|FOR IMMEDIATE RELEASE||Contact: Carrie O'Connor|
|February 20, 2020||Senior Director of Communications|
|email@example.com | 317.465.0469|
Federal Home Loan Bank of Indianapolis Declares Dividends, Reports Earnings
Indianapolis, IN…Today the Board of Directors of the Federal Home Loan Bank of Indianapolis ("FHLBank Indianapolis" or "Bank") declared its fourth quarter 2019 dividends on Class B-1 and Class B-2 capital stock at annualized rates of 4.25% and 3.40%, respectively. The dividends will be paid in cash on February 21, 2020.
"We’re pleased to declare a strong dividend to our shareholders," President and CEO Cindy Konich, said. "As a cooperative, our goal is to deliver value to our members by providing both reliable liquidity as well as a reasonable return on their investments."
Net income for the fourth quarter of 2019 was $48 million, an increase of $9 million compared to the corresponding quarter in the prior year, substantially due to net gains resulting from derivatives and hedging activities1 and net gains on trading securities2, partially offset by narrower spreads on the Bank's interest-earning assets.
Net income for the year ended December 31, 2019 was $142 million, a decrease of $53 million compared to the prior year, primarily due to the non-recurring net realized gain in 2018 on the sale of all of the Bank's private-label mortgage-backed securities, higher net losses resulting from derivatives and hedging activities1, and narrower spreads on the Bank's interest-earning assets, partially offset by net gains on trading securities2.
In accordance with an amendment to accounting guidance effective January 1, 2019, hedging gains (losses) on qualifying fair-value hedging relationships1 are reported prospectively in net interest income instead of in other income. As a result, net interest income3 after provision for credit losses for the fourth quarter and year ended December 31, 2019 included net hedging gains of $8 million and net hedging losses of $24 million, respectively. In general, the Bank holds the derivatives and associated hedged items to the maturity, call, or put date. As a result, we expect that nearly all of the net gains and losses on these financial instruments will reverse over the remaining contractual terms of the hedged items.
1 FHLBank Indianapolis uses interest-rate swaps to hedge the risk of changes in the fair value of certain of its advances, available-for-sale securities and consolidated obligations. These derivatives are designated as fair-value hedges. Changes in the estimated fair value of the derivative and, to the extent these relationships qualify for hedge accounting, changes in the fair value of the hedged item that are attributable to the hedged risk are recorded in earnings.
2 The Bank uses U.S. Treasury securities as part of its liquidity portfolio. Such securities are classified as trading securities, on which changes in fair value are recorded in earnings. Changes in the estimated fair value of the associated hedging instruments are also recorded in earnings.
3 FHLBank Indianapolis earns interest income on advances to and mortgage loans purchased from its Michigan and Indiana member financial institutions, as well as on long- and short-term investments. Net interest income is primarily determined by the spread between the interest earned on those assets and the interest cost of funding with consolidated obligations.
The following information was filed by Federal Home Loan Bank Of Indianapolis on Thursday, February 20, 2020 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.