Advances

Redemption Terms. At both September 30, 2013 and December 31, 2012, the Bank had advances outstanding at interest rates ranging from 0.04 percent to 8.61 percent, as summarized below (dollars in thousands).



	September 30, 2013					December 31, 2012
Contractual Maturity	Amount			Weighted Average Interest Rate		Amount			Weighted Average Interest Rate
Overdrawn demand deposit accounts	$	12		4.06%		$	7,682		4.12	%

Due in one year or less	8,957,289			0.35		8,950,062			0.70
Due after one year through two years	1,289,230			1.86		1,886,603			1.04
Due after two years through three years	795,030			1.81		942,691			2.37
Due after three years through four years	965,478			2.71		434,521			3.00
Due after four years through five years	1,310,680			2.89		1,865,480			3.40
Due after five years	1,058,814			2.93		1,521,679			3.13
Amortizing advances	2,035,515			3.70		2,319,538			3.94
Total par value	16,412,048			1.46	%	17,928,256			1.79	%

Deferred prepayment fees	(15,962		)			(19,006		)
Commitment fees	(113		)			(118		)
Hedging adjustments	238,262					485,665
Total	$	16,634,235				$	18,394,797

The balances of overdrawn demand deposit accounts were fully collateralized at September 30, 2013 and December 31, 2012 and were repaid in early October 2013 and early January 2013, respectively. Amortizing advances require repayment according to predetermined amortization schedules.

The Bank offers advances to members that may be prepaid on specified dates without the member incurring prepayment or termination fees (prepayable and callable advances). The prepayment of other advances requires the payment of a fee to the Bank (prepayment fee) if necessary to make the Bank financially indifferent to the prepayment of the advance. At September 30, 2013 and December 31, 2012, the Bank had aggregate prepayable and callable advances totaling $112,214,000 and $121,123,000, respectively, substantially all of which were amortizing advances.

The Bank also offers putable advances. With a putable advance, the Bank purchases a put option from the member that allows the Bank to terminate the fixed-rate advance on specified dates and offer, subject to certain conditions, replacement funding at prevailing market rates. At September 30, 2013 and December 31, 2012, the Bank had putable advances outstanding totaling $1,653,471,000 and $2,572,471,000, respectively.

The following table summarizes advances outstanding at September 30, 2013 and December 31, 2012, by the earlier of contractual maturity or next possible put date (in thousands):



Contractual Maturity or Next Put Date	September 30, 2013		December 31, 2012
Overdrawn demand deposit accounts	$	12	$	7,682

Due in one year or less	10,580,359		11,193,533
Due after one year through two years	1,181,230		1,876,203
Due after two years through three years	724,530		786,691
Due after three years through four years	658,358		392,021
Due after four years through five years	432,730		601,359
Due after five years	799,314		751,229
Amortizing advances	2,035,515		2,319,538

Total par value	$	16,412,048	$	17,928,256

Interest Rate Payment Terms. The following table provides interest rate payment terms for advances outstanding at September 30, 2013 and December 31, 2012 (in thousands):



	September 30, 2013		December 31, 2012
Fixed-rate
Due in one year or less	$	7,932,949	$	7,979,254
Due after one year	7,393,427		7,883,320
Total fixed-rate	15,326,376		15,862,574
Variable-rate
Due in one year or less	1,041,672		1,016,682
Due after one year	44,000		1,049,000
Total variable-rate	1,085,672		2,065,682
Total par value	$	16,412,048	$	17,928,256

At September 30, 2013 and December 31, 2012, 33 percent and 42 percent, respectively, of the Bank’s fixed-rate advances were swapped to a variable rate.

Prepayment Fees. When a member/borrower prepays an advance, the Bank could suffer lower future income if the principal portion of the prepaid advance is reinvested in lower-yielding assets. To protect against this risk, the Bank generally charges a prepayment fee that makes it financially indifferent to a borrower’s decision to prepay an advance. The Bank records prepayment fees received from members/borrowers on prepaid advances net of any associated hedging adjustments on those advances. These fees are reflected as interest income in the statements of income either immediately (as prepayment fees on advances) or over time (as interest income on advances) as further described below. In cases in which the Bank funds a new advance concurrent with or within a short period of time before or after the prepayment of an existing advance and the advance meets the accounting criteria to qualify as a modification of the prepaid advance, the net prepayment fee on the prepaid advance is deferred, recorded in the basis of the modified advance, and amortized into interest income over the life of the modified advance using the level-yield method. During the three months ended September 30, 2013 and 2012, gross advance prepayment fees received from members/borrowers were $74,234,000 and $23,526,000, respectively, of which $258,000 and $254,000, respectively, were deferred. During the nine months ended September 30, 2013 and 2012, gross advance prepayment fees received from members/borrowers were $84,238,000 and $29,309,000, respectively, of which $504,000 and $686,000, respectively, were deferred.