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 third quarter 2019 dividends on Class B-1 and Class B-2 capital stock at annualized rates of 4.75% and 3.80%, respectively. The dividends will be paid in cash on October 25, 2019.
"We are pleased to declare yet another strong dividend to our shareholders," FHLBank Indianapolis President and CEO Cindy Konich said. "Despite the lower rate environment, the FHLBank Indianapolis dividend continues to outperform short-term indices."
Net income for the third quarter of 2019 was $26 million, a decrease of $13 million compared to the corresponding quarter in the prior year, substantially due to lower spreads on the Bank's interest-earning assets.
Net income for the nine months ended September 30, 2019 was $94 million, a decrease of $62 million compared to the corresponding 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 private-label mortgage-backed securities and higher 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 nine months ended September 30, 2019 was reduced by $9 million and $31 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 to recover nearly all of the net losses on these financial instruments over the remaining contractual terms of the hedged items.
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.
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, October 24, 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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Form Type: 10-Q Quarterly Report Accession Number: 0001331754-19-000210 Submitted to the SEC: Thu Nov 07 2019 11:37:59 AM EST Accepted by the SEC: Thu Nov 07 2019 Period: Monday, September 30, 2019 Industry: Federal And Federally Sponsored Credit Agencies