Today the Board of Directors of the Federal Home Loan Bank of
Indianapolis ("FHLBank Indianapolis" or "Bank") declared its first
quarter 2024 dividends on Class B-2 activity-based capital stock
and Class B-1 non-activity-based stock at annualized rates of 9.50%
and 4.50%, respectively. The higher dividend rate on activity-based
stock reflects the Board's discretion under the Bank's capital plan
to reward members that use FHLBank Indianapolis in support of their
liquidity needs.
The dividends will be paid in cash on April 26, 2024.
Earnings Highlights
Net income, for the first quarter of 2024, was $95 million, an
increase of $3 million compared to the corresponding quarter in the
prior year. The increase was primarily due to higher earnings on
the portion of the Bank's assets funded by its capital1, driven
substantially by the increase in market interest rates. However,
such increase was substantially offset by net gains on the
extinguishment of consolidated obligations in the corresponding
quarter that did not occur in the current quarter.
Affordable Housing Program Allocation
The Bank's Affordable Housing Program ("AHP") provides grant
funding to support housing for low- and moderate-income families in
communities served by its Michigan and Indiana members. Full-year
2024 AHP allocations will be available to the Bank's members in
2025 to help address their communities' affordable housing needs,
including construction, rehabilitation, accessibility improvements
and homebuyer down-payment assistance.
_____________________________
1 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
size of the Bank's balance sheet and the spread between the
interest earned on its assets and the interest cost of funding with
consolidated obligations. Because of the Bank's inherent relatively
low 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.
For the three months ended March 31, 2024, AHP assessments2
totaled $11 million. In addition, as part of the Bank's commitment
to allocate voluntary funding in 2024 of 5% of its net earnings for
2023 to further support its AHP and additional affordable housing,
small business and community investment programs, the Bank
voluntarily allocated $4 million, which is reported in other
expenses. As a result, the Bank's combined required and voluntary
allocation for the three-month period totaled $15 million, an
increase of $1 million, or 8%, compared to the corresponding period
in the prior year.
Condensed Statements of Income
The following table presents unaudited condensed statements of
income ($ amounts in millions):
|
Three Months EndedMarch 31, |
|
2024 |
|
2023 |
Interest income(a) |
$ |
1,016 |
|
$ |
819 |
Interest expense(a) |
|
887 |
|
|
715 |
Provision for credit
losses |
|
— |
|
|
— |
Net interest income after
provision for credit losses |
|
129 |
|
|
104 |
Other income(b) |
|
9 |
|
|
30 |
Other expenses |
|
32 |
|
|
31 |
AHP assessments |
|
11 |
|
|
11 |
|
|
|
|
Net income |
$ |
95 |
|
$ |
92 |
(a) |
Includes
hedging gains (losses) and net interest settlements on fair-value
hedge relationships. The Bank uses derivatives, specifically
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 and, therefore, changes in the estimated fair
value of the derivative, and changes in the fair value of the
hedged item that are attributable to the hedged risk, are recorded
in net interest income. |
(b) |
Includes impact of purchase discount (premium) recorded through
mark-to-market gains (losses) on trading securities and net
interest settlements on derivatives hedging trading securities,
while generally offsetting interest income on trading securities is
included in interest income. |
Balance Sheet Highlights
Total assets, at March 31, 2024, were $71.4 billion, a net
decrease of $5.2 billion, or 7%, from December 31, 2023,
primarily due to decreases in investments.
Advances 3
Advances outstanding, at March 31, 2024, at carrying value,
totaled $35.3 billion, a net decrease of $265 million, or 1%, from
December 31, 2023. The par value of advances outstanding
decreased by 0.1% to $35.8 billion, which included a net decrease
in short-term advances of 5% and a net increase in long-term
advances of 1%. At March 31, 2024, long-term advances composed
74% of advances outstanding, while short-term advances composed
26%.
_____________________________
2 Each year, Federal Home Loan Banks are required to
allocate to the AHP 10% of earnings, defined for this purpose as
income before assessments plus interest expense on mandatorily
redeemable capital stock.3 Advances are secured loans that
the Bank provides to its member institutions.
The par value of advances outstanding to depository institutions
— comprising commercial banks, savings institutions and credit
unions — increased by 1%, while advances outstanding to insurance
companies decreased by 2%. As a percent of total advances
outstanding at par value, at March 31, 2024, advances to
commercial banks and savings institutions were 49% and advances to
credit unions were 14%, resulting in total advances to depository
institutions of 63%, while advances to insurance companies were
37%.
Mortgage Loans Held for Portfolio 4
Mortgage loans held for portfolio, at March 31, 2024,
totaled $8.9 billion, a net increase of $239 million, or 3%, from
December 31, 2023, as the Bank's purchases from its members
exceeded principal repayments by borrowers. Purchases of mortgage
loans, for the three months ended March 31, 2024, totaled $418
million.
Liquidity Investments 5
Liquidity investments, at March 31, 2024, totaled $7.0
billion, a net decrease of $5.1 billion, or 42%, from
December 31, 2023. However, our liquidity remained well above
regulatory requirements and continues to enable the Bank to be a
reliable liquidity provider to its members.
Cash and short-term investments decreased by $5.1 billion, or
44%, to $6.4 billion, primarily as a result of market conditions
and the lack of availability of short-term investments at
attractive interest rates relative to our cost of funds. The
portion of U.S. Treasury obligations classified as trading
securities decreased by $18 million, or 3%, to $582 million.
As a result of this activity, cash and short-term investments
represented 92% of the total liquidity investments at
March 31, 2024, while U.S. Treasury obligations represented
8%.
Other Investment Securities
Other investment securities, which consist substantially of
mortgage-backed securities and U.S. Treasury obligations classified
as held-to-maturity or available-for-sale, at March 31, 2024,
totaled $19.4 billion, a net decrease of $62 million, or 0.3%, from
December 31, 2023.
Consolidated Obligations 6
FHLBank Indianapolis' consolidated obligations outstanding, at
March 31, 2024, totaled $65.7 billion, a net decrease of $5.3
billion, or 7%, from December 31, 2023, which reflected lower
funding needs associated with the net decrease in the Bank's total
assets.
Capital 7
Total capital, at March 31, 2024, was $4.0 billion, a net
increase of $224 million, or 6%, from December 31, 2023. The
net increase resulted from the increase in accumulated other
comprehensive income, issuances of capital stock to support advance
activity and growth of retained earnings.
_____________________________
4 The Bank purchases mortgage loans from its members to
support its housing mission, provide an additional source of
liquidity to its members, and diversify its investments. 5 The
Bank's liquidity investments consist of cash, interest-bearing
deposits, securities purchased under agreements to resell, federal
funds sold and U.S. Treasury obligations.6 The primary source
of funds for FHLBank Indianapolis, and for the other FHLBanks, is
the sale of FHLBanks' consolidated obligations in the capital
markets. FHLBank Indianapolis is the primary obligor for the
payment of the principal and interest on the consolidated
obligations issued on its behalf; additionally, it is jointly and
severally liable with each of the other FHLBanks for all of the
FHLBanks' consolidated obligations outstanding.7 FHLBank
Indianapolis is a cooperative whose member financial institutions
and former members own all of its capital stock as a condition of
membership and to support outstanding credit products.
The Bank's regulatory capital-to-assets ratio8, at
March 31, 2024, was 6.03%, which exceeds all applicable
regulatory capital requirements.
Condensed Statements of Condition
The following table presents unaudited condensed statements of
condition ($ amounts in millions):
|
March 31, 2024 |
|
December 31, 2023 |
Advances |
$ |
35,297 |
|
|
$ |
35,562 |
|
Mortgage loans held for
portfolio, net |
|
8,853 |
|
|
|
8,614 |
|
Liquidity investments |
|
7,031 |
|
|
|
12,152 |
|
Other investment
securities(a) |
|
19,389 |
|
|
|
19,451 |
|
Other assets |
|
800 |
|
|
|
829 |
|
|
|
|
|
Total assets |
$ |
71,370 |
|
|
$ |
76,608 |
|
|
|
|
|
Consolidated obligations |
$ |
65,739 |
|
|
$ |
71,053 |
|
MRCS |
|
367 |
|
|
|
369 |
|
Other liabilities |
|
1,296 |
|
|
|
1,442 |
|
Total liabilities |
|
67,402 |
|
|
|
72,864 |
|
|
|
|
|
Capital stock(b) |
|
2,357 |
|
|
|
2,285 |
|
Retained earnings(c) |
|
1,583 |
|
|
|
1,532 |
|
Accumulated other
comprehensive income (loss) |
|
28 |
|
|
|
(73 |
) |
Total capital |
|
3,968 |
|
|
|
3,744 |
|
|
|
|
|
Total liabilities and
capital |
$ |
71,370 |
|
|
$ |
76,608 |
|
|
|
|
|
Total regulatory
capital(d) |
$ |
4,307 |
|
|
$ |
4,186 |
|
|
|
|
|
Regulatory capital-to-assets
ratio |
|
6.03 |
% |
|
|
5.46 |
% |
(a) |
Includes
held-to-maturity and available-for-sale securities. |
(b) |
Putable by members at par value. |
(c) |
Includes restricted retained earnings, at March 31, 2024
and December 31, 2023, of $417 million and $398 million,
respectively. |
(d) |
Consists of total capital less accumulated other comprehensive
income plus mandatorily redeemable capital stock. |
All amounts referenced above are unaudited. More detailed
information about FHLBank Indianapolis' financial condition as of
March 31, 2024, and its results for the three months then
ended, will be included in Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Bank's
Quarterly Report on Form 10-Q.
_____________________________
8 Total regulatory capital, which consists of capital
stock, mandatorily redeemable capital stock and retained earnings,
as a percentage of total assets.
Safe Harbor Statement
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 concerning plans, objectives, goals, strategies, future events
and performance. Forward-looking statements can be identified by
words such as "will," "believes," "may," "temporary," "estimates,"
and "expects" or the negative of these words or comparable
terminology. Each forward-looking statement contained in this news
release 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 news release
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 provide
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, including
commercial banks, credit unions, insurance companies, savings
institutions and community development financial institutions. For
more information about FHLBank Indianapolis, visit www.fhlbi.com.
Also, follow the Bank on LinkedIn, as well as Instagram and X at
@FHLBankIndy.
Contact: Scott Thien |
Senior Internal Communications Lead |
sthien@fhlbi.com | 317-902-3103 |