Federal Home Loan Bank Of Indianapolis (1331754) SEC Filing 10-Q Quarterly report for the period ending Sunday, June 30, 2019

Earnings Press Release
10-Q Quarterly Report
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Federal Home Loan Bank Of Indianapolis
CIK: 1331754

NEWS RELEASE



FOR IMMEDIATE RELEASE			Contact: Carrie O'Connor
July 25, 2019			Senior Director of Communications
			coconnor@fhlbi.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 second quarter 2019 dividends on Class B-1 and Class B-2 capital stock at annualized rates of 5.50% and 4.40%, respectively. The dividends will be paid in cash on July 26, 2019.

Earnings Highlights

Net income for the second quarter of 2019 was $35 million, a decrease of $34 million compared to the same quarter in the prior year, substantially due to the non-recurring net realized gain in the second quarter of 2018 on the sale of all of the Bank's private-label mortgage-backed securities ("PLMBS").

Net income for the six months ended June 30, 2019 was $68 million, a decrease of $49 million compared to the same period in the prior year, primarily due to the non-recurring net realized gain in 2018 on the sale of all of the Bank's PLMBS and net losses resulting from derivatives and hedging activities.

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 other income. As a result, net interest income² after provision for credit losses for the quarter and six months ended June 30, 2019 was reduced by $9 million and $22 million, respectively. In general, we hold the derivatives and associated hedged items to the maturity, call, or put date. As a result, we expect to recover nearly all of the net losses on these financial instruments over the remaining contractual terms of the hedged items.

Affordable Housing Program Allocation ³

As a direct result of the earnings for the six months ended June 30, 2019, FHLBank Indianapolis allocated $8 million to its Affordable Housing Program ("AHP"), which provides grant funding to support housing for low- and moderate-income families in Michigan and Indiana. Full year 2019 AHP allocations will be available to the Bank's members in 2020 to help address their communities' affordable housing needs, including construction, rehabilitation, accessibility improvements and homebuyer down-payment assistance.

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	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.


³	Each year FHLBanks allocate to the AHP 10% of earnings, which is defined as income before assessments, plus interest expense on mandatorily redeemable capital stock.

The following information was filed by Federal Home Loan Bank Of Indianapolis on Thursday, July 25, 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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