|FOR IMMEDIATE RELEASE||Contact: Carrie O'Connor|
|April 29, 2020||Senior Director of Communications|
|firstname.lastname@example.org | 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 first quarter 2020 dividends on Class B-1 and Class B-2 capital stock at annualized rates of 4.00% and 3.20%, respectively. The dividends will be paid in cash on April 30, 2020.
Net income for the first quarter of 2020 was $30 million, a decrease of $3 million compared to the corresponding quarter in the prior year, primarily due to higher net losses on economic hedging relationships, accelerated amortization of purchase premium, resulting from higher prepayments on mortgage loans, and concession fees, resulting from called consolidated obligations, and net decreases in the fair values of the investments indirectly funding our supplemental retirement plan. These decreases were substantially offset by lower net losses on qualifying fair-value hedging relationships1 and higher net gains on trading securities.2.
Hedging gains (losses) on qualifying fair-value hedging relationships are reported in net interest income. As a result, net interest income3 after provision for credit losses for the first quarter 2020 included net hedging losses of $4 million compared to net hedging losses in the corresponding quarter in the prior year of $14 million. 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 Wednesday, April 29, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.