes and the ability to develop and support technology and information systems, including the ability to securely access the internet and internet-based systems and services, sufficient to effectively manage the risks of the FHLBank’s business;


•	The ability of each of the other FHLBanks to repay the principal and interest on consolidated obligations for which it is the primary obligor and with respect to which the FHLBank has joint and several liability;


•	Changes in the U.S. government’s long-term debt rating and the long-term credit rating of the senior unsecured debt issues of the FHLBank System;


•	Changes in the fair value and economic value of, impairments of, and risks associated with, the FHLBank’s investments in mortgage loans and mortgage-backed securities (MBS) or other assets and related credit enhancement protections; and


•	The volume and quality of eligible mortgage loans originated and sold by participating members to the FHLBank through its various mortgage finance products (Mortgage Partnership Finance^® (MPF^®) Program). “Mortgage Partnership Finance,” “MPF,” “MPF Xtra,” and “MPF Direct” are registered trademarks of the FHLBank Chicago.

Readers of this quarterly report should not rely solely on the forward-looking statements and should consider all risks and uncertainties addressed throughout this quarterly report, as well as those discussed under Item 1A – Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2018, incorporated by reference herein.

All forward-looking statements contained in this Form 10-Q are expressly qualified in their entirety by reference to this cautionary notice. The reader should not place undue reliance on such forward-looking statements, since the statements speak only as of the date that they are made and the FHLBank has no obligation and does not undertake publicly to update, revise or correct any forward-looking statement for any reason to reflect events or circumstances after the date of this quarterly report.

PART I

Item 1: Financial Statements



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CONDITION - Unaudited
(In thousands, except par value)
	09/30/2019		12/31/2018
ASSETS
Cash and due from banks	$	24,639	$	15,060
Interest-bearing deposits	481,989		670,660
Securities purchased under agreements to resell (Note 10)	2,137,374		1,251,096
Federal funds sold	900,000		50,000

Investment securities:
Trading securities (Note 3)	2,901,575		2,151,113
Available-for-sale securities (Note 3)	6,098,929		1,725,640
Held-to-maturity securities¹ (Note 3)	3,728,655		4,456,873
Total investment securities	12,729,159		8,333,626

Advances (Notes 4, 6)	30,634,583		28,730,113
Mortgage loans held for portfolio, net of allowance for credit losses of $905 and $812 (Notes 5, 6)	9,833,763		8,410,462
Accrued interest receivable	150,823		109,366
Derivative assets, net (Notes 7, 10)	137,050		36,095
Other assets	101,750		108,778

TOTAL ASSETS	$	57,131,130	$	47,715,256

LIABILITIES
Deposits (Note 8)	$	756,376	$	473,820

Consolidated obligations, net:
Discount notes (Note 9)	21,044,232		20,608,332
Bonds (Note 9)	32,441,885		23,966,394
Total consolidated obligations, net	53,486,117		44,574,726

Mandatorily redeemable capital stock (Note 11)	2,477		3,597
Accrued interest payable	116,478		87,903
Affordable Housing Program payable	41,304		43,081
Derivative liabilities, net (Notes 7, 10)	990		7,884
Other liabilities	69,066		69,993

TOTAL LIABILITIES	54,472,808		45,261,004

Commitments and contingencies (Note 14)

¹Fair value: $3,717,004 and $4,447,078 as of September 30, 2019 and December 31, 2018, respectively.

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CONDITION - Unaudited
(In thousands, except par value)
	09/30/2019		12/31/2018
CAPITAL
Capital stock outstanding - putable:
Class A ($100 par value; 3,444 and 2,473 shares issued and outstanding) (Note 11)	$	344,453	$	247,361
Class B ($100 par value; 13,262 and 12,772 shares issued and outstanding) (Note 11)	1,326,237		1,277,176
Total capital stock	1,670,690		1,524,537

Retained earnings:
Unrestricted	748,888		716,555
Restricted	224,060		197,467
Total retained earnings	972,948		914,022

Accumulated other comprehensive income (loss) (Note 12)	14,684		15,693

TOTAL CAPITAL	2,658,322		2,454,252

TOTAL LIABILITIES AND CAPITAL	$	57,131,130	$	47,715,256

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF INCOME - Unaudited
(In thousands)
	Three Months Ended						Nine Months Ended
	09/30/2019			09/30/2018			09/30/2019			09/30/2018
INTEREST INCOME:
Interest-bearing deposits	$	5,300		$	3,931		$	15,518		$	9,402
Securities purchased under agreements to resell	26,768			20,618			84,266			46,610
Federal funds sold	8,179			7,896			28,058			29,539
Trading securities	20,342			16,764			68,211			54,243
Available-for-sale securities	47,811			12,563			78,694			32,670
Held-to-maturity securities	24,337			30,602			84,469			85,538
Advances	186,431			158,943			563,602			460,751
Mortgage loans held for portfolio	76,546			65,424			225,015			186,709
Other	346			381			1,097			1,165
Total interest income	396,060			317,122			1,148,930			906,627

INTEREST EXPENSE:
Deposits	2,540			2,289			7,701			6,113
Consolidated obligations:
Discount notes	133,680			108,137			433,473			314,109
Bonds	185,096			138,668			519,967			382,442
Mandatorily redeemable capital stock (Note 11)	30			58			113			175
Other	299			311			1,016			766
Total interest expense	321,645			249,463			962,270			703,605

NET INTEREST INCOME	74,415			67,659			186,660			203,022
Provision (reversal) for credit losses on mortgage loans (Note 6)	393			(391		)	509			(345		)
NET INTEREST INCOME AFTER LOAN LOSS PROVISION (REVERSAL)	74,022			68,050			186,151			203,367

OTHER INCOME (LOSS):
Net gains (losses) on trading securities (Note 3)	16,186			(11,514		)	86,784			(50,495		)
Net gains (losses) on sale of held-to-maturity securities (Note 3)	—			1,529			(46		)	1,591
Net gains (losses) on derivatives and hedging activities (Note 7)	(20,386		)	6,032			(78,939		)	29,661
Standby bond purchase agreement commitment fees	566			642			1,685			2,242
Letters of credit fees	1,190			1,086			3,581			3,300
Other	937			725			2,470			2,676
Total other income (loss)	(1,507		)	(1,500		)	15,535			(11,025		)

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF INCOME - Unaudited
(In thousands)
	Three Months Ended				Nine Months Ended
	09/30/2019		09/30/2018		09/30/2019		09/30/2018
OTHER EXPENSES:
Compensation and benefits	$	9,781	$	12,682	$	28,598	$	29,009
Other operating	5,031		4,763		14,331		13,419
Federal Housing Finance Agency	812		690		2,437		2,144
Office of Finance	972		812		2,717		2,313
Other	2,037		1,481		5,853		4,501
Total other expenses	18,633		20,428		53,936		51,386

INCOME BEFORE ASSESSMENTS	53,882		46,122		147,750		140,956

Affordable Housing Program	5,391		4,618		14,786		14,113

NET INCOME	$	48,491	$	41,504	$	132,964	$	126,843

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF COMPREHENSIVE INCOME - Unaudited
(In thousands)
	Three Months Ended					Nine Months Ended
	09/30/2019			09/30/2018		09/30/2019			09/30/2018
Net income	$	48,491		$	41,504	$	132,964		$	126,843

Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale securities	(17,324		)	3,694		(1,249		)	2,116
Net non-credit portion of other-than-temporary impairment losses on held-to-maturity securities	—			3,655		—			4,163
Defined benefit pension plan	95			5		240			17
Total other comprehensive income (loss)	(17,229		)	7,354		(1,009		)	6,296

TOTAL COMPREHENSIVE INCOME	$	31,262		$	48,858	$	131,955		$	133,139

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CAPITAL - Unaudited
(In thousands)
	Capital Stock¹															Retained Earnings								Accumulated			Total Capital
																								Other
	Class A					Class B					Total													Comprehensive
	Shares		Par Value			Shares		Par Value			Shares		Par Value			Unrestricted			Restricted		Total			Income (Loss)
Balance at June 30, 2018	1,966		$	196,571		12,997		$	1,299,708		14,963		$	1,496,279		$	695,310		$	180,480	$	875,790		$	24,600		$	2,396,669
Comprehensive income																33,203			8,301		41,504			7,354			48,858
Proceeds from issuance of capital stock	3		310			3,973		397,309			3,976		397,619														397,619
Repurchase/redemption of capital stock	(2,360	)	(236,009		)	(21	)	(2,068		)	(2,381	)	(238,077		)												(238,077		)
Net reclassification of shares to mandatorily redeemable capital stock	(574	)	(57,364		)	(1,577	)	(157,743		)	(2,151	)	(215,107		)												(215,107		)
Net transfer of shares between Class A and Class B	2,793		279,316			(2,793	)	(279,316		)	—		—														—
Dividends on capital stock (Class A - 2.0%, Class B - 7.2%):
Cash payment																(69		)			(69		)				(69		)
Stock issued						232		23,209			232		23,209			(23,209		)			(23,209		)				—
Balance at September 30, 2018	1,828		$	182,824		12,811		$	1,281,099		14,639		$	1,463,923		$	705,235		$	188,781	$	894,016		$	31,954		$	2,389,893

	Capital Stock¹															Retained Earnings								Accumulated			Total Capital
																								Other
	Class A					Class B					Total													Comprehensive
	Shares		Par Value			Shares		Par Value			Shares		Par Value			Unrestricted			Restricted		Total			Income (Loss)
Balance at June 30, 2019	2,155		$	215,536		13,830		$	1,382,968		15,985		$	1,598,504		$	735,915		$	214,361	$	950,276		$	31,913		$	2,580,693
Comprehensive income																38,792			9,699		48,491			(17,229		)	31,262
Proceeds from issuance of capital stock	—		—			3,974		397,429			3,974		397,429														397,429
Repurchase/redemption of capital stock	(721	)	(72,148		)	(1,191	)	(119,069		)	(1,912	)	(191,217		)												(191,217		)
Net reclassification of shares to mandatorily redeemable capital stock	(253	)	(25,225		)	(1,345	)	(134,550		)	(1,598	)	(159,775		)												(159,775		)
Net transfer of shares between Class A and Class B	2,263		226,290			(2,263	)	(226,290		)	—		—														—
Dividends on capital stock (Class A - 2.5%, Class B - 7.5%):
Cash payment																(70		)			(70		)				(70		)
Stock issued						257		25,749			257		25,749			(25,749		)			(25,749		)				—
Balance at September 30, 2019	3,444		$	344,453		13,262		$	1,326,237		16,706		$	1,670,690		$	748,888		$	224,060	$	972,948		$	14,684		$	2,658,322

¹Putable

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CAPITAL - Unaudited
(In thousands)
	Capital Stock¹															Retained Earnings								Accumulated			Total Capital
																								Other
	Class A					Class B					Total													Comprehensive
	Shares		Par Value			Shares		Par Value			Shares		Par Value			Unrestricted			Restricted		Total			Income (Loss)
Balance at December 31, 2017	2,351		$	235,134		14,049		$	1,404,905		16,400		$	1,640,039		$	676,993		$	163,413	$	840,406		$	25,658		$	2,506,103
Comprehensive income																101,475			25,368		126,843			6,296			133,139
Proceeds from issuance of capital stock	11		1,154			12,939		1,293,853			12,950		1,295,007														1,295,007
Repurchase/redemption of capital stock	(6,457	)	(645,743		)	(48	)	(4,732		)	(6,505	)	(650,475		)												(650,475		)
Net reclassification of shares to mandatorily redeemable capital stock	(1,950	)	(195,026		)	(6,985	)	(698,519		)	(8,935	)	(893,545		)												(893,545		)
Net transfer of shares between Class A and Class B	7,873		787,305			(7,873	)	(787,305		)	—		—														—
Dividends on capital stock (Class A - 1.7%, Class B - 6.9%):
Cash payment																(336		)			(336		)				(336		)
Stock issued						729		72,897			729		72,897			(72,897		)			(72,897		)				—
Balance at September 30, 2018	1,828		$	182,824		12,811		$	1,281,099		14,639		$	1,463,923		$	705,235		$	188,781	$	894,016		$	31,954		$	2,389,893

	Capital Stock¹															Retained Earnings								Accumulated			Total Capital
																								Other
	Class A					Class B					Total													Comprehensive
	Shares		Par Value			Shares		Par Value			Shares		Par Value			Unrestricted			Restricted		Total			Income (Loss)
Balance at December 31, 2018	2,473		$	247,361		12,772		$	1,277,176		15,245		$	1,524,537		$	716,555		$	197,467	$	914,022		$	15,693		$	2,454,252
Comprehensive income																106,371			26,593		132,964			(1,009		)	131,955
Proceeds from issuance of capital stock	12		1,171			11,601		1,160,158			11,613		1,161,329														1,161,329
Repurchase/redemption of capital stock	(6,450	)	(645,039		)	(2,256	)	(225,555		)	(8,706	)	(870,594		)												(870,594		)
Net reclassification of shares to mandatorily redeemable capital stock	(778	)	(77,763		)	(1,406	)	(140,648		)	(2,184	)	(218,411		)												(218,411		)
Net transfer of shares between Class A and Class B	8,187		818,723			(8,187	)	(818,723		)	—		—														—
Dividends on capital stock (Class A - 2.4%, Class B - 7.5%):
Cash payment																(209		)			(209		)				(209		)
Stock issued						738		73,829			738		73,829			(73,829		)			(73,829		)				—
Balance at September 30, 2019	3,444		$	344,453		13,262		$	1,326,237		16,706		$	1,670,690		$	748,888		$	224,060	$	972,948		$	14,684		$	2,658,322

¹Putable

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CASH FLOWS - Unaudited
(In thousands)
	Nine Months Ended
	09/30/2019			09/30/2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	132,964		$	126,843
Adjustments to reconcile income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization:
Premiums and discounts on consolidated obligations, net	738			(7,736		)
Concessions on consolidated obligations	10,128			4,050
Premiums and discounts on investments, net	6,246			2,676
Premiums, discounts and commitment fees on advances, net	(1,379		)	(3,758		)
Premiums, discounts and deferred loan costs on mortgage loans, net	18,542			13,786
Fair value adjustments on hedged assets or liabilities	2,948			1,249
Premises, software and equipment	2,331			2,226
Other	240			17
Provision (reversal) for credit losses on mortgage loans	509			(345		)
Non-cash interest on mandatorily redeemable capital stock	111			173
Net realized (gains) losses on sale of held-to-maturity securities	46			(1,591		)
Net other-than-temporary impairment losses on held-to-maturity securities	—			26
Net realized (gains) losses on sale of premises and equipment	(3		)	(880		)
Other adjustments	(272		)	(238		)
Net (gains) losses on trading securities	(86,784		)	50,495
Net change in derivatives and hedging activities	(144,589		)	36,107
(Increase) decrease in accrued interest receivable	(41,801		)	(15,814		)
Change in net accrued interest included in derivative assets	(1,254		)	(7,822		)
(Increase) decrease in other assets	3,056			(854		)
Increase (decrease) in accrued interest payable	28,372			35,166
Change in net accrued interest included in derivative liabilities	4,332			(456		)
Increase (decrease) in Affordable Housing Program liability	(1,777		)	784
Increase (decrease) in other liabilities	(1,682		)	(3,691		)
Total adjustments	(201,942		)	103,570
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(68,978		)	230,413

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CASH FLOWS - Unaudited
(In thousands)
	Nine Months Ended
	09/30/2019			09/30/2018
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits	$	(32,829	)	$	28,298
Net (increase) decrease in securities purchased under resale agreements	(886,278		)	(823,576		)
Net (increase) decrease in Federal funds sold	(850,000		)	(265,000		)
Proceeds from sale of trading securities	429			—
Proceeds from maturities of and principal repayments on trading securities	3,015,268			3,290,566
Purchases of trading securities	(3,679,375		)	(2,682,969		)
Proceeds from maturities of and principal repayments on available-for-sale securities	8,732			16,165
Purchases of available-for-sale securities	(4,180,862		)	(281,489		)
Proceeds from sale of held-to-maturity securities	9,442			87,827
Proceeds from maturities of and principal repayments on held-to-maturity securities	716,417			699,016
Purchases of held-to-maturity securities	—			(625,170		)
Advances repaid	279,880,008			300,011,912
Advances originated	(281,623,825		)	(302,270,146		)
Principal collected on mortgage loans	1,011,265			706,748
Purchases of mortgage loans	(2,451,132		)	(1,553,027		)
Proceeds from sale of foreclosed assets	1,965			3,728
Purchases of other long-term assets	—			(6,000		)
Other investing activities	2,320			2,136
Proceeds from sale of premises, software and equipment	—			2,416
Purchases of premises, software and equipment	(1,037		)	(8,002		)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(9,059,492		)	(3,666,567		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits	205,498			91,182
Net proceeds from issuance of consolidated obligations:
Discount notes	633,162,917			765,464,193
Bonds	20,517,358			8,790,535
Payments for maturing and retired consolidated obligations:
Discount notes	(632,736,460		)	(763,468,454		)
Bonds	(12,082,800		)	(7,440,940		)
Net increase (decrease) in other borrowings	—			6,000
Net interest payments received (paid) for financing derivatives	652			(3,614		)
Proceeds from issuance of capital stock	1,161,329			1,295,007
Payments for repurchase/redemption of capital stock	(870,594		)	(650,475		)
Payments for repurchase of mandatorily redeemable capital stock	(219,642		)	(894,494		)
Cash dividends paid	(209		)	(336		)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	9,138,049			3,188,604
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	9,579			(247,550		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	15,060			268,050
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	24,639		$	20,500

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



FEDERAL HOME LOAN BANK OF TOPEKA
STATEMENTS OF CASH FLOWS - Unaudited
(In thousands)
	Nine Months Ended
	09/30/2019		09/30/2018
Supplemental disclosures:
Interest paid	$	919,428	$	672,944
Affordable Housing Program payments	$	16,859	$	13,468
Net transfers of mortgage loans to other assets	$	627	$	2,817

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

FEDERAL HOME LOAN BANK OF TOPEKA

Notes to Financial Statements - Unaudited

September 30, 2019

NOTE 1 – BASIS OF PRESENTATION

Basis of Presentation: The accompanying interim financial statements of the FHLBank are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instruction provided by Article 10, Rule 10-01 of Regulation S-X. The financial statements contain all adjustments which are, in the opinion of management, necessary for a fair statement of the FHLBank’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments were of a normal recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period.

The FHLBank’s significant accounting policies and certain other disclosures are set forth in the notes to the audited financial statements for the year ended December 31, 2018. The interim financial statements presented herein should be read in conjunction with the FHLBank’s audited financial statements and notes thereto, which are included in the FHLBank’s annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 18, 2019 (annual report on Form 10-K). The notes to the interim financial statements highlight significant changes to the notes included in the annual report on Form 10-K.

Reclassifications: Presentation of cash flow amounts in the prior period have been reclassified to reflect short-term trading securities purchases and proceeds on a gross, rather than net, basis. Certain other immaterial amounts in the financial statements have been reclassified to conform to current period presentations.

Out-of-Period Adjustment: Included in net income for the three months ended September 30, 2019 was an out-of-period adjustment of $14,336,000, of which $2,545,000 and $11,791,000 related to income that should have been recorded during the three months ended March 31, 2019 and June 30, 2019, respectively. The out-of-period adjustment related to hedged item valuations for certain available-for-sale securities in fair value hedging relationships and resulted in an increase in available-for-sale interest income and a reduction in other comprehensive income. The FHLBank has assessed the impact of this error and concluded that the amounts were not material, either individually or in the aggregate, to any prior period financial statements and the impact of correcting this error in the three months ended September 30, 2019 is not material to the current financial statements.

Use of Estimates: The preparation of financial statements under GAAP requires management to make estimates and assumptions as of the date of the financial statements in determining the reported amounts of assets, liabilities and estimated fair values and in determining the disclosure of any contingent assets or liabilities. Estimates and assumptions by management also affect the reported amounts of income and expense during the reporting period. The most significant of these estimates include the fair value of trading and available-for-sale securities, the fair value of derivatives and the allowance for credit losses. Many of the estimates and assumptions, including those used in financial models, are based on financial market conditions as of the date of the financial statements. Because of the volatility of the financial markets, as well as other factors that affect management estimates, actual results may vary from these estimates.

Derivatives and Hedging Activities: Beginning January 1, 2019, the FHLBank adopted new hedge accounting guidance, which, among other things, impacts the presentation of gains (losses) on derivatives and hedging activities for qualifying hedges. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded in net interest income in the same line as the earnings effect of the hedged item. Net gains (losses) on derivatives and hedging activities for qualifying hedges recorded in net interest income include unrealized and realized gains (losses), which include net interest settlements.

Prior to January 1, 2019, fair value hedge ineffectiveness (which represented the amount by which the change in the fair value of the derivative differed from the change in the fair value of the hedged item) was recorded in non-interest income as net gains (losses) on derivatives and hedging activities.

Investment Securities: Securities that are not classified as trading or held-to-maturity are classified as available-for-sale and are carried at fair value. The change in fair value of available-for-sale securities is recorded in other comprehensive income (loss) (OCI) as net unrealized gains (losses) on available-for-sale securities. Beginning January 1, 2019, the FHLBank adopted new hedge accounting guidance, which, among other things, impacts the presentation of gains (losses) on derivatives and hedging activities for qualifying hedges, including fair value hedges of available-for-sale securities. For available-for-sale securities that have been hedged and qualify as a fair value hedge, the FHLBank records the portion of the change in the fair value of the investment related to the risk being hedged in available-for-sale interest income together with the related change in the fair value of the derivative, and records the remainder of the change in the fair value of the investment in OCI as net unrealized gains (losses) on available-for-sale securities.

Prior to January 1, 2019, for available-for-sale securities that were hedged and qualified as a fair value hedge, the FHLBank recorded the portion of the change in the fair value of the investment related to the risk being hedged in non-interest income as net gains (losses) on derivatives and hedging activities together with the related change in the fair value of the derivative, and recorded the remainder of the change in the fair value of the investment in OCI as net unrealized gains (losses) on available-for-sale securities.

Prepayment Fees on Advances: The FHLBank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity. The FHLBank records prepayment fees net of basis adjustments related to hedging activities included in the carrying value of the advance as advance interest income in the Statements of Income.

If a new advance does not qualify as a modification of an existing advance, the existing advance is treated as an advance termination and any prepayment fee, net of hedging adjustments, is recorded to advance interest income in the Statements of Income.

If a new advance qualifies as a modification of an existing advance, any prepayment fee, net of hedging adjustments, is deferred, recorded in the basis of the modified advance, and amortized using a level-yield methodology over the life of the modified advance to advance interest income. If the modified advance is hedged and meets hedge accounting requirements, the modified advance is marked to benchmark or full fair value, depending on the risk being hedged, and subsequent fair value changes that are attributable to the hedged risk are recorded in advance interest income effective January 1, 2019. Prior to January 1, 2019, subsequent fair value changes were recorded in non-interest income as net gains (losses) on derivatives and hedging activities.

NOTE 2 – RECENTLY ISSUED ACCOUNTING STANDARDS AND INTERPRETATIONS AND CHANGES IN AND ADOPTIONS OF ACCOUNTING PRINCIPLES

Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes (Accounting Standards Update (ASU) 2018-16). In October 2018, the Financial Accounting Standards Board (FASB) issued an amendment that permits use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the U.S. Treasury rate, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association Municipal Swap Rate. The amendments apply to all entities that elect to apply hedge accounting of the benchmark interest rate. The amendments were adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The amendment was effective concurrently with ASU 2017-12 (see below) for annual periods, and interim periods within those annual periods, beginning January 1, 2019. The adoption of this guidance did not materially affect the FHLBank's application of hedge accounting or utilization of hedging strategies.

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (ASU 2018-15). In August 2018, the FASB issued an amendment to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this ASU require an entity in a hosting arrangement that is a service contract to follow existing guidance relating to internal-use software to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Costs to develop or obtain internal-use software that cannot be capitalized also cannot be capitalized for a hosting arrangement that is a service contract. Therefore, an entity in a hosting arrangement that is a service contract determines to which project stage (that is, preliminary project stage, application development stage, or post-implementation stage) an implementation activity relates. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. The amendments in this ASU also require the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU will be effective for annual periods, and interim periods within those annual periods beginning after December 31, 2019, which is January 1, 2020 for the FHLBank. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period, for all entities. The FHLBank does not plan on early adoption. The adoption of this guidance is not expected to have a material effect on the FHLBank's financial condition, results of operations or cash flows.

Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14). In August 2018, the FASB issued an amendment modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans to improve disclosure effectiveness. The amendments in the ASU remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this ASU are effective for annual periods ending after December 15, 2020, which is the year ending December 31, 2020 for the FHLBank, and will be applied retrospectively for all comparative periods presented. Early adoption is permitted. The FHLBank does not plan on early adoption. The adoption of this guidance will not have a material impact on the disclosures related to defined benefit plans and will not impact the FHLBank’s financial condition, results of operations or cash flows.

Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). In August 2018, the FASB issued an amendment that modifies the disclosure requirements for fair value measurements. This ASU removes the requirement to disclose: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; and (3) the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this ASU will be effective for annual periods, and interim periods within those annual periods beginning after December 31, 2019, which is January 1, 2020 for the FHLBank. Early adoption is permitted. The FHLBank does not plan on early adoption. The adoption of this guidance will not have a material impact on the disclosures related to fair value measurements and will not impact the FHLBank’s financial condition, results of operations or cash flows.

Targeted Improvements to Accounting for Hedging Activities, as amended (ASU 2017-12). In August 2017, the FASB issued an amendment to simplify the application of hedge accounting guidance in current GAAP and to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. This guidance requires that, for fair value hedges, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness be presented in the same income statement line that is used to present the earnings effect of the hedged item. In addition, the amendments include certain targeted improvements to the assessment of hedge effectiveness and permit, among other things, the following:


•	Measurement of the change in fair value of the hedged item on the basis of the benchmark rate component of the contractual coupon cash flows determined at hedge inception;


•	Measurement of the hedged item in a partial-term fair value hedge of interest rate risk by assuming the hedged item has a term that reflects only the designated cash flows being hedged;


•	Consideration only of how changes in the benchmark interest rate affect a decision to settle a prepayable instrument before its scheduled maturity in calculating the change in the fair value of the hedged item attributable to interest rate risk;


•	For a cash flow hedge of interest rate risk of a variable rate financial instrument, an entity can designate the variability in cash flows attributable to the contractually specified interest rate as the hedged risk; and


•	If an entity that applies the shortcut method determines that use of that method was not or is no longer appropriate, the entity may apply a long-haul method for assessing hedge effectiveness as long as the hedge is highly effective and the entity documents at inception which long-haul methodology it will use.

The amendment became effective for annual periods, and interim periods within those annual periods beginning on January 1, 2019 for the FHLBank. The guidance did not affect the FHLBank's application of hedge accounting for existing hedge strategies. For all short-cut hedge accounting trades, the FHLBank updated existing documentation to designate a long-haul method to be utilized in the event a hedge ceases to qualify for the short-cut method. The guidance also provided opportunities to enhance risk management through new hedge strategies, including partial term hedges. The adoption of this guidance did not have a material effect on the FHLBank's financial condition, results of operations or cash flows beyond a prospective change in income statement presentation for fair value hedge relationships and new required disclosures.

Premium Amortization on Purchased Callable Debt Securities (ASU 2017-08). In March 2017, the FASB issued an amendment to shorten the amortization period of any premium on callable debt securities to the first call date instead of over the contractual life of the instrument. The amendment does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is intended to reduce diversity in practice in the amortization of premiums and the consideration of how the potential of a security being called is factored into current impairment assessments. The amendment also intends to more closely align the amortization of premiums and discounts to the expectations incorporated into the market pricing of the instrument. The amendment became effective for annual periods, and interim periods within those annual periods beginning on January 1, 2019 for the FHLBank. The adoption of this guidance did not have an impact on the FHLBank's financial condition, results of operations or cash flows.

Measurement of Credit Losses on Financial Instruments, as amended (ASU 2016-13). In June 2016, the FASB issued amended guidance for the accounting of credit losses on financial instruments. The amendments require entities to measure expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Additionally, under the new guidance, a financial asset, or a group of financial assets, measured at amortized cost basis is required to be presented at the net amount expected to be collected.

The guidance also requires:


•	The statement of income to reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period;


•	The entities to determine the allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis in a similar manner to other financial assets measured at amortized cost basis. The initial allowance for credit losses is required to be added to the purchase price;


•	Credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The amendments limit the allowance for credit losses to the amount by which fair value is below amortized cost; and


•	Public entities to further disaggregate the current disclosure of credit quality indicators in relation to the amortized cost of financing receivables by the year of origination (i.e., vintage).

The guidance is effective for the FHLBank for interim and annual periods beginning on January 1, 2020. Early application is permitted as of the interim and annual reporting periods beginning after December 15, 2018. The FHLBank does not plan on early adoption. The guidance should be applied using a modified-retrospective approach, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. In addition, entities are required to use a prospective transition approach for debt securities for which an other-than-temporary impairment (OTTI) charge had been recognized before the effective date; however, the FHLBank currently does not have any OTTI debt securities. The FHLBank does not expect this guidance to impact certain financial instruments, including advances, Agency and government-sponsored enterprise investments, securities purchased under agreements to resell, and other overnight investments due to the specific terms, issuer guarantees, and/or collateralized nature of the instruments that result in high credit quality holdings with no expected credit losses. Adoption of this guidance is not expected to have a material impact on the FHLBank's municipal securities, short-term investments and mortgage loans held for portfolio. Consequently, adoption of this guidance is not expected to have a material impact on the FHLBank’s financial condition, results of operations, or cash flows.

Leases (ASU 2016-02). In February 2016, FASB issued amendments to lease accounting guidance. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases in the statement of financial condition, which effectively removes a source of off-balance sheet financing for operating leases. A distinction remains between finance leases and operating leases, but the assets and liabilities arising from operating leases are now also required to be recognized in the statement of financial condition. Lessor accounting is largely unchanged. The amendments became effective for annual periods, and interim periods within those annual periods, beginning on January 1, 2019 for the FHLBank. The adoption of this guidance did not have a material effect on the FHLBank's financial condition, results of operations or cash flows.

NOTE 3 – INVESTMENT SECURITIES

Trading Securities: Trading securities by major security type as of September 30, 2019 and December 31, 2018 are summarized in Table 3.1 (in thousands):

Table 3.1



	Fair Value
	09/30/2019		12/31/2018
Non-mortgage-backed securities:
U.S. Treasury obligations	$	1,533,842	$	252,377
GSEobligations¹	468,747		1,000,495
Non-mortgage-backed securities	2,002,589		1,252,872
Mortgage-backed securities:
U.S. obligation MBS²	—		467
GSE MBS³	898,986		897,774
Mortgage-backed securities	898,986		898,241
TOTAL	$	2,901,575	$	2,151,113


¹	Represents debentures issued by other FHLBanks, Federal National Mortgage Association (Fannie Mae), Federal Farm Credit Bank (Farm Credit) and Federal Agricultural Mortgage Corporation (Farmer Mac). GSE securities are not guaranteed by the U.S. government.


²	Represents single-family MBS issued by Government National Mortgage Association (Ginnie Mae), which are guaranteed by the U.S. government.


³	Represents single-family and multi-family MBS issued by Fannie Mae and Federal Home Loan Mortgage Corporation (Freddie Mac).

Net gains (losses) on trading securities during the three and nine months ended September 30, 2019 and 2018 are shown in Table 3.2 (in thousands):

Table 3.2



	Three Months Ended						Nine Months Ended
	09/30/2019			09/30/2018			09/30/2019			09/30/2018
Net gains (losses) on trading securities held as of September 30, 2019	$	16,352		$	(10,375	)	$	87,222		$	(47,833	)
Net gains (losses) on trading securities sold or matured prior to September 30, 2019	(166		)	(1,139		)	(438		)	(2,662		)
NET GAINS (LOSSES) ON TRADING SECURITIES	$	16,186		$	(11,514	)	$	86,784		$	(50,495	)

Available-for-sale Securities: Available-for-sale securities by major security type as of September 30, 2019 are summarized in Table 3.3 (in thousands):

Table 3.3



	09/30/2019
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
Non-mortgage-backed securities:
U.S. Treasury obligations	$	3,516,938	$	—	$	(6,210	)	$	3,510,728
Non-mortgage-backed securities	3,516,938		—		(6,210		)	3,510,728
Mortgage-backed securities:
GSE MBS¹	2,564,172		29,013		(4,984		)	2,588,201
Mortgage-backed securities	2,564,172		29,013		(4,984		)	2,588,201
TOTAL	$	6,081,110	$	29,013	$	(11,194	)	$	6,098,929


¹	Represents fixed rate multi-family MBS issued by Fannie Mae.

Available-for-sale securities by major security type as of December 31, 2018 are summarized in Table 3.4 (in thousands):

Table 3.4



	12/31/2018
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
Mortgage-backed securities:
GSE MBS¹	$	1,706,572	$	25,815	$	(6,747	)	$	1,725,640
TOTAL	$	1,706,572	$	25,815	$	(6,747	)	$	1,725,640


¹	Represents fixed rate multi-family MBS issued by Fannie Mae.

Table 3.5 summarizes the available-for-sale securities with unrealized losses as of September 30, 2019 (in thousands). The unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

Table 3.5



	09/30/2019
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Non-mortgage-backed securities:
U.S. Treasury obligations	$	3,510,728	$	(6,210	)	$	—	$	—		$	3,510,728	$	(6,210	)
Non-mortgage-backed securities	3,510,728		(6,210		)	—		—			3,510,728		(6,210		)
Mortgage-backed securities:
GSE MBS¹	155,339		(344		)	307,143		(4,640		)	462,482		(4,984		)
Mortgage-backed securities	155,339		(344		)	307,143		(4,640		)	462,482		(4,984		)
TOTAL TEMPORARILY IMPAIRED SECURITIES	$	3,666,067	$	(6,554	)	$	307,143	$	(4,640	)	$	3,973,210	$	(11,194	)


¹	Represents fixed rate multi-family MBS issued by Fannie Mae.

Table 3.6 summarizes the available-for-sale securities with unrealized losses as of December 31, 2018 (in thousands). The unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

Table 3.6



	12/31/2018
	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities:
GSE MBS¹	$	570,042	$	(6,747	)	$	—	$	—	$	570,042	$	(6,747	)
TOTAL TEMPORARILY IMPAIRED SECURITIES	$	570,042	$	(6,747	)	$	—	$	—	$	570,042	$	(6,747	)


¹	Represents fixed rate multi-family MBS issued by Fannie Mae.

The amortized cost and fair values of available-for-sale securities by contractual maturity as of September 30, 2019 and December 31, 2018 are shown in Table 3.7 (in thousands). Expected maturities of MBS will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment fees.

Table 3.7



	09/30/2019				12/31/2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Non-mortgage-backed securities:
Due in one year or less	$	252,032	$	251,643	$	—	$	—
Due after one year through five years	3,264,906		3,259,085		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Non-mortgage-backed securities	3,516,938		3,510,728		—		—
Mortgage-backed securities	2,564,172		2,588,201		1,706,572		1,725,640
TOTAL	$	6,081,110	$	6,098,929	$	1,706,572	$	1,725,640

Held-to-maturity Securities: Held-to-maturity securities by major security type as of September 30, 2019 are summarized in Table 3.8 (in thousands):

Table 3.8



	09/30/2019
	Amortized Cost		Carrying Value		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
Non-mortgage-backed securities:
State or local housing agency obligations	$	85,670	$	85,670	$	—	$	(3,248	)	$	82,422
Non-mortgage-backed securities	85,670		85,670		—		(3,248		)	82,422
Mortgage-backed securities:
U.S. obligation MBS¹	97,647		97,647		11		(333		)	97,325
GSE MBS²	3,545,338		3,545,338		8,360		(16,441		)	3,537,257
Mortgage-backed securities	3,642,985		3,642,985		8,371		(16,774		)	3,634,582
TOTAL	$	3,728,655	$	3,728,655	$	8,371	$	(20,022	)	$	3,717,004


¹	Represents single-family MBS issued by Ginnie Mae.


²	Represents single-family and multi-family MBS issued by Fannie Mae and Freddie Mac.

Held-to-maturity securities by major security type as of December 31, 2018 are summarized in Table 3.9 (in thousands):

Table 3.9



	12/31/2018
	Amortized Cost		Carrying Value		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
Non-mortgage-backed securities:
State or local housing agency obligations	$	86,430	$	86,430	$	1	$	(3,480	)	$	82,951
Non-mortgage-backed securities	86,430		86,430		1		(3,480		)	82,951
Mortgage-backed securities:
U.S. obligation MBS¹	109,866		109,866		125		(99		)	109,892
GSE MBS²	4,260,577		4,260,577		12,164		(18,506		)	4,254,235
Mortgage-backed securities	4,370,443		4,370,443		12,289		(18,605		)	4,364,127
TOTAL	$	4,456,873	$	4,456,873	$	12,290	$	(22,085	)	$	4,447,078


¹	Represents single-family MBS issued by Ginnie Mae.


²	Represents single-family and multi-family MBS issued by Fannie Mae and Freddie Mac.

Table 3.10 summarizes the held-to-maturity securities with unrealized losses as of September 30, 2019 (in thousands). The unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

Table 3.10



	09/30/2019
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Non-mortgage-backed securities:
State or local housing agency obligations	$	55,666	$	(5	)	$	26,757	$	(3,243	)	$	82,423	$	(3,248	)
Non-mortgage-backed securities	55,666		(5		)	26,757		(3,243		)	82,423		(3,248		)
Mortgage-backed securities:
U.S. obligation MBS¹	60,360		(217		)	26,259		(116		)	86,619		(333		)
GSE MBS²	634,043		(2,581		)	2,147,252		(13,860		)	2,781,295		(16,441		)
Mortgage-backed securities	694,403		(2,798		)	2,173,511		(13,976		)	2,867,914		(16,774		)
TOTAL TEMPORARILY IMPAIRED SECURITIES	$	750,069	$	(2,803	)	$	2,200,268	$	(17,219	)	$	2,950,337	$	(20,022	)


¹	Represents single-family MBS issued by Ginnie Mae.


²	Represents single-family and multi-family MBS issued by Fannie Mae and Freddie Mac.

Table 3.11 summarizes the held-to-maturity securities with unrealized losses as of December 31, 2018 (in thousands). The unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

Table 3.11



	12/31/2018
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Non-mortgage-backed securities:
State or local housing agency obligations	$	—	$	—		$	26,520	$	(3,480	)	$	26,520	$	(3,480	)
Non-mortgage-backed securities	—		—			26,520		(3,480		)	26,520		(3,480		)
Mortgage-backed securities:
U.S. obligation MBS¹	—		—			30,702		(99		)	30,702		(99		)
GSE MBS²	1,655,048		(4,769		)	1,567,728		(13,737		)	3,222,776		(18,506		)
Mortgage-backed securities	1,655,048		(4,769		)	1,598,430		(13,836		)	3,253,478		(18,605		)
TOTAL TEMPORARILY IMPAIRED SECURITIES	$	1,655,048	$	(4,769	)	$	1,624,950	$	(17,316	)	$	3,279,998	$	(22,085	)


¹	Represents single-family MBS issued by Ginnie Mae.


²	Represents single-family and multi-family MBS issued by Fannie Mae and Freddie Mac.

The amortized cost, carrying value and fair values of held-to-maturity securities by contractual maturity as of September 30, 2019 and December 31, 2018 are shown in Table 3.12 (in thousands). Expected maturities of certain securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment fees.

Table 3.12

09/30/2019

12/31/2018

Amortized

Cost

Carrying

Value

Fair

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	-0	$-0

10-Q	2019-11-12	Quarter: 2019-09-30
10-Q	2019-08-08	Quarter: 2019-06-30
10-Q	2019-05-09	Quarter: 2019-03-31
10-K	2019-03-18	Annual: 2018-12-31
10-Q	2018-11-07	Quarter: 2018-09-30
10-Q	2018-08-09	Quarter: 2018-06-30
10-Q	2018-05-10	Quarter: 2018-03-31
10-K	2018-03-15	Annual: 2017-12-31
10-Q	2017-11-09	Quarter: 2017-09-30
10-Q	2017-08-08	Quarter: 2017-06-30
10-Q	2017-05-04	Quarter: 2017-03-31
10-K	2017-03-09	Annual: 2016-12-31
10-Q	2016-11-03	Quarter: 2016-09-30
10-Q	2016-08-04	Quarter: 2016-06-30
10-Q	2016-05-05	Quarter: 2016-03-31
10-K	2016-03-10	Annual: 2015-12-31
10-Q	2015-11-05	Quarter: 2015-09-30
10-Q	2015-08-06	Quarter: 2015-06-30
10-Q	2015-05-07	Quarter: 2015-03-31
10-K	2015-03-13	Annual: 2014-12-31
10-Q	2014-11-06	Quarter: 2014-09-30
10-Q	2014-08-08	Quarter: 2014-06-30
10-Q	2014-05-09	Quarter: 2014-03-31
10-K	2014-03-14	Annual: 2013-12-31
10-Q	2013-11-08	Quarter: 2013-09-30
10-Q	2013-08-09	Quarter: 2013-06-30
10-Q	2013-05-09	Quarter: 2013-03-31
10-K	2013-03-15	Annual: 2012-12-31
10-Q	2012-11-09	Quarter: 2012-09-30
10-Q	2012-08-10	Quarter: 2012-06-30
10-Q	2012-05-10	Quarter: 2012-05-07
10-K	2012-03-19	Annual: 2011-12-31
10-Q	2011-11-10	Quarter: 2011-09-30
10-Q	2011-08-11	Quarter: 2011-06-30
10-Q	2011-05-12	Quarter: 2011-03-31
10-K	2011-03-24	Annual: 2010-12-31
10-Q	2010-11-12	Quarter: 2010-09-30
10-Q	2010-08-12	Quarter: 2010-06-30
10-Q	2010-05-12	Quarter: 2010-03-31
10-K	2010-03-25	Annual: 2009-12-31

8-K	2020-01-14	Off-BS Arrangement, Exhibits
8-K	2020-01-09	Off-BS Arrangement, Exhibits
8-K	2020-01-07	Off-BS Arrangement, Exhibits
8-K	2019-12-24	Off-BS Arrangement, Exhibits
8-K	2019-12-20	Regulation FD, Exhibits
8-K	2019-12-20	Off-BS Arrangement, Exhibits
8-K	2019-12-13	Off-BS Arrangement, Exhibits
8-K	2019-12-10	Off-BS Arrangement, Exhibits
8-K	2019-12-03	Off-BS Arrangement, Exhibits
8-K	2019-11-26	Off-BS Arrangement, Exhibits
8-K	2019-11-22	Off-BS Arrangement, Exhibits
8-K	2019-11-19	Off-BS Arrangement, Exhibits
8-K	2019-11-15	Off-BS Arrangement, Exhibits
8-K	2019-11-13	Officers, Shareholder Vote, Regulation FD, Exhibits
8-K	2019-11-08	Off-BS Arrangement, Exhibits
8-K	2019-11-05	Off-BS Arrangement, Exhibits
8-K	2019-11-01	Off-BS Arrangement, Exhibits
8-K	2019-10-29	Earnings, Regulation FD, Exhibits
8-K	2019-10-29	Off-BS Arrangement, Exhibits
8-K	2019-10-25	Off-BS Arrangement, Exhibits
8-K	2019-10-24	Officers, Exhibits
8-K	2019-10-22	Off-BS Arrangement, Exhibits
8-K	2019-10-18
8-K	2019-10-11
8-K	2019-10-08	Off-BS Arrangement, Exhibits
8-K	2019-10-04	Off-BS Arrangement, Exhibits
8-K	2019-09-27	Off-BS Arrangement, Exhibits
8-K	2019-09-27	Other Events, Exhibits
8-K	2019-09-24	Off-BS Arrangement, Exhibits
8-K	2019-09-20	Regulation FD, Exhibits
8-K	2019-09-20	Off-BS Arrangement, Exhibits
8-K	2019-09-17	Off-BS Arrangement, Exhibits
8-K	2019-09-13	Off-BS Arrangement, Exhibits
8-K	2019-09-10	Off-BS Arrangement, Exhibits
8-K	2019-09-06	Off-BS Arrangement, Exhibits
8-K	2019-09-03	Off-BS Arrangement, Exhibits
8-K	2019-08-30	Off-BS Arrangement, Exhibits
8-K	2019-08-27	Off-BS Arrangement, Exhibits
8-K	2019-08-23	Off-BS Arrangement, Exhibits
8-K	2019-08-20	Off-BS Arrangement, Exhibits
8-K	2019-08-16	Off-BS Arrangement, Exhibits
8-K	2019-08-13	Off-BS Arrangement, Exhibits
8-K	2019-08-09	Off-BS Arrangement, Exhibits
8-K	2019-08-06	Off-BS Arrangement, Exhibits
8-K	2019-08-02	Off-BS Arrangement, Exhibits
8-K	2019-07-30	Off-BS Arrangement, Exhibits
8-K	2019-07-29	Earnings, Regulation FD, Exhibits
8-K	2019-07-26	Off-BS Arrangement, Exhibits
8-K	2019-07-23	Off-BS Arrangement, Exhibits
8-K	2019-07-19	Off-BS Arrangement, Exhibits
8-K	2019-07-16	Off-BS Arrangement, Exhibits
8-K	2019-07-12	Off-BS Arrangement, Exhibits
8-K	2019-07-09	Off-BS Arrangement, Exhibits
8-K	2019-06-28	Officers, Regulation FD, Exhibits
8-K	2019-06-28	Off-BS Arrangement, Exhibits
8-K	2019-06-27	Regulation FD, Exhibits
8-K	2019-06-25	Off-BS Arrangement, Exhibits
8-K	2019-06-21	Off-BS Arrangement, Exhibits
8-K	2019-06-18	Off-BS Arrangement, Exhibits
8-K	2019-06-14	Off-BS Arrangement, Exhibits
8-K	2019-06-11	Off-BS Arrangement, Exhibits
8-K	2019-06-07	Off-BS Arrangement, Exhibits
8-K	2019-06-04	Off-BS Arrangement, Exhibits
8-K	2019-05-31	Off-BS Arrangement, Exhibits
8-K	2019-05-24	Off-BS Arrangement, Exhibits
8-K	2019-05-21	Off-BS Arrangement, Exhibits
8-K	2019-05-17	Off-BS Arrangement, Exhibits
8-K	2019-05-14	Off-BS Arrangement, Exhibits
8-K	2019-05-10	Off-BS Arrangement, Exhibits
8-K	2019-05-07	Off-BS Arrangement, Exhibits
8-K	2019-05-03	Off-BS Arrangement, Exhibits
8-K	2019-05-02	Officers
8-K	2019-04-30	Off-BS Arrangement, Exhibits
8-K	2019-04-29	Earnings, Regulation FD, Exhibits
8-K	2019-04-26	Off-BS Arrangement, Exhibits
8-K	2019-04-12	Off-BS Arrangement, Exhibits
8-K	2019-04-05	Off-BS Arrangement, Exhibits
8-K	2019-04-02	Off-BS Arrangement, Exhibits
8-K	2019-03-29	Off-BS Arrangement, Exhibits
8-K	2019-03-26	Off-BS Arrangement, Exhibits
8-K	2019-03-22	Off-BS Arrangement, Exhibits
8-K	2019-03-22	Regulation FD, Exhibits
8-K	2019-03-19	Off-BS Arrangement, Exhibits
8-K	2019-03-15	Off-BS Arrangement, Exhibits
8-K	2019-03-12	Off-BS Arrangement, Exhibits
8-K	2019-03-08	Off-BS Arrangement, Exhibits
8-K	2019-03-01	Off-BS Arrangement, Exhibits
8-K	2019-02-26	Off-BS Arrangement, Exhibits
8-K	2019-02-22	Off-BS Arrangement, Exhibits
8-K	2019-02-21	Earnings, Regulation FD, Exhibits
8-K	2019-02-19	Off-BS Arrangement, Exhibits
8-K	2019-02-12	Off-BS Arrangement, Exhibits
8-K	2019-02-08	Off-BS Arrangement, Exhibits
8-K	2019-01-29	Off-BS Arrangement, Exhibits
8-K	2019-01-25	Off-BS Arrangement, Exhibits
8-K	2019-01-22	Off-BS Arrangement, Exhibits
8-K	2019-01-18	Off-BS Arrangement, Exhibits
8-K	2019-01-15	Off-BS Arrangement, Exhibits
8-K	2019-01-11	Off-BS Arrangement, Exhibits
8-K	2019-01-08	Off-BS Arrangement, Exhibits
8-K	2019-01-04
8-K	2019-01-04	Off-BS Arrangement, Exhibits
8-K	2018-12-25	Off-BS Arrangement, Exhibits
8-K	2018-12-21	Off-BS Arrangement, Exhibits
8-K	2018-12-17	Regulation FD, Exhibits
8-K	2018-12-14	Off-BS Arrangement, Exhibits
8-K	2018-12-14	Amend Bylaw, Exhibits
8-K	2018-12-07	Off-BS Arrangement, Exhibits
8-K	2018-12-04	Off-BS Arrangement, Exhibits
8-K	2018-11-27	Off-BS Arrangement, Exhibits
8-K	2018-11-13	Officers, Shareholder Vote, Regulation FD, Exhibits
8-K	2018-11-13	Off-BS Arrangement, Exhibits
8-K	2018-11-09	Off-BS Arrangement, Exhibits
8-K	2018-11-02	Off-BS Arrangement, Exhibits
8-K	2018-10-29	Earnings, Regulation FD, Exhibits
8-K	2018-10-26	Off-BS Arrangement, Exhibits
8-K	2018-10-23	Off-BS Arrangement, Exhibits
8-K	2018-10-19	Off-BS Arrangement, Exhibits
8-K	2018-10-12	Off-BS Arrangement, Exhibits
8-K	2018-10-05	Off-BS Arrangement, Exhibits
8-K	2018-10-04	Officers, Exhibits
8-K	2018-09-28	Off-BS Arrangement, Exhibits
8-K	2018-09-25	Off-BS Arrangement, Exhibits
8-K	2018-09-20	Regulation FD, Exhibits
8-K	2018-09-19	Off-BS Arrangement, Exhibits
8-K	2018-09-18	Off-BS Arrangement, Exhibits
8-K	2018-09-12	Off-BS Arrangement, Exhibits
8-K	2018-09-06	Off-BS Arrangement, Exhibits
8-K	2018-08-22	Off-BS Arrangement, Exhibits
8-K	2018-08-16	Off-BS Arrangement, Exhibits
8-K	2018-08-14	Off-BS Arrangement, Exhibits
8-K	2018-08-08	Off-BS Arrangement, Exhibits
8-K	2018-08-02	Off-BS Arrangement, Exhibits
8-K	2018-07-31	Off-BS Arrangement, Exhibits
8-K	2018-07-26	Earnings, Regulation FD, Exhibits
8-K	2018-07-26	Officers, Exhibits
8-K	2018-07-18	Off-BS Arrangement, Exhibits
8-K	2018-07-17	Off-BS Arrangement, Exhibits
8-K	2018-07-10	Off-BS Arrangement, Exhibits
8-K	2018-07-05	Off-BS Arrangement, Exhibits
8-K	2018-07-02	Off-BS Arrangement, Exhibits
8-K	2018-06-27	Off-BS Arrangement, Exhibits
8-K	2018-06-25	Off-BS Arrangement, Exhibits
8-K	2018-06-22	Regulation FD, Exhibits
8-K	2018-06-20	Off-BS Arrangement, Exhibits
8-K	2018-06-18	Off-BS Arrangement, Exhibits
8-K	2018-06-13	Off-BS Arrangement, Exhibits
8-K	2018-06-08	Off-BS Arrangement, Exhibits
8-K	2018-06-05	Off-BS Arrangement, Exhibits
8-K	2018-05-30	Off-BS Arrangement, Exhibits
8-K	2018-05-16	Off-BS Arrangement, Exhibits
8-K	2018-05-14	Off-BS Arrangement, Exhibits
8-K	2018-05-02	Off-BS Arrangement, Exhibits
8-K	2018-05-01	Off-BS Arrangement, Exhibits
8-K	2018-04-26	Earnings, Regulation FD, Exhibits
8-K	2018-04-25	Off-BS Arrangement, Exhibits
8-K	2018-04-24	Off-BS Arrangement, Exhibits
8-K	2018-04-18	Off-BS Arrangement, Exhibits
8-K	2018-04-13	Off-BS Arrangement, Exhibits
8-K	2018-04-10	Off-BS Arrangement, Exhibits
8-K	2018-04-06	Off-BS Arrangement, Exhibits
8-K	2018-03-28	Off-BS Arrangement, Exhibits
8-K	2018-03-23	Regulation FD, Exhibits
8-K	2018-03-19	Off-BS Arrangement, Exhibits
8-K	2018-03-15	Off-BS Arrangement, Exhibits
8-K	2018-03-12	Off-BS Arrangement, Exhibits
8-K	2018-03-08	Off-BS Arrangement, Exhibits
8-K	2018-03-05	Off-BS Arrangement, Exhibits
8-K	2018-02-21	Earnings, Regulation FD, Exhibits
8-K	2018-02-21	Off-BS Arrangement, Exhibits
8-K	2018-02-14	Off-BS Arrangement, Exhibits
8-K	2018-02-07	Off-BS Arrangement, Exhibits
8-K	2018-02-06	Off-BS Arrangement, Exhibits
8-K	2018-01-31	Off-BS Arrangement, Exhibits
8-K	2018-01-30	Officers, Exhibits
8-K	2018-01-29	Off-BS Arrangement, Exhibits
8-K	2018-01-29	Enter Agreement, Exhibits
8-K	2018-01-24	Off-BS Arrangement, Exhibits
8-K	2018-01-23	Off-BS Arrangement, Exhibits
8-K	2018-01-22	Officers, Exhibits
8-K	2018-01-17	Off-BS Arrangement, Exhibits
8-K	2018-01-10	Off-BS Arrangement, Exhibits
8-K	2018-01-08	Off-BS Arrangement, Exhibits
8-K	2018-01-03	Off-BS Arrangement, Exhibits
8-K	2017-12-29	Off-BS Arrangement, Exhibits

EX-31.1	ex09302019311.htm
EX-31.2	ex09302019312.htm
EX-32	ex0930201932.htm