Affordable Housing Program

12 Months Ended

Dec. 31, 2019

Affordable Housing Program [Abstract]

Affordable Housing Program [Text Block]

Affordable Housing Program

The FHLBank Act requires each FHLBank to establish and maintain an AHP to provide subsidies in the form of direct grants and below-market interest-rate advances (AHP advances). These funds are intended to assist in the purchase, construction, or rehabilitation of housing for very low-, low-, and moderate-income households. Each FHLBank is required to contribute to its

AHP the greater of 10 percent of its previous year's net income before interest expense associated with mandatorily redeemable capital stock and the assessment for AHP (AHP earnings), or the prorated sum required to ensure the aggregate contribution by the FHLBanks is no less than $100 million for each year. We accrue this expense monthly based on our AHP earnings, and the accruals are accumulated into our AHP payable account. We reduce our AHP payable account as we disburse the funds either in the form of direct grants to member institutions or as a discount on below-market-rate AHP advances.

If we experience a net loss during a quarter, but still have AHP earnings for the year, our obligation to the AHP would be calculated based on our AHP earnings for that calendar year. In annual periods where our AHP earnings are zero or less, our AHP assessment is zero since our required annual contribution is limited to our annual AHP earnings. If the result of the aggregate 10 percent calculation described above is less than $100 million for all the FHLBanks, then each FHLBank would be required to contribute such prorated sums as may be required to ensure that the aggregate contributions by the FHLBanks equals $100 million. The proration would be made on the basis of the income of the FHLBanks for the year, except that the required annual AHP contribution for an FHLBank cannot exceed its AHP earnings for the year pursuant to an FHFA regulation. Each FHLBank's required annual AHP contribution is limited to its annual net earnings. Our AHP expense for 2019, 2018, and 2017 was $21.3 million, $24.3 million, and $21.3 million, respectively.

There was no shortfall, as described above, in 2019, 2018, or 2017. If an FHLBank is experiencing financial instability and finds that its required AHP contributions are contributing to the financial instability, the FHLBank may apply to the FHFA for a temporary suspension of its contributions. We did not make such an application in 2019, 2018, or 2017.

Table 15.1 - AHP Liability (dollars in thousands)
	2019			2018
Balance at beginning of year	$	83,965		$	81,600
AHP expense for the period	21,302			24,299
AHP direct grant disbursements	(15,723		)	(17,729		)
AHP subsidy for AHP advance disbursements	(3,450		)	(4,360		)
Return of previously disbursed grants and subsidies	37			155
Balance at end of year	$	86,131		$	83,965