|FOR IMMEDIATE RELEASE||Contact: Carrie O'Connor|
|April 29, 2021||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 2021 dividends on Class B-2 activity-based capital stock and Class B-1 non-activity-based stock at annualized rates of 3.25% and 1.50%, respectively. The higher dividend rate on activity-based stock reflects the Board's discretion under our amended capital plan effective September 26, 2020 to reward members that use FHLBank Indianapolis in support of their liquidity needs.
The dividends will be paid in cash on April 30, 2021.
Net income for the first quarter of 2021 was $29.9 million, an increase of $0.4 million compared to the corresponding quarter in the prior year. The increase was primarily due to net hedging gains on qualifying fair-value hedging relationships1, substantially offset by lower earnings on the portion of the Bank's assets funded by its capital2 and accelerated amortization of purchase premium resulting from higher prepayments on mortgage loans, each driven by the decline in market interest rates.
Hedging gains (losses) on qualifying fair-value hedging relationships are reported in net interest income3. As a result, net interest income for the first quarter of 2021 and 2020 included net hedging gains of $18.6 million and losses of $(3.6) 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 gains and losses on these financial instruments will reverse over the remaining contractual terms of the hedged items.
1 The Bank 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 Because of the Bank's relatively low net interest-rate spread, it has historically derived a substantial portion of its net interest income from deploying its interest-free capital in floating-rate assets.
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, April 29, 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.