Federal Home Loan Bank Of Topeka 10-K Annual Report Mon Mar 18 2019

February 21, 2019 - FHLBank Topeka (FHLBank) announces its 2018 fourth quarter and annual operating results. FHLBank is reporting net income computed in accordance with U.S. generally accepted accounting principles (GAAP) of $43.4 million for the three months ended December 31, 2018 compared to $48.4 million for the three months ended December 31, 2017. For the twelve months ended December 31, 2018, FHLBank is reporting net income of $170.3 million compared to $197.2 million for the twelve months ended December 31, 2017.

During the fourth quarter of 2018, FHLBank paid a dividend of 2.00 percent on the average outstanding shares of Class A Common Stock and 7.25 percent on the average outstanding shares of Class B Common Stock. Other operating highlights from the fourth quarter of 2018 and the year then ended are presented below. FHLBank expects to file its Form 10-K for the year ended December 31, 2018 with the Securities and Exchange Commission (SEC) on or about March 18, 2019.

Operating Highlights

Net income for the three months ended December 31, 2018 was $43.4 million, compared to net income of $48.4 million for the same period in 2017. The $5.0 million, or 10.2 percent, decrease in net income for the three months ended December 31, 2018 compared to the same period in 2017 was due primarily to a $3.2 million decline in net fair value of trading securities and derivatives and a $1.3 million decline in net interest income after provision for credit losses. Net income was $170.3 million for the twelve months ended December 31, 2018 compared to $197.2 million for the same period in 2017. The $26.9 million, or 13.7 percent, decrease in net income for the twelve months ended December 31, 2018 compared to the prior year period was also primarily due to a $30.8 million decline in net fair value of trading securities and derivatives.

Net interest income after provision for credit losses for the three months ended December 31, 2018 was $67.8 million compared to $69.1 million for the same period in the prior year. The $1.3 million decline resulted primarily from a decline in the average balance of advances precipitated by a change in the relationship of the average funding cost relative to the Federal funds effective rate and other short-term rates. Despite the decrease in net interest income, net interest margin increased by one basis point for the period due to continued increases in short-term interest rates, which magnified the benefit of utilizing capital as funding during the three months ended December 31, 2018. Net interest income after provision for credit losses for the twelve months ended December 31, 2018 was $271.2 million compared to $270.2 million for the same period in the prior year. The $1.0 million increase in net interest income after provision for credit losses was due to an increase in average earning assets, despite the rising cost of holding liquidity caused by the increase in short-term interest rates. Net interest margin declined by one basis point for the twelve months ended December 31, 2018 due to the increase in average funding cost driven by short-term interest rates, which also caused a decline in net interest spread of three basis points and four basis points for the three- and twelve-month periods ended December 31, 2018, respectively.

The decline in net income resulted in a decrease in return on average equity (ROE) for both the three- and twelve-month periods, from 7.62 percent for the three months ended December 31, 2017 to 7.07 percent for the three months ended December 31, 2018, and from 8.18 percent for the year ended December 31, 2017 to 6.82 percent for the twelve months ended December 31, 2018. The weighted average dividend rate for the three months ended December 31, 2018 was 6.24 percent, which represented a dividend payout ratio of 53.9 percent, compared to a weighted average dividend rate of 5.78 percent and a payout ratio of 49.8 percent for the same period in 2017. The weighted average dividend rate for the twelve months ended December 31, 2018 was 6.13 percent, which represented a dividend payout ratio of 56.8 percent, compared to a weighted average dividend rate of 5.77 percent and a payout ratio of 46.7 percent for the same period in 2017.

Balance Sheet Highlights

Total assets declined $0.4 billion, or 0.8 percent, from December 31, 2017 to December 31, 2018 despite increases in the end-of-period balances of advances and mortgage loans. Average interest-earning assets increased $0.9 billion, or 1.7 percent, for the twelve months ended December 31, 2018 compared to the same period in the prior year due to continued growth in the average balances of mortgage loans along with a higher level of investment securities, partially offset by a decrease of $1.7 billion in the average balance of advances. The increase in mortgage loans was attributed in large part to continued production from our top five PFIs and also due to attractive pricing of the MPF Program relative to other mortgage purchase programs. The decline in the average balance of advances resulted from the change in the relationship between certain short-term rates, as short-term advance rates became less attractive relative to the rate on excess reserves. Total capital declined $51.9 million, or 2.1 percent, between periods primarily due to an increase in stock repurchases caused by the decline in average advance utilization.

Financial Highlights

Attached are highlights of FHLBank’s financial position as of December 31, 2018 and 2017 and highlights of the results of operations for the quarterly and annual periods ended December 31, 2018 and 2017.

The following information was filed by Federal Home Loan Bank Of Topeka on Thursday, February 21, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Material Contracts, Statements, Certifications & more

Federal Home Loan Bank Of Topeka provided additional information to their SEC Filing as exhibits

Exhibit 24.1: Power Of Attorney

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32: Section 1350 Certification

Exhibit 99.1: Additional Exhibits

Exhibit 99.2: Additional Exhibits

CIK: 1325878
Form Type: 10-K Annual Report
Accession Number: 0001325878-19-000005
Submitted to the SEC: Mon Mar 18 2019 5:14:40 PM EST
Accepted by the SEC: Mon Mar 18 2019
Period: Monday, December 31, 2018
Industry: Federal And Federally Sponsored Credit Agencies

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Federal Home Loan Bank Of Topeka (1325878) SEC Filing 10-K Annual report for the fiscal year ending Monday, December 31, 2018

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