Company Quick10K Filing
Federal Home Loan Bank of Topeka
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
FHLBT 2019-09-30
Part I
Item 1: Financial Statements
Note 1 - Basis of Presentation
Note 2 - Recently Issued Accounting Standards and Interpretations and Changes in and Adoptions of Accounting Principles
Note 3 - Investment Securities
Note 4 - Advances
Note 5 - Mortgage Loans
Note 6 - Allowance for Credit Losses
Note 7 - Derivatives and Hedging Activities
Note 8 - Deposits
Note 9 - Consolidated Obligations
Note 10 - Assets and Liabilities Subject To Offsetting
Note 11 - Capital
Note 12 - Accumulated Other Comprehensive Income
Note 13 - Fair Values
Note 14 - Commitments and Contingencies
Note 15 - Transactions with Stockholders
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II. Other Information
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Mine Safety Disclosures
Item 5: Other Information
Item 6: Exhibits
EX-31.1 ex09302019311.htm
EX-31.2 ex09302019312.htm
EX-32 ex0930201932.htm

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

FHLBT 10Q Quarterly Report

Balance SheetIncome StatementCash 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
 
OR
 
¨  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 
Item 1. 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
Part II 
Item 1.
Item 1A. 
Item 2. 
Item 3. 
Item 4. 
Item 5. 
Item 6. 


2


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.


3


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.


4



PART I

Item 1: Financial Statements


5


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)


 
 
 


1    Fair 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.



6




6


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.
7


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.
8


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.
9


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.
10


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

                   
1    Putable


The accompanying notes are an integral part of these financial statements.
11


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

                   
1    Putable


The accompanying notes are an integral part of these financial statements.
12


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.
13


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.
14


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.
15



FEDERAL HOME LOAN BANK OF TOPEKA
Notes to Financial Statements - Unaudited
September 30, 2019


NOTE 1BASIS 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.


16


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 2RECENTLY 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.


17


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.


18


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.



19


NOTE 3INVESTMENT 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

GSE obligations1
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
)


20


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.


21


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



22


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.


23


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.


24


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