Federal Home Loan Bank of Indianapolis Declares Dividends, Reports Earnings
INDIANAPOLIS, Ind., Oct. 24, 2019 (GLOBE NEWSWIRE) — 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.”Earnings HighlightsNet 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.Affordable Housing Program Allocation 3
As a direct result of its earnings for the nine months ended September 30, 2019, FHLBank Indianapolis allocated $11 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.Balance Sheet HighlightsTotal assets at September 30, 2019 were $67.3 billion, an increase of $1.9 billion, or 3%, from December 31, 2018, substantially driven by additions to the Bank’s liquidity portfolio.Advances 4Advances outstanding at September 30, 2019 totaled $32.5 billion, a net decrease of $241 million, or 1%, from December 31, 2018. Such decline included a net decrease in short-term advances outstanding of 24% and a net increase in long-term advances outstanding of 18%.The par value of advances to depository institutions – comprising commercial banks, savings institutions and credit unions – and insurance companies each decreased by 2%. Advances to depository institutions, as a percent of total advances outstanding at par value, were 53% at September 30, 2019, while advances to insurance companies were 47%.Mortgage Loans Held for Portfolio 5Mortgage loan purchases from members for the nine months ended September 30, 2019 totaled $877 million. Mortgage loans held for portfolio at September 30, 2019 totaled $11.1 billion, a net decrease of $281 million, or 2%, from December 31, 2018.Liquidity Portfolio 6The liquidity portfolio at September 30, 2019 totaled $9.9 billion, an increase of $2.3 billion, or 31%, from December 31, 2018. In 2019, to enhance liquidity, the Bank began purchasing trading securities, consisting solely of U.S. Treasury securities, which totaled $4.4 billion at September 30, 2019. Cash and short-term investments decreased by $2.1 billion, or 27%, to $5.5 billion. As a result, U.S. Treasury securities represented 44% of the liquidity portfolio at September 30, 2019.Consolidated Obligations 7FHLBank Indianapolis’ consolidated obligations outstanding at September 30, 2019 totaled $62.5 billion, a net increase of $1.3 billion, or 2%, from December 31, 2018. The increase in consolidated obligations supported the Bank’s growth in assets.Capital 8Total capital at September 30, 2019 was $3.1 billion, a net increase of $35 million, or 1%, from December 31, 2018.The Bank’s regulatory capital9-to-assets ratio at September 30, 2019 was 4.99%, which exceeds all applicable regulatory capital requirements.
Safe Harbor Statement
This document may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 concerning plans, objectives, goals, strategies, future events or performance. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” or the negative of these terms or comparable terminology. Any forward-looking statement contained in this document reflects FHLBank Indianapolis’ current beliefs and expectations. Actual results or performance may differ materially from what is expressed in any forward-looking statements.Any forward-looking statement contained in this document speaks only as of the date on which it was made. FHLBank Indianapolis undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Readers are referred to the documents filed by the Bank with the U.S. Securities and Exchange Commission, specifically reports on Form 10-K and Form 10-Q, which include factors that could cause actual results to differ from forward-looking statements. These reports are available at www.sec.gov.Building Partnerships. Serving Communities.
FHLBank Indianapolis is a regional bank included in the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to ensure access to low-cost funding for their member financial institutions, with particular attention paid to providing solutions that support the housing and small business needs of members’ customers. FHLBanks are privately capitalized and funded, and receive no Congressional appropriations. FHLBank Indianapolis is owned by its Indiana and Michigan financial institution members, which include commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions. For more information about FHLBank Indianapolis, visit www.fhlbi.com.