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Federal Home Loan Bank Of Topeka (1325878) SEC Filing 10-Q Quarterly report for the period ending Monday, September 30, 2019

Federal Home Loan Bank Of Topeka

CIK: 1325878


Exhibit 99.1
FHLBANK TOPEKA ANNOUNCES 2019 THIRD QUARTER RESULTS

October 29, 2019 - FHLBank Topeka (FHLBank) announces its 2019 third quarter operating results. FHLBank is reporting net income computed in accordance with U.S. generally accepted accounting principles (GAAP) of $48.5 million for the three months ended September 30, 2019 compared to $41.5 million for the three months ended September 30, 2018. For the nine months ended September 30, 2019, FHLBank is reporting net income of $133.0 million compared to $126.8 million for the nine months ended September 30, 2018.

During the third quarter of 2019, FHLBank paid a dividend of 2.50 percent on the average outstanding shares of Class A Common Stock and 7.50 percent on the average outstanding shares of Class B Common Stock. Other operating highlights from the third quarter of 2019 are presented below. FHLBank expects to file its Form 10-Q for the quarter ended September 30, 2019 with the Securities and Exchange Commission (SEC) on or about November 7, 2019.

Operating Highlights
Net income for the three months ended September 30, 2019 increased $7.0 million, or 16.8 percent, compared to the same period in 2018 and increased by $6.2 million, or 4.8 percent, for the nine months ended September 30, 2019 compared to the same period in the prior year. The increase in both periods was driven by fair value fluctuations on derivatives and trading securities and the change in net interest income for the respective period. Declines in longer-term market interest rates since December 31, 2018 resulted in unrealized fair value losses recorded for the majority of economic derivatives for both the three- and nine-month periods ended September 30, 2019, but those losses were largely offset by positive fair value fluctuations on trading securities. Fair value net losses on economic derivatives and trading securities were recorded for both the three- and nine-month periods ended September 30, 2018, resulting in an increase in other income for both the three- and nine-month periods ended September 30, 2019 compared to the same periods in the prior year.

Net interest income for the three months ended September 30, 2019 was $74.4 million compared to $67.7 million for the same period in the prior year. For the nine months ended September 30, 2019, net interest income was $186.7 million compared to $203.0 million for the same period in the prior year. The average cost of debt increased for both the three- and nine-month periods ended September 30, 2019 compared to the same periods in the prior year due to an increase in average short-term interest rates between periods. Market interest rates, particularly long-term interest rates, decreased during the second and third quarters of 2019, which caused an increase in prepayment speeds on mortgage-related assets, resulting in acceleration of premium amortization. However, this decrease in long-term market interest rates allowed FHLBank to replace some callable consolidated obligation bonds at a lower cost, which FHLBank expects will eventually partially offset the recent increase in the average cost of debt. Accelerated amortization of concessions (i.e. broker fees) on called debt and accelerated premium amortization on mortgages and mortgage-backed securities reduced net interest income for both the three- and nine-month periods ended September 30, 2019. Both periods were also impacted by fair value fluctuations on designated fair value hedges; however, the impact was positive for the third quarter of 2019 and negative for the 2019 year-to-date period.

The change in net interest income for both the three- and nine-month periods ended September 30, 2019 was also impacted by the adoption of a new hedge accounting standard on January 1, 2019 that requires fair value fluctuations on designated fair value hedges to be presented in the income statement line item related to the hedged item, which is interest income/expense for FHLBank. The guidance was adopted prospectively, so the fair value fluctuations on fair value hedges in the prior year are presented in other income, which creates a lack of comparability between periods.

The increase in net income for the current quarter resulted in an increase in return on average equity (ROE), from 6.89 percent for the three months ended September 30, 2018 to 7.54 percent for the three months ended September 30, 2019. The increase in net income combined with a decrease in average capital for the current nine-month period resulted in an increase in ROE, from 6.74 percent for the nine months ended September 30, 2018 compared to 7.14 percent for the nine months ended September 30, 2019. The weighted average dividend rate for the three months ended September 30, 2019 was 6.61 percent, which represented a dividend payout ratio of 53.2 percent, compared to a weighted average dividend rate of 6.32 percent and a payout ratio of 56.1 percent for the same period in 2018. The weighted average dividend rate for the nine months ended September 30, 2019 was 6.58 percent, which represented a dividend payout ratio of 55.7 percent, compared to a weighted average dividend rate of 6.10 percent and a payout ratio of 57.7 percent for the same period in 2018.
 
Balance Sheet Highlights
Total assets increased $9.4 billion, or 19.7 percent, from December 31, 2018 to September 30, 2019 primarily due to increases in short- and long-term investments, advances, and mortgage loans. The majority of the increase and change in composition of investments was in response to changes to regulatory liquidity requirements that became effective March 31, 2019, including the purchase of $5.0 billion in U.S. Treasury obligations since the third quarter of 2018. Total capital increased $204.1 million, or 8.3 percent, between periods due to the increase in capital stock from advance utilization and net income in excess of dividends paid.




The following information was filed by Federal Home Loan Bank Of Topeka on Tuesday, October 29, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Document And Entity Information
Statements Of Capital
Statements Of Capital (Parenthetical)
Statements Of Cash Flows
Statements Of Comprehensive Income
Statements Of Condition
Statements Of Condition (Parenthetical)
Statements Of Income
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Accumulated Other Comprehensive Income Or Loss) (Details)
Accumulated Other Comprehensive Income (Tables)
Advances
Advances (Advances By Interest Rate Payment Terms) (Details)
Advances (Advances By Year Of Redemption Term, Next Call Date, Or Next Convert Date) (Details)
Advances (Advances Redemption Terms) (Details)
Advances (Narrative) (Details)
Advances (Tables)
Allowance For Credit Losses
Allowance For Credit Losses (Narrative) (Details)
Allowance For Credit Losses (Recorded Investment By Impairment Method) (Details)
Allowance For Credit Losses (Recorded Investment In Delinquent Mortgage Loans) (Details)
Allowance For Credit Losses (Rollforward Of Allowance For Credit Losses On Mortgage Loans) (Details)
Allowance For Credit Losses (Tables)
Assets And Liabilities Subject To Offsetting
Assets And Liabilities Subject To Offsetting (Tables)
Assets And Liabilities Subject To Offsetting Assets Subject To Offsetting (Schedule Of Offsetting Assets) (Details)
Assets And Liabilities Subject To Offsetting Liabilities Subject To Offsetting (Schedule Of Offsetting Liabilities) (Details)
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Capital
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Capital (Narrative) (Details)
Capital (Regulatory Capital Requirements) (Details)
Capital (Tables)
Commitments And Contingencies
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Commitments And Contingencies (Off-Balance Sheet Commitments) (Details)
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Consolidated Obligations
Consolidated Obligations (Consolidated Bond Obligations By Contractual Maturity Or Next Call Date) (Details)
Consolidated Obligations (Consolidated Bond Obligations Outstanding By Contractual Maturity) (Details)
Consolidated Obligations (Consolidated Bonds By Interest-Rate Payment Type) (Details)
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Deposits
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Derivatives And Hedging Activities
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Mortgage Loans
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Federal Home Loan Bank Of Topeka provided additional information to their SEC Filing as exhibits

CIK: 1325878
Form Type: 10-Q Quarterly Report
Accession Number: 0001325878-19-000024
Submitted to the SEC: Tue Nov 12 2019 2:50:18 PM EST
Accepted by the SEC: Tue Nov 12 2019
Period: Monday, September 30, 2019
Industry: Federal And Federally Sponsored Credit Agencies

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