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Capital
 9 Months Ended
Sep. 30, 2020
Banking Regulation, Total Capital [Abstract]  
Capital Capital
    The Bank is subject to three capital requirements under its current Capital Plan Structure and the Finance Agency rules and regulations: (1) risk-based capital; (2) total regulatory capital; and (3) leverage capital. Regulatory capital does not include AOCI, but does include mandatorily redeemable capital stock. See details regarding these requirements and the Bank’s Capital Plan in Note 15 to the audited financial statements in the Bank’s 2019 Form 10-K. At September 30, 2020, the Bank was in compliance with all regulatory capital requirements.

The Bank has two subclasses of capital stock: B1 membership stock and B2 activity stock. The Bank had $0.3 billion and $1.5 billion in B1 membership stock and B2 activity stock, respectively, at September 30, 2020. The Bank had $0.3 billion and $2.7 billion in B1 membership stock and B2 activity stock, respectively, at December 31, 2019.

The following table demonstrates the Bank’s compliance with the regulatory capital requirements at September 30, 2020 and December 31, 2019.
 September 30, 2020December 31, 2019
(dollars in thousands)RequiredActualRequiredActual
Regulatory capital requirements:    
RBC$506,766 $3,454,571 $610,573 $4,724,586 
Total capital-to-asset ratio4.0 %5.7 %4.0 %4.9 %
Total regulatory capital2,417,731 3,454,571 3,828,965 4,724,586 
Leverage ratio5.0 %8.6 %5.0 %7.4 %
Leverage capital3,022,164 5,181,857 4,786,206 7,086,879 

The Finance Agency has established four capital classifications for the FHLBanks: adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. On September 25, 2020, the Bank received final notification from the Finance Agency that it was considered "adequately capitalized" for the quarter ended June 30, 2020. As of the date of this filing, the Bank has not received final notice from the Finance Agency regarding its capital classification for the quarter ended September 30, 2020.

Mandatorily Redeemable Capital Stock. The Bank is a cooperative whose member financial institutions and former members own all of the relevant Bank's issued and outstanding capital stock. Shares cannot be purchased or sold except between the Bank and its members at the shares' par value of $100, as mandated by the Bank's capital plan.

At September 30, 2020 and December 31, 2019, the Bank had $223.1 million and $343.6 million, respectively, in capital stock subject to mandatory redemption with payment subject to a five-year waiting period and the Bank meeting its minimum regulatory capital requirements. The estimated dividends on mandatorily redeemable capital stock recorded as interest expense was $4.1 million and $14.1 million during the three and nine months ended September 30, 2020, respectively. Estimated dividends on mandatorily redeemable capital stock recorded as interest expense was $6.7 million and $10.6 million during the three and nine months ended September 30, 2019, respectively

The following table provides the related dollar amounts for activities recorded in mandatorily redeemable capital stock during the nine months ended September 30, 2020 and 2019.
 Nine months ended September 30,
(in thousands)20202019
Balance, beginning of the period$343,575 $24,099 
Capital stock subject to mandatory redemption reclassified from capital39,457 361,117 
Redemption/repurchase of mandatorily redeemable stock(159,980)(41,505)
Balance, end of the period$223,052 $343,711 

    As of September 30, 2020, the total mandatorily redeemable capital stock reflected the balance for six institutions. Four institutions were merged out of district and are considered to be non-members and one relocated and became a member of another FHLBank at which time the membership with the Bank terminated.  One other institution has notified the Bank of its
intention to voluntarily redeem its capital stock and withdraw from membership. This institution will continue to be a member of the Bank until the withdrawal period is completed.

The following table shows the amount of mandatorily redeemable capital stock by contractual year of redemption at September 30, 2020 and December 31, 2019.
(in thousands)September 30, 2020December 31, 2019
Due in 1 year or less$— $3,316 
Due after 1 year through 2 years— — 
Due after 2 years through 3 years20,021 21 
Due after 3 years through 4 years200,000 20,000 
Due after 4 years through 5 years19 320,000 
Past contractual redemption date due to remaining activity3,012 238 
Total$223,052 $343,575 

Under the terms of the Bank’s Capital Plan, membership capital stock is redeemable five years from the date of membership termination or withdrawal notice from the member. If the membership is terminated due to a merger or consolidation, the membership capital stock is deemed to be excess stock and is repurchased. The activity capital stock (i.e., supporting advances, letters of credit and MPF) relating to termination, withdrawal, mergers or consolidation is recalculated based on the underlying activity. Any excess activity capital stock is repurchased on an ongoing basis as part of the Bank’s excess stock repurchase program that is in effect at the time. Therefore, the redemption period could be less than five years if the stock becomes excess stock. However, the redemption period could extend beyond five years if the underlying activity is still outstanding.

Partial Recovery of Prior Capital Distribution to Financing Corporation. The Competitive Equality Banking Act of 1987 provided for the recapitalization of the Federal Savings and Loan Insurance Corporation through a newly-chartered entity, the Financing Corporation (FICO). The capitalization of FICO was provided by capital distributions from the FHLBanks to FICO in exchange for FICO nonvoting capital stock. Capital distributions totaling $680.0 million were made by the FHLBanks in 1987 through 1989. Upon passage of Financial Institutions Reform, Recovery and Enforcement Act of 1989, the FHLBanks’ previous investment in capital stock of FICO was determined to be non-redeemable and the FHLBanks charged-off their prior capital distributions to FICO directly against retained earnings.

FICO paid off its last long-term debt obligation in September 2019, and the following month began the process of dissolution in accordance with relevant statutory requirements of the FHFA. FICO determined that approximately $200.0 million in excess funds were available for distribution to its stockholders, the FHLBanks. The Bank’s partial recovery of prior capital distributions in the second quarter of 2020 totaled $8.5 million based on its share of the $680 million originally contributed. These funds are accounted for as a return of the FHLBanks’ investment in FICO capital stock as a partial recovery of the prior capital distributions and credited to the Bank's unrestricted retained earnings account.

Dividends and Retained Earnings. The Bank is required to contribute 20% of its net income each quarter to a restricted retained earnings (RRE) account until the balance of that account equals at least 1% of the Bank's average balance of outstanding consolidated obligations for the previous quarter. These RRE will not be available to pay dividends. At September 30, 2020, retained earnings were $1,351.1 million, including $905.1 million of unrestricted retained earnings and $446.0 million of RRE.

Dividends paid by the Bank are subject to Board approval and may be paid in either capital stock or cash; historically, the Bank has paid cash dividends only. These dividends are based on stockholders' average balances for the previous quarter. Dividends paid through the third quarter of 2020 and 2019 are presented in the table below.
Dividend - Annual Yield
20202019
MembershipActivityMembershipActivity
February4.50 %7.75 %4.50 %7.75 %
April3.00 %6.25 %4.50 %7.75 %
July3.00 %6.25 %4.50 %7.75 %
    In October 2020, the Bank paid a quarterly dividend equal to an annual yield of 3.00% and 6.25% on membership and activity stock, respectively.

    The following table summarizes the changes in AOCI for the three and nine months ended September 30, 2020 and 2019.
(in thousands)Net Unrealized Gains(Losses) on AFSNon-credit OTTI Gains(Losses) on AFSNet Unrealized Gains (Losses) on Hedging ActivitiesPension and Post-Retirement PlansTotal
June 30, 2019$55,105 $60,689 $161 $(1,839)$114,116 
Other comprehensive income (loss) before reclassification:
Net unrealized gains (losses)(5,595)(4,880)— — (10,475)
Non-credit OTTI to credit OTTI— 271 — — 271 
Amortization on hedging activities— — (10)— (10)
Pension and post-retirement— — — 106 106 
September 30, 2019$49,510 $56,080 $151 $(1,733)$104,008 
June 30, 2020$118,049 $— $— $(4,145)$113,904 
Other comprehensive income (loss) before reclassification:
Net unrealized gains (losses)26,384 — — — 26,384 
Pension and post-retirement— — — 171 171 
September 30, 2020$144,433 $— $— $(3,974)$140,459 
December 31, 2018$9,887 $65,133 $176 $(2,050)$73,146 
Other comprehensive income (loss) before reclassification:
Net unrealized gains (losses)39,623 (9,383)— — 30,240 
Noncredit OTTI to credit OTTI— 330 — — 330 
Amortization on hedging activities— — (25)— (25)
Pension and post-retirement— — — 317 317 
September 30, 2019$49,510 $56,080 $151 $(1,733)$104,008 
December 31, 2019$45,155 $51,704 $149 $(5,182)$91,826 
Other comprehensive income (loss) before reclassification:
Adoption of ASU 2016-13 51,704 (51,704)— — — 
Net unrealized gains (losses)47,574 — — — 47,574 
Amortization on hedging activities— — (149)— (149)
Pension and post-retirement— — — 1,208 1,208 
September 30, 2020$144,433 $— $— $(3,974)$140,459