10-Q 1 c878-20130930x10q.htm 10-Q a61476e4947646d

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

 

OR

 

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

 

Commission File Number 000-52004

 

FEDERAL HOME LOAN BANK OF TOPEKA

(Exact name of registrant as specified in its charter)

 

 

 

 

Federally chartered corporation

   

48-0561319

(State or other jurisdiction of

incorporation or organization)

   

(I.R.S. Employer

Identification No.)

 

One Security Benefit Pl. Suite 100

Topeka, KS

   

 

66606

(Address of principal executive offices)

   

(Zip Code)

 

Registrant’s telephone number, including area code: 785.233.0507

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes  ¨ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x  Yes    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. ¨ Large accelerated filer  ¨ Accelerated filer  x Non-accelerated filer  ¨ Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  ¨ Yes  x No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

 

Shares outstanding

as of 11/07/2013

Class A Stock, par value $100

4,891,606

Class B Stock, par value $100

8,394,963

 

 

 

1


 

.FEDERAL HOME LOAN BANK OF TOPEKA

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

PART I

FINANCIAL INFORMATION 

4

Item 1.

Financial Statements

4

 

Statements of Condition

5

 

Statements of Income

7

 

Statements of Comprehensive Income

8

 

Statements of Capital

9

 

Statements of Cash Flows

10

 

Notes to Financial Statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

52

 

Executive Level Overview

52

 

Financial Market Trends

55

 

Critical Accounting Policies and Estimates

56

 

Results of Operations

57

 

Financial Condition

68

 

Liquidity and Capital Resources

84

 

Risk Management

86

 

Recently Issued Accounting Standards

90

 

Recent Regulatory and Legislative Developments

90

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

90

Item 4.

Controls and Procedures

97

PART II

OTHER INFORMATION 

98

Item 1.

Legal Proceedings

98

Item 1A.

Risk Factors

98

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

98

Item 3.

Defaults Upon Senior Securities

98

Item 4.

Mine Safety Disclosures

98

Item 5.

Other Information

98

Item 6.

Exhibits

98

 

2


 

Important Notice about Information in this Quarterly Report

 

In this quarterly report, unless the context suggests otherwise, references to the “FHLBank,” “FHLBank Topeka,” “we,” “us” and “our” mean the Federal Home Loan Bank of Topeka, and “FHLBanks” mean the 12 Federal Home Loan Banks, including the FHLBank Topeka.

 

The information contained in this quarterly report is accurate only as of the date of this quarterly report and as of the dates specified herein.

 

The product and service names used in this quarterly report are the property of the FHLBank, and in some cases, the other FHLBanks. Where the context suggests otherwise, the products, services and company names mentioned in this quarterly report are the property of their respective owners.

 

Special Cautionary Notice Regarding Forward-looking Statements

 

The information contained in this Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements describing the objectives, projections, estimates or future predictions of the FHLBank’s operations. These statements may be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “is likely,” “could,” “estimate,” “expect,” “will,” “intend,” “probable,” “project,” “should,” or their negatives or other variations of these terms. The FHLBank cautions that by their nature forward-looking statements involve risk or uncertainty and that actual results may differ materially from those expressed in any forward-looking statements as a result of such risks and uncertainties, including but not limited to:

Governmental actions, including legislative, regulatory, judicial or other developments that affect the FHLBank; its members, counterparties or investors; housing government sponsored enterprises (GSE); or the FHLBank System in general;

Regulatory actions and determinations, including those resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act);

Changes in the FHLBank’s capital structure;

Changes in economic and market conditions, including conditions in the mortgage, housing and capital markets;

Changes in demand for advances or consolidated obligations of the FHLBank and/or of the FHLBank System;

Effects of derivative accounting treatment, other-than-temporary impairment (OTTI) accounting treatment and other accounting rule requirements;

The effects of amortization/accretion;

Gains/losses on derivatives or on trading investments and the ability to enter into effective derivative instruments on acceptable terms;

Volatility of market prices, interest rates and indices and the timing and volume of market activity;

Membership changes, including changes resulting from member failures or mergers, changes in the principal place of business of members or changes in the Federal Housing Finance Agency (Finance Agency) regulations on membership standards;

Our ability to declare dividends or to pay dividends at rates consistent with past practices;

Soundness of other financial institutions, including FHLBank members, nonmember borrowers, and the other FHLBanks;

Changes in the value or liquidity of collateral underlying advances to FHLBank members or nonmember borrowers or collateral pledged by reverse repurchase and derivative counterparties;

Competitive forces, including competition for loan demand, purchases of mortgage loans and access to funding;

The ability of the FHLBank to introduce new products and services to meet market demand and to manage successfully the risks associated with new products and services;

Our ability to keep pace with technological changes and the ability of the FHLBank to develop and support technology and information systems, including the ability to access the internet and internet-based systems and services, sufficient to effectively manage the risks of the FHLBank’s business;

The ability of each of the other FHLBanks to repay the principal and interest on consolidated obligations for which it is the primary obligor and with respect to which the FHLBank has joint and several liability;

Changes in the U.S. government’s long-term debt rating and the long-term credit rating of the senior unsecured debt issues of the FHLBank System;

Changes in the fair value and economic value of, impairments of, and risks associated with, the FHLBank’s investments in mortgage loans and mortgage-backed securities (MBS) or other assets and related credit enhancement (CE) protections; and

The volume and quality of eligible mortgage loans originated and sold by participating members to the FHLBank through its various mortgage finance products (Mortgage Partnership Finance® (MPF®) Program1).

 

1“Mortgage Partnership Finance,” “MPF” and eMPF” are registered trademarks of the Federal Home Loan Bank of Chicago.

3


 

Readers of this report should not rely solely on the forward-looking statements and should consider all risks and uncertainties addressed throughout this report, as well as those discussed under Item 1A – “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2012, incorporated by reference herein.

 

All forward-looking statements contained in this Form 10-Q are expressly qualified in their entirety by this cautionary notice. The reader should not place undue reliance on such forward-looking statements, since the statements speak only as of the date that they are made and the FHLBank has no obligation and does not undertake publicly to update, revise or correct any forward-looking statement for any reason.

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

 

 

 

 

4


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

STATEMENTS OF CONDITION - Unaudited

 

 

 

 

 

 

(In thousands, except par value)

 

 

 

 

 

 

 

September 30,

December 31,

 

2013

2012

ASSETS

 

 

 

 

 

 

Cash and due from banks

$

962,845 

 

$

369,997 

 

Interest-bearing deposits

 

2,524 

 

 

455 

 

Securities purchased under agreements to resell (Note 11)

 

600,000 

 

 

1,999,288 

 

Federal funds sold

 

545,000 

 

 

850,000 

 

 

 

 

 

 

 

 

Investment securities:

 

 

 

 

 

 

Trading securities (Note 3)

 

3,502,694 

 

 

2,764,918 

 

Held-to-maturity securities1 (Note 3)

 

5,678,720 

 

 

5,159,750 

 

Total investment securities

 

9,181,414 

 

 

7,924,668 

 

 

 

 

 

 

 

 

Advances (Notes 4, 6)

 

18,805,283 

 

 

16,573,348 

 

 

 

 

 

 

 

 

Mortgage loans held for portfolio:

 

 

 

 

 

 

Mortgage loans held for portfolio (Note 5)

 

5,919,268 

 

 

5,945,933 

 

Less allowance for credit losses on mortgage loans (Note 6)

 

(6,891)

 

 

(5,416)

 

Mortgage loans held for portfolio, net

 

5,912,377 

 

 

5,940,517 

 

 

 

 

 

 

 

 

Accrued interest receivable

 

63,721 

 

 

77,445 

 

Premises, software and equipment, net

 

11,055 

 

 

8,874 

 

Derivative assets (Notes 7, 11)

 

14,611 

 

 

25,166 

 

Other assets

 

45,939 

 

 

48,869 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

36,144,769 

 

$

33,818,627 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Interest-bearing (Note 8)

$

720,958 

 

$

1,117,627 

 

Non-interest-bearing (Note 8)

 

36,258 

 

 

64,330 

 

Total deposits

 

757,216 

 

 

1,181,957 

 

 

 

 

 

 

 

 

Consolidated obligations, net:

 

 

 

 

 

 

Discount notes (Note 9)

 

12,185,294 

 

 

8,669,059 

 

Bonds (Note 9)

 

21,055,434 

 

 

21,973,902 

 

Total consolidated obligations, net

 

33,240,728 

 

 

30,642,961 

 

 

 

 

 

 

 

 

Mandatorily redeemable capital stock (Note 12)

 

5,184 

 

 

5,665 

 

Accrued interest payable

 

81,191 

 

 

81,801 

 

Affordable Housing Program (Note 10)

 

33,229 

 

 

31,198 

 

Derivative liabilities (Notes 7, 11)

 

129,526 

 

 

123,414 

 

Other liabilities

 

84,431 

 

 

31,150 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

34,331,505 

 

 

32,098,146 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

                    

1Fair value: $5,674,693 and $5,192,330 as of September 30, 2013 and December 31, 2012, respectively.

 

The accompanying notes are an integral part of these financial statements.

 

5


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

STATEMENTS OF CONDITION - Unaudited (continued)

 

 

 

 

 

 

(In thousands, except par value)

 

 

 

 

 

 

 

September 30,

December 31,

 

2013

2012

Capital:

 

 

 

 

 

 

Capital stock outstanding - putable:

 

 

 

 

 

 

Class A ($100 par value; 4,274 and 4,053 shares issued and outstanding) (Note 12)

$

427,441 

 

$

405,304 

 

Class B ($100 par value; 8,682 and 8,592 shares issued and outstanding) (Note 12)

 

868,228 

 

 

859,152 

 

Total capital stock

 

1,295,669 

 

 

1,264,456 

 

 

 

 

 

 

 

 

Retained earnings:

 

 

 

 

 

 

Unrestricted

 

494,303 

 

 

453,346 

 

Restricted

 

44,347 

 

 

27,936 

 

Total retained earnings

 

538,650 

 

 

481,282 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss) (Note 13)

 

(21,055)

 

 

(25,257)

 

 

 

 

 

 

 

 

TOTAL CAPITAL

 

1,813,264 

 

 

1,720,481 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND CAPITAL

$

36,144,769 

 

$

33,818,627 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

6


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF INCOME - Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-month Period Ended

September 30,

Nine-month Period Ended

September 30,

 

2013

2012

2013

2012

INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

56 

 

$

135 

 

$

257 

 

$

367 

 

Securities purchased under agreements to resell

 

42 

 

 

661 

 

 

821 

 

 

1,574 

 

Federal funds sold

 

285 

 

 

384 

 

 

989 

 

 

881 

 

Trading securities

 

14,285 

 

 

16,980 

 

 

42,483 

 

 

53,590 

 

Held-to-maturity securities

 

14,408 

 

 

17,101 

 

 

44,222 

 

 

54,862 

 

Advances

 

30,689 

 

 

37,170 

 

 

93,736 

 

 

113,344 

 

Prepayment fees on terminated advances

 

287 

 

 

693 

 

 

3,529 

 

 

3,933 

 

Mortgage loans held for portfolio

 

48,675 

 

 

49,572 

 

 

145,050 

 

 

145,633 

 

Other

 

409 

 

 

443 

 

 

1,252 

 

 

1,397 

 

Total interest income

 

109,136 

 

 

123,139 

 

 

332,339 

 

 

375,581 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

179 

 

 

331 

 

 

768 

 

 

1,162 

 

Consolidated obligations:

 

 

 

 

 

 

 

 

 

 

 

 

Discount notes

 

2,041 

 

 

2,859 

 

 

6,746 

 

 

6,261 

 

Bonds

 

52,319 

 

 

66,843 

 

 

166,037 

 

 

201,493 

 

Mandatorily redeemable capital stock (Note 12)

 

 

 

 

 

19 

 

 

35 

 

Other

 

45 

 

 

34 

 

 

121 

 

 

145 

 

Total interest expense

 

54,590 

 

 

70,075 

 

 

173,691 

 

 

209,096 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

54,546 

 

 

53,064 

 

 

158,648 

 

 

166,485 

 

Provision for credit losses on mortgage loans (Note 6)

 

530 

 

 

1,062 

 

 

2,061 

 

 

2,518 

 

NET INTEREST INCOME AFTER MORTGAGE LOAN LOSS PROVISION

 

54,016 

 

 

52,002 

 

 

156,587 

 

 

163,967 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

 

 

Total other-than-temporary impairment losses on held-to-maturity securities

 

(5)

 

 

(13)

 

 

(19)

 

 

(5,105)

 

Portion of other-than-temporary impairment losses on held-to-maturity securities recognized in other comprehensive income (loss)

 

(295)

 

 

(189)

 

 

(433)

 

 

3,682 

 

Net other-than-temporary impairment losses on held-to-maturity securities (Note 3)

 

(300)

 

 

(202)

 

 

(452)

 

 

(1,423)

 

Net gain (loss) on trading securities (Note 3)

 

(6,768)

 

 

(4,447)

 

 

(37,687)

 

 

(15,894)

 

Net gain (loss) on derivatives and hedging activities (Note 7)

 

(5,592)

 

 

(6,122)

 

 

2,875 

 

 

(24,228)

 

Standby bond purchase agreement commitment fees

 

1,408 

 

 

1,211 

 

 

3,774 

 

 

3,474 

 

Letters of credit fees

 

736 

 

 

715 

 

 

2,298 

 

 

2,394 

 

Other

 

685 

 

 

71 

 

 

1,613 

 

 

1,338 

 

Total other income (loss)

 

(9,831)

 

 

(8,774)

 

 

(27,579)

 

 

(34,339)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

6,879 

 

 

7,286 

 

 

20,208 

 

 

22,190 

 

Other operating

 

3,364 

 

 

2,817 

 

 

10,206 

 

 

9,046 

 

Finance Agency

 

481 

 

 

738 

 

 

1,698 

 

 

2,380 

 

Office of Finance

 

622 

 

 

466 

 

 

1,844 

 

 

1,661 

 

Other

 

1,084 

 

 

897 

 

 

3,872 

 

 

3,548 

 

Total other expenses

 

12,430 

 

 

12,204 

 

 

37,828 

 

 

38,825 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE ASSESSMENTS

 

31,755 

 

 

31,024 

 

 

91,180 

 

 

90,803 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affordable Housing Program assessments (Note 10)

 

3,176 

 

 

3,103 

 

 

9,120 

 

 

9,084 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

$

28,579 

 

$

27,921 

 

$

82,060 

 

$

81,719 

 

 

The accompanying notes are an integral part of these financial statements.

 

7


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF COMPREHENSIVE INCOME - Unaudited

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-month Period Ended

September 30,

Nine-month Period Ended

September 30,

 

2013

2012

2013

2012

Net income

$

28,579 

 

$

27,921 

 

$

82,060 

 

$

81,719 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net non-credit portion of other-than-temporary impairment losses on held-to-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Non-credit portion

 

(5)

 

 

(13)

 

 

(19)

 

 

(4,634)

 

Reclassification of non-credit portion included in net income

 

300 

 

 

202 

 

 

452 

 

 

952 

 

Accretion of non-credit portion

 

738 

 

 

1,449 

 

 

3,467 

 

 

4,628 

 

Total net non-credit portion of other-than-temporary impairment losses on held-to-maturity securities

 

1,033 

 

 

1,638 

 

 

3,900 

 

 

946 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension plan:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net loss

 

101 

 

 

126 

 

 

302 

 

 

378 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

1,134 

 

 

1,764 

 

 

4,202 

 

 

1,324 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE INCOME

$

29,713 

 

$

29,685 

 

$

86,262 

 

$

83,043 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

8


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF CAPITAL - Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

Capital Stock1

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Class A

Class B

Total

Retained Earnings

Comprehensive

Total

 

Shares

Par Value

Shares

Par Value

Shares

Par Value

Unrestricted

Restricted

Total

Income (Loss)

Capital

BALANCE - DECEMBER 31, 2011

 

5,373 

 

$

537,304 

 

 

7,905 

 

$

790,523 

 

 

13,278 

 

$

1,327,827 

 

$

395,588 

 

$

5,873 

 

$

401,461 

 

$

(27,841)

 

$

1,701,447 

 

Proceeds from issuance of capital stock

 

38 

 

 

3,790 

 

 

3,164 

 

 

316,455 

 

 

3,202 

 

 

320,245 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

320,245 

 

Repurchase/redemption of capital stock

 

(680)

 

 

(68,021)

 

 

(159)

 

 

(15,890)

 

 

(839)

 

 

(83,911)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(83,911)

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,375 

 

 

16,344 

 

 

81,719 

 

 

1,324 

 

 

83,043 

 

Net reclassification of shares to mandatorily redeemable capital stock

 

(558)

 

 

(55,790)

 

 

(1,852)

 

 

(185,200)

 

 

(2,410)

 

 

(240,990)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(240,990)

 

Net transfer of shares between Class A and Class B

 

156 

 

 

15,624 

 

 

(156)

 

 

(15,624)

 

 

 -

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Dividends on capital stock (Class A - 0.3%, Class B - 3.5%):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(215)

 

 

 

 

 

(215)

 

 

 

 

 

(215)

 

Stock issued

 

 

 

 

 

 

 

223 

 

 

22,250 

 

 

223 

 

 

22,250 

 

 

(22,250)

 

 

 

 

 

(22,250)

 

 

 

 

 

 -

 

BALANCE SEPTEMBER 30, 2012

 

4,329 

 

$

432,907 

 

 

9,125 

 

$

912,514 

 

 

13,454 

 

$

1,345,421 

 

$

438,498 

 

$

22,217 

 

$

460,715 

 

$

(26,517)

 

$

1,779,619 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

Capital Stock1

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Class A

Class B

Total

Retained Earnings

Comprehensive

Total

 

Shares

Par Value

Shares

Par Value

Shares

Par Value

Unrestricted

Restricted

Total

Income (Loss)

Capital

BALANCE - DECEMBER 31, 2012

 

4,053 

 

$

405,304 

 

 

8,592 

 

$

859,152 

 

 

12,645 

 

$

1,264,456 

 

$

453,346 

 

$

27,936 

 

$

481,282 

 

$

(25,257)

 

$

1,720,481 

 

Proceeds from issuance of capital stock

 

 

 

827 

 

 

3,858 

 

 

385,857 

 

 

3,866 

 

 

386,684 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

386,684 

 

Repurchase/redemption of capital stock

 

(1,594)

 

 

(159,414)

 

 

(134)

 

 

(13,385)

 

 

(1,728)

 

 

(172,799)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(172,799)

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,649 

 

 

16,411 

 

 

82,060 

 

 

4,202 

 

 

86,262 

 

Net reclassification of shares to mandatorily redeemable capital stock

 

(290)

 

 

(28,973)

 

 

(1,782)

 

 

(178,177)

 

 

(2,072)

 

 

(207,150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(207,150)

 

Net transfer of shares between Class A and Class B

 

2,097 

 

 

209,697 

 

 

(2,097)

 

 

(209,697)

 

 

 -

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Dividends on capital stock (Class A - 0.3%, Class B - 3.5%):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(214)

 

 

 

 

 

(214)

 

 

 

 

 

(214)

 

Stock issued

 

 

 

 

 

 

 

245 

 

 

24,478 

 

 

245 

 

 

24,478 

 

 

(24,478)

 

 

 

 

 

(24,478)

 

 

 

 

 

 -

 

BALANCE SEPTEMBER 30, 2013

 

4,274 

 

$

427,441 

 

 

8,682 

 

$

868,228 

 

 

12,956 

 

$

1,295,669 

 

$

494,303 

 

$

44,347 

 

$

538,650 

 

$

(21,055)

 

$

1,813,264 

 

                    

1

Putable

 

The accompanying notes are an integral part of these financial statements.

 

 

 

9


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

STATEMENTS OF CASH FLOWS - Unaudited

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

Nine-month Period Ended
September 30,

 

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

$

82,060 

 

$

81,719 

 

Adjustments to reconcile income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

Premiums and discounts on consolidated obligations, net

 

(22,913)

 

 

(19,207)

 

Concessions on consolidated obligations

 

4,956 

 

 

14,235 

 

Premiums and discounts on investments, net

 

(1,178)

 

 

(1,568)

 

Premiums, discounts and commitment fees on advances, net

 

(11,375)

 

 

(9,627)

 

Premiums, discounts and deferred loan costs on mortgage loans, net

 

16,772 

 

 

13,834 

 

Fair value adjustments on hedged assets or liabilities

 

11,436 

 

 

13,759 

 

Premises, software and equipment

 

1,470 

 

 

1,640 

 

Other

 

302 

 

 

378 

 

Provision for credit losses on mortgage loans

 

2,061 

 

 

2,518 

 

Non-cash interest on mandatorily redeemable capital stock

 

18 

 

 

33 

 

Net other-than-temporary impairment losses on held-to-maturity securities

 

452 

 

 

1,423 

 

Net realized (gain) loss on disposals of premises, software and equipment

 

(19)

 

 

614 

 

Other (gains) losses

 

114 

 

 

238 

 

Net (gain) loss on trading securities

 

37,687 

 

 

15,894 

 

(Gain) loss due to change in net fair value adjustment on derivative and hedging activities

 

11,963 

 

 

43,333 

 

(Increase) decrease in accrued interest receivable

 

13,766 

 

 

13,565 

 

Change in net accrued interest included in derivative assets

 

(213)

 

 

(23,053)

 

(Increase) decrease in other assets

 

2,048 

 

 

3,667 

 

Increase (decrease) in accrued interest payable

 

(612)

 

 

(6,154)

 

Change in net accrued interest included in derivative liabilities

 

(16,832)

 

 

5,517 

 

Increase (decrease) in Affordable Housing Program liability

 

2,031 

 

 

(1,070)

 

Increase (decrease) in other liabilities

 

(862)

 

 

230 

 

Total adjustments

 

51,072 

 

 

70,199 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

133,132 

 

 

151,918 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Net (increase) decrease in interest-bearing deposits

 

99,746 

 

 

(19,834)

 

Net (increase) decrease in securities purchased under resale agreements

 

1,399,288 

 

 

(1,749,125)

 

Net (increase) decrease in Federal funds sold

 

305,000 

 

 

(5,000)

 

Net (increase) decrease in short-term trading securities

 

(539,914)

 

 

1,057,829 

 

Proceeds from maturities of and principal repayments on long-term trading securities

 

264,772 

 

 

458,045 

 

Purchases of long-term trading securities

 

(500,279)

 

 

(399,975)

 

Proceeds from maturities of and principal repayments on long-term held-to-maturity securities

 

1,185,321 

 

 

1,289,419 

 

Purchases of long-term held-to-maturity securities

 

(1,645,872)

 

 

(1,317,566)

 

Principal collected on advances

 

54,345,379 

 

 

26,052,711 

 

Advances made

 

(56,722,373)

 

 

(26,572,683)

 

Principal collected on mortgage loans

 

1,029,054 

 

 

1,091,003 

 

Purchase or origination of mortgage loans

 

(1,030,602)

 

 

(2,013,700)

 

Proceeds from sale of foreclosed assets

 

3,556 

 

 

6,722 

 

Principal collected on other loans made

 

1,469 

 

 

1,374 

 

Proceeds from sale of premises, software and equipment

 

47 

 

 

24 

 

Purchases of premises, software and equipment

 

(3,679)

 

 

(862)

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

(1,809,087)

 

 

(2,121,618)

 

 

The accompanying notes are an integral part of these financial statements.

10


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL HOME LOAN BANK OF TOPEKA

 

 

 

 

 

 

STATEMENTS OF CASH FLOWS - Unaudited (continued)

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

Nine-month Period Ended
September 30,

 

2013

2012

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Net increase (decrease) in deposits

$

(419,122)

 

$

331,646 

 

Net proceeds from issuance of consolidated obligations:

 

 

 

 

 

 

Discount notes

 

72,658,386 

 

 

53,760,905 

 

Bonds

 

6,361,367 

 

 

15,924,786 

 

Payments for maturing and retired consolidated obligations:

 

 

 

 

 

 

Discount notes

 

(69,141,787)

 

 

(53,438,855)

 

Bonds

 

(7,146,000)

 

 

(14,406,300)

 

Net increase (decrease) in overnight loans from other FHLBanks

 

 -

 

 

(35,000)

 

Net increase (decrease) in other borrowings

 

 -

 

 

(5,000)

 

Proceeds from financing element derivatives

 

170 

 

 

 -

 

Net interest payments received (paid) for financing derivatives

 

(50,233)

 

 

(57,486)

 

Proceeds from issuance of capital stock

 

386,684 

 

 

320,245 

 

Payments for repurchase/redemption of capital stock

 

(172,799)

 

 

(83,911)

 

Payments for repurchase of mandatorily redeemable capital stock

 

(207,649)

 

 

(243,074)

 

Cash dividends paid

 

(214)

 

 

(215)

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

2,268,803 

 

 

2,067,741 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

592,848 

 

 

98,041 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

369,997 

 

 

116,041 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

962,845 

 

$

214,082