8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 23, 2020

Federal Home Loan Bank of Topeka

(Exact name of registrant as specified in its charter)

Federally Chartered Corporation	000-52004		48-0561319
(State or other jurisdiction of incorporation)	(Commission File Number)		(I.R.S. Employer Identification No.)
500 SW Wanamaker Road, Topeka, Kansas			66606
(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code:		785.233.0507

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Item 3.03 Material Modification to Rights of Security Holders

On July 23, 2020, the board of directors (board) of the Federal Home Loan Bank of Topeka (FHLBank) changed the established Acquired Member Assets (AMA) Activity-Based Stock Purchase Requirement pursuant to its Capital Plan, effective as of August 5, 2020. Section 7(b) of FHLBank’s Capital Plan establishes the AMA Activity-Based Stock Purchase Requirements and permits the board to establish the specified percentage for AMA Activity-Based Stock Purchase Requirements from time to time. Pursuant to Section 7(b)(2) of the Capital Plan, the board has changed the AMA Activity-Based Stock Purchase Requirement to three percent (3.0%) from the previous requirement of zero percent (0.0%), with a maximum AMA Activity-Based Stock Purchase Requirement of three percent (3.0%) of the Member’s total assets as of December 31 of the preceding year.

In addition, on July 23, 2020, the board of FHLBank changed the established Letter of Credit Activity-Based Stock Purchase Requirement pursuant to its Capital Plan, effective as of January 22, 2021. Section 7(b) of FHLBank’s Capital Plan establishes the Letter of Credit Activity-Based Stock Purchase Requirements and permits the board to establish the specified percentage for Letter of Credit Activity-Based Stock Purchase Requirements from time to time. Pursuant to Section 7(b)(3) of the Capital Plan, the board has changed the Letter of Credit Activity-Based Stock Purchase Requirement to one quarter of one percent (0.25%) from the previous requirement of zero percent (0.0%).

The foregoing changes will only impact member institutions. The change in the Activity-Based Stock Purchase Requirements will not change for former members with outstanding business transactions with FHLBank.

The official notification of the impact of the change to the AMA Activity-Based Stock Purchase Requirement will be sent to members on August 5, 2020. On that same date, a member’s AMA Activity-Based Stock Purchase Requirement will become three percent (3.0%). The official notification of the impact of the change to the Letter of Credit Activity-Based Stock Purchase Requirement will be sent to members on January 22, 2021. On that same date, a member’s Letter of Credit Activity-Based Stock Purchase Requirement will become one quarter of one percent (0.25%).

Item 7.01 Regulation FD Disclosure.

On July 24, 2020, the Federal Home Loan Bank of Topeka (FHLBank) sent a message to its members announcing capital stock changes. A copy of the message is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Item 7.01 and Exhibit 99.1 is being furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933 if such subsequent filing specifically references this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits
99.1 Message to FHLBank members dated July 24, 2020, announcing capital stock changes.

__________________

Exhibit Index  

Exhibit No.			Description
99.1			Message to FHLBank members dated July 24, 2020, announcing capital stock changes.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Federal Home Loan Bank of Topeka
July 24, 2020	By:	/s/ Patrick C. Doran
		Name: Patrick C. Doran
		Title: Executive Vice President, Chief Compliance and Ethics Officer and General Counsel

EX-99.1

MPF Capital Stock Announcement to Members

July 24, 2020

SUBJECT: Adding a Capital Requirement on the MPF Program to Support Growth

Since we launched the Mortgage Partnership Finance® (MPF®) Program 20 years ago, it has continued to grow in popularity with our members. As a result, our MPF mortgage loan portfolio has grown significantly to more than 20% of our total assets as of June 30, 2020, prompting us to take steps recently to limit the MPF portfolio’s size.

We did not take that step lightly because all members benefit from the contribution MPF assets make to our earnings. As your cooperative, we remain laser focused on providing the products, services and strong dividend you value. To make sure that happens, we will implement an MPF stock requirement beginning on Aug. 5, 2020, that will help support the future growth of the MPF Program.

What does this mean for your FHLBank dividend?

Currently, members are rewarded for using FHLBank advances with a patronage dividend on Class B activity-based stock. This patronage will now be extended to members for their MPF use based on their capital support and the contribution the assets make to our net income. Although the increase in capital will lead to a slightly lower Class B dividend rate assuming a similar dividend payout ratio, members will continue to receive a healthy subsidy relative to the cost of advances and will now receive an enhancement to the income generated through their MPF sales to FHLBank.

DIVIDEND BENEFIT ILLUSTRATION1
	MPF	Advances
Class B Dividend Rate	4.50%	4.50%
Interest of Excess Reserves	-0.10%	-0.10%
Marginal Spread	4.40%	4.40%	A
Class B Activity Requirements	3.00%	4.50%	B
Incremental Benefit of Dividend	0.13%	0.20%	A x B

For example, if we paid a 4.50% Class B dividend, you would recognize a 20-basis-point reduction in your advance rate. Plus, the MPF stock requirement adds a new way to benefit from the dividend – through an MPF subsidy. The MPF subsidy is estimated at 13 bps per annum in income, which more than doubles the credit enhancement fee of 10 bps that is currently paid to members participating in the MPF Program.

How will the MPF stock requirement work?

The new stock requirement is 3% of the unpaid balance of loans sold under the traditional on-balance sheet MPF products. This includes MPF Original, MPF 125 and the on-balance sheet government product. The stock requirement is capped at 3% of your institution’s prior year-end total assets.

Because of the new capital requirement, members who use both advances and the MPF Program can have more Class B stock, at a rate that is significantly above comparable market yields.

What’s next?

¹  For illustrative purposes only. The illustration is not necessarily indicative of future dividend rates, spreads, or the incremental benefit of the dividend.

Classification: FHLBank Topeka Non-Public

 

You will receive official notification of your stock requirements on Aug.5, 2020. Following that notice, you will have 60 days to comply with the new requirement.However, if you transact MPF loan fundings or advancesduring that 60-day period, compliance will occur at the time of the transaction. On the date of compliance, you’ll also receive a notification detailing the capital stock transactions that will occur on that day.

In first quarter 2021, we also plan to institute an activity-based stock requirement for Letters of Credit. That requirement will be equal to 0.25% of the outstanding balance of letters of credit. Watch for more details on this early next year.

Questions?

We will keep you apprised of developments along the way. If you have any questions on our capital changes, please contact your regional account manager or Lending at 800.809.2733.

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

Classification: FHLBank Topeka Non-Public