Federal Home Loan Bank Of Topeka 10-Q Quarterly Report November 2021

October 28, 2021 - FHLBank Topeka (FHLBank) is reporting net income of $37.4 million computed in accordance with U.S. generally accepted accounting principles (GAAP) for the quarter ended September 30, 2021 compared to $40.0 million for the quarter ended September 30, 2020. FHLBank is reporting net income of $114.3 million for the nine months ended September 30, 2021 compared to $72.1 million for the nine months ended September 30, 2020. The $2.6 million decrease for the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020 was a result of a $12.8 million increase in unrealized net losses on economic derivatives (i.e., derivatives not qualifying for hedge accounting) and trading securities that were not entirely offset by the increase in net interest income of $8.5 million and the reversal of the provision for credit losses of $1.8 million. The $42.2 million increase for the nine months ended September 30, 2021 was primarily attributed to an increase in net interest income of $37.3 million.

Net interest income increased $8.5 million for the quarter, from $64.8 million for the quarter ended September 30, 2020 to $73.3 million for the quarter ended September 30, 2021. Net interest income increased $37.3 million for the current year-to-date period, from $176.6 million for the nine months ended September 30, 2020 to $213.9 million for the nine months ended September 30, 2021. The increase for both periods was a result of a significant decrease in FHLBank's cost of debt between periods. Interest income for the quarter and year-to-date periods was reduced by the decline in the average balance and average rate across most asset categories, most notably advances and mortgage loans for the year-to-date period, and the change in net interest settlements on fair value hedges. However, the reduction in interest income was more than offset by the significant decrease in FHLBank's cost of debt.

FHLBank expects to file its Form 10-Q for the quarter ended September 30, 2021 with the Securities and Exchange Commission (SEC) on or about November 10, 2021.

Operating Highlights

•Net interest income/margin: Net interest income of $73.3 million for the quarter ended September 30, 2021 increased $8.5 million compared to the same period in 2020. Net interest margin increased 14 basis points for the current quarter, from 0.47 percent for the quarter ended September 30, 2020 to 0.61 percent for the quarter ended September 30, 2021. This improvement was attributed primarily to the decrease in the cost of debt. Slowing prepayment speeds and the corresponding decline in premium amortization on mortgage loans also provided a positive contribution to net interest margin for the quarter ended September 30, 2021 compared to the prior year period.

•Total assets: Total assets decreased from $52.6 billion as of December 31, 2020 to $45.5 billion as of September 30, 2021, driven largely by the decrease in the short-term liquidity portfolio between those periods.

•Advances: Advances increased from $21.2 billion at December 31, 2020 to $21.4 billion at September 30, 2021. The average balance of advances increased $1.0 billion, or 4.6 percent, for the three months ended September 30, 2021 when compared to the prior year period.

•Mortgage loans: Mortgage loans decreased by $0.9 billion from December 31, 2020 to September 30, 2021, representing 18.3 percent of total assets as of September 30, 2021, compared to 17.5 percent as of December 31, 2020. Despite the decrease in mortgage loans, the decline in our liquidity and investment portfolios resulted in our mortgage loan portfolio representing a larger portion of our total assets compared to December 31, 2020. The average balance of mortgage loans decreased $2.2 billion, or 21.2 percent, for the three months ended September 30, 2021 when compared to the prior year period as prepayments have outpaced acquisitions during 2021.

•Performance ratios: Return on average equity (ROE) decreased to 5.40 percent for the quarter ended September 30, 2021 compared to 6.34 percent for the prior year period due primarily to the decrease in net income for the current quarter, combined with an increase in average capital.

•Dividends: The Class A Common Stock dividend rate of 0.25 percent per annum and the Class B Common Stock dividend rate of 5.25 percent per annum combined for a weighted average dividend rate for the quarter ended September 30, 2021 of 4.15 percent per annum, compared to a weighted average dividend rate of 3.69 percent for the same period in 2020.

Financial Highlights

Attached are highlights of FHLBank’s financial position as of September 30, 2021 and December 31, 2020 and results of operations for the three and nine months ended September 30, 2021 and 2020.

The following information was filed by Federal Home Loan Bank Of Topeka on Thursday, October 28, 2021 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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Financial Statements, Disclosures and Schedules

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

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

CIK: 1325878
Form Type: 10-Q Quarterly Report
Accession Number: 0001325878-21-000124
Submitted to the SEC: Wed Nov 10 2021 4:09:22 PM EST
Accepted by the SEC: Wed Nov 10 2021
Period: Thursday, September 30, 2021
Industry: Federal And Federally Sponsored Credit Agencies

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Federal Home Loan Bank Of Topeka (1325878) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

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