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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-51999

FEDERAL HOME LOAN BANK OF DES MOINES
(Exact name of registrant as specified in its charter)
Federally chartered corporation of the United States42-6000149
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification number)
909 Locust Street50309
Des Moines, IA
(Zip code)
(Address of principal executive offices)
Registrant’s telephone number, including area code: (515) 412-2100
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act: Class B Stock, par value $100
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No
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 o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer xSmaller reporting company 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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to 17 CFR 240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No
Registrant’s stock is not publicly traded and is only issued to members of the registrant. Such stock is issued and redeemed at par value, $100 per share, subject to certain regulatory and statutory limits. At June 30, 2023, the aggregate par value of the stock held by current and former members of the registrant was $6,462,027,100. At February 29, 2024, 66,734,674 shares of stock were outstanding.


Table of Contents
Part I
Part II
Part III
Part IV
2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND DEFINITIONS

Statements contained in this report, including statements describing the objectives, projections, estimates, or future predictions in our operations, may be forward-looking statements. These statements may be identified by the use of forward-looking terminology, such as believes, projects, expects, anticipates, estimates, intends, strategy, plan, could, should, may, and will or their negatives or other variations on these terms. By their nature, forward-looking statements involve risk or uncertainty, and actual results could differ materially from those expressed or implied or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. As a result, you are cautioned not to place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following:
political or economic events, including legislative, regulatory, monetary, judicial, or other developments that affect us, our members, our counterparties, and/or our investors in the consolidated obligations of the 11 FHLBanks, including the Finance Agency’s comprehensive review of the FHLBank System;

the ability to meet capital and other regulatory requirements;

competitive forces, including without limitation, other sources of funding available to our borrowers that could impact the demand for our advances, other entities purchasing mortgage loans in the secondary mortgage market, and other entities borrowing funds in the capital markets;

reliance on a relatively small number of member institutions for a large portion of our advance business;

member consolidations and failures;

disruptions in the credit and debt markets and the effect on future funding costs, sources, and availability;

general economic and market conditions that could impact the business we do with our members, including, but not limited to, the timing and volatility of market activity, inflation/deflation, employment rates, geopolitical instability or conflicts, housing market activity and housing prices, the level of mortgage prepayments, the valuation of pledged collateral, and the condition of the capital markets and the impact it has on our consolidated obligations;

ineffective use of hedging strategies or the availability of derivative instruments in the types and quantities needed for risk management purposes from acceptable counterparties;

the volatility of reported results due to changes in the fair value of certain assets, liabilities, and derivative instruments;

risks related to the other FHLBanks that could trigger our joint and several liability for debt issued by the other FHLBanks;

changes in the relative attractiveness of consolidated obligations due to actual or perceived changes in the FHLBanks’ credit ratings as well as the U.S. Government’s long-term credit rating;

increases in delinquency or loss estimates on mortgage loans;

the ability to develop and support internal controls, business processes, information systems, and other operating technologies that effectively manage the risks we face, including but not limited to, cyber-attacks, widespread health emergencies, and other business interruptions;

significant business interruptions resulting from third-party failures;

the volatility of credit quality, market prices, interest rates, and other factors that could affect the value of collateral held by us as security for borrower and counterparty obligations;

the ability to attract and retain key personnel; and

natural disasters, including those from significant climate change.


3

These forward-looking statements apply only as of the date they are made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. A detailed discussion of the more important risks and uncertainties that could cause actual results and events to differ from such forward-looking statements is included under “Item 1A. Risk Factors.”

Throughout this Form 10-K, acronyms and terms used are defined in the Glossary of Terms. Unless the context otherwise requires, the terms “Bank,” “we,” “us,” and “our” refer to the Federal Home Loan Bank of Des Moines or its management.

PART I

ITEM 1. BUSINESS
OVERVIEW
The Bank is a federally chartered corporation that is exempt from all federal, state, and local taxation (except real property taxes and certain employer payroll taxes) and is one of 11 district FHLBanks. The FHLBanks are GSEs and were created under the authority of the FHLBank Act to serve the public by enhancing the availability of funds for residential mortgages and targeted community development. The Bank is regulated by the Finance Agency.
We are a cooperative, meaning we are owned by our customers, whom we call members. As a condition of membership, all members must purchase and maintain capital stock to support business activities with us. In return, we provide a readily available source of funding and liquidity to our member institutions and eligible housing associates in Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming, and the U.S. Pacific territories of American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. Commercial banks, savings institutions, credit unions, insurance companies, and CDFIs may apply for membership. While not considered members, we also conduct certain business activities with state and local housing associates meeting statutory criteria.
BUSINESS MODEL
Our mission is to be a reliable provider of funding, liquidity, and services for our members so that they can meet the housing, business, and economic development needs of the communities they serve. In addition, we help to meet the economic and housing needs of our communities through our affordable housing and community investment initiatives. Our operating model balances the trade-off between attractively priced products, reasonable returns on capital stock, maintaining an adequate level of capital to meet regulatory capital requirements, and maintaining adequate retained earnings to preserve the par value of member-owned capital stock.
We are capitalized through the purchase of capital stock by our members. As a condition of membership, all of our members must purchase and maintain membership capital stock based on a percentage of their total assets as of the preceding December 31st subject to a cap of $10 million and a floor of $10,000. Each member is also required to purchase and maintain activity-based capital stock to support certain business activities with us. Member demand for our products expands and contracts with economic and market conditions. Our self-capitalizing capital structure, which allows us to repurchase or require additional capital stock based on member activity, provides us with the flexibility to effectively and efficiently meet the changing needs of our membership. While eligible to borrow, housing associates are not members and, as such, are not permitted to purchase capital stock.
Our capital stock is not publicly traded. It is purchased and redeemed by members or repurchased by us at a par value of $100 per share. Our current and former members own all of our outstanding capital stock. Former members own capital stock (included in MRCS) to support business transactions still outstanding with us. All stockholders, including current and former members, may receive dividends on their capital stock investment to the extent declared by our Board of Directors.
Our primary business activities are providing collateralized loans, known as advances, to members and housing associates and acquiring residential mortgage loans from our members. In addition, we maintain a portfolio of investments, all of which we believe are investment quality at the time of purchase. Our primary source of funding and liquidity is the issuance of debt securities, referred to as consolidated obligations, in the capital markets. Consolidated obligations are the joint and several obligations of all FHLBanks and are backed only by the financial resources of the FHLBanks. A critical component to the success of our operations is the ability to issue consolidated obligations regularly in the capital markets under a wide range of maturities, structures, and amounts, and at relatively favorable spreads to market interest rates.
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Our net income is primarily attributable to the difference between the interest income we earn on our advances, mortgage loans, and investments, and the interest expense we pay on our consolidated obligations. A portion of our annual net income is used to fund our AHP, which provides grants and subsidized advances to members to support housing for very low-, low-, or moderate-income households. By regulation, we recognize AHP assessment expense equal to the greater of 10 percent of our annual income subject to assessment, or our prorated sum required to ensure the aggregate contribution by the FHLBanks is no less than $100 million for each year. For purposes of the statutory AHP assessment, income subject to assessment is defined as net income before AHP assessments, plus interest expense related to MRCS. In addition to our statutory AHP contributions, we engage in a variety of community investment initiatives to help meet the economic and housing needs of our communities. For additional details, refer to the “Affordable Housing and Community Investment” section of Item 1.
We have risk management policies, established by our Board of Directors, that allow us to monitor and control our exposure to various risks, including interest rate, liquidity, credit, operational, model, information security, legal, regulatory and compliance, DEI, strategic, and reputational, as well as capital adequacy. Our primary risk management objective is to manage our assets and liabilities in ways that ensure liquidity is available to our members and protect the par redemption value of our capital stock. For additional information on our risk management practices, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.”

MEMBERSHIP
Our membership includes commercial banks, savings institutions, credit unions, insurance companies, and CDFIs. The majority of depository institutions in our district that are eligible for membership are currently members.
The following table summarizes our membership by type of institution:
December 31,
Institutional Entity20232022
Commercial banks878 894 
Savings institutions31 32 
Credit unions270 257 
Insurance companies72 69 
CDFIs
Total1,257 1,258 

The following table summarizes our membership by asset size:
December 31,
Membership Asset Size1
20232022
Depository institutions2
Less than $100 million16 %17 %
$100 million to $500 million46 47 
Greater than $500 million32 31 
Insurance companies
$100 million to $500 million
Greater than $500 million
Total100 %100 %
1    Membership asset size is based on the preceding September 30th financial information provided by members.

2    Depository institutions consist of commercial banks, savings institutions, credit unions, and CDFIs.

Our membership level remained relatively stable during 2023. At December 31, 2023, approximately 64 percent of our members were CFIs. For 2023, CFIs were defined under the FHLBank Act to include all FDIC insured institutions with average total assets over the previous three-year period of less than $1.4 billion. In addition to collateral types eligible for all members, CFIs may also pledge collateral consisting of secured small business, small agri-business, or small farm loans.

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BUSINESS SEGMENTS
We manage our operations as one business segment. Management and our Board of Directors review enterprise-wide financial information in order to make operating decisions and assess performance.
PRODUCTS AND SERVICES
Advances
We carry out our mission primarily through lending funds, which we call advances, to our members and eligible housing associates (collectively, borrowers). Our advance products are designed to provide liquidity and help borrowers meet the credit needs of their communities while competing effectively in their markets. Borrowers generally use our advance products as sources of wholesale funding and general asset-liability management.
Our advance products currently offered include the following:

Overnight Advances. These advances can renew automatically for a period up to 90 days. Interest rates are set daily.

Fixed Rate Advances. These advances are available over a variety of terms in amortizing and non-amortizing structures. Using an amortizing advance, a borrower makes predetermined principal and interest payments at scheduled intervals throughout the term of the advance. Forward starting advances are a type of fixed rate non-amortizing advance with settlement dates up to two years in the future, allowing members to lock in an interest rate at the outset, while delaying the receipt of funding and principal and interest payments. Delayed amortizing advances are a type of fixed rate advance with a feature that delays commencement of the repayment of the principal up to five years, allowing members control over the principal cash flows and the repayment of the advance. Certain long-term fixed rate and amortizing advances contain a symmetrical prepayment feature. This feature allows borrowers to prepay an advance and potentially realize a gain if interest rates rise to a level greater than those existing when the advance was originated.

Variable Rate Advances. These advances have interest rates that reset periodically to a specified interest rate index such as SOFR or to consolidated obligation yields.

Callable Advances. These advances may be prepaid by borrowers on predetermined dates (call dates) without incurring a prepayment fee and therefore provide borrowers a source of long-term financing with prepayment flexibility. Callable advances can be either fixed or variable in nature. Variable rate callable advances may reset at different frequencies generally ranging from one to six months and are callable at each rate reset date. For certain variable rate callable advances, we retain the flexibility to adjust the spread relative to our cost of funds on each rate reset date. Fixed rate callable advances may have different call schedules based on member specifications, and principal balances may be amortizing in nature.

Community Investment Advances. These advances are below-market rate funds used by borrowers in both eligible housing projects and community development. Interest rates on these advances represent our cost of funds plus a mark-up to cover our administrative expenses.
For the years ended December 31, 2023, 2022, and 2021, advances represented 65, 59, and 54 percent of our total average assets and generated 68, 63, and 56 percent of our total interest income. For additional information on our advances, including our top five borrowers, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Statements of Condition — Advances.” In addition, refer to “Item 1A. Risk Factors” for a discussion on our exposure to customer concentration risk.
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COLLATERAL
We are required by regulation to obtain sufficient collateral to fully secure our advances, standby letters of credit, and other extensions of credit to borrowers (collectively, credit products). The estimated value of the collateral required to secure each borrower’s credit products is calculated by applying collateral discounts, or haircuts, to the unpaid principal balance or market value, as applicable, of the collateral.

Borrowers may pledge collateral to us by executing a blanket pledge agreement, specifically assigning collateral, or placing physical possession of collateral with us or our custodians. We perfect our security interest in all pledged collateral by filing Uniform Commercial Code financing statements or by taking possession or control of the collateral. Under the FHLBank Act, any security interest granted to us by our members, or any affiliates of our members, has priority over the claims and rights of any party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), unless those claims and rights would be entitled to priority under otherwise applicable law and are held by actual purchasers or by parties that have perfected security interests.
HOUSING ASSOCIATES
The FHLBank Act permits us to provide advances to eligible housing associates. Housing associates are eligible if they are approved mortgagees under Title II of the National Housing Act that meet certain criteria, including: (i) chartered under law and have succession, (ii) subject to inspection and supervision by some governmental agency, and (iii) lend their own funds as their principal activity in the mortgage field. The same regulatory lending requirements that apply to our members generally apply to housing associates. Because housing associates are not members, they are not subject to certain provisions of the FHLBank Act applicable to members and cannot own our capital stock. In addition, they may only pledge certain types of collateral including, but not limited to: (i) FHA mortgages, (ii) Ginnie Mae securities backed by FHA mortgages, (iii) certain residential mortgage loans, and (iv) cash deposited with us.
PREPAYMENT FEES
We generally charge a prepayment fee for advances that a borrower elects to terminate prior to the stated maturity or outside of a predetermined call date. The fees charged are priced to make us financially indifferent to the prepayment of the advance. For certain advances with symmetrical prepayment features, we may charge the borrower a prepayment fee or pay the borrower a prepayment credit, depending on certain circumstances, such as movements in interest rates, when the advance is prepaid.
Standby Letters of Credit
We may issue standby letters of credit on behalf of our members to support certain obligations of the members to third-party beneficiaries. Standby letters of credit may be offered to assist members and non-member housing associates in facilitating residential housing finance, community lending, and asset-liability management, and to provide liquidity. In particular, members often use standby letters of credit as collateral for deposits from federal and state government agencies. For additional details on our standby letters of credit, refer to “Item 8. Financial Statements and Supplementary Data — Note 14 — Commitments and Contingencies.”
Mortgage Loans
We invest in mortgage loans through the MPF program, a secondary mortgage market structure developed by the FHLBank of Chicago to help fulfill the housing mission of the FHLBanks. In the past, we also acquired mortgage loans purchased under the MPP; however, we currently do not purchase mortgage loans under this program. For the years ended December 31, 2023, 2022, and 2021, mortgage loans represented five, seven, and nine percent of our total average assets and generated three, nine, and 24 percent of our total interest income.
Under the MPF program, we purchase eligible mortgage loans from members or housing associates called PFIs. We may also acquire MPF loans through participations with other FHLBanks. MPF loans are conforming conventional or government-insured fixed rate mortgage loans secured by one-to-four family residential properties.

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The FHLBank of Chicago (in this capacity, the MPF Provider) provides the infrastructure and operational support for the MPF program and is responsible for publishing and maintaining the MPF Guides, which detail the requirements PFIs must follow in originating, selling, and servicing MPF loans. In exchange for providing these services, the MPF Provider receives a fee from each of the FHLBanks participating in the MPF program. The MPF Provider has engaged Computershare Limited as the master servicer for the MPF program. Throughout the servicing process, the master servicer monitors each PFI’s compliance with certain MPF program requirements and makes periodic reports to the MPF Provider.
Participating Financial Institutions
Our members and eligible housing associates must apply to become a PFI. In order to do MPF business with us, each member or eligible housing associate must meet certain eligibility standards and sign a PFI Agreement. The PFI Agreement provides the terms and conditions for the sale of MPF loans, including the servicing of MPF loans.
PFIs may either retain the servicing of MPF loans or sell the servicing to an approved third-party provider. If a PFI chooses to retain the servicing, it receives a servicing fee to manage the servicing activities. If a PFI chooses to sell the servicing rights to an approved third-party provider, the servicing is transferred concurrently with the sale of the MPF loans and a servicing fee is paid to the third-party provider.
MPF Loan Types
We currently offer MPF closed loan products in which we purchase loans acquired or originated by the PFI. In addition, we offer certain off-balance sheet loan products. MPF Xtra is an off-balance sheet loan product in which we assign 100 percent of our interest in PFI master commitments to the FHLBank of Chicago. The FHLBank of Chicago then purchases mortgage loans from our PFIs and sells MPF Xtra loans to Fannie Mae. MPF Government MBS is an off-balance sheet loan product where our PFIs sell government loans directly to the FHLBank of Chicago where they are pooled and securitized into Ginnie Mae MBS. Under these off-balance sheet products, we receive a small fee for our continued management of the PFI relationship.
The PFI performs all traditional retail loan origination functions on our MPF loan products. We are responsible for managing the interest rate risk and liquidity risk associated with the MPF loans we purchase and carry on our Statements of Condition. In order to limit our credit risk exposure to approximately that of an investor in an investment grade MBS, we require a credit risk sharing arrangement with the PFI on all MPF loans at the time of purchase.
MPF Loan Volume
Our member base for MPF loans is primarily a diverse mix of commercial banks and credit unions. Our ability to price MPF loans, coupled with changes in the interest rate environment, has allowed us to serve the liquidity needs of a broad range of members. During the years ended December 31, 2023, 2022, and 2021, we purchased $2.4 billion, $1.9 billion, and $1.9 billion of MPF loan products (excluding off-balance sheet loan products). In addition, during the years ended December 31, 2023, 2022, and 2021, we had off-balance sheet loan volumes of $0.3 billion, $0.7 billion, and $3.2 billion.
LOAN MODIFICATION PLANS

We offer loan modification plans for our PFIs. Under these plans, we generally reduce the interest rate, extend the maturity date, or permit the capitalization of past due amounts, escrow, or advance balances up to the original loan amount. We may also grant a forbearance period or offer payment deferrals in limited circumstances.

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Investments
We maintain an investment portfolio primarily to provide liquidity as well as investment income. Our investment portfolio consists of both short- and long-term investments. Our short-term investments may include, but are not limited to, interest-bearing deposits, federal funds sold, securities purchased under agreements to resell, certificates of deposit, commercial paper, and U.S. Treasury obligations. Our long-term investments may include, but are not limited to, U.S. Treasury obligations, other U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, taxable municipal bonds, and agency MBS. For the years ended December 31, 2023, 2022, and 2021, investments represented 29, 32, and 36 percent of our total average assets and generated 29, 28, and 20 percent of our total interest income.
Finance Agency regulations limit the type of investments we may purchase, and we do not have any subsidiaries or equity positions in any partnerships, corporations, or off-balance sheet special purpose entities. The Finance Agency further limits our investments in MBS by requiring that the balance of our MBS not exceed three times regulatory capital at the time of purchase. For details on our compliance with this regulatory requirement, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Statements of Condition — Investments.” For additional discussion on our investments and their related credit risk, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Credit Risk — Investments.”
Standby Bond Purchase Agreements
We currently hold standby bond purchase agreements with state housing finance agencies within our district pursuant to which, for a fee, we agree to serve as a standby liquidity provider if required, to purchase and hold the bonds until the designated marketing agent can find a suitable investor or the state housing finance agency repurchases the bonds according to a schedule established by the agreement. Each standby bond purchase agreement includes the provisions under which we would be required to purchase the bonds and typically allows the Bank to terminate the agreement upon the occurrence of a default event of the issuer. If purchased, the bonds would be classified as AFS or trading securities on our Statements of Condition. For additional details on our standby bond purchase agreements, refer to “Item 8. Financial Statements and Supplementary Data — Note 14 — Commitments and Contingencies.”
Deposits
We accept uninsured deposits from our members, eligible housing associates, and/or counterparties. We offer deposit programs, including demand, overnight, and term deposits. Deposit programs provide us funding while providing members a low-risk, interest-earning asset.
Consolidated Obligations
Our primary source of funding and liquidity is the issuance of debt securities, referred to as consolidated obligations, in the capital markets. Consolidated obligations (bonds and discount notes) are the joint and several obligations of all FHLBanks and are backed only by the financial resources of the FHLBanks. They are not obligations of the U.S. Government, and the U.S. Government does not guarantee them. At February 29, 2024, S&P and Moody’s rated the consolidated obligations AA+/A-1+ with a stable outlook and Aaa/P-1 with a negative outlook. In addition, as of February 29, 2024, our consolidated obligations were rated AA+ with a stable outlook by Fitch Ratings.
The FHLBanks’ Office of Finance issues all consolidated obligations on behalf of the FHLBanks. It is also responsible for servicing all outstanding debt, coordinating transfers of debt between the FHLBanks, serving as a source of information for the FHLBanks on capital market developments, managing the FHLBank System’s relationship with the rating agencies with respect to consolidated obligations, and preparing and making available the FHLBank System’s Combined Financial Reports.
Although we are primarily responsible for the portion of consolidated obligations issued on our behalf, we are also jointly and severally liable with the other FHLBanks for the payment of principal and interest on all consolidated obligations. The Finance Agency, at its discretion, may require any FHLBank to make principal and/or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that consolidated obligation. The Finance Agency has never exercised this discretionary authority.
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To the extent that an FHLBank makes any payment on a consolidated obligation on behalf of another FHLBank, the paying FHLBank is entitled to reimbursement from the FHLBank otherwise responsible for the payment. However, if the Finance Agency determines that an FHLBank is unable to satisfy its obligations, then the Finance Agency may allocate the outstanding liability among the remaining FHLBanks on a pro-rata basis in proportion to each FHLBank’s participation in all consolidated obligations outstanding, or on any other basis that it may determine.

The Finance Agency also requires each FHLBank to maintain unpledged qualifying assets, as defined by regulation, in an amount at least equal to the amount of that FHLBank’s participation in the total consolidated obligations outstanding. For details on our compliance with this regulatory requirement, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Liquidity — Liquidity Requirements.”

BONDS
Bonds are generally issued to satisfy our short-, intermediate-, and long-term funding needs. They may have maturities ranging up to 30 years, although there is no statutory or regulatory limitation as to their maturity. Bonds are issued with either fixed or variable rate payment terms, such as SOFR. To meet the specific needs of investors, both fixed and variable rate bonds may also contain certain embedded features, which result in complex coupon payment terms and/or call features. When bonds are issued on our behalf, we may concurrently enter into a derivative agreement to effectively convert the fixed rate payment stream to variable or to offset the embedded features in the bond.
Depending on the amount and type of funding needed, bonds may be issued through negotiated or competitively bid transactions with approved underwriters or selling group members (i.e., TAP Issue Program, auction, and Global Debt Program), or through debt transfers between FHLBanks.
The TAP Issue Program is used to issue fixed rate, non-callable bonds with maturities ranging up to 30 years. The goal of the TAP Issue Program is to aggregate frequent smaller bond issues into a larger bond issue that may have greater market liquidity.
An auction process is used to issue fixed rate, callable bonds. Auction structures are determined by the FHLBanks in consultation with the Office of Finance and the securities dealer community. We may receive zero to 100 percent of the proceeds of the bonds issued via the callable auction depending on (i) the amounts and costs for the bonds bid by underwriters, (ii) the maximum costs we or other FHLBanks participating in the same issue, if any, are willing to pay for the obligations, and (iii) the guidelines for allocation of bond proceeds among multiple participating FHLBanks administered by the Office of Finance.
The Global Debt Program allows the FHLBanks to diversify their funding sources to include overseas investors. Global Debt Program bonds may be issued in maturities ranging up to 30 years and can be customized with different terms and currencies. The FHLBanks approve the terms of the individual issues under the Global Debt Program.
DISCOUNT NOTES
Discount notes are generally issued to satisfy our short-term funding needs. They have maturities of up to one year and are offered daily through a discount note selling group and other authorized underwriters. Discount notes are generally sold at a discount and mature at par.
On a daily basis, we may request that specific amounts of discount notes with specific maturity dates be offered by the Office of Finance for sale through certain securities dealers. We may receive zero to 100 percent of the proceeds of the discount notes issued via this sales process depending on (i) the time of the request, (ii) the maximum costs we or other FHLBanks participating in the same issue, if any, are willing to pay for the discount notes, and (iii) the amount of orders for the discount notes submitted by dealers.
Twice weekly, we may request that specific amounts of discount notes with fixed maturities of four to 26 weeks be offered by the Office of Finance through competitive auctions conducted with securities dealers in the discount note selling group. One or more of the FHLBanks may also request that amounts of those same discount notes be offered for sale for their benefit through the same auction. The discount notes offered for sale through competitive auction are not subject to a limit on the maximum costs the FHLBanks are willing to pay. We may receive zero to 100 percent of the proceeds of the discount notes issued through a competitive auction depending on the amounts of the discount notes bid by underwriters and the guidelines for allocation of discount note proceeds among multiple participating FHLBanks administered by the Office of Finance.
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Derivatives
We use derivatives to manage interest rate risk. Finance Agency regulations and our risk management policies establish guidelines for derivatives, prohibit the speculative use of derivatives, and limit credit risk arising from derivatives. The goal of our interest rate risk management strategy is not to eliminate interest rate risk, but to manage it within appropriate limits.
We can use interest rate swaps, swaptions, interest rate caps and floors, options, and future/forward contracts as part of our interest rate risk management strategies. These derivatives can be used as either a fair value hedge of a financial instrument or firm commitment or an economic hedge to manage certain defined risks. We use economic hedges primarily to (i) manage mismatches between the coupon features of our assets and liabilities, (ii) offset prepayment risk in certain assets, (iii) mitigate the income statement volatility that occurs when financial instruments are recorded at fair value and hedge accounting is not permitted by accounting guidance, or (iv) reduce exposure to reset risk.
CAPITAL AND DIVIDENDS
Capital Stock
Our capital stock has a par value of $100 per share, and all shares are issued, redeemed, and repurchased only at the stated par value. We issue a single class of capital stock (Class B capital stock) and have two subclasses of Class B capital stock: membership and activity-based. Effective December 15, 2023, each member must purchase and hold membership capital stock in an amount equal to 0.06 percent of its total assets as of the preceding December 31st, subject to a cap of $10 million and a floor of $10,000. In addition, each member is required to purchase activity-based capital stock equal to 4.50 percent of its outstanding advances, 4.00 percent of its outstanding mortgage loans, and 0.10 percent of its outstanding standby letters of credit. Prior to December 15, 2023, members were required to purchase and hold membership capital stock in an amount equal to 0.12 percent of their total assets as of the preceding December 31st, subject to a cap of $10 million and a floor of $10,000. They were also required to purchase activity-based capital stock equal to 4.00 percent of their outstanding advances and mortgage loans and 0.10 percent of their outstanding standby letters of credit. All capital stock issued is subject to a notice of redemption period of five years.

The capital stock requirements established in our Capital Plan are designed so that we can remain adequately capitalized as member activity changes. Our Board of Directors may make adjustments to the capital stock requirements within ranges established in our Capital Plan.
Capital stock owned by members in excess of their investment requirement is deemed excess capital stock. Under our Capital Plan, we, at our discretion and upon 15 days written notice, may repurchase excess membership capital stock. We, at our discretion, may also repurchase excess activity-based capital stock to the extent that (i) the excess capital stock balance exceeds an operational threshold set forth in the Capital Plan, which is currently set at zero, or (ii) a member submits a notice to redeem all or a portion of the excess activity-based capital stock.

We reclassify capital stock subject to redemption from equity to a liability, which represents MRCS, when a member provides written notice of intention to withdraw from membership, becomes ineligible for continuing membership, or attains non-member status by merger or consolidation, charter termination, or other involuntary termination from membership. Dividends on MRCS are classified as interest expense on the Statements of Income.


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Retained Earnings
Our risk management policies outline a targeted level of retained earnings based on the amount we believe necessary to help protect the redemption value of capital stock, facilitate safe and sound operations, maintain regulatory capital ratios, and support our ability to pay a relatively stable dividend. We monitor our achievement of this targeted level and may utilize tools such as restructuring our balance sheet, generating additional income, reducing our risk exposures, increasing capital stock requirements, or reducing our dividends to achieve this level of retained earnings. At December 31, 2023 and 2022, our actual retained earnings exceeded our targeted level of retained earnings.

We entered into a JCE Agreement with all of the other FHLBanks in 2011. Under the JCE Agreement, we are required to allocate 20 percent of our quarterly net income to a separate restricted retained earnings account until the balance of that account, calculated as of the last day of each calendar quarter, equals at least one percent of our average balance of outstanding consolidated obligations for the calendar quarter. These restricted retained earnings are not available to pay dividends.
Dividends
Our Board of Directors may declare and pay different dividends for each subclass of capital stock. Dividend payments may be made in the form of cash and/or additional shares of capital stock. Historically, we have only paid cash dividends. By regulation, we may only pay dividends from current earnings or unrestricted retained earnings. We are prohibited from paying a dividend in the form of additional shares of capital stock if, after the issuance, the outstanding excess capital stock would be greater than one percent of our total assets. Our Board of Directors may not declare or pay dividends if it would result in our non-compliance with regulatory capital requirements.
For additional information on our capital stock, retained earnings, and dividends, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital.”

HUMAN CAPITAL RESOURCES

Our human capital is a significant contributor to the success of our strategic business objectives. In managing our human capital, we focus on our workforce profile and the various programs and philosophies described below.

Workforce Profile

Our workforce is primarily comprised of corporate employees, with our principal operations in one location. As of December 31, 2023, we had 369 employees, 365 full-time and four part-time. As of December 31, 2023, approximately 48 percent of our workforce was female, 52 percent male, 79 percent non-minority and 21 percent minority, based on employees who chose to self-identify. We strive to both develop talent from within the organization and supplement with external hires. We believe that developing talent internally results in institutional strength and continuity and promotes loyalty and commitment in our employee base, which furthers our success, while adding new employees contributes to new ideas, continuous improvement, and our goals of a diverse and inclusive workforce. As of December 31, 2023, the average tenure of our employees was seven years. There are no collective bargaining agreements with our employees.

Total Rewards

We seek to attract, develop, retain, and engage talented employees to create and implement strategies that are critical to our long-term success and ensure we bring value for our members. We affect this objective through a combination of development programs, benefits and employee wellness programs, and recognizing and rewarding performance. Specifically, our programs include:

Cash compensation – includes competitive salary, other cash subsidies, and performance-based incentives;

Benefits – health insurance, life and accidental death and dismemberment insurance, supplemental life insurance, 401(k) retirement savings plans with employer match, and healthcare concierge;

Wellness program – fitness reimbursement, employee assistance program, interactive education sessions, online wellness portal, on-site gym, wellness incentive program, and ergonomic work environment;

Time away from work – including paid time off, holidays, and volunteer opportunities;

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Culture – DEI Council, Wellness Council, Community Relations Council, business resource groups, community involvement, as well as various cultural and inclusion initiatives;

Work/Life balance – short-term disability, parental and military leave, bereavement, jury duty, and court appearance leaves, as well as flexible scheduling and remote working options, including a hybrid working model with most employees working from our headquarters three days or more a week;

Development programs and training – leadership development, mentoring program, employee engagement, educational assistance programs, online learning portal, professional competency exam reimbursement, internal education and development opportunities, fee reimbursement for external education, professional organization memberships, and development programs, including goals for developmental activities as part of performance management; and

Management succession planning – our Board of Directors and leadership actively engage in management succession planning, with a defined plan for executive leadership roles.

Our Performance Management framework includes performance planning and goal-setting, ongoing coaching and feedback, and a mid-year and annual performance review. Overall annual performance ratings are calibrated and merit and incentive payments are differentiated for our highest performers.

Diversity, Equity and Inclusion Program

DEI is a strategic business priority for the Bank. It is an integral part of who we are as a company, how we operate, how we see our future, and how we interact with each other, our members, suppliers, and broker-dealers. As an organization, we are committed to integrating and promoting DEI as a key aspect of our culture and in all relevant business functions, financial transactions, and activities, especially those in service to our members, suppliers, and broker-dealers.

Our Chief DEI Officer is a member of the executive team, reports to the President and CEO and serves as a liaison to the Board of Directors. We recognize that diversity increases capacity for innovation and creativity and that inclusion allows us to leverage the unique perspectives of all employees and strengthens our retention efforts. We operationalize our commitment through the development and execution of a three-year DEI strategic plan that includes quantifiable metrics to measure our success, and we report regularly on our performance to management and the Board of Directors. We offer a range of opportunities for our employees to connect and grow personally and professionally through our Office of Minority and Women Inclusion Committee, DEI Council, business resource groups, internal training, and community involvement. We consider learning an important component of our DEI strategy and regularly offer educational opportunities to our employees and evaluate inclusive behaviors as part of our annual goal setting, performance management, and succession planning processes. We also incorporate DEI as a key component of our incentive plan framework to ensure organizational focus and accountability.

COMPETITION
Our primary business activities are providing advances and acquiring residential mortgage loans from our members. These activities are funded through the issuance of consolidated obligations. We face competition for advances, mortgage loans, and funding from other institutions, including, but not limited to, investment banks, commercial banks, other GSEs, and U.S. Government agencies, including the Federal Reserve. For further discussion on our competition, refer to “Item 1A. Risk Factors.”
TAXATION
Under the FHLBank Act, we are exempt from all federal, state, and local taxation (except real property taxes and certain employer payroll taxes).


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AFFORDABLE HOUSING AND COMMUNITY INVESTMENT
The FHLBank Act requires each FHLBank to establish and fund an AHP, which provides subsidies in the form of direct grants or below-market interest rates on advances to members who provide the funds to assist in the purchase, construction, or rehabilitation of housing for very low-, low-, or moderate-income households. Annually, the FHLBanks recognize AHP assessment expense equal to the greater of 10 percent of their annual income subject to assessment, or their prorated sum required to ensure the aggregate contribution by the FHLBanks is no less than $100 million. In addition to the required AHP assessment, our Board may elect to make voluntary contributions to the AHP. For purposes of the statutory AHP assessment, income subject to assessment is defined as net income before AHP assessments, plus interest expense related to MRCS. The exclusion of interest expense related to MRCS is a regulatory interpretation of the Finance Agency. We accrue the AHP assessment monthly based on our income subject to assessment and reduce our AHP liability as program funds are distributed. For additional information on our AHP, refer to “Item 8. Financial Statements and Supplementary Data — Note 10 — Affordable Housing Program.”
In addition to our statutory AHP contributions, we engage in a variety of community investment initiatives to help meet the economic and housing needs of our communities. These initiatives include, but are not limited to, our Member Impact Fund, a discretionary program in which we match member donations to local housing and community development organizations, disaster relief contributions to areas within our district, and additional voluntary contributions to AHP, as mentioned above. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Affordable Housing and Community Impact” for details on our initiatives in 2023.
OVERSIGHT, AUDITS, AND EXAMINATIONS
Our business is subject to extensive regulation and supervision. The laws and regulations to which we are subject cover all key aspects of our business, including, but not limited to, our product and service offerings, pricing, competitive position and strategic plan, relationships with members and third parties, capital structure, liquidity, and information security. Our primary regulatory oversight is summarized below.
The Finance Agency supervises and regulates the FHLBanks and the Office of Finance. The Finance Agency has a statutory responsibility and corresponding authority to ensure that the FHLBanks operate in a safe and sound manner. Consistent with that duty, the Finance Agency has an additional responsibility to ensure the FHLBanks carry out their housing and community development finance mission. In order to carry out those responsibilities, the Finance Agency establishes regulations governing the FHLBanks, conducts ongoing off-site monitoring and supervisory reviews, performs annual on-site examinations and periodic interim on-site reviews, and requires the FHLBanks to submit monthly and quarterly information regarding their financial condition, results of operations, and risk metrics.

The Comptroller General has authority under the FHLBank Act to audit or examine the Finance Agency and the FHLBanks and to decide the extent to which they fairly and effectively fulfill the purposes of the FHLBank Act. Furthermore, the Government Corporation Control Act provides that the Comptroller General may review any audit of an FHLBank’s financial statements conducted by an independent registered public accounting firm. If the Comptroller General conducts such a review, then he or she must report the results and provide his or her recommendations to Congress, the Office of Management and Budget, and the FHLBank in question. The Comptroller General may also conduct his or her own audit of the financial statements of any FHLBank.

As required by federal regulation, we have an internal audit department and an audit committee of our Board. An independent public accounting firm registered with the PCAOB audits our annual financial statements. Our independent registered public accounting firm, PricewaterhouseCoopers LLP, must adhere to PCAOB and Government Auditing Standards, as issued by the Comptroller General, when conducting our audits. Our Board, our senior management, and the Finance Agency receive these audit reports. We also submit annual management reports to Congress, the President of the United States, the Office of Management and Budget, and the Comptroller General. These reports include audited financial statements, a statement of internal accounting and administrative control systems, and the report of the independent registered public accounting firm on the financial statements.

For further discussion on the potential impacts of legislative and regulatory developments, refer to “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Legislative and Regulatory Developments.”


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AVAILABLE INFORMATION
We are required to file with the SEC an annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The SEC maintains a website containing these reports and other information regarding our electronic filings located at www.sec.gov.

We also provide direct links from our website at www.fhlbdm.com to the SEC website for our annual reports, quarterly reports, current reports, and amendments to all such reports filed with or furnished to the SEC, as soon as reasonably practicable after such reports are available. Annual and quarterly reports for the FHLBanks on a combined basis are also available, free of charge, at the website of the Office of Finance as soon as reasonably practicable after such reports are available. The website address to obtain these reports is www.fhlb-of.com.
Information contained in the previously mentioned websites, or that can be accessed through those websites, is not incorporated by reference into this annual report on Form 10-K and does not constitute a part of this or any report filed with the SEC.

ITEM 1A. RISK FACTORS

The following discussion summarizes some of the more significant risks we face. This discussion is not exhaustive, and there may be other risks we face, which are not described below. In particular, we may fail to identify and manage risks related to a variety of aspects of our business, including but not limited to, interest rate, liquidity, and legal, regulatory, and compliance risks. We have adopted controls, procedures, policies, and systems to monitor and manage these risks. Management cannot provide complete assurance that those controls, procedures, policies, and systems are adequate to identify and manage the risks inherent in our business. In addition, because our business continues to evolve, we may fail to fully understand the implications of changes in the business, and therefore, we may fail to enhance our risk governance framework to timely or adequately address those changes. This risk and any of the other risks described below, if realized, could negatively affect our business operations, financial condition, future results of operations, and among other things, could result in our inability to pay dividends on our capital stock or repurchase capital stock or adversely impact our reputation.

BUSINESS AND REGULATORY RISK
WE ARE SUBJECT TO A COMPLEX BODY OF LAWS AND REGULATIONS THAT COULD CHANGE IN A MANNER DETRIMENTAL TO OUR BUSINESS OPERATIONS
The FHLBanks are GSEs, organized under the authority of the FHLBank Act and, as such, are governed by federal laws and regulations adopted and applied by the Finance Agency. Congress may amend the FHLBank Act or other statutes in ways that significantly affect the rights and obligations of the FHLBanks or the manner in which the FHLBanks carry out their mission and business operations. In addition, new or modified legislation enacted by Congress or changes in regulatory requirements applied or imposed by the Finance Agency could affect the composition of our membership and the extent to which members engage in business with us. There continues to be uncertainties surrounding our legislative and regulatory environment, and new or modified legislation enacted by Congress or regulations adopted or guidance issued by the Finance Agency or other financial services regulators.
Recently, the Finance Agency completed a comprehensive review of the FHLBank System culminating in a written report released on November 7, 2023. The report covers topics such as the FHLBanks’ adequate fulfillment of their mission and purpose in a changing marketplace; their organization, operational efficiency, and effectiveness; their role in promoting affordable, sustainable, equitable, and resilient housing and community investment; addressing the unique needs of rural and financially vulnerable communities; member products, services, and collateral requirements; and membership eligibility and requirements. The Finance Agency has stated that it intends to pursue legislative, regulatory, or other actions as a result of its review; however, it remains uncertain what the potential impact of any such actions on the FHLBanks may be. Any of these factors could negatively affect our business operations, financial condition, results of operations, and the value of FHLBank membership.

Additionally, the FASB or SEC may amend financial accounting and reporting standards that govern our accounting and disclosure practices, such as standards on climate change and ESG matters. Specifically, policy or regulatory changes relating to ESG matters, as well as market and stakeholder expectations, are evolving and may result in additional responsibilities or costs for us, such as compliance requirements, operational or technological changes, and increased disclosures.

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For a discussion of new and proposed legislative and regulatory developments that could affect us, including additional information on the Finance Agency’s comprehensive review of the FHLBank System, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Legislative and Regulatory Developments.”

FAILURE TO MEET MINIMUM CAPITAL AND OTHER REGULATORY REQUIREMENTS COULD ADVERSELY AFFECT OUR ABILITY TO REDEEM OR REPURCHASE CAPITAL STOCK, PAY DIVIDENDS, AND ATTRACT NEW MEMBERS
We are regulated by the Finance Agency and if we fail to meet regulatory requirements, we could be subject to corrective action that could adversely impact our financial condition and results of operations. For example, we are required to maintain capital to meet specific minimum requirements, as defined by the Finance Agency. Historically, our capital has exceeded all capital requirements and we have maintained adequate capital and leverage ratios. If we fail to meet any of these requirements or if our Board of Directors or the Finance Agency determines that we have incurred, or are likely to incur, losses resulting in, or losses that are expected to result in, a charge against capital, we would not be able to redeem or repurchase any capital stock while such charges are continuing or expected to continue. In addition, failure to meet our capital requirements could result in the Finance Agency’s imposition of restrictions pertaining to dividend payments, lending, investing, or other business activities. Additionally, the Finance Agency could require that we call upon our members to purchase additional capital stock to meet our minimum regulatory capital requirements. Members may be unable or unwilling to satisfy such calls for additional capital, which could lead to a member’s involuntary termination of membership as a result of noncompliance with our Capital Plan, which could adversely impact our financial condition and results of operations.
WE FACE COMPETITION FOR ADVANCES, MORTGAGE LOANS, AND FUNDING
Our primary business activities are providing advances to members and housing associates and acquiring residential mortgage loans from our members. Demand for our advances is affected by, among other things, the cost of other available sources of funding for our borrowers. We may from time to time compete with other suppliers of secured and unsecured wholesale funding including, but not limited to, investment banks, commercial banks, other GSEs, and U.S. Government agencies, including the Federal Reserve. We may compete with other FHLBanks to the extent that member institutions have affiliated institutions located outside of our district. Furthermore, our members may have access to customer deposits, brokered or reciprocal deposits, and resale agreements, all of which represent competitive alternatives to our advances.
Many of our competitors are not subject to the same body of regulation that we are, which may enable them to offer products and terms that we cannot. Efforts to effectively compete with other suppliers of wholesale funding by changing the pricing of our advances may result in a decrease in our profitability. The availability of alternative funding sources for our members could also change their perception of the value of FHLBank membership. A decrease in the demand for advances or a decrease in the profitability on advances could negatively affect our financial condition and results of operations.
The purchase of mortgage loans through the MPF program is subject to competition on the basis of prices paid for mortgage loans, customer service, and ancillary services, such as automated underwriting and loan servicing options. We compete primarily with other GSEs, such as Fannie Mae, Freddie Mac, other financial institutions, and private investors for acquisition of fixed rate mortgage loans. Increased competition could result in a reduction in the amount of mortgage loans we are able to purchase, which could negatively affect our financial condition and results of operations.
We also compete with the U.S. Government, Fannie Mae, Freddie Mac, and other GSEs as well as corporate, sovereign, and supranational entities for raising funds through the issuance of debt in the national and global markets. In the absence of increased demand, increased supply of competing debt products may result in higher debt costs or lesser amounts of debt issued at the same cost. An increase in funding costs would negatively affect our financial condition and results of operations.

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WE COULD BE ADVERSELY AFFECTED BY OUR EXPOSURE TO CUSTOMER CONCENTRATION RISK
We are subject to customer concentration risk as a result of our reliance on a relatively small number of member institutions for a large portion of our total advances and resulting interest income. At December 31, 2023 and 2022, advances outstanding to our top five borrowers totaled $55.0 billion and $50.9 billion, representing 45 percent of our total advances outstanding at each period end. At December 31, 2023 and 2022, our single largest borrower, Wells Fargo Bank, N.A., accounted for 30 percent and 28 percent of total advances outstanding and for approximately 29 percent and 20 percent of advance interest income for the years ended December 31, 2023 and 2022. Advance balances with members could change due to factors such as a change in member demand or borrowing capacity, which can be influenced by economic conditions, relocation of members out of our district, or members with affiliated institutions located outside of our district choosing to do business with another FHLBank. In addition, advance balances could change as a result of new or modified legislation impacting us or our members or regulations or other directives adopted by the Finance Agency or other financial services regulators. If we experience a decrease in the amount of business with our top five borrowers, our financial condition and results of operations could be negatively affected. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Statements of Condition — Advances” for additional information on our top five borrowers.
MEMBER CONSOLIDATIONS AND FAILURES COULD ADVERSELY AFFECT OUR BUSINESS
Member consolidations and failures could reduce the number of current and potential members in our district. During 2023, our number of members remained relatively stable; however, if the number of member consolidations and/or failures were to accelerate, we could experience a reduction in the level of our members’ advance and other business activities. This loss of business could negatively impact our business operations, financial condition, and results of operations.

MARKET AND LIQUIDITY RISK

WE COULD BE ADVERSELY AFFECTED BY OUR INABILITY TO ACCESS THE CAPITAL MARKETS
Our primary source of funds is through the issuance of consolidated obligations in the capital markets. Our ability to obtain funds through the issuance of consolidated obligations depends in part on our real and perceived relationship to the U.S. Government, prevailing market conditions in the capital markets, and rating agency actions, all of which are beyond our control. In addition, changes to the regulatory environment that affect bank counterparties, debt underwriters, and investors could adversely affect our ability to access the capital markets and the cost of that funding. We cannot make any assurance that we will be able to obtain funding on terms acceptable to us, if at all. For example, previous money market fund reform resulted in a significant increase in demand for U.S. government and agency debt, including our short-term consolidated obligations. While this increased demand benefited our ability to access short-term funding at attractive costs, there could be a scenario in which regulatory change may cause a decrease in demand that could lead to significant investor outflows and unfavorable market conditions due to our concentration in money market investors. Any further change in regulatory requirements governing money market funds, including any reversal of money market fund reforms, could negatively impact our short term funding costs and strategies.

If we cannot access funding when needed, our ability to support and continue business operations, including our ability to refund maturing debt and maintain compliance with regulatory liquidity requirements, could be adversely impacted, which could adversely impact our financial condition and results of operations. Although our debt issuances have historically kept pace with the funding needs of our members and eligible housing associates, there can be no assurance that this will continue.


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CHANGES IN ECONOMIC CONDITIONS OR FEDERAL FISCAL AND MONETARY POLICY COULD ADVERSELY IMPACT OUR BUSINESS
We operate with narrow margins and our net income is sensitive to changes in market conditions that can impact the interest we earn and pay and introduce volatility in net income. These conditions include, but are not limited to, the following:
volatility in interest rates;
fluctuations in both debt and equity capital markets;
changes in the fair value of our assets and liabilities;
conditions in the financial, credit, mortgage, and housing markets;
the willingness and ability of financial institutions to expand lending; and
the strength of the U.S. economy and the local economies in which we conduct business, which may be impacted by inflation/deflation, labor shortages, supply chain disruptions, and geopolitical instability or conflicts.
Our financial condition, results of operations, and ability to pay dividends could be negatively affected by changes in one or more of these conditions. Additionally, our business and results of operations may be affected by the fiscal and monetary policies of the federal government and its agencies, including the Federal Reserve, which regulates the supply of money and credit in the U.S. The Federal Reserve’s policies directly and indirectly influence the yield on interest-earning assets and the cost of interest-bearing liabilities. For example, in response to high inflation, the FOMC raised the target range for the federal funds rate throughout 2022 and 2023. Any future rate changes will continue to impact our business as well as the business of our members.
Further events impacting market conditions, such as civil unrest, climate change, or other natural disasters, may impact the economy and require actions by the federal government and its agencies in an effort to stabilize market conditions. Responses to those actions and the resulting impact on demand for advances could adversely affect our financial condition, results of operations, and ability to pay dividends. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Conditions in the Financial Markets” for additional information on recent market activity.
WE COULD BE ADVERSELY AFFECTED BY INEFFECTIVE USE OF HEDGING STRATEGIES OR OUR INABILITY TO ENTER INTO DERIVATIVE INSTRUMENTS ON ACCEPTABLE TERMS
We use derivatives to manage interest rate risk. Our effective use of derivative instruments depends upon management’s ability to determine the appropriate hedging strategies and positions in light of our assets and liabilities as well as prevailing and anticipated market conditions. In addition, the effectiveness of our hedging strategies depends upon our ability to enter into derivatives with acceptable counterparties, on terms desirable to us, and in quantities necessary to hedge our corresponding assets and liabilities. Further, the cost of entering into derivative instruments could increase as a result of changes in legislation and regulations regarding over-the-counter derivatives, including increased margin and capital requirements, and increased regulatory costs and transaction fees associated with clearing and custodial agreements. If we are unable to manage our hedging positions properly, or are unable to enter into derivative instruments on desirable terms, we may incur higher funding costs and be unable to effectively manage our interest rate risk and other risks, which could negatively affect our financial condition and results of operation.

EXPOSURE TO OPTION RISK IN OUR FINANCIAL ASSETS AND LIABILITIES COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS
Our mortgage assets provide homeowners the option to prepay their mortgages prior to maturity. The effect of changes in interest rates can exacerbate prepayment or extension risk, which is the risk that mortgage assets will be refinanced by the mortgagor in low interest rate environments or will remain outstanding longer than expected at below-market yields when interest rates increase. Our advances, consolidated obligations, and derivatives may provide us, the borrower, the issuer, or the counterparty with the option to call or put the asset or liability. These options leave us susceptible to unpredictable cash flows associated with our financial assets and liabilities. The exercise of the option and the prepayment or extension risk is dependent upon general market conditions and could have an adverse effect on our financial condition and results of operations.

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CREDIT RISK
WE COULD BE ADVERSELY AFFECTED BY OUR EXPOSURE TO CREDIT RISK
We are exposed to credit risk based on the deterioration in the creditworthiness of the obligor or the credit quality of a security instrument. We assume unsecured and secured credit risk exposure in that a borrower or counterparty could default and we may suffer a loss if we are not able to fully recover amounts owed to us in a timely manner. Our risk of credit losses may be exacerbated by economic conditions, such as a downturn in the housing markets, including a reduction in home prices, higher delinquencies due in part to the effects of inflation, as well as financial difficulties or failures of mortgage servicers. In addition, increased risk of credit losses may be the result of a decrease in the value of collateral securing our advances or mortgage loans, which could be due to the effects of climate change or other catastrophic events.
We attempt to mitigate unsecured credit risk by limiting the terms of unsecured investments and the borrowing capacity of our counterparties. We attempt to mitigate secured credit risk through collateral requirements and credit analysis of our borrowers and counterparties. We require collateral on advances, standby letters of credit, certain mortgage loan credit enhancements provided by PFIs, certain investments, and derivatives. All advances, standby letters of credit, and applicable mortgage loan credit enhancements are required to be fully collateralized. We evaluate the types of collateral pledged by our borrowers and counterparties and assign a borrowing capacity to the collateral, generally based on a percentage of its unpaid principal balance or estimated market value, if available. We generally have the ability to call for additional or substitute collateral during the life of an obligation to ensure we are fully collateralized. Notwithstanding these mitigating factors, we may suffer losses that could adversely impact our financial condition and results of operations.

If a borrower or counterparty fails or does not meet its obligations to us, we have the right to liquidate or take ownership of the collateral covering the obligation. However, if the liquidation value of the collateral is less than the value of the outstanding obligation, we may incur losses that could adversely affect our financial condition and results of operations. If we are unable to secure the obligations of borrowers and counterparties, this could negatively impact our financial condition and results of operations.
WE ARE JOINTLY AND SEVERALLY LIABLE FOR THE CONSOLIDATED OBLIGATIONS OF OTHER FHLBANKS AND MAY BE REQUIRED TO PROVIDE FINANCIAL ASSISTANCE TO OTHER FHLBANKS
Each of the FHLBanks relies upon the issuance of consolidated obligations as a primary source of funds. Consolidated obligations are the joint and several obligations of the 11 FHLBanks and are backed only by the financial resources of the FHLBanks. They are not obligations of the U.S. Government, and the U.S. Government does not guarantee them. The Finance Agency, at its discretion, may require any FHLBank to make principal and/or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that consolidated obligation. Furthermore, if the Finance Agency determines that an FHLBank is unable to satisfy its obligations, it may allocate the outstanding liability among the remaining FHLBanks on a pro-rata basis in proportion to each FHLBank’s participation in all consolidated obligations outstanding, or on any other basis that it may determine. Accordingly, we could incur liability beyond our primary obligation under consolidated obligations, which could negatively affect our financial condition and results of operations. Moreover, we may not pay dividends to, or redeem or repurchase capital stock from, any of our members if timely payment of principal and interest on all FHLBank consolidated obligations has not been made. Accordingly, our ability to pay dividends or to redeem or repurchase capital stock may be affected not only by our financial condition, but by the financial condition of the other FHLBanks.
Due to our relationship with other FHLBanks, we could also be impacted by events other than the default on a consolidated obligation. Events that impact other FHLBanks include, but are not limited to, member failures and capital deficiencies. These events may cause the Finance Agency, at its discretion, to require any FHLBank to either provide capital to or buy assets of any other FHLBank. If we are called upon by the Finance Agency to do either of these items, it may negatively impact our financial condition.
Additionally, the FHLBank Act requires each FHLBank to establish and fund an AHP. Annually, the FHLBanks recognize AHP assessment expense, in aggregate, equal to the greater of 10 percent of their current year earnings or $100 million. If the FHLBanks do not make the minimum $100 million AHP contribution in a given year (i.e., a shortfall), we could be required to contribute more than 10 percent of our current year net earnings. An increase in our AHP contributions due to a shortfall or other legislative or regulatory actions could impact our financial condition and results of operations as well as our ability to pay dividends.

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ACTUAL OR PERCEIVED CHANGES IN THE FHLBANKS’ CREDIT RATINGS AS WELL AS THE U.S. GOVERNMENT’S CREDIT RATING COULD ADVERSELY AFFECT OUR BUSINESS
Our consolidated obligations are currently rated AA+/A-1+ with a stable outlook by S&P and Aaa/P-1 with a negative outlook by Moody’s. These ratings are subject to reduction or withdrawal at any time by a NRSRO, and the FHLBank System may not be able to maintain these credit ratings. For example, in November 2023, Moody’s affirmed the ratings of our consolidated obligations of Aaa/P-1 and changed the outlook on the ratings to negative from stable, consistent with its ratings action taken with respect to the United States Government. Adverse rating agency actions on the FHLBank System or U.S. Government may reduce investor confidence and negatively affect our cost of funds and ability to issue consolidated obligations on acceptable terms, which could adversely impact our financial condition and results of operations.
Certain products and transactions that we offer or use may be impacted by rating downgrades. Demand for certain Bank products, including, but not limited to, standby letters of credit and standby bond purchase agreements, is influenced by our credit rating. A reduction in our credit rating could weaken or eliminate demand for such products, and our financial condition and results of operations could be adversely affected. For cleared derivatives, the clearinghouse determines initial margin requirements and generally credit ratings are not factored into the initial margin. However, clearing agents may require additional initial margin to be posted based on credit considerations, including but not limited to, credit rating downgrades.
INCREASES IN DELINQUENCY OR LOSS ESTIMATES ON OUR MORTGAGE LOANS MAY HAVE AN ADVERSE IMPACT ON OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The condition of the U.S. housing market can have a significant impact on the Bank. If economic conditions weaken and result in increased unemployment and a decline in home prices, we could see an increase in loan delinquencies or loss estimates and decide to increase our allowance for credit losses on mortgage loans. In addition, the occurrence of weather-related events, other natural or environmental disasters, civil unrest, widespread health emergencies, or other disruptive events could impact the ability of borrowers to continue to make principal and interest payments on mortgage loans or cause a decline in the underlying value of the mortgage loans, resulting in additional loss estimates. Further, to the extent that mortgage insurance providers fail to fulfill their obligations to pay us for claims, we could bear additional losses on certain mortgage loans with outstanding mortgage insurance coverage. As a result, our financial condition and results of operations could be adversely impacted.

OPERATIONAL RISK
FAILURES OR INTERRUPTIONS IN INTERNAL CONTROLS, INFORMATION SYSTEMS, AND OTHER OPERATING TECHNOLOGIES COULD HARM OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS, REPUTATION, AND RELATIONS WITH MEMBERS
Control failures, including failures in our controls over financial reporting, or business interruptions with members, could result from human error, fraud, breakdowns in information and computer systems, lapses in operating processes, and natural or man-made disasters, including those resulting from the effects of climate change, civil unrest, or widespread health emergencies. If a significant control failure or business interruption were to occur, it could materially damage our financial condition and results of operations. We may not be able to foresee, prevent, mitigate, reverse, or repair the negative effects of such failures or interruptions.
We rely heavily upon information systems and other operating technologies to conduct and manage our business. To the extent that our technology fails to keep up with our changing environment, we may be unable to conduct and manage our business effectively. In addition, any technical failures or interruptions in key systems or other operating technologies, including any “cyberattacks” or other breaches of technical security, could jeopardize the confidentiality or integrity of our information, or otherwise cause interruptions in our operations. These threats may increase as a result of the increased capabilities of artificial intelligence and other emerging technologies that may be used maliciously, as well as geopolitical instability or conflicts. Although we have implemented a disaster recovery and business continuity plan, we can make no assurance that it will be able to prevent, timely and adequately address, or mitigate the negative effects of all technical failures or interruptions. Any technical failure or interruption could harm our member relations, risk management, and profitability, and could adversely impact our financial condition and results of operations. Refer to “Item 1C. Cybersecurity” for additional information on our information security risk management.
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RELIANCE ON THIRD PARTIES COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS
As part of our business, we rely on third parties for certain services essential to ongoing operations, including but not limited to, IT infrastructure and software services, administration of our mortgage loan program, and servicing of our consolidated obligations, and could be adversely impacted by disruptions in those services. In addition, we utilize professional and contractual services to support certain strategic initiatives. The success or timing of those initiatives could be adversely impacted if services are not performed or executed as expected.
We participate in the MPF program with the FHLBank of Chicago. In its role as MPF Provider, the FHLBank of Chicago provides the infrastructure and operational support for the MPF program and is responsible for publishing and maintaining the MPF Guides, which detail the requirements PFIs must follow in originating, selling, and servicing MPF loans. If the FHLBank of Chicago changes its MPF Provider role, ceases to operate the MPF program, or experiences a failure or interruption in its information systems and other technology, our mortgage purchase business could be adversely affected, and we could experience a related decrease in our net interest margin and profitability. In the same way, we could be adversely affected if any of the FHLBank of Chicago’s third-party vendors supporting the operation of the MPF program were to experience operational or technical difficulties.
We also rely on the Office of Finance for, among other things, the issuance of consolidated obligations, servicing of all outstanding debt, and managing the FHLBank System’s relationship with the rating agencies with respect to consolidated obligations. A disruption in any of these services due to events such as IT or operational failures, including cyber-attacks, civil unrest, climate change, or other natural disasters, could affect our ability to access funding, and could negatively impact our business operations, financial condition, and results of operations.
THE IMPACT OF FINANCIAL MODELS AND THE UNDERLYING ASSUMPTIONS USED TO VALUE FINANCIAL INSTRUMENTS AND COLLATERAL MAY HAVE AN ADVERSE IMPACT ON OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The degree of management judgment involved in determining the fair value of financial instruments or collateral is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments and collateral that are actively traded and have quoted market prices or parameters readily available, there is little to no subjectivity in determining fair value. If market quotes are not available, fair values are based on discounted cash flows using market estimates of interest rates and volatility or on dealer prices or prices of similar instruments. We utilize external and internal pricing models to determine the fair value of certain financial instruments and collateral. For prices obtained externally, as per our established procedure, we review the prices and compare them to other vendors for reasonableness. In addition, on an annual basis, we conduct reviews of our pricing vendors to confirm and further augment our understanding of the vendors’ pricing processes, methodologies, and control procedures for investment securities. For prices determined by internal pricing models, the underlying assumptions are based on management’s best estimates for discount rates, prepayments, market volatility, and other factors.
The assumptions used in both external and internal pricing models could have a significant effect on the reported fair values of assets and liabilities or collateral, the related income and expense, and the expected future behavior of assets and liabilities or collateral. While models we use to value financial instruments and collateral are subject to periodic validation by independent parties, rapid changes in market conditions could impact the value of our financial instruments and collateral. The use of different models and assumptions, as well as changes in market conditions, could impact our financial condition and results of operations as well as the amount of collateral we require from borrowers and counterparties.
The information provided by our internal financial models is also used in making business decisions relating to strategies, initiatives, transactions, and products. We have adopted controls, procedures, and policies to monitor and manage assumptions used in our internal models. However, models are inherently imperfect predictors of actual results because they are based on assumptions about future performance or activities. Changes in any models or in any of the assumptions, judgments, or estimates used in the models may cause the results generated by the model to be materially different. If the results are not reliable due to inaccurate assumptions, we could make poor business decisions, including asset and liability management, or other decisions, which could result in an adverse financial impact.

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GENERAL RISK FACTORS
THE INABILITY TO ATTRACT AND RETAIN KEY PERSONNEL COULD ADVERSELY IMPACT OUR BUSINESS
We rely heavily upon our employees in order to successfully execute our business and strategies. The success of our business mission depends, in large part, on our ability to attract and retain key personnel with required talents and skills. We may be unable to hire or retain key personnel with the needed talents or skills if we fail to offer a competitive employment package and work arrangements, which is increasingly important during periods in which economic conditions drive labor shortages and/or high rates of employee turnover. In addition, if we lack a diverse, equitable, and inclusive working environment, or fail to develop and execute a succession plan, our business operations could be adversely impacted.

NATURAL DISASTERS, INCLUDING THOSE FROM SIGNIFICANT CLIMATE CHANGE, COULD ADVERSELY AFFECT OUR MEMBERS AND OUR BUSINESS, FINANCIAL CONDITION, AND RESULTS OF OPERATIONS

The occurrence of weather-related events and other natural or environmental disasters, especially ones affecting our district, could negatively impact our members and business, financial condition, and results of operations. The frequency, intensity, and duration of extreme weather and climate-related disaster events have increased. These natural disasters, including those resulting from significant climate change, could destroy or damage our facilities or other properties of our members (such as collateral that members have pledged to secure advances or mortgages), disrupt business, increase the probability of power or other outages, negatively affect the livelihood of borrowers of members, or otherwise cause significant economic dislocation in the affected regions. Any of these situations may adversely affect our financial condition and results of operations.

There is also an increasing focus from investors, policy makers, regulators, and other stakeholders on climate change and other ESG matters. Enhanced governmental, regulatory, and societal attention to climate change and other ESG matters, including expanding mandatory and voluntary reporting, diligence, and disclosure, could expand the nature, scope, complexity, and cost of matters that we are required to control, assess, and report.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY
RISK MANAGEMENT AND STRATEGY

Information security risk includes the risk that cyber incidents and threats could result in a failure or interruption of our business operations. A cybersecurity incident is an unauthorized occurrence, or a series of related unauthorized occurrences, through information systems that jeopardizes the confidentiality, integrity, or availability of our information systems or any information residing therein. Cybersecurity threats are potential unauthorized occurrences on or conducted through information systems that may result in adverse effects on the confidentiality, integrity, or availability of information systems or any information residing therein. Information systems are any electronic information resources, owned or used by us, including physical or virtual infrastructure controlled by such information resources, or their components, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of our information to maintain or support our operations. We have implemented processes to identify, assess, and manage material risks from cybersecurity incidents or threats that may directly or indirectly impact our business strategy, results of operations, or financial condition. Please refer to “Item 1A. Risk Factors” for additional information on our operational risk, which includes the risk of failures or interruptions in information systems resulting from cybersecurity threats or incidents.

Our cybersecurity program is designed to identify, assess, and manage material risks from cybersecurity threats and to protect the confidentiality, integrity, and availability of our IT assets and data. We utilize a widely adopted industry framework to guide and benchmark the activities of our information security program in alignment with our risk appetite statement. Our cybersecurity program includes specific controls and processes for the monitoring, mitigation, and reporting associated with cybersecurity risks. For example, administrative, physical, and logical controls are in place for identifying, monitoring, and controlling system access, sensitive data, and system changes. In addition, we employ an information security training program that includes security training lessons and phishing exercises for all employees as well as mandatory staff training on cyber risks. We also regularly engage with third-parties to test, maintain, and enhance our cybersecurity risk management practices and threat monitoring. These engagements include, among other things, penetration testing, detection and response services, cybersecurity tabletops, and cybersecurity framework assessments. We also maintain cyber insurance coverage in an effort to reduce financial losses stemming from a security incident.

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To ensure the continuance of our operations in the event of a cybersecurity incident or threat, we have established an Information Security Policy and Security Incident Response Plan, and have adopted a business continuity management program.

Our Information Security Policy establishes administrative, technical, and physical safeguards designed to protect the security, confidentiality, and integrity of Bank information in accordance with Finance Agency regulations, the Gramm-Leach-Bliley Act and the interagency guidelines issued thereunder, and applicable laws.

Our Security Incident Response Plan determines how cybersecurity threats and incidents are identified, classified, and escalated, including for the purposes of reporting, and providing relevant information to senior management and the Board of Directors. The Security Incident Response Plan requires management to assess materiality of the threat or incident for purposes of public disclosure.

Our Security Incident Response Plan includes third-party cybersecurity incidents and threats, as we do rely on third-party information systems and other technologies. As part of our vendor risk management process, we undertake due diligence of third-party systems with whom we interact, including risk profiling and classification, in addition to requiring data protection covenants in our vendor agreements. Our vendor risk management program includes regular reviews and oversight of service providers, including performance and technology reviews, and escalation of any unsatisfactory reviews.

Our business continuity management program is designed to ensure that necessary resources are in place to protect us from potential loss during a disruption, which includes the unavailability of IT assets due to unintentional events like fire, power loss, and other technical incidents, such as hardware failures.

During the period covered by this report, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, did not have a material impact on our business strategy, results of operations, or financial condition. Cybersecurity incidents may occur in the future and any such cybersecurity incident could result in significantly harmful consequences to us, our members, and their customers. We are prepared to assess materiality of any such cybersecurity incident from several perspectives including, but not limited to, our ability to continue to service our members and protect the privacy of the data they or their customers have entrusted to us, lost revenue, disruption of business operations, increased operating costs, litigation, and reputational harm.

GOVERNANCE

Our Information Security Department is led by the CIO, who reports to the President and CEO. Our CIO establishes our strategic direction and provides executive support for our information security program, and has significant experience in information systems and information security. Refer to “Item 10. Directors, Executive Officers and Corporate Governance” for more information.

Our dedicated Information Security Department is comprised of specialized professionals responsible for the day-to-day, hands-on management of cybersecurity risk, including the processes and procedures to mitigate and implement protective, proactive, and reactive measures to protect us against this risk. Personnel in this department hold a variety of technical certifications relevant to their job functions and engage in continuing education. This department is also responsible for developing, documenting, and approving our technical information security control standards, guidelines, and procedures designed to preserve the confidentiality, integrity, and availability of our IT assets and data under our control.

Our Technology and Operations Committee provides independent and integrated oversight over our information security program, physical security program, business continuity program, security policies and procedures, and security exceptions and violations. This committee is comprised of leadership representatives from our operational risk, information security, IT, and legal departments, as well as other departments that provide both specific, technical and multidisciplinary expertise to the committee. This committee is responsible for reviewing and approving our Information Security Policy. It also receives regular, prompt, and periodic information from the Information Security Department, which in turn provides periodic, regular and prompt reporting to the Technology Committee of the Board of Directors on topics such as threat intelligence, major cybersecurity risk areas, technologies and best practices, and any cybersecurity incidents that may have impacted us, as well risk assessment, management, and monitoring updates, as applicable or needed.


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Our Board of Directors is responsible for the oversight of our information security program and establishes our information security risk appetite. The Technology Committee of our Board approves certain Bank-wide governing policies, including our Information Security Policy, as well as other standards, guidelines, and procedures for IT and information security. It also oversees the development of mitigation plans, monitors the tactical implementation of policy, and engages in detailed risk assessments.

Our Board of Directors receives regular presentations and reports throughout the year on cybersecurity and information security addressing a broad range of topics. These topics include, but are not limited to, updates on technology trends, regulatory developments, legal issues, policies and practices, information security resources, environmental threats and vulnerability assessments, and efforts to prevent, detect, and respond to potential gaps, internal and external incidents and critical threats. At least quarterly, our Board of Directors discusses cybersecurity and information security risks with our CIO. Our Board of Directors is also required to complete cybersecurity training and participate in a cloud computing education session annually. Our policies and processes are designed such that the Board of Directors would receive prompt and timely information from Bank management on any cybersecurity or information security incident or threat that may pose significant risk to us and would continue to receive regular reports on any incident until its conclusion.

ITEM 2. PROPERTIES

Our headquarters is located at 909 Locust Street, Des Moines, Iowa. We currently occupy 94,000 of the approximate 226,000 square feet of office space, and have leased or are in the process of leasing the remaining space. We also lease an off-site back-up facility with approximately 3,500 square feet in Urbandale, Iowa and approximately 3,000 square feet of office space in Washington, D.C. to support government relations, which is shared with two other FHLBanks.

ITEM 3. LEGAL PROCEEDINGS


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
We are a cooperative. This means we are owned by our customers, whom we call members. Our current and former members own all of our outstanding capital stock. Our capital stock is not publicly traded and has a par value of $100 per share. All shares are issued, redeemed, or repurchased by us at the stated par value. Our capital stock may be redeemed with a five year notice from the member or voluntarily repurchased by us at par value, subject to certain limitations set forth in our Capital Plan. At February 29, 2024, we had 1,253 current members that held 67 million shares of capital stock and 14 former members that held less than one million shares of MRCS.
ITEM 6. [RESERVED]
24

    
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our MD&A is designed to provide information that will help the reader develop a better understanding of our financial statements, changes in our financial statements from year to year, and the primary factors driving those changes. Readers also should carefully review “Forward-Looking Information” and “Item 1A. Risk Factors” for a description of the forward-looking statements contained in this annual report on Form 10-K and a discussion of the factors that might cause our actual results to differ, perhaps materially, from these forward-looking statements. Unless expressly stated otherwise, the comparisons presented in this MD&A refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the years ended December 31, 2023 and December 31, 2022. Discussion of 2021 items and the year-over-year comparison of changes in our financial condition and results of operations as of and for the years ended December 31, 2022 and December 31, 2021 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K, filed with the SEC on March 8, 2023.

Our MD&A is organized as follows:
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EXECUTIVE OVERVIEW

Our Bank is a member-owned cooperative serving shareholder members in our district. Our mission is to be a reliable provider of funding, liquidity, and services for our members so that they can meet the housing, business, and economic development needs of the communities they serve. In addition, we help to meet the economic and housing needs of our communities through our affordable housing and community investment initiatives. Our operating model balances the trade-off between attractively priced products, reasonable returns on capital stock, maintaining an adequate level of capital to meet regulatory capital requirements, and maintaining adequate retained earnings to preserve the par value of member-owned capital stock. Our members include commercial banks, savings institutions, credit unions, insurance companies, and CDFIs.

Affordable Housing and Community Impact
During 2023, we disbursed $49 million of AHP funds through our Competitive and Set-Aside down payment assistance programs as a part of our ongoing mission to support members’ affordable housing and community development needs. We also recorded various discretionary community and housing contributions during 2023, including contributions to our Member Impact Fund totaling $37 million and a $5 million voluntary AHP contribution. Further, in partnership with our Hawaii members and related trade associations, we provided $5 million during 2023 to local organizations in support of communities impacted by the Maui wildfires.

Financial Results
Our financial condition and results of operations are influenced by global and national economies, local economies within our district, and the conditions in the financial, housing, and credit markets, all of which impact the interest rate environment. The interest rate environment significantly impacts our profitability. Throughout 2022 and 2023, in response to higher inflation, the FOMC raised the target range for the federal funds rate, which led to higher interest rates that bolstered our net interest income. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Conditions in the Financial Markets” for additional discussion on economic conditions impacting our financial results.
In 2023, we reported net income of $962 million compared to $430 million in the prior year.

Net interest income increased $623 million when compared to the prior year primarily driven by higher short-term interest rates, which improved earnings on invested capital, and growth in advance balances.

Other income (loss) improved by $25 million when compared to the prior year primarily driven by changes in the fair value of our trading securities, fair value option instruments, economic derivatives, and non-qualified benefit plan assets.

Other expense increased $60 million during 2023 when compared to the prior year primarily due to an increase in discretionary community and housing contributions of $44 million.


Our total assets increased to $184.4 billion at December 31, 2023, from $164.2 billion at December 31, 2022, driven primarily by an increase in advances and investments. Advances increased $11.3 billion due mainly to an increase in borrowings by large depository institution members. Investments increased $6.4 billion primarily driven by the purchase of agency MBS, partially offset by a decline in short-term investments, specifically federal funds sold and securities purchased under agreements to resell. In addition, mortgage loans increased $1.6 billion due to new loan purchases exceeding paydowns.

Total capital increased to $9.8 billion at December 31, 2023, from $8.8 billion at December 31, 2022, primarily due to an increase in activity-based capital stock resulting from an increase in advance balances, and an increase in retained earnings. Our regulatory capital ratio increased to 5.44 percent at December 31, 2023, from 5.41 percent at December 31, 2022; and remained above the required regulatory minimum at each period end. Regulatory capital includes capital stock, MRCS, and retained earnings.



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Adjusted Earnings

As part of evaluating our financial performance, we adjust net interest income and net income before assessments, both calculated in accordance with GAAP, for the impact of (i) unpredictable items, including, but not limited to, market adjustments relating to derivative and hedging activities and instruments held at fair value, net asset prepayment fee income, MRCS interest expense, debt extinguishment gains (losses), and (ii) other non-routine items, if applicable. The resulting non-GAAP measure, referred to as our adjusted earnings, reflects both adjusted net interest income and adjusted net income.

Because our business model is primarily one of holding assets and liabilities to maturity, management believes that the adjusted earnings measure is helpful in understanding our operating results and provides a meaningful period-to-period comparison of our economic performance in contrast to GAAP results, which can be impacted by fair value changes driven by market volatility on financial instruments recorded at fair value or transactions that are considered to be unpredictable or not routine. As a result, management uses the adjusted earnings measure to assess performance under our incentive compensation plans. Non-GAAP financial measures have inherent limitations, and are not audited. While these non-GAAP measures can be used to assist in understanding the components of our earnings, they should not be considered a substitute for results reported under GAAP.

The adjusted net income methodology is calculated on a post-AHP assessment basis. Management believes AHP assessments are a fundamental component of our business and believes this assessment should be included in our adjusted net income calculation.

As indicated in the tables that follow, our adjusted net interest income and adjusted net income increased during 2023 when compared to 2022. Our adjusted net interest income was impacted primarily by higher short-term interest rates, which improved earnings on invested capital, and growth in advance balances.

The following table summarizes the reconciliation between GAAP and adjusted net interest income (dollars in millions):
For the Years Ended December 31,
20232022
GAAP net interest income $1,306 $683 
Exclude:
Prepayment fees on advances, net1
25 
Prepayment fees on investments, net2
11 21 
MRCS interest expense(1)(1)
Market value adjustments on fair value hedges3
(33)
Total adjustments38 
Include items reclassified from other income (loss):
Net interest income (expense) on economic hedges(51)(58)
Adjusted net interest income$1,253 $587 
GAAP net interest margin0.72 %0.61 %
Adjusted net interest margin0.69 %0.53 %

1    Prepayment fees on advances, net includes basis adjustment amortization and premium and/or discount amortization.

2    Prepayment fees on investments, net includes basis adjustment amortization, as well as premium and/or discount amortization on non-MBS.

3     Represents market value gains (losses) on derivatives and hedged items in qualifying hedging relationships.


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The following table summarizes the reconciliation between GAAP net income before assessments and adjusted net income (dollars in millions):
For the Years Ended December 31,
20232022
GAAP net income before assessments
$1,069 $478 
Exclude:
Prepayment fees on advances, net1
25 
Prepayment fees on investments, net2
11 21 
MRCS interest expense(1)(1)
Market value adjustments on fair value hedges3
(33)
Market value adjustments on economic hedges4
11 (6)
Net gains (losses) on financial instruments held under fair value option(92)106 
Net gains (losses) on trading securities93 (95)
Net gains (losses) on extinguishment of debt— 
Gains on litigation settlements, net— 
Adjusted net income before assessments1,052 435 
Adjusted AHP assessments5
105 44 
Adjusted net income$947 $391 

1    Prepayment fees on advances, net includes basis adjustment amortization and premium and/or discount amortization.

2    Prepayment fees on investments, net includes basis adjustment amortization, as well as premium and/or discount amortization on non-MBS.

3    Represents market value gains (losses) on derivatives and hedged items in qualifying hedging relationships.

4    Represents market value gains (losses) on economic derivatives.

5    Adjusted AHP assessments for this non-GAAP measure are calculated as 10 percent of adjusted net income before assessments. For additional discussion on AHP assessments, refer to “Item 8. Financial Statements and Supplementary Data — Note 10 — Affordable Housing Program.”


For additional discussion on items impacting our GAAP earnings, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Replacement of the LIBOR Benchmark Interest Rate
In March 2021, the Financial Conduct Authority announced that LIBOR would either cease to be provided by any
administrator or no longer be representative for the more frequently used LIBOR settings, after June 30, 2023. In 2021, we ceased all new LIBOR-indexed transactions and began utilizing SOFR as our dominant rate. As of June 30, 2023, we had transitioned all of our outstanding LIBOR-indexed instruments to reference SOFR immediately after June 30, 2023, or at the beginning of the next reset period following LIBOR cessation. As of September 30, 2023, all of our qualifying contracts had fully transitioned to SOFR. As such, we no longer have any outstanding LIBOR exposure.




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CONDITIONS IN THE FINANCIAL MARKETS

Economy and Financial Markets

Throughout 2022 and 2023, the FOMC raised the target range for the federal funds rate. However, noting improving financial conditions and progress towards lower inflation, the Committee decided to maintain the target range at 5.25 to 5.50 percent at its November and December 2023 meetings. At its January 2024 meeting, the FOMC again decided to maintain the current target, stating that it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments in order to return inflation to two percent over time. The Committee stated that it will also continue reducing its holdings of Treasury securities and agency debt and agency MBS.

In March 2023, several U.S. banks experienced significant deposit outflows and financial difficulties, creating stress for the banking industry and the financial markets in general. During this time, the FHLBanks continued to execute their mission by serving as a reliable source of liquidity and funding for their members.

Mortgage Markets

During 2023, mortgage rates increased, on average, compared to 2022. The primary driver of mortgage activity throughout the year was purchase activity as mortgage rates remain elevated. New home sales increased relative to the prior year, while existing home sales declined. Home prices increased in 2023 while prepayment activity decreased relative to the prior year.

Interest Rates

    The following table shows information on key market interest rates1:
12-Month Average
Period End
December 31, 2023December 31, 2022December 31, 2023December 31, 2022
Federal funds5.03 %1.68 %5.33 %4.33 %
SOFR5.01 1.63 5.38 4.30 
2-year U.S. Treasury4.58 2.99 4.23 4.43 
10-year U.S. Treasury3.96 2.95 3.88 3.88 
30-year residential mortgage note6.79 5.28 6.42 6.41 

1    Source: Bloomberg.

In response to higher inflation, the FOMC raised the target range for the federal funds rate, which led to higher interest rates, on average, during 2023 when compared to the prior year.





29

SELECTED FINANCIAL DATA

The following tables present selected financial data for the periods indicated (dollars in millions):
December 31,
Statements of Condition20232022202120202019
Cash and due from banks$31 $89 $295 $978 $1,029 
Investments1
49,828 43,381 33,442 31,497 38,465 
Advances122,530 111,202 44,111 46,530 80,360 
Mortgage loans held for portfolio, net2
9,967 8,348 7,578 8,242 9,334 
Total assets184,406 164,169 85,852 87,691 129,603 
Consolidated obligations
Discount notes54,537 69,170 22,348 27,345 29,531 
Bonds116,961 84,337 55,205 52,254 91,553 
Total consolidated obligations3
171,498 153,507 77,553 79,599 121,084 
MRCS12 15 29 52 206 
Total liabilities174,575 155,418 80,014 81,951 122,877 
Capital stock — Class B putable6,873 6,250 3,364 3,341 4,517 
Retained earnings3,138 2,618 2,390 2,351 2,165 
Accumulated other comprehensive income (loss)(180)(117)84 48 44 
Total capital9,831 8,751 5,838 5,740 6,726 
Regulatory capital ratio4
5.44 5.41 6.74 6.55 5.31 
For the Years Ended December 31,
Statements of Income20232022202120202019
Net interest income$1,306 $683 $381 $472 $576 
Provision (reversal) for credit losses on mortgage loans1 4  — 
Other income (loss)5
(15)(40)121 20 
Community and housing contributions47 3 — — — 
All other expense6
174 158 156 189 168 
AHP assessments 107 48 23 41 44 
Net income962 430 206 362 384 
Selected Financial Ratios7
Net interest spread8
0.43 %0.48 %0.39 %0.38 %0.29 %
Net interest margin9
0.72 0.61 0.44 0.45 0.42 
Return on average equity10.30 6.33 3.48 5.88 5.38 
Return on average capital stock14.41 9.78 5.92 9.33 7.75 
Return on average assets0.52 0.38 0.23 0.34 0.27 
Average equity to average assets5.02 6.02 6.73 5.73 5.10 

1    Investments include interest-bearing deposits, securities purchased under agreements to resell, federal funds sold, trading securities, AFS securities, and HTM securities.

2    Includes an allowance for credit losses of $6 million at December 31, 2023, $5 million at December 31, 2022, and $1 million at December 31, 2021, 2020, and 2019.

3    The total par value of outstanding consolidated obligations of the 11 FHLBanks was $1,204.3 billion, $1,181.7 billion, $652.9 billion, $746.8 billion, and $1,025.9 billion at December 31, 2023, 2022, 2021, 2020, and 2019.

4    Represents period-end regulatory capital expressed as a percentage of period-end total assets. Regulatory capital includes Class B capital stock (including MRCS) and retained earnings.

5    Other income (loss) includes, among other things, net gains (losses) on investment securities, net gains (losses) on derivatives, and net gains (losses) on financial instruments held under fair value option. Other income (loss) may also be impacted by net gains on litigation settlements.

6    All other expense includes, among other things, compensation and benefits, professional fees, and contractual services.

7    Amounts used to calculate selected financial ratios are based on numbers in actuals. Accordingly, recalculations using numbers in millions may not produce the same results.

8    Represents yield on total interest-earning assets minus cost of total interest-bearing liabilities.

9    Represents net interest income expressed as a percentage of average interest-earning assets.

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RESULTS OF OPERATIONS

Net Interest Income

Our net interest income is impacted by changes in average interest-earning asset and interest-bearing liability balances, and the related yields and costs. The following table presents average balances and yields/costs of major asset and liability categories (dollars in millions):    
For the Years Ended December 31,
202320222021
Average
Balance1
Yield/Cost
Interest
Income/
Expense2
Average
Balance1
Yield/Cost
Interest
Income/
Expense2
Average
Balance1
Yield/Cost
Interest
Income/
Expense2
Interest-earning assets
Interest-bearing deposits$4,342 5.01 %$217 $1,639 1.95 %$32 $810 0.11 %$
Securities purchased under agreements to resell10,589 5.12 542 5,213 1.97 103 3,230 0.07 
Federal funds sold14,911 5.07 757 12,431 1.85 230 9,505 0.07 
MBS3,4,5
18,957 5.95 1,128 12,356 2.53 313 12,497 0.73 92 
    Other investments3,4,5,6
4,322 3.70 160 4,836 2.20 107 5,714 1.21 69 
Advances4,7
120,027 5.44 6,533 66,562 2.63 1,750 47,796 0.99 472 
Mortgage loans8
9,019 3.54 319 7,971 3.00 239 7,714 2.65 204 
Loans to other FHLBanks23 5.08 11 0.64 — 0.12 — 
Total interest-earning assets182,190 5.30 9,657 111,019 2.50 2,774 87,267 0.97 847 
Non-interest-earning assets3,703 — — 1,817 — — 935 — — 
Total assets$185,893 5.20 %$9,657 $112,836 2.46 %$2,774 $88,202 0.96 %$847 
Interest-bearing liabilities      
Deposits$1,127 4.21 %$47 $1,559 0.89 %$14 $1,945 0.01 %$— 
Consolidated obligations      
Discount notes4
60,662 4.80 2,910 50,842 1.87 948 21,793 0.06 12 
Bonds4
109,589 4.92 5,392 50,931 2.21 1,128 57,265 0.79 452 
Other interest-bearing liabilities9
23 6.98 21 5.75 36 4.96 
Total interest-bearing liabilities171,401 4.87 8,351 103,353 2.02 2,091 81,039 0.58 466 
Non-interest-bearing liabilities5,159 — — 2,691 — — 1,225 — — 
Total liabilities176,560 4.73 8,351 106,044 1.97 2,091 82,264 0.57 466 
Capital9,333 — — 6,792 — — 5,938 — — 
Total liabilities and capital$185,893 4.49 %$8,351 $112,836 1.85 %$2,091 $88,202 0.53 %$466 
Net interest income and spread10
0.43 %$1,306  0.48 %$683  0.39 %$381 
Net interest margin11
0.72 % 0.61 %  0.44 % 
Average interest-earning assets to interest-bearing liabilities106.29 % 107.42 %  107.68 % 

    
1    Average balances are calculated on a daily weighted average basis and do not reflect the effect of derivative master netting arrangements with counterparties and/or clearing agents.

2    Interest income and expense amounts reported for advances, MBS, other investments, and consolidated obligation bonds include gains (losses) on hedged items and derivatives in qualifying fair value hedge relationships.

3    The average balance of AFS and HTM securities is reflected at amortized cost.

4    Average balances reflect the impact of fair value hedging adjustments and/or fair value option adjustments.

5    Interest income on investment securities includes prepayment fees, net of related amortization, of $11 million, $21 million, and less than $1 million for the years ended December 31, 2023, 2022, and 2021.

6    Other investments primarily include U.S. Treasury obligations, other U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, and taxable municipal bonds.

7    Interest income on advances includes prepayment fees, net of related amortization, of $25 million, $9 million, and $48 million for the years ended December 31, 2023, 2022, and 2021.

8    Non-accrual loans are included in the average balance used to determine the average yield.

9    Other interest-bearing liabilities consists of MRCS and/or borrowings from other FHLBanks.

10    Represents yield on total interest-earning assets minus cost of total interest-bearing liabilities.

11    Represents net interest income expressed as a percentage of average interest-earning assets.

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The following table presents changes in interest income and interest expense. Changes in interest income and interest expense that are not identifiable as either volume-related or rate-related, but rather attributable to both volume and rate changes, are allocated to the volume and rate categories based on the proportion of the absolute value of the volume and rate changes (dollars in millions).
2023 vs. 2022
2022 vs. 2021
Total Increase
(Decrease) Due to
Total Increase
(Decrease)
Total Increase
(Decrease) Due to
Total Increase
(Decrease)
VolumeRateVolumeRate
Interest income
Interest-bearing deposits$95 $90 $185 $$29 $31 
Securities purchased under agreements to resell172 267 439 99 101 
Federal funds sold54 473 527 220 223 
MBS231 584 815 (1)222 221 
Other investments(12)65 53 (12)50 38 
Advances2,053 2,730 4,783 245 1,033 1,278 
Mortgage loans34 46 80 28 35 
Loans to other FHLBanks
— — — — 
Total interest income2,627 4,256 6,883 246 1,681 1,927 
Interest expense
Deposits(5)38 33 — 14 14 
Consolidated obligations
Discount notes215 1,747 1,962 40 896 936 
Bonds2,065 2,199 4,264 (55)731 676 
Other interest-bearing liabilities— (1)— (1)
Total interest expense2,275 3,985 6,260 (16)1,641 1,625 
Net interest income$352 $271 $623 $262 $40 $302 
    
Interest income increased during 2023 when compared to 2022 due primarily to the higher interest rate environment, as well as higher advance volumes. Interest expense increased during 2023 when compared to 2022 due primarily to the higher interest rate environment and higher consolidated obligation volumes necessary to fund our asset growth and/or meet liquidity requirements.

Net interest spread represents the yield on total interest-earning assets minus the cost of total interest-bearing liabilities. Our net interest spread declined during 2023 due primarily to market value losses on our fair value hedge relationships, offset in part by higher net asset prepayment fee income. Net interest margin equals net interest income expressed as a percentage of average interest-earning assets. During 2023, our net interest margin increased when compared to 2022 due primarily to higher short-term interest rates, which improved our earnings on invested capital.

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Other Income (Loss)

    The following table summarizes the components of other income (loss) (dollars in millions):
For the Years Ended
 December 31,
20232022
Net gains (losses) on trading securities$93 $(95)
Net gains (losses) on financial instruments held under fair value option(92)106 
Net gains (losses) on derivatives(41)(64)
Net gains (losses) on extinguishment of debt— 
Standby letter of credit fees
Other, net14 
Total other income (loss)$(15)$(40)
    
Other income (loss) improved $25 million during 2023 when compared to 2022. During 2023, we recorded net combined losses of $40 million on our trading securities, fair value option instruments, and economic derivatives, including the related interest settlements, compared to net losses of $53 million in 2022. These changes were primarily driven by the interest rate environment and the reversal of historic gains and losses on instruments as they approach maturity. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Hedging Activities” for additional discussion on our economic derivatives. The increase in other, net during 2023 was driven primarily by an increase in the market value of our non-qualified defined benefit plan assets.

Hedging Activities

We use derivatives to manage interest rate risk. Accounting rules affect the timing and recognition of income and expense on derivatives and therefore we may be subject to income statement volatility. If a hedging activity qualifies for hedge accounting treatment (fair value hedge), the net interest settlements of interest receivables or payables related to the derivative are recognized as interest income or expense in the relevant income statement line item consistent with the hedged asset or liability. The net fair value gains and losses of derivatives and hedged items designated in fair value hedge relationships are also recognized as interest income or expense. Amortization of basis adjustments from terminated hedges is also recorded in interest income or expense.

If a hedging activity does not qualify for hedge accounting treatment (economic hedge), the net interest settlements of interest receivables or payables related to the derivative as well as the fair value gains and losses on the derivative are recorded as a component of other income (loss) in “Net gains (losses) on derivatives;” however, there is no fair value adjustment for the corresponding asset or liability being hedged unless changes in the fair value of the asset or liability are normally marked to fair value through earnings (i.e., trading securities and fair value option instruments).


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The following table categorizes the net effect of hedging activities on net income by product (dollars in millions):
For the Year Ended December 31, 2023
Net Effect of Hedging ActivitiesAdvancesInvestmentsMortgage
Loans
Discount NotesBondsOtherTotal
Net interest income:
Net amortization/accretion1
$68 $29 $$— $(15)$— $83 
Net gains (losses) on derivatives and hedged items
(33)37 — — (36)— (32)
Net interest settlements on derivatives2
779 298 — — (229)— 848 
Total impact to net interest income814 364 — (280)— 899 
Other income (loss):
Net gains (losses) on derivatives3
— (3)(2)(4)— — (9)
Net gains (losses) on trading securities4
— 93 — — — — 93 
Net gains (losses) on financial instruments held under fair value option4
— — — (92)— — (92)
Price alignment amount on derivatives5
— — — — — (32)(32)
Total impact to other income (loss)— 90 (2)(96)— (32)(40)
Total net effect of hedging activities6
$814 $454 $(1)$(96)$(280)$(32)$859 

1    Represents the amortization/accretion of basis adjustments on closed hedge relationships.

2    Represents the interest component on derivatives that qualify for fair value hedge accounting.

3    Represents net gains (losses) on economic derivatives and the related interest settlements.

4    Represents the net gains (losses) on those trading securities and fair value option instruments for which we are utilizing economic derivatives to hedge the risk of changes in fair value.

5    Represents the price alignment amount on derivatives for which variation margin is characterized as a daily settled contract, which fluctuates with changes in the interest rate environment.

6    The hedging activity tables do not include the interest component on the related hedged items or the gross prepayment fee income on terminated advance or investment hedge relationships.


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The following table categorizes the net effect of hedging activities on net income by product (dollars in millions):
For the Year Ended December 31, 2022
Net Effect of Hedging ActivitiesAdvancesInvestmentsMortgage
Loans
Discount NotesBondsOtherTotal
Net interest income:
Net amortization/accretion1
$22 $14 $— $— $(4)$— $32 
Net gains (losses) on derivatives and hedged items(6)30 — — (10)— 14 
Net interest settlements on derivatives2
73 (16)— — (32)— 25 
Total impact to net interest income89 28 — — (46)— 71 
Other income (loss):
Net gains (losses) on derivatives3
— 108 (1)(160)— — (53)
Net gains (losses) on trading securities4
— (95)— — — — (95)
Net gains (losses) on financial instruments held under fair value option4
— — — 106 — — 106 
Price alignment amount on derivatives5
— — — — — (11)(11)
Total impact to other income (loss)— 13 (1)(54)— (11)(53)
Total net effect of hedging activities6
$89 $41 $(1)$(54)$(46)$(11)$18 

1    Represents the amortization/accretion of basis adjustments on closed hedge relationships.

2    Represents the interest component on derivatives that qualify for fair value hedge accounting.

3    Represents net gains (losses) on economic derivatives and the related interest settlements.

4    Represents the net gains (losses) on those trading securities and fair value option instruments for which we are utilizing economic derivatives to hedge the risk of changes in fair value.

5    Represents the price alignment amount on derivatives for which variation margin is characterized as a daily settled contract, which fluctuates with changes in the interest rate environment.

6    The hedging activity tables do not include the interest component on the related hedged items or the gross prepayment fee income on terminated advance or investment hedge relationships.


NET AMORTIZATION/ACCRETION

Net amortization/accretion varies from period to period depending on our hedge relationship termination activities and the maturity, call, or prepayment of assets or liabilities previously in hedge relationships. During 2023, the change in amortization activity when compared to the prior year was driven primarily by the prepayment of advances and investments that were previously in a hedge relationship, as well as the termination of certain advance and investment fair value hedge relationships.

NET GAINS (LOSSES) ON DERIVATIVES AND HEDGED ITEMS

Net gains and losses on derivatives and hedged items designated in fair value hedge relationships are recorded in net interest income. Gains (losses) on derivatives and hedged items fluctuate with changes in market conditions and are based on a range of factors, including current and projected levels of interest rates and volatility.

NET INTEREST SETTLEMENTS ON DERIVATIVES

Net interest settlements represent the interest component on derivatives that qualify for fair value hedge accounting. These amounts vary from period to period depending on our hedging activities and interest rates and are partially offset by the interest component on the related hedged item within net interest income. The hedging activity tables do not include the impact of the interest component on the related hedged item.


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NET GAINS (LOSSES) ON DERIVATIVES

We utilize economic derivatives to manage certain risks on our Statements of Condition. Gains and losses on economic derivatives include interest settlements. Interest settlements represent the interest component on economic derivatives. These amounts vary from period to period depending on our hedging activities and interest rates. During 2023, we recorded net losses of $9 million on our economic derivatives, compared to net losses of $53 million during 2022. These changes were primarily driven by the interest rate environment.

Other Expense
The following table shows the components of other expense (dollars in millions):
For the Years Ended
 December 31,
 20232022
Compensation and benefits$77 $72 
Contractual services23 20 
Professional fees16 16 
Other operating expenses22 19 
Total operating expenses138 127 
Federal Housing Finance Agency11 10 
Office of Finance
Community and housing contributions
47 
Other, net17 13 
Total other expense$221 $161 

Other expense increased $60 million during 2023 when compared to 2022 primarily due to discretionary community and housing contributions. During 2023, we recorded contributions of $37 million to our Member Impact Fund, a discretionary matching grant program intended to support affordable housing and community development, and also recorded a $5 million voluntary AHP contribution. Further, in partnership with our Hawaii members and related trade associations, we provided $5 million during 2023 to local organizations in support of communities impacted by the Maui wildfires.
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STATEMENTS OF CONDITION

Financial Highlights

    Our total assets increased to $184.4 billion at December 31, 2023, from $164.2 billion at December 31, 2022. Our total liabilities increased to $174.6 billion at December 31, 2023, from $155.4 billion at December 31, 2022. Total capital increased to $9.8 billion at December 31, 2023, from $8.8 billion at December 31, 2022. See further discussion of changes in our financial condition in the sections that follow.

Advances

The following table summarizes our advances by type of institution (dollars in millions):
December 31,
20232022
Commercial banks$75,997 $66,303 
Savings institutions1,359 1,498 
Credit unions13,458 12,989 
Insurance companies31,992 31,433 
CDFIs12 
Total member advances122,814 112,235 
Housing associates354 74 
Non-member borrowers53 65 
Total par value$123,221 $112,374 

Our total advance par value increased $10.8 billion or 10 percent at December 31, 2023 when compared to December 31, 2022, primarily due to an increase in borrowings by large depository institution members.









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INTEREST RATE PAYMENT AND REDEMPTION TERMS

The following table summarizes advances by interest rate payment and redemption terms (dollars in millions):
December 31, 2023December 31, 2022
Amount% of TotalAmount% of Total
Fixed rate
Due in one year or less$34,208 28 $43,716 39 
Due after one year through three years21,473 17 10,196 
Due after three years through five years13,640 11 7,219 
Due after five years through 15 years2,160 2,533 
Thereafter21 — 29 — 
Total par value71,502 58 63,693 57 
Fixed rate, putable
Due after one year through three years— — 160 — 
Due after five years through 15 years— — — 
Total par value— — 168 — 
Variable rate
Due in one year or less16,828 14 6,463 
Due after one year through three years773 — 16,341 14 
Due after three years through five years241 — 151 — 
Due after five years through 15 years953 953 
Total par value18,795 15 23,908 21 
Variable rate, callable1
Due in one year or less1,585 11,097 10 
Due after one year through three years5,423 6,701 
Due after three years through five years24,647 20 5,493 
Total par value31,655 26 23,291 21 
Other2
Due in one year or less270 — 302 — 
Due after one year through three years427 418 
Due after three years through five years350 — 333 — 
Due after five years through 15 years217 — 253 — 
Thereafter— — 
Total par value1,267 1,313 
Overdrawn demand deposit accounts— — 
Total advance par value123,221 100 112,374 100 
Premiums11 
Fair value hedging adjustments3
(697)(1,183)
Total$122,530 $111,202 
1    Callable advances are those advances that may be contractually prepaid by the borrower on predetermined dates without incurring prepayment or termination fees. Interest rates on our variable rate callable advances reset at each call date to be consistent with either the underlying index or our current offering rate in line with our underlying cost of funds.

2    Includes fixed-rate amortizing and fixed-rate callable advances.

3    Primarily represents fair value hedging adjustments on active hedging relationships driven by changes in interest rates.

    



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At December 31, 2023 and 2022, advances outstanding to our five largest member borrowers totaled $55.0 billion and $50.9 billion, representing 45 percent of our total advances outstanding at each period end. The following table summarizes advances outstanding to our five largest member borrowers at December 31, 2023 (dollars in millions):
Amount% of Total Advances
Wells Fargo Bank, N.A.$37,000 30 
Athene Annuity and Life Company1
5,931 
UBS Bank USA4,351 
Principal Life Insurance Company3,950 
Umpqua Bank3,750 
Total par value$54,982 45 
    
1    Excludes $0.6 billion of advances with Athene Annuity & Life Assurance Company, an affiliate of Athene Annuity and Life Company.

We evaluate advances for credit losses on a quarterly basis and have never experienced a credit loss on our advances. For additional discussion on our advance credit risk, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Credit Risk — Advances.”

Mortgage Loans

    The following table summarizes information on our mortgage loans held for portfolio (dollars in millions):
December 31,
20232022
Fixed rate conventional loans$9,506 $7,890 
Fixed rate government-insured loans378 387 
Total unpaid principal balance9,884 8,277 
Premiums113 96 
Discounts(11)(11)
Basis adjustments from mortgage loan purchase commitments(13)(9)
Total mortgage loans held for portfolio9,973 8,353 
Allowance for credit losses(6)(5)
Total mortgage loans held for portfolio, net$9,967 $8,348 

Our total mortgage loans increased $1.6 billion or 19 percent at December 31, 2023 when compared to December 31, 2022. The increase was primarily due to new loan purchases exceeding principal paydowns, driven in part by a decrease in prepayment activity as mortgage rates remained elevated.

REDEMPTION TERMS
The following table summarizes our fixed rate mortgage loans held for portfolio by redemption terms (dollars in millions):
December 31,
Redemption Term20232022
Due in one year or less$332 $308 
Due after one year through five years1,386 1,288 
Due after five years through fifteen years3,532 3,166 
Thereafter4,634 3,515 
Total unpaid principal balance$9,884 $8,277 

We evaluate mortgage loans for credit losses on a quarterly basis. For additional discussion on our mortgage loan credit risk, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Credit Risk — Mortgage Loans.”
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Investments

The following table summarizes the carrying value of our investments (dollars in millions):
December 31, 2023December 31, 2022
Amount% of TotalAmount% of Total
Short-term investments1
Interest-bearing deposits$3,481 $2,031 
Securities purchased under agreements to resell11,400 23 12,590 29 
Federal funds sold7,120 14 9,415 22 
Total short-term investments22,001 44 24,036 55 
Long-term investments2
MBS
GSE single-family633 767 
GSE multifamily17,955 36 9,805 23 
U.S. obligations single-family3
4,399 3,678 
Private-label residential— — 
Total MBS22,990 46 14,254 33 
Non-MBS
U.S. Treasury obligations3
2,925 2,501 
Other U.S. obligations3
396 834 
GSE and TVA obligations757 888 
State or local housing agency obligations489 482 
Other4
270 386 
Total non-MBS4,837 10 5,091 12 
Total long-term investments27,827 56 19,345 45 
Total investments$49,828 100 $43,381 100 

1    Short-term investments have original maturities equal to or less than one year.

2    Long-term investments have original maturities of greater than one year.

3    Represents investment securities backed by the full faith and credit of the U.S. Government.

4    Consists primarily of taxable municipal bonds.


Our investments increased $6.4 billion or 15 percent at December 31, 2023 when compared to December 31, 2022. The increase was driven by the purchase of agency MBS, partially offset by a decline in short-term investments, specifically federal funds sold and securities purchased under agreements to resell. At December 31, 2023 and 2022, we had agency MBS with a total par value of $692 million and $181 million that were traded but not yet settled. These investments were recorded as “available-for-sale” on our Statements of Condition with a corresponding payable recorded in “other liabilities.”

The Finance Agency limits our investments in MBS by requiring that the balance of our MBS not exceed three times regulatory capital at the time of purchase. At December 31, 2023, our ratio of MBS to regulatory capital was 2.35 compared to 1.69 at December 31, 2022.
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REDEMPTION TERMS AND YIELDS

The following table summarizes the carrying value and yield characteristics of our AFS and HTM investment portfolios on the basis of remaining terms to contractual maturity. Expected maturities of some securities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without call or prepayment fees (dollars in millions):
December 31,
20232022
 Due in one year or lessDue after one year through five yearsDue after five years through 10 yearsDue after 10 yearsCarrying ValueCarrying Value
AFS securities
Non-MBS
Other U.S. obligations1
$68 $260 $— $— $328 $758 
GSE and TVA obligations21 15 33 275 344 470 
State or local housing agency obligations118 193 141 458 449 
Other2
117 24 19 — 160 240 
Total non-MBS212 417 245 416 1,290 1,917 
MBS
U.S. obligations
single-family1
— — — 4,398 4,398 3,676 
GSE single-family— — — 180 180 210 
GSE multifamily401 1,988 15,170 396 17,955 9,760 
Total MBS401 1,988 15,170 4,974 22,533 13,646 
Total AFS securities613 2,405 15,415 5,390 23,823 15,563 
HTM securities
Non-MBS
GSE and TVA obligations— 238 68 58 364 369 
State or local housing agency obligations— 11 15 31 33 
Total non-MBS— 249 73 73 395 402 
MBS
U.S. obligations
single-family1
— — — 
GSE single-family— 23 34 396 453 557 
Private-label— — 
Total MBS— 24 36 397 457 563 
Total HTM securities
$— $273 $109 $470 $852 $965 
Weighted-average yields on:
AFS securities3
4.78 %5.16 %4.04 %5.96 %
HTM securities3
— %4.40 %4.77 %5.56 %


1    Represents investment securities backed by the full faith and credit of the U.S. Government.

2    Consists primarily of taxable municipal bonds.

3    The weighted average yields on AFS and HTM securities are calculated as the sum of each debt security using the period end balances multiplied by the coupon rate, divided by the total debt securities in the applicable HTM or AFS portfolio. The result is then multiplied by 100 to express it as a percentage.


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INTEREST RATE PAYMENT TERMS

The following table summarizes the interest rate payment terms of investment securities (dollars in millions):
December 31,
20232022
Trading securities at fair value
Fixed rate$3,152 $2,817 
Total trading securities$3,152 $2,817 
AFS securities at amortized cost
Fixed rate$17,485 $9,128 
Variable rate6,516 6,549 
Total AFS securities$24,001 $15,677 
HTM securities at amortized cost
Fixed rate$452 $480 
Variable rate400 485 
Total HTM securities$852 $965 

We evaluate investments for credit losses on a quarterly basis. For additional discussion on our investment credit risk, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Credit Risk — Investments.”

Consolidated Obligations

    Consolidated obligations, which include bonds and discount notes, are the primary source of funds to support our advances, mortgage loans, and investments. At December 31, 2023 and 2022, the carrying value of consolidated obligations for which we are primarily liable totaled $171.5 billion and $153.5 billion.

DISCOUNT NOTES

The following table summarizes our discount notes, all of which are due within one year (dollars in millions):
December 31,
20232022
Par value$55,288 $70,002 
Discounts and concession fees1
(736)(725)
Fair value option adjustments(15)(107)
Total$54,537 $69,170 

1    Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation discount notes.


Our discount notes decreased $14.6 billion or 21 percent at December 31, 2023 when compared to December 31, 2022. Although the balance declined from the prior year-end, during 2023, we continued to utilize discount notes primarily to fund our increase in short-term assets and/or meet our liquidity requirements. Unamortized discounts outstanding at December 31, 2023 were higher than the prior year-end despite a decline in total par value due primarily to the higher interest rate environment, which results in larger discount levels. Fair value option adjustments changed $92 million at December 31, 2023 when compared to December 31, 2022, driven primarily by the interest rate environment and the reversal of historic gains and losses on fair value option discount notes as they approach maturity.


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BONDS

The following table summarizes information on our bonds (dollars in millions):
December 31,
20232022
Par value$116,963 $84,572 
Premiums52 86 
Discounts and concession fees1
(29)(23)
Fair value hedging adjustments(25)(298)
Total$116,961 $84,337 

1    Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation bonds.


Our bonds increased $32.6 billion or 39 percent at December 31, 2023 when compared to December 31, 2022. During 2023, we increased our utilization of consolidated obligation bonds primarily to fund our asset growth and/or meet our liquidity requirements. Fair value hedging adjustments changed $273 million at December 31, 2023 when compared to December 31, 2022, due primarily to the impact of interest rates on our cumulative fair value adjustments on bonds in active hedging relationships.

INTEREST RATE PAYMENT TERMS
Bonds are issued with fixed or variable rate payment terms, such as SOFR. The following table summarizes our bonds by interest rate payment terms (dollars in millions):
December 31,
20232022
Fixed rate$63,477 $34,520 
Simple variable rate53,486 50,052 
Total par value$116,963 $84,572 


Deposits

Deposits represent a small portion of our funding, totaling $1.0 billion at December 31, 2023, and remained relatively stable from December 31, 2022. All of our deposits are uninsured and the balance of deposits varies depending on market factors, such as the attractiveness of our deposit pricing relative to rates available on alternative money market instruments, our members’ investment preferences and the availability of alternative short-term investments, and our members’ liquidity levels.

Interest-bearing demand and overnight deposits pay interest based on a daily interest rate. The average balances of demand and overnight deposits were $1.0 billion, $1.4 billion, and $1.8 billion, and the weighted-average interest rates paid on demand and overnight deposits were 4.07 percent, 0.83 percent, and 0.01 percent during the years ended December 31, 2023, 2022, and 2021. Term deposits pay interest based on a fixed rate determined at the issuance of the deposit. The average balances of term deposits were $171 million, $185 million, and $97 million, and the weighted-average interest rates paid on term deposits were 4.97 percent, 1.17 percent, and 0.02 percent during the years ended December 31, 2023, 2022, and 2021.
The following table summarizes our uninsured term deposits (dollars in millions):
December 31,
20232022
Three months or less$26 $26 
Over three months through six months
Total$27 $29 

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Capital

The following table summarizes information on our capital (dollars in millions):
December 31,
20232022
Capital stock$6,873 $6,250 
Retained earnings3,138 2,618 
Accumulated other comprehensive income (loss)(180)(117)
Total capital$9,831 $8,751 

Our capital increased $1.1 billion or 12 percent at December 31, 2023 when compared to December 31, 2022, primarily due to an increase in activity-based capital stock resulting from an increase in advance balances, and an increase in retained earnings. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital” for additional information on our capital.

Derivatives

    We use derivatives to manage interest rate risk. The notional amount of derivatives serves as a factor in determining periodic interest payments and cash flows received and paid. However, the notional amount of derivatives represents neither the actual amounts exchanged nor our overall exposure to credit and market risk.

The following table categorizes the notional amount of our derivatives by type (dollars in millions):
December 31,
20232022
Interest rate swaps
Non-callable$133,720 $94,582 
Callable by counterparty32,284 6,901 
Total interest rate swaps166,004 101,483 
Forward settlement agreements115 46 
Mortgage loan purchase commitments112 46 
Total notional amount$166,231 $101,575 
    
The notional amount of our derivative contracts increased $64.7 billion or 64 percent at December 31, 2023 when compared to December 31, 2022. This was primarily due to increased utilization of both non-callable and callable swaps to hedge our advances and consolidated obligations in an effort to manage our interest rate risk. For additional discussion regarding our use of derivatives, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Interest Rate Risk — Derivatives.”

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LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital positions are actively managed in an effort to preserve stable, reliable, and cost-effective sources of funds to meet current and projected future operating financial commitments, as well as regulatory, liquidity, and capital requirements.

Liquidity

SOURCES OF LIQUIDITY

We utilize several sources of liquidity to carry out our business activities. These include, but are not limited to, proceeds from the issuance of consolidated obligations, payments collected on advances and mortgage loans, proceeds from investment securities, member deposits, the issuance of capital stock, and current period earnings.

Our primary source of liquidity is proceeds from the issuance of consolidated obligations (bonds and discount notes) in the capital markets. During 2023, proceeds from the issuance of bonds and discount notes were $139.3 billion and $1,653.5 billion compared to $83.8 billion and $1,022.9 billion in 2022. During 2023, we increased our utilization of consolidated obligations compared to the prior year primarily to fund our asset growth and/or meet our liquidity requirements.

Access to debt markets has been reliable because investors, driven by increased liquidity preference and our GSE status, have sought the FHLBanks’ debt as an asset of choice. However, due to the short-term maturity of the debt, we may be exposed to additional risks associated with refinancing and our ability to access the capital markets.

We are focused on maintaining an adequate liquidity balance and a funding balance between our financial assets and financial liabilities and work collectively with the other FHLBanks to manage the system-wide liquidity and funding needs. We monitor our debt refinancing risk and liquidity position primarily by tracking the maturities of financial assets and financial liabilities. In managing and monitoring the amounts of assets that require refunding, we consider contractual maturities of our financial assets and liabilities, as well as certain assumptions regarding expected cash flows (i.e., estimated prepayments). External factors, including member borrowing needs, supply and demand in the debt markets, and other factors may affect liquidity balances and the funding balances between financial assets and financial liabilities. Refer to “Item 8. Financial Statements and Supplementary Data” for additional information regarding the contractual maturities or redemption terms of certain of our financial assets and liabilities.

Our ability to raise funds in the capital markets as well as our cost of borrowing may be affected by our credit ratings. In August 2023, Fitch Ratings downgraded the long-term U.S. sovereign rating to AA+ with a stable outlook. Following this action, Fitch Ratings also downgraded our long-term rating to AA+ with a stable outlook. Further, in November 2023, Moody’s affirmed the ratings of our consolidated obligations of Aaa/P-1 and changed the outlook on the ratings to negative from stable, consistent with its ratings action taken with respect to the United States Government. As of February 29, 2024, our consolidated obligations remained rated AA+ with a stable outlook by Fitch Ratings, AA+/A-1+ with a stable outlook by S&P, and Aaa/P-1 with a negative outlook by Moody’s. For further discussion of how credit rating changes and our ability to access the capital markets may impact us in the future, refer to “Item 1A. Risk Factors.”

Although we are primarily liable for the portion of consolidated obligations that are issued on our behalf, we are also jointly and severally liable with the other FHLBanks for the payment of principal and interest on all consolidated obligations issued by the FHLBank System. At December 31, 2023 and 2022, the total par value of outstanding consolidated obligations for which we are primarily liable was $172.2 billion and $154.6 billion. At December 31, 2023 and 2022, the total par value of outstanding consolidated obligations issued on behalf of other FHLBanks for which we are jointly and severally liable was $1,032.1 billion and $1,027.1 billion.

The Office of Finance and FHLBanks have contingency plans in place that prioritize the allocation of proceeds from the issuance of consolidated obligations during periods of financial distress if consolidated obligations cannot be issued in sufficient amounts to satisfy all FHLBank demand. In the event of significant market disruptions or local disasters, our President and CEO or designee is authorized to establish interim borrowing relationships with other FHLBanks. To provide further access to funding, the FHLBank Act also authorizes the U.S. Treasury to directly purchase new issue consolidated obligations of the GSEs, including FHLBanks, up to an aggregate principal amount of $4.0 billion. As of February 29, 2024, no purchases had been made by the U.S. Treasury under this authorization.


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USES OF LIQUIDITY

    We use our available liquidity, including proceeds from the issuance of consolidated obligations, primarily to repay consolidated obligations, fund advances, and purchase investments. During 2023, repayments of consolidated obligations totaled $1,775.5 billion compared to $1,030.8 billion in 2022.

During 2023, advance disbursements (excluding daily renewals) totaled $580.7 billion compared to $424.9 billion in 2022. Advance disbursements will vary from period to period depending on member needs and increased during 2023 due primarily to increased member utilization of short-term advances. In particular, we saw accelerated member demand throughout March in response to the stress placed on the banking industry and financial markets resulting from the financial difficulties experienced by certain depository institutions. During 2023, investment purchases (excluding overnight investments) totaled $12.8 billion compared to $9.3 billion in 2022, an increase due primarily to additional purchases of agency MBS.

We also use liquidity to purchase mortgage loans, redeem member deposits, pledge collateral to derivative counterparties, redeem or repurchase capital stock, pay expenses, and pay dividends.

LIQUIDITY REQUIREMENTS

We are subject to certain liquidity requirements set forth by the Finance Agency, as further outlined below. We also maintain a liquidity contingency funding plan designed to enable us to meet our obligations and the liquidity needs of our members in the event of short-term capital market disruptions, or operational disruptions at our Bank and/or the Office of Finance.

Liquidity Guidance AB – This guidance requires us to maintain sufficient liquidity for a period of 10 to 30 calendar days. The base case scenario requires 20 days of positive daily cash balances and assumes that we cannot access the capital markets to issue debt, and during that time we will automatically renew maturing and called advances for all members, including very large highly-rated members, and we hold additional liquid assets equal to one percent of our letters of credit balances. At December 31, 2023 and 2022, we were in compliance with this base case liquidity guidance.

The Liquidity Guidance AB also specifies appropriate funding gap limits to address the risks associated with an FHLBank having too large a mismatch between the contractual maturities of its assets and liabilities. A funding gap measures the difference between assets and liabilities that are scheduled to mature during a specified period and is expressed as a percentage of total assets. The guidance provides recommended funding gap maximums of negative 15 percent at the three-month horizon and negative 30 percent at the one-year horizon. At December 31, 2023 and 2022, we adhered to these funding gap requirements.

Liquidity Reserves for Deposits – We are required to have available at all times an amount greater than or equal to members’ current deposits invested in advances with maturities not to exceed five years, deposits in banks or trust companies, and obligations of the U.S. Treasury. At December 31, 2023 and 2022, we were in compliance with this liquidity guidance.

Unpledged Qualifying Assets – We are required to maintain, in the aggregate, unpledged qualifying assets in an amount at least equal to the amount of our participation in total consolidated obligations outstanding. The following table shows our compliance with this requirement (dollars in billions):
December 31,
 20232022
Qualifying assets free of lien or pledge$182.9 $163.4 
Consolidated obligations outstanding171.5 153.5 
Excess liquidity$11.4 $9.9 


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Capital

CAPITAL REQUIREMENTS

    We are subject to certain regulatory capital requirements. First, the FHLBank Act requires that we maintain at all times permanent capital greater than or equal to the sum of our credit, market, and operational risk capital requirements, all calculated in accordance with Finance Agency regulations. Only permanent capital, defined as the amounts paid-in for Class B capital stock (including MRCS), and retained earnings can satisfy this risk-based capital requirement. Second, the FHLBank Act requires a minimum four percent capital-to-asset ratio, which is defined as total regulatory capital divided by total assets. Total regulatory capital includes all Class B capital stock (including MRCS) and retained earnings. Third, the FHLBank Act imposes a five percent minimum leverage ratio, which is defined as the sum of permanent capital weighted 1.5 times and nonpermanent capital weighted 1.0 times, divided by total assets. At December 31, 2023 and 2022, we did not hold any nonpermanent capital. At December 31, 2023 and 2022, we were in compliance with all three of the Finance Agency’s regulatory capital requirements.

In addition to the requirements previously discussed, the the Capital Stock AB requires each FHLBank to maintain at all times a ratio of at least two percent of capital stock to total assets. For purposes of the Capital Stock AB, capital stock includes MRCS. The capital stock to total assets ratio is measured on a daily average basis at month end. At December 31, 2023 and 2022, we were in compliance with the Capital Stock AB.

Refer to “Item 8. Financial Statements and Supplementary Data — Note 11 — Capital” for additional information on our regulatory capital requirements.    

CAPITAL STOCK
Our capital stock has a par value of $100 per share, and all shares are issued, redeemed, and repurchased only at the stated par value. We issue a single class of capital stock (Class B capital stock) and have two subclasses of Class B capital stock: membership and activity-based. All Class B capital stock issued is subject to a notice of redemption period of five years.

The capital stock requirements established in our Capital Plan are designed so that we can remain adequately capitalized as member activity changes. Our Board of Directors may make adjustments to the capital stock requirements within ranges established in our Capital Plan.
Effective December 15, 2023, we reduced the amount of membership stock each member must purchase and hold from 0.12 percent to 0.06 percent of its total assets as of the preceding December 31st, with no change to the cap of $10 million and floor of $10,000. In addition, we increased the activity stock requirement on advances from 4.00 percent to 4.50 percent while maintaining the activity stock requirement of 4.00 percent on mortgage loans and 0.10 percent on standby letters of credit. These changes allow the Bank the improve scalability of capital with changes in advance demand. The impact of these changes at the effective date resulted in a net increase in total capital stock of approximately $76 million.

Because membership is voluntary, a member can provide a notice of withdrawal from membership at any time. If a member provides a notice of withdrawal from membership, we will not repurchase or redeem any membership stock until five years from the date of receipt of a notice of withdrawal. To the extent membership is terminated involuntarily, we may elect to repurchase that institution’s membership stock prior to the end of the five-year redemption period. If a member withdraws or is involuntarily terminated from membership and holds activity-based capital stock, we will repurchase any such stock that is not required to support remaining business activity with the institution.

A member may cancel any pending notice of redemption before the completion of the five-year redemption period by providing a written notice of cancellation. We charge a cancellation fee equal to a percentage of the par value of the shares of capital stock subject to redemption. This fee is currently set at a range of one to five percent depending on when we receive notice of cancellation from the member. Our Board of Directors retains the right to change the cancellation fee at any time. We will provide at least 15 days’ written notice to each member of any adjustment or amendment to our cancellation fee.
We cannot repurchase or redeem any membership or activity-based capital stock if the repurchase or redemption would cause a member to be out of compliance with its required investment. In addition, there are statutory and regulatory restrictions on our obligation or right to redeem outstanding capital stock.
First, in no case may we redeem any capital stock if, following such redemption, we would fail to satisfy our minimum regulatory capital requirements. By law, all member holdings of our capital stock immediately become nonredeemable if we become undercapitalized.
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Second, we are precluded by regulation from redeeming any capital stock without the prior approval of the Finance Agency if either our Board of Directors or the Finance Agency determines that we incurred or are likely to incur losses resulting in or likely to result in a charge against capital.
Third, we cannot redeem shares of capital stock from any member if the principal or interest on any consolidated obligation is not paid in full when due, or under certain circumstances if (i) we project, at any time, that we will fail to comply with statutory or regulatory liquidity requirements, or will be unable to timely and fully meet all of our current obligations, (ii) we actually fail to comply with statutory or regulatory liquidity requirements or to timely and fully meet all of our current obligations, or enter or negotiate to enter into an agreement with one or more other FHLBanks to obtain financial assistance to meet our current obligations, or (iii) the Finance Agency determines that we will cease to be in compliance with statutory or regulatory liquidity requirements, or will lack the capacity to timely or fully meet all of our current obligations.
If we are liquidated, after payment in full to our creditors, our stockholders will be entitled to receive the par value of their capital stock as well as any retained earnings, in an amount proportional to the stockholder’s share of the total shares of capital stock. In the event of a merger or consolidation, our Board of Directors shall determine the rights and preferences of our stockholders, subject to applicable Finance Agency regulations, as well as any terms and conditions imposed by the Finance Agency.

Regulatory Capital Stock
The following table summarizes our regulatory capital stock by type of member (dollars in millions):
December 31,
20232022
Commercial banks$4,172 $3,659 
Savings institutions102 119 
Credit unions919 926 
Insurance companies1,679 1,545 
CDFIs
Total GAAP capital stock6,873 6,250 
MRCS12 15 
Total regulatory capital stock$6,885 $6,265 
The increase in regulatory capital stock at December 31, 2023 when compared to December 31, 2022 was primarily due to an increase in activity-based capital stock resulting from an increase in advance balances. For additional information on our capital stock, refer to “Item 8. Financial Statements and Supplementary Data — Note 11 — Capital.”

RETAINED EARNINGS
Our risk management policies outline a targeted level of retained earnings based on the amount we believe necessary to help protect the redemption value of capital stock, facilitate safe and sound operations, maintain regulatory capital ratios, and support our ability to pay a relatively stable dividend. We monitor our achievement of this targeted level and may utilize tools such as restructuring our balance sheet, generating additional income, reducing our risk exposures, increasing capital stock requirements, or reducing our dividends to achieve this level of retained earnings. At December 31, 2023 and 2022, our actual retained earnings exceeded our targeted level of retained earnings.
Under the JCE Agreement, we are required to allocate 20 percent of our quarterly net income to a separate restricted retained earnings account until the balance of that account, calculated as of the last day of each calendar quarter, equals at least one percent of our average balance of outstanding consolidated obligations for the calendar quarter. The restricted retained earnings are not available to pay dividends and are presented separately on our Statements of Condition. At December 31, 2023 and 2022, our restricted retained earnings account totaled $896 million and $703 million. One percent of our average balance of outstanding consolidated obligations for the three months ended December 31, 2023 was $1.7 billion.

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DIVIDENDS

Our Board of Directors may declare and pay different dividends for each subclass of capital stock. Dividend payments may be made in the form of cash and/or additional shares of capital stock. Historically, we have only paid cash dividends. By regulation, we may only pay dividends from current earnings or unrestricted retained earnings. We are prohibited from paying a dividend in the form of additional shares of capital stock if, after the issuance, the outstanding excess capital stock would be greater than one percent of our total assets. Our Board of Directors may not declare or pay dividends if it would result in our non-compliance with regulatory capital requirements.

Our dividend philosophy is to pay a consistent dividend equal to or greater than the current market rate for a highly-rated investment (i.e. SOFR), and at a rate that the Board of Directors believes is sustainable under current and projected earnings to maintain an appropriate level of capital and retained earnings. Our actual dividend is determined quarterly by our Board of Directors, based on policies, regulatory requirements, actual performance, and other considerations that the Board of Directors determines to be appropriate.
The following table summarizes dividend-related information (dollars in millions):
For the Years Ended
December 31,
20232022
Aggregate cash dividends paid1
$442 $202 
Effective combined annualized dividend rate paid on capital stock2
6.90 %5.27 %
Annualized dividend rate paid on membership capital stock3.00 %3.00 %
Annualized dividend rate paid on activity-based capital stock8.04 %6.57 %
Average SOFR5.01 %1.63 %

1    Includes aggregate cash dividends paid during the period. Amount excludes cash dividends paid on MRCS. For financial reporting purposes, these dividends were recorded as interest expense on our Statements of Income.

2    Effective combined annualized dividend rate is paid on total capital stock, including MRCS.


CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements in accordance with GAAP requires management to make a number of judgments, estimates, and assumptions that affect our reported results and disclosures. Given the assumptions and judgment used, we have identified fair value measurements as our critical accounting estimate.

For a discussion of recently adopted or issued accounting standards, refer to “Item 8. Financial Statements and Supplementary Data — Note 2 — Recently Adopted and Issued Accounting Guidance.”

Fair Value Measurements

We record trading securities, AFS securities, derivative assets, derivative liabilities, financial instruments held under the fair value option, and certain other assets at fair value on a recurring basis, and on occasion certain impaired mortgage loans held for portfolio on a non-recurring basis. Fair value is a market-based measurement and is defined as the price received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under current market conditions.

Fair values play an important role in our valuation of certain assets, liabilities, and hedging instruments. They are inherently subjective and may require the use of significant assumptions, adjustments, and judgment including, among others, discount rates, forward interest rates, and volatility assumptions. We evaluate our fair value measurements on an ongoing basis. While management believes our estimates and assumptions are reasonable based on historical experience and other factors, actual results could differ from those estimates and differences could be material to the financial statements.
We categorize our financial instruments carried at fair value into a three-level hierarchy. The hierarchy is based upon the observability of inputs used to value the asset or liability as of the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. At December 31, 2023 and 2022, we did not carry any financial assets or liabilities, measured on a recurring basis, at fair value on our Statements of Condition based on unobservable inputs.
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While all fair value measurements inherently have a significant level of estimation uncertainty, the following items are those most likely to have a material impact on our financial statements:

Trading and AFS Investment Securities. Our valuation technique incorporates prices from third-party pricing vendors, that generally use various proprietary models to price investment securities. The inputs to those models are derived from various sources including, but not limited to, benchmark securities and yields, reported trades, dealer estimates, issuer spreads, bids, offers, and other market-related data. Since many investment securities do not trade on a daily basis, the pricing vendors use available information, as applicable, such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to determine the prices for individual securities. Each pricing vendor has an established process in place to challenge investment valuations, which facilitates resolution of questionable prices we may identify. Periodically, we conduct reviews of our pricing vendors to confirm and further augment our understanding of the vendors’ pricing processes, methodologies, and control procedures. In limited instances, when no prices are available from the designated pricing services, we obtain prices from dealers or use the purchase price if the investment security is unsettled.

Derivative Assets and Liabilities and Related Hedged Items. The fair value of our derivatives is generally estimated using standard valuation techniques such as a discounted cash flow analysis and comparisons to similar instruments, and includes variation margin payments for daily settled contracts. Our cash flow model utilizes market-observable inputs (inputs that are actively quoted and can be validated to external sources). These inputs include assumptions on discount rates, forward interest rates, and volatility. In limited instances, fair value estimates for derivatives may be obtained using an external pricing model that utilizes observable market data. For the related hedged items, the fair value is estimated using a discounted cash flow analysis which also considers assumptions on discount rates and volatility.
Throughout 2023, there were no material changes in our valuation techniques or primary inputs used to develop fair value measurements for investment securities or derivatives. Further, the risk profile and composition of these instruments did not materially change when compared to prior year. Refer to “Item 8. Financial Statements and Supplementary Data — Note 13 — Fair Value” for additional discussion on our fair value measurements, including the quantitative impact these fair value estimates had on our financial statements and disclosures at December 31, 2023 and 2022.

LEGISLATIVE AND REGULATORY DEVELOPMENTS

Finance Agency’s Review and Analysis of the FHLBank System

Commencing in the fall of 2022, and over a period of several months, the Finance Agency undertook a review and analysis of the FHLBank System, in part through a series of public listening sessions, regional roundtable discussions, and receipt of comments from stakeholders and the public. This review covered such areas as the FHLBanks’ mission and purpose in a changing marketplace; their organization, operational efficiency, and effectiveness; their role in promoting affordable, sustainable, equitable, and resilient housing and community investment; their role in addressing the unique needs of rural and financially vulnerable communities; member products, services, collateral requirements; and membership eligibility and requirements.

On November 7, 2023, the Finance Agency issued a written report titled “FHLBank System at 100: Focusing on the Future”, presenting its review and analysis of the FHLBank System and the actions and recommendations that it plans to pursue in service of its vision for the future of the FHLBank System. The report focused on four broad themes: (1) the mission of the FHLBank System; (2) the FHLBank System as a stable and reliable source of liquidity; (3) housing and community development; and (4) FHLBank System operational efficiency, structure, and governance. The Finance Agency expects its initiative to continue as a multi-year, collaborative effort with the FHLBanks, their member institutions, and other stakeholders to address the recommended actions in the report and has stated that it can implement some of the recommendations from the report through ongoing supervision, guidance, or rulemaking, as well as through statutory changes by proposing specific requests for Congressional action.

Among other things, the Finance Agency has indicated that it plans to:

Update and clarify its regulatory statement of the FHLBanks’ mission to explicitly incorporate its view of the core objectives of the FHLBanks’ mission, which are (1) providing stable and reliable liquidity to members, and (2) supporting housing and community development;


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Clarify the FHLBanks’ liquidity role and take steps that the Finance Agency believes will better position the FHLBanks to perform their liquidity function, including enhancing Finance Agency oversight of FHLBank credit risk evaluation of their members and establishing protocols for large depository members to borrow from the Federal Reserve discount window;

Expand the FHLBanks’ housing and community development focus by requiring the establishment of mission-oriented collateral programs, re-evaluating the definition of long-term advances, exploring revisions to the Community Support Requirements, and reviewing the AHP, Community Investment Programs, and Community Investment Cash Advance Programs to encourage greater use in a safe and sound manner. The Finance Agency will also recommend that Congress consider amending the FHLBank Act to at least double the statutory minimum required annual AHP contributions by the FHLBanks; and

Review the FHLBanks’ operational efficiencies through encouraging collaboration among the FHLBanks, evaluating the size and structure of FHLBank boards, considering the structure of FHLBank districts and composition of their membership, and studying whether realignment or consolidation are necessary for the efficiency of the FHLBank System.

We are continuing to evaluate the report and are not able to predict what actions will ultimately result from the Finance Agency’s recommendations in the report, the timing of these actions, the extent of any changes to us or the FHLBank System, or the ultimate effect on us or the FHLBank System in the future. We plan to continue to engage with the Finance Agency and other stakeholders to ensure that the FHLBank System remains well positioned to serve our members and their communities. For a further discussion of related risks, see “Item 1A. Risk Factors.”

Finance Agency Proposed Rule on Fair Lending, Fair Housing, and Equitable Housing Finance Plans

On April 26, 2023, the Finance Agency published a proposed rule that specifies requirements related to FHLBank compliance with fair housing and fair lending laws and prohibitions on unfair or deceptive acts or practices. The fair housing and fair lending laws would be the Fair Housing Act, the Equal Credit Opportunity Act, and those acts’ implementing regulations. Further, the proposed rule would outline the Finance Agency’s enforcement authority. We are evaluating the potential impact of the proposed rule on us and our operations.

Consumer Financial Protection Bureau Final Rule

On March 30, 2023, the CFPB issued a final rule requiring certain covered financial institutions to collect and report small business lending data. Small businesses are businesses with $5 million or less in gross annual revenue in the preceding fiscal year. An FHLBank will be subject to data collection and reporting obligations if the FHLBank has originated a minimum of 100 “covered credit transactions” to small businesses in each of the two preceding calendar years. The final rule implements phased-in compliance dates, beginning on October 1, 2024, based on the number of originations the covered financial institution makes to small businesses within a specified timeframe. We are assessing to which extent the obligations will be triggered for us and what operational changes will be necessary for compliance. While we are still analyzing the impact of the final rule, we do not believe these changes will have a material effect on our financial condition or results of operations. Under a federal court order in a related litigation, the CFPB has been enjoined from implementing and enforcing the final rule against covered financial institutions nationwide and all deadlines for compliance with the final rule have been stayed.

Federal Reserve Bank Term Funding Program

On March 12, 2023, in response to prevailing concerns about the ability of banks to meet the needs of all their depositors, the Federal Reserve announced the implementation of a BTFP, as an additional source of liquidity for eligible borrowers, including any U.S. federally insured depository institution or U.S. branch or agency of a foreign bank that is eligible for primary credit with the Federal Reserve. The BTFP offers up to one-year term loans to be secured by eligible collateral owned by eligible borrowers as of March 12, 2023. Such loans can be requested until March 11, 2024. The BTFP is subject to $25 billion in credit protection by the U.S. Department of Treasury. On January 24, 2024, the Federal Reserve announced that the BTFP will cease making new loans as scheduled on March 11, 2024.

OFF-BALANCE SHEET ARRANGEMENTS
In the ordinary course of business, we engage in financial transactions that, in accordance with GAAP, are not recorded on our Statements of Condition or may be recorded on our Statements of Condition in amounts that are different from the full contract or notional amount of the transactions. For additional information on our off-balance sheet arrangements, refer to “Item 8 — Financial Statements and Supplementary Data — Note 14 — Commitments and Contingencies.”
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RISK MANAGEMENT
    
We have risk management policies, established by our Board of Directors, that allow us to monitor and control our exposure to various risks, including interest rate, liquidity, credit, operational, model, information security, legal, regulatory and compliance, DEI, strategic, and reputational, as well as capital adequacy. Our primary risk management objective is to manage our assets and liabilities in ways that ensure liquidity is available to our members and protect the par redemption value of our capital stock. We periodically evaluate our risk management policies in order to respond to changes in our financial position and general market conditions.

Interest Rate Risk

We define interest rate risk as the risk that changes in interest rates or spreads will adversely affect our financial condition (market value) or performance (income). Interest rate risk is the principal type of risk to which we are exposed, as our cash flows, and therefore earnings and equity value, can change significantly as interest rates change. Our general approach toward managing interest rate risk is to acquire and maintain a portfolio of assets, liabilities, and derivatives which, taken together, limit our expected exposure to interest rate risk. Our key interest rate risk measures are MVE and Projected 24-Month Income. Management regularly monitors these key measures, as discussed further in the sections below.

MARKET VALUE OF EQUITY

    MVE measures the net present value of the Bank by either marking positions to market or discounting all future cash flows using market discount rates. MVE is measured as the market value of our assets minus the market value of our liabilities (excluding MRCS). MVE is an estimate of the Bank’s value and takes into account short-term market price fluctuations.

The MVE calculation is derived by a model that uses market prices which are computed using interest rates. This model allows for items such as spreads, volatilities, and prepayment speeds, and assumes a run-off balance sheet. To ensure the accuracy of the MVE calculation, we benchmark the computed market prices of complex instruments, such as derivatives and mortgage assets, to market observed prices or dealers’ quotes.

Interest rate risk stress tests of MVE involve instantaneous parallel and non-parallel changes in interest rates. The resulting percentage change in MVE from the base case value is an indication of longer-term repricing risk and option risk embedded in the balance sheet.

In an effort to protect MVE from large interest rate swings, we manage the interest rate risk of our balance sheet by using hedging transactions, such as issuing consolidated obligation bonds, including floating rate, simple bullet, callable, or other structured features, and entering into or canceling interest rate swaps, caps, floors, and swaptions.

We monitor and manage to MVE policy limits in an effort to ensure the stability of the Bank’s value. Our policy limits are based on declines from the base case in parallel and non-parallel interest rate change scenarios. Any policy limit breach must be reported to the Enterprise Risk Committee of the Bank and the Risk and Compliance Committee of the Board of Directors and be remediated in a timely manner. At December 31, 2023 and 2022, we were in compliance with all MVE policy limits.

MVCS represents our MVE divided by the total outstanding shares of our capital stock (including MRCS). To ensure we remain adequately capitalized, we must ensure our MVCS remains at or above our $100 par value.


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The following tables show our base case and change from base case MVE in percent change, MVE policy limits, and MVCS, assuming instantaneous parallel changes in interest rates at December 31, 2023 and 2022:
MVE Assuming Parallel Changes (dollars in millions)
Down 200Down 100Base CaseUp 100Up 200
2023$10,154 $9,955 $9,748 $9,548 $9,344 
2022$8,716 $8,648 $8,563 $8,477 $8,392 
% Change from Base Case
Down 200Down 100Base CaseUp 100Up 200
20234.2 %2.1 %— %(2.0)%(4.1)%
20221.8 %1.0 %— %(1.0)%(2.0)%
Policy Limits (declines from base case)
Down 2001
Down 100Base CaseUp 100Up 200
2022 and 2023
(7.5)%(4.0)%— %(4.0)%(7.5)%
MVCS Assuming Parallel Changes (dollars per share)
Down 200Down 100Base CaseUp 100Up 200
2023$147.5 $144.6 $141.6 $138.7 $135.7 
2022$139.1 $138.1 $136.7 $135.3 $134.0 

1    The down 200 basis point policy limit is suspended when the 10-year swap rate falls below an established threshold for five consecutive days. At December 31, 2023 and 2022, the threshold was 1.50 percent and the 10-year swap rate was above this level; as such, the associated policy limits were in effect.

The following tables show our base case and change from base case MVE in percent change, MVE policy limits, and MVCS, assuming instantaneous non-parallel changes in interest rates at December 31, 2023 and 2022:
MVE Assuming Non-Parallel Changes (dollars in millions)
Down 200Down 100Base CaseUp 100Up 200
2023$9,862 $9,816 $9,748 $9,667 $9,566 
2022$8,577 $8,606 $8,563 $8,486 $8,409 
% Change from Base Case
Down 200Down 100Base CaseUp 100Up 200
20231.2 %0.7 %— %(0.8)%(1.9)%
20220.2 %0.5 %— %(0.9)%(1.8)%
Policy Limits (declines from base case)
Down 2001
Down 100Base CaseUp 100Up 200
2022 and 2023
(7.5)%(4.0)%— %(4.0)%(7.5)%
MVCS Assuming Non-Parallel Changes (dollars per share)
Down 200Down 100Base CaseUp 100Up 200
2023$143.2 $142.6 $141.6 $140.4 $138.9 
2022$136.9 $137.4 $136.7 $135.5 $134.2 

1    The down 200 basis point policy limit is suspended when the 10-year swap rate falls below an established threshold for five consecutive days. At December 31, 2023 and 2022, the threshold was 1.50 percent and the 10-year swap rate was above this level; as such, the associated policy limits were in effect.

Our base case MVE increased at December 31, 2023 when compared to December 31, 2022, primarily due to higher asset balances resulting from increased invested capital, specifically activity-based capital stock and retained earnings. During 2023, we recorded net income of $962 million and our dividends totaled $442 million. The earnings in excess of our dividend payments had a positive impact on MVE. Our base case MVCS increased at December 31, 2023 when compared to December 31, 2022, due primarily to an increase in our MVE, offset in part by the issuance of activity-based capital stock at par value, which is below our current MVCS value.

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PROJECTED 24-MONTH INCOME

The projected 24-month income simulation measures our short-term earnings forecast over a two-year horizon based on forward interest rates and business assumptions. The spread between our projected AROCS and average SOFR is used as the primary measure of our profitability. For additional information on our adjusted earnings measure, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Adjusted Earnings.”
We monitor and manage to policy limits, which are based on the spread between our projected AROCS and average SOFR in parallel and non-parallel interest rate change scenarios. Additionally, there is a limit on the decline in projected AROCS from base case AROCS for certain basis shock scenarios to limit basis risk exposure. Any policy limit breach must be reported to the Enterprise Risk Committee of the Bank and the Risk and Compliance Committee of the Board of Directors and be remediated in a timely manner. We were in compliance with all projected 24-month income policy limits at December 31, 2023 and 2022.
The following tables show our projected 24-month AROCS spread to average SOFR and associated policy limits, assuming instantaneous parallel shifts in interest rates at December 31, 2023 and 2022:
Projected AROCS Spread to SOFR
Down 200Down 100Base CaseUp 100Up 200
20237.47 %7.16 %6.77 %6.31 %5.79 %
20226.71 %6.53 %6.40 %6.27 %6.09 %
Policy Limits1
Down 2001
Down 100Base CaseUp 100Up 200
2022 and 2023
1.75 %1.75 %— %1.75 %1.75 %
1    The down 200 basis point policy limit is suspended when the 10-year swap rate falls below an established threshold for five consecutive days. At December 31, 2023 and 2022, the threshold was 1.50 percent and the 10-year swap rate was above this level; as such, the associated policy limit was in effect.

The following tables show our projected 24-month AROCS spread to average SOFR and associated policy limits, assuming instantaneous non-parallel shifts in interest rates at December 31, 2023 and 2022:
Projected AROCS Spread to SOFR
Down 100Base CaseUp 100
20236.69 %6.77 %6.77 %
20226.43 %6.40 %6.35 %
Policy Limits
Down 100Base CaseUp 100
2022 and 2023
1.75 %— %1.75 %


The following tables show our change from base projected 24-month AROCS for index specific shock scenarios and our associated policy limits at December 31, 2023 and 2022:
Projected AROCS
% Change from Base Case
2023(0.13)%
2022(0.51)%
Policy Limit
Base Case
2022 and 2023(1.75)%

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DERIVATIVES
We use derivatives to manage interest rate risk. Finance Agency regulations and our risk management policies establish guidelines for derivatives, prohibit the speculative use of derivatives, and limit credit risk arising from derivatives. Our hedging strategies include hedges of specific assets and liabilities that qualify for fair value hedge accounting and economic hedges that are used to reduce overall market risk exposure. All new hedging strategies are approved by our Asset-Liability Committee. See additional discussion regarding our derivative contracts in “Item 8. Financial Statements and Supplementary Data — Note 7 — Derivatives and Hedging Activities.”

The following table summarizes our interest rate exchange agreements by type of hedged item, hedging instrument, associated hedging strategy, hedge accounting designation, and notional amount (dollars in millions):
December 31,
Hedged Item / Hedging InstrumentHedging StrategyHedge Accounting Designation
2023
 Notional Amount
2022
 Notional Amount
Advances    
Pay-fixed, receive floating interest rate swap (without options)Converts the advance’s fixed rate to a variable rate index.Fair Value$45,021 $21,750 
Economic— 
Pay-fixed, receive floating interest rate swap (with options)Converts the advance’s fixed rate to a variable rate index and offsets option risk in the advance.Fair Value— 168 
Investments
Pay-fixed, receive floating interest rate swapConverts the investment’s fixed rate to a variable rate index.Fair Value17,146 9,316 
Economic3,239 2,934 
Mortgage Loans
Mortgage loan purchase commitmentRepresents a stand-alone derivative that exposes us to fair value risk due to the fixed rate purchase commitment.Economic112 46 
Forward settlement agreementProtects against changes in market value of fixed rate mortgage loan purchase commitments resulting from changes in interest rates.Economic115 46 
Bonds
Receive-fixed or structured, pay floating interest rate swap (without options)Converts the bond’s fixed or structured rate to a variable rate index.Fair Value20,502 15,169 
Receive-fixed or structured, pay floating interest rate swap (with options)Converts the bond’s fixed or structured rate to a variable rate index and offsets option risk in the bond.Fair Value30,284 6,733 
Discount Notes
Receive-fixed, pay-float interest rate swapConverts the discount note’s fixed rate to a variable rate index.Economic47,812 45,207 
Offsetting Positions
Pay-fixed, receive-float interest rate swap and receive-fixed, pay-float interest rate swapRepresents offsetting positions on interest rate swaps.Economic2,000 200 
Total$166,231 $101,575 
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Capital Adequacy

An adequate capital position is necessary for facilitating safe and sound business operations, protecting the redemption value of our capital stock, maintaining regulatory capital ratios, and supporting our ability to pay dividends and redeem excess capital stock. To ensure capital adequacy, we maintain a targeted level of retained earnings to accomplish business imperatives and cover unexpected losses. Our key capital adequacy measures are regulatory capital and targeted retained earnings in order to maintain capital levels in accordance with Finance Agency regulations. In addition, our risk management policies require that we maintain MVCS at or above our $100 par value.

For additional information on our compliance with regulatory capital requirements as well as our targeted retained earnings, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”


Liquidity Risk

We define liquidity risk as the risk that we will be unable to meet our financial obligations as they come due or meet the credit needs of our members in a timely and cost efficient manner. To manage this risk, we maintain liquidity in accordance with Finance Agency regulations. For additional information on our compliance with these requirements, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Liquidity — Liquidity Requirements.”

Credit Risk

    We define credit risk as the risk that a member or counterparty will fail to meet its financial obligations. Our primary credit risks arise from our ongoing lending, investing, and hedging activities. Our overall objective in managing credit risk is to operate a sound credit granting process and to maintain appropriate credit administration, measurement, and monitoring practices.

ADVANCES

    We manage our credit exposure to advances through an approach that provides for an established credit limit for each borrower, ongoing reviews of each borrower’s financial condition, and detailed collateral and lending policies to limit risk of loss while balancing borrowers’ needs for a reliable source of funding. In addition, we lend to our borrowers in accordance with the FHLBank Act, Finance Agency regulations, and other applicable laws.

We are required by regulation to obtain sufficient collateral to fully secure our advances, standby letters of credit, and other extensions of credit to borrowers (collectively, credit products). The estimated value of the collateral required to secure each borrower’s credit products is calculated by applying collateral discounts, or haircuts, to the unpaid principal or market value, as applicable, of the collateral. We also have policies and procedures for validating the reasonableness of our collateral valuations. In addition, we perform collateral verifications and on-site reviews based on the risk profile of the borrower. Management believes that these policies effectively manage our credit risk from advances.

    At December 31, 2023 and 2022, borrowers pledged $380.7 billion and $350.2 billion of collateral (net of applicable discounts) to support activity with us, including advances. At December 31, 2023 and 2022, all of our advances met the requirement to be collateralized at a minimum of 100 percent, net of applicable discounts. Borrowers pledge collateral in excess of their collateral requirement mainly to demonstrate available liquidity and to borrow additional amounts in the future.


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The following table shows the amount of collateral pledged to us (net of applicable discounts) (dollars in billions):    
December 31, 2023
Collateral Type
Discount Range1
Amount% of Total
Single-family loans
22-38
$194.3 51 
Multi-family loans3027.8 
Other real estate
25-56
115.4 30 
Securities
Cash, agency securities and residential MBS
0-26
31.5 
Commercial MBS167.0 
Government-insured loans
15-25
0.7 — 
Secured small business and agri-business loans
354.0 
Total$380.7 100 

1    Represents the discount or the range of discounts applied to the unpaid principal balance or market value of collateral pledged.


    We evaluate advances for credit losses on a quarterly basis and have never experienced a credit loss on our advances. Based upon our collateral and lending policies, the collateral held as security, and the repayment history on advances, management has determined that there were no expected credit losses on our advances at December 31, 2023 and 2022. Refer to “Item 8. Financial Statements and Supplementary Data — Note 5 — Advances” for additional information on our eligible collateral types, collateral practices, and allowance for credit losses.

MORTGAGE LOANS

Mortgage loan credit risk is the risk that we will not receive timely payments of principal and interest due from mortgage borrowers because of borrower defaults. Credit risk on mortgage loans is affected by a number of factors, including loan type, borrower’s credit history, and other factors such as home price fluctuations, unemployment levels, and other economic factors in the local market or nationwide.

The following table presents the unpaid principal balance of our mortgage loans by product type (dollars in millions):
December 31,
Product Type20232022
Conventional$9,506 $7,890 
Government378 387 
Total unpaid principal balance$9,884 $8,277 

We manage the credit risk on mortgage loans by (i) adhering to our underwriting standards, (ii) using agreements to establish credit risk sharing responsibilities with our PFIs, and (iii) monitoring the performance of the mortgage loan portfolio and creditworthiness of PFIs.

We evaluate mortgage loans for credit losses on a quarterly basis and establish an allowance for credit losses to reflect management’s estimate of expected credit losses inherent in the portfolio. At December 31, 2023 and 2022, the allowance for credit losses on our conventional mortgage loans was $6 million and $5 million. At December 31, 2023, over 99 percent of our conventional loan portfolio was performing (i.e. current payment status) and charge-offs recorded during the year ended December 31, 2023 were less than one percent of the total conventional portfolio.

We have never experienced a credit loss on our government-insured mortgage loans. At December 31, 2023 and 2022, we determined no allowance for credit losses was necessary on our government-insured mortgage loans.

Refer to “Item 8. Financial Statements and Supplementary Data — Note 6 — Mortgage Loans Held for Portfolio” for additional information on our allowance for credit losses and the payment status of our conventional mortgage loans.


57

The following table presents supplemental information on our mortgage loans (dollars in millions):
December 31,
Unpaid Principal Balance20232022
Average mortgage loans outstanding during the period$8,944 $7,888 
Mortgage loans held for portfolio9,884 8,277 
Non-accrual loans40 40 
Allowance for credit losses on mortgage loans held for portfolio(6)(5)
Net charge-offs (recoveries)1
— (1)
Ratio of net charge-offs (recoveries) to average mortgage loans outstanding during the period1
— %0.01 %
Ratio of allowance for credit losses to mortgage loans held for portfolio0.07 %0.06 %
Ratio of non-accrual loans to mortgage loans held for portfolio0.40 %0.48 %
Ratio of allowance for credit losses to non-accrual loans16.64 %12.59 %
1    Net charge-offs and recoveries were less than $1 million at December 31, 2023.

The following table shows our conventional mortgage loans by FICO® score. All percentages are calculated based on unpaid principal balances as of the period end.
FICO® Score1
December 31, 2023
620 to < 660%
660 to < 70013 
700 to < 74020 
>= 74062 
Total100 %
Weighted average FICO score748 
1    Represents the lowest original FICO® score of the borrowers and co-borrowers.


The following table shows our conventional mortgage loans by loan-to-value ratio. All percentages are calculated based on unpaid principal balances as of the period end.

Loan-to-Value1
December 31, 2023
<= 60%13 %
> 60% to 70%13 
> 70% to 80%49 
> 80% to 90%2
12 
> 90%2
13 
Total100 %
Weighted average loan-to-value76 %
1    Represents the loan-to-value at origination for the related loan.

2    These conventional loans were required to have PMI at origination.


The following table shows the five largest state concentrations of our conventional mortgage loan portfolio. All percentages are calculated based on unpaid principal balances as of the period end.
 December 31, 2023
Iowa24 %
Missouri22 
Minnesota21 
South Dakota
Idaho
All others21 
Total100 %

58

INVESTMENTS

    We maintain an investment portfolio primarily to provide liquidity as well as investment income. Our primary credit risk on investments is the counterparties’ ability to meet repayment terms. We mitigate this credit risk by purchasing investment quality securities. We define investment quality as a security with adequate financial backings so that full and timely payment of principal and interest on such security is expected and there is minimal risk that the timely payment of principal and interest would not occur because of adverse changes in economic and financial conditions during the projected life of the security. We consider a variety of credit quality factors when analyzing potential investments, including collateral performance, marketability, asset class or sector considerations, local and regional economic conditions, NRSRO credit ratings, and/or the financial health of the underlying issuer. We limit our purchases of MBS to those guaranteed by the U.S. Government or issued by a GSE. We perform ongoing analysis on these investments in an effort to determine potential credit issues.

Finance Agency regulations also limit the type of investments we may purchase. We are prohibited from investing in financial instruments issued by non-U.S. entities other than those issued by U.S. branches and agency offices of foreign commercial banks, unless otherwise approved by the Finance Agency. Our unsecured credit exposures to U.S. branches and agency offices of foreign commercial banks include the risk that, as a result of political or economic conditions in a country, the counterparty may be unable to meet their contractual repayment obligations. Our unsecured credit exposures to domestic counterparties and U.S. subsidiaries of foreign commercial banks include the risk that these counterparties have extended credit to foreign counterparties. At December 31, 2023, we were in compliance with the above regulation and did not own any financial instruments issued by non-U.S. entities, other than those issued by U.S. branches and agency offices of foreign commercial banks, and those approved by the Finance Agency.

In addition, Finance Agency regulations include limits on the amount of unsecured credit we may extend to a counterparty or to a group of affiliated counterparties. These limits are based on a percentage of regulatory capital and the counterparty’s overall credit rating. Under these regulations, the level of regulatory capital is determined as the lesser of our total regulatory capital or the amount of regulatory capital of the counterparty. The amount of regulatory capital is then multiplied by a stated percentage. The percentage that we may offer for extensions of unsecured credit, excluding overnight federal funds sold, ranges from one to 15 percent based on the counterparty’s credit rating. Our total unsecured exposure to a counterparty, including overnight federal funds sold, may not exceed twice that amount, or a total of two to 30 percent of the amount of regulatory capital, based on the counterparty’s credit rating. At December 31, 2023, we were in compliance with the regulatory limits established for unsecured credit.

Our short-term portfolio may include, but is not limited to, interest-bearing deposits, federal funds sold, securities purchased under agreements to resell, certificates of deposit, commercial paper, and U.S. Treasury obligations. Our long-term portfolio may include, but is not limited to, U.S. Treasury obligations, other U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, taxable municipal bonds, and agency MBS. We consider our long-term investments issued or guaranteed by the U.S. Government, an agency or instrumentality of the U.S. Government, or the FDIC to be of the highest credit quality and therefore those exposures are not monitored with other unsecured investments. Given the credit quality of our unsecured long-term investments, our unsecured credit risk is primarily in the short-term portfolio.

We limit short-term unsecured credit exposure primarily to the following overnight investment types:

Interest-bearing deposits. Primarily consists of unsecured deposits that earn interest.

Federal funds sold. Unsecured loans of reserve balances at the Federal Reserve Banks between financial institutions.

Commercial paper. Unsecured debt issued by corporations, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.


59

At December 31, 2023, our unsecured short-term investment exposure consisted of overnight interest-bearing deposits and federal funds sold. The following table presents our unsecured short-term investment exposure by counterparty credit rating and domicile (dollars in millions):
December 31, 2023
Credit Rating1,2
Domicile of CounterpartyAAATotal
Domestic$— $3,480 $3,480 
U.S. subsidiaries of foreign commercial banks— 750 750 
U.S. branches and agency offices of foreign commercial banks
Australia1,250 — 1,250 
Canada— 2,260 2,260 
Finland700 — 700 
France— 200 200 
Germany700 — 700 
Netherlands— 400 400 
United Kingdom— 860 860 
Total U.S. branches and agency offices of foreign commercial banks2,650 3,720 6,370 
Total unsecured short-term investment exposure$2,650 $7,950 $10,600 

1    Represents either the lowest credit rating available for each counterparty based on an NRSRO, or the guarantor credit rating, if applicable. In instances where an NRSRO rating or guarantor rating is not available for the investment, the investment is classified as unrated.

2    Table excludes investments issued or guaranteed by the U.S. Government, U.S. government agencies, government instrumentalities, GSEs, and supranational entities, and does not include related accrued interest.


The following table summarizes the carrying value of our investments by credit rating (dollars in millions):
December 31, 2023
Credit Rating1
AAAAAABBBUnratedTotal
Interest-bearing deposits$— $$3,480 $— $— $3,481 
Securities purchased under agreements to resell— — 3,750 — 7,650 11,400 
Federal funds sold— 2,650 4,470 — — 7,120 
Investment securities:
MBS
GSE single-family— 633 — — — 633 
GSE multifamily— 17,955 — — — 17,955 
U.S. obligations single-family2
— 4,399 — — — 4,399 
Private-label residential— — — 
Total MBS— 22,987 — 22,990 
Non-MBS
U.S. Treasury obligations2
— 2,925 — — — 2,925 
Other U.S. obligations2
— 396 — — — 396 
GSE and TVA obligations— 757 — — — 757 
State or local housing agency obligations399 90 — — — 489 
Other3
251 19 — — — 270 
Total non-MBS650 4,187 — — — 4,837 
Total investments$650 $29,825 $11,702 $$7,650 $49,828 

1    Represents either the lowest credit rating available for each investment based on an NRSRO, or the guarantor credit rating, if applicable. In instances where an NRSRO rating or guarantor rating is not available for the investment, the investment is classified as unrated.

2    Represents investment securities backed by the full faith and credit of the U.S. Government.

3    Consists primarily of taxable municipal bonds.

     We evaluate investments for credit losses on a quarterly basis. At December 31, 2023 and 2022, we determined no allowance for credit losses was necessary on our investments. Refer to “Item 8. Financial Statements and Supplementary Data — Note 4 — Investments” for additional information our allowance for credit losses.

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DERIVATIVES

    We execute most of our derivative transactions with large banks and major broker-dealers. Over-the-counter derivative transactions may be either executed directly with a counterparty, referred to as uncleared derivatives, or cleared through a clearing agent with a clearinghouse, referred to as cleared derivatives.

We are subject to credit risk due to the risk of nonperformance by counterparties to our derivative agreements. The amount of credit risk on derivatives depends on the extent to which netting procedures and collateral requirements are used and are effective in mitigating the risk. We manage credit risk through credit analysis of derivative counterparties, collateral requirements, and adherence to the requirements set forth in our policies, CFTC regulations, and Finance Agency regulations.

Uncleared Derivatives. Uncleared derivative transactions executed on or after September 1, 2022 are subject to two-way initial margin requirements as mandated by the Dodd-Frank Act, if our aggregate uncleared derivative transactions exposure to a counterparty exceeds a specified threshold. The initial margin is required to be held at a third-party custodian and does not change ownership. Rather, the party in respect of which the initial margin has been posted to the third-party custodian will have a security interest in the amount of initial margin required under the uncleared margin rules and can only take ownership upon the occurrence of certain events, including an event of default due to bankruptcy, insolvency, or similar proceeding. As of February 29, 2024, we were not required to post initial margin on our uncleared derivative transactions in accordance with the noted regulation. Uncleared derivative agreements are also generally fully collateralized with a zero unsecured threshold in accordance with variation margin requirements issued by the U.S. federal bank regulatory agencies and the CFTC. As a result of these risk mitigation initiatives, we do not anticipate any credit losses on our uncleared derivative agreements.

Cleared Derivatives. For cleared derivatives, the clearinghouse is our counterparty. We are subject to risk of nonperformance by the clearinghouse and clearing agent. The requirement that we post initial and variation margin through the clearing agent, to the clearinghouse, exposes us to institutional credit risk in the event that the clearing agent or the clearinghouse fails to meet its obligations. However, the use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral/payments are posted daily, through a clearing agent, for changes in the fair value of cleared derivatives. We do not anticipate any credit losses on our cleared derivatives.

The contractual or notional amount of derivatives reflects our involvement in the various classes of financial instruments. Our maximum credit risk is the estimated cost of replacing derivatives if there is a default, minus the value of any related collateral. In determining maximum credit risk, we consider accrued interest receivables and payables as well as our ability to net settle positive and negative positions with the same counterparty and/or clearing agent when netting requirements are met.


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The following table shows our derivative counterparty credit exposure (dollars in millions):
December 31, 2023
Credit Rating1
Notional AmountNet Derivatives
Fair Value Before Collateral
Cash Collateral Pledged
To (From) Counterparty
Net Credit Exposure
 to Counterparties
Non-member counterparties:
Asset positions with credit exposure
Uncleared derivatives
A
$4,988 $60 $(57)$
Cleared derivatives2
131,881 37 1,226 1,263 
Liability positions with credit exposure
Uncleared derivatives
A3
1,239 (4)— 
Total derivative positions with credit exposure to non-member counterparties138,108 93 1,173 1,266 
Member institutions4
107 — 
Total138,215 $94 $1,173 $1,267 
Derivative positions without credit exposure28,016 
Total notional$166,231 

1    Represents either the lowest credit rating available for each counterparty based on an NRSRO, or the guarantor credit rating, if applicable.

2    Represents derivative transactions cleared with CME Clearing and LCH Ltd., our clearinghouses. CME Clearing is not rated, but its parent, CME Group Inc. was rated Aa3 by Moody’s and AA- by S&P at December 31, 2023. LCH Ltd. was rated AA- by S&P at December 31, 2023.

3    Net credit exposure is less than $1 million.

4    Represents mortgage loan purchase commitments with our member institutions.


Refer to “Item 8. Financial Statements and Supplementary Data Note 7 Derivatives and Hedging Activities” for additional information on our derivatives and hedging activities.


Operational Risk

We define operational risk as the risk of loss arising from inadequate or failed processes, people, and/or systems, including those emanating from external sources. All of our activities and processes generate operational risk. Management has established policies, procedures, and controls to reduce the level of operational risk. We perform annual risk assessments to identify, assess, mitigate, and report on operational risks outside of the Board’s risk appetite. Due to the manual nature of many of our processes, our operational risk exposure is closely monitored. Refer to “Item 1A. Risk Factors” for additional information.

Model Risk

We define model risk as the risk of adverse consequences from decisions based on incorrect and misused model outputs. Throughout the course of our day-to-day activities, we utilize external and internal pricing and financial models as important inputs into business and risk management decision-making processes.    

Models are inherently imperfect predictors of actual results because they are based on assumptions about future performance. Changes in any models or in any of the assumptions, judgments, or estimates used in the models may cause the results generated by the model to be materially different. Refer to “Item 1A. Risk Factors” for additional information.

Information Security Risk

We define information security risk as the risk arising from unauthorized access, use, disclosure, disruption, modification, or destruction of information or information systems. Importantly, this definition includes the confidentiality, integrity, and availability of both digital and non-digital information managed within information systems and processes. Refer to “Item 1C. Cybersecurity” for additional information.


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Legal, Regulatory, and Compliance Risk

We define legal, regulatory, and compliance risk as the risk of violations of laws, rules, regulations, regulatory and supervisory guidance, and internal enterprise governing documents. Our legal and compliance departments are responsible for coordinating with various business units in connection with the identification, evaluation, and mitigation of our legal, regulatory, and compliance risks. We manage compliance risk by the development of, and adherence to, appropriate policies, procedures, and controls.

DEI Risk

We define DEI risk as the risk of not achieving the key objectives in our DEI Plan. The DEI Plan is internally-developed to layout DEI-related goals, help achieve our SBP, and comply with all Finance Agency regulations. We actively monitor progress against the goals established in our DEI Plan. Our Board of Directors actively oversees management’s efforts and remains steadfast in its commitment to further developing our DEI program. The DEI Office maintains collaborative lines of communication with our Board of Directors, executive team, business units, and the compliance risk and internal audit departments in an effort to ensure the appropriate level of risk is maintained.

Strategic Risk

We define strategic risk as the risk arising from adverse strategic business decisions, poor implementation of strategic plans, or a lack of responsiveness to changes in the industry and operating environment. Strategic risk includes legislative risk. From time to time, proposals are made, or legislative changes are considered, which could affect our cost of doing business or other aspects of our business. To support our mission, we endeavor to manage and mitigate strategic risk through the business planning process and by monitoring the external environment.
Reputational Risk
We define reputational risk as the risk arising from negative publicity that could adversely affect our reputation and consequently our financial performance or ability to meet our key business objectives. We manage reputational risk by the identification of emerging risks, development of crisis response and contingency plans, and monitoring the effectiveness of the overall risk management processes.
For additional information on some of the more important risks we face, refer to “Item 1A. Risk Factors.”

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Interest Rate Risk” and the sections referenced therein for quantitative and qualitative disclosures about market risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AUDITED FINANCIAL STATEMENTS:
Note 4 - Investments

64

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of the Federal Home Loan Bank of Des Moines

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying statements of condition of the Federal Home Loan Bank of Des Moines (the “Bank”) as of December 31, 2023 and 2022, and the related statements of income, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “financial statements”). We also have audited the Bank's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Bank as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Bank's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Bank’s financial statements and on the Bank's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Interest-Rate Derivatives and Related Hedged Items

As described in Notes 7 and 13 to the financial statements, the Bank uses derivatives to manage its exposure to interest-rate risks and to reduce funding costs, among other objectives. The total notional amount of derivatives as of December 31, 2023 was $166 billion, of which 68 percent were designated as hedging instruments, and the fair value of derivative assets and liabilities as of December 31, 2023 was $1,267 million and $7 million, respectively. The fair values of interest-rate derivatives and related hedged items are generally estimated using standard valuation techniques such as discounted cash flow analyses and comparisons to similar instruments. The discounted cash flow model uses market-observable inputs, such as discount rate, forward interest rate, and volatility assumptions.

The principal considerations for our determination that performing procedures relating to the valuation of interest-rate derivatives and related hedged items is a critical audit matter are the significant audit effort in evaluating the discount rate, forward interest rate, and volatility assumptions used to fair value these derivatives and related hedged items, and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to the valuation of interest-rate derivatives and hedged items, including controls over the model, data and assumptions. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of interest rate derivatives and related hedged items and comparison of management’s estimate to the independently developed ranges. Developing the independent range of prices involved testing the completeness and accuracy of data provided by management and independently developing the discount rate, forward interest rate, and volatility assumptions.



/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
March 7, 2024

We have served as the Bank’s auditor since 1990.











66

FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF CONDITION
(dollars in millions, except capital stock par value)
December 31,
20232022
ASSETS
Cash and due from banks (Note 3)$31 $89 
Interest-bearing deposits (Note 4)3,481 2,031 
Securities purchased under agreements to resell (Note 4)11,400 12,590 
Federal funds sold (Note 4)7,120 9,415 
Investment securities (Note 4)
Trading securities3,152 2,817 
Available-for-sale securities (amortized cost of $24,001 and $15,677)
23,823 15,563 
Held-to-maturity securities (fair value of $850 and $959)
852 965 
Total investment securities27,827 19,345 
Advances (Note 5)122,530 111,202 
Mortgage loans held for portfolio, net of allowance for credit losses of $6 and $5 (Note 6)
9,967 8,348 
Accrued interest receivable582 389 
Derivative assets, net (Note 7)1,267 643 
Other assets, net201 117 
TOTAL ASSETS$184,406 $164,169 
LIABILITIES
Deposits (Note 8)
Interest-bearing$959 $1,006 
Non-interest-bearing80 70 
Total deposits1,039 1,076 
Consolidated obligations (Note 9)
Discount notes (includes $47,442 and $44,531 at fair value held under fair value option)
54,537 69,170 
Bonds116,961 84,337 
Total consolidated obligations171,498 153,507 
Mandatorily redeemable capital stock (Note 11)12 15 
Accrued interest payable1,023 436 
Affordable Housing Program payable (Note 10)198 135 
Derivative liabilities, net (Note 7)7 4 
Other liabilities798 245 
TOTAL LIABILITIES174,575 155,418 
Commitments and contingencies (Note 14)
CAPITAL (Note 11)
Capital stock - Class B putable ($100 par value); 68,731,881 and 62,495,304 issued and outstanding shares
6,873 6,250 
Retained earnings
Unrestricted2,242 1,915 
Restricted896 703 
Total retained earnings3,138 2,618 
Accumulated other comprehensive income (loss)(180)(117)
TOTAL CAPITAL9,831 8,751 
TOTAL LIABILITIES AND CAPITAL$184,406 $164,169 
The accompanying notes are an integral part of these financial statements.
67

FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF INCOME
(dollars in millions)
For the Years Ended December 31,
202320222021
INTEREST INCOME
Advances$6,533 $1,750 $472 
Interest-bearing deposits217 32 1 
Securities purchased under agreements to resell542 103 2 
Federal funds sold757 230 7 
Trading securities41 34 34 
Available-for-sale securities1,203 354 101 
Held-to-maturity securities44 32 26 
Mortgage loans held for portfolio319 239 204 
Loans to other FHLBanks1   
Total interest income9,657 2,774 847 
INTEREST EXPENSE
Consolidated obligations - Discount notes2,910 948 12 
Consolidated obligations - Bonds5,392 1,128 452 
Deposits47 14  
Borrowings from other FHLBanks1   
Mandatorily redeemable capital stock1 1 2 
Total interest expense8,351 2,091 466 
NET INTEREST INCOME1,306 683 381 
Provision (reversal) for credit losses on mortgage loans1 4  
NET INTEREST INCOME AFTER PROVISION (REVERSAL) FOR CREDIT LOSSES1,305 679 381 
OTHER INCOME (LOSS)
Net gains (losses) on trading securities93 (95)(38)
Net gains (losses) on financial instruments held under fair value option(92)106 1 
Net gains (losses) on derivatives(41)(64)14 
Net gains (losses) on extinguishment of debt2   
Standby letter of credit fees 9 9 10 
Other, net14 4 17 
Total other income (loss)(15)(40)4 
OTHER EXPENSE
Compensation and benefits77 72 80 
Contractual services23 20 19 
Professional fees16 16 14 
Other operating expenses22 19 19 
Federal Housing Finance Agency11 10 9 
Office of Finance8 8 7 
Community and housing contributions
47 3  
Other, net17 13 8 
Total other expense221 161 156 
NET INCOME BEFORE ASSESSMENTS1,069 478 229 
Affordable Housing Program assessments 107 48 23 
NET INCOME$962 $430 $206 
The accompanying notes are an integral part of these financial statements.
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FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
For the Years Ended December 31,
202320222021
Net income $962 $430 $206 
Other comprehensive income (loss)
Net unrealized gains (losses) on available-for-sale securities(64)(202)36 
Pension and postretirement benefits1 1  
Total other comprehensive income (loss)(63)(201)36 
TOTAL COMPREHENSIVE INCOME (LOSS)$899 $229 $242 
The accompanying notes are an integral part of these financial statements.



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FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF CAPITAL
(dollars and shares in millions)
Capital Stock
Class B (putable)
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Capital
SharesPar ValueUnrestrictedRestrictedTotal
BALANCE, DECEMBER 31, 202034 $3,341 $1,775 $576 $2,351 $48 $5,740 
Comprehensive income (loss)— — 165 41 206 36 242 
Proceeds from issuance of capital stock28 2,763 — — — — 2,763 
Repurchases/redemptions of capital stock(27)(2,659)— — — — (2,659)
Net stock reclassified (to) from mandatorily redeemable capital stock
(1)(81)— — — — (81)
Cash dividends on capital stock— — (167)— (167)— (167)
BALANCE, DECEMBER 31, 202134 $3,364 $1,773 $617 $2,390 $84 $5,838 
Comprehensive income (loss)— — 344 86 430 (201)229 
Proceeds from issuance of capital stock95 9,524 — — — — 9,524 
Repurchases/redemptions of capital stock(66)(6,633)— — — — (6,633)
Net stock reclassified (to) from mandatorily redeemable capital stock
 (5)— — — — (5)
Cash dividends on capital stock— — (202)— (202)— (202)
BALANCE, DECEMBER 31, 202263 $6,250 $1,915 $703 $2,618 $(117)$8,751 
Comprehensive income (loss)— — 769 193 962 (63)899 
Proceeds from issuance of capital stock111 11,087 — — — — 11,087 
Repurchases/redemptions of capital stock(105)(10,460)— — — — (10,460)
Net stock reclassified (to) from mandatorily redeemable capital stock
 (4)— — — — (4)
Cash dividends on capital stock— — (442)— (442)— (442)
BALANCE, DECEMBER 31, 202369 $6,873 $2,242 $896 $3,138 $(180)$9,831 
The accompanying notes are an integral part of these financial statements.

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FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF CASH FLOWS
(dollars in millions)
For the Years Ended December 31,
202320222021
OPERATING ACTIVITIES
Net income$962 $430 $206 
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization/(accretion)283 436 58 
Net (gains) losses on trading securities(93)95 38 
Net (gains) losses on financial instruments held under fair value option92 (106)(1)
Net change in derivatives and hedging activities(573)1,516 360 
Net (gains) losses on extinguishment of debt(2)  
Other adjustments, net2 4 17 
Net change in:
Accrued interest receivable(401)(356)(7)
Other assets(14)7 (7)
Accrued interest payable588 340 (48)
Other liabilities106 4 (29)
Total adjustments(12)1,940 381 
Net cash provided by (used in) operating activities950 2,370 587 
INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits(1,976)(2,012)149 
Securities purchased under agreements to resell1,190 (140)(7,650)
Federal funds sold2,295 (4,725)(995)
Trading securities
Proceeds from sales389 549  
Proceeds from maturities and paydowns1,094 299 4,766 
Purchases(1,725)(2,591)(1,098)
Available-for-sale securities
Proceeds from maturities and paydowns3,417 3,316 2,693 
Purchases(10,833)(6,498)(115)
Held-to-maturity securities
Proceeds from maturities and paydowns106 357 478 
Advances
Repaid569,885 356,629 138,435 
Originated(580,732)(424,864)(136,486)
Mortgage loans held for portfolio
Principal collected810 1,056 2,506 
Purchased(2,447)(1,861)(1,885)
Other investing activities, net(12)(9)(2)
Net cash provided by (used in) investing activities(18,539)(80,494)796 
The accompanying notes are an integral part of these financial statements.
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FEDERAL HOME LOAN BANK OF DES MOINES
STATEMENTS OF CASH FLOWS (continued from previous page)
(dollars in millions)
For the Years Ended December 31,
202320222021
FINANCING ACTIVITIES
Net change in deposits42 (674)(48)
Net proceeds from issuance of consolidated obligations
Discount notes1,653,546 1,022,899 325,463 
Bonds139,265 83,778 65,424 
Payments for maturing and retiring consolidated obligations
Discount notes(1,668,653)(976,460)(330,458)
Bonds(106,847)(54,295)(62,280)
Proceeds from issuance of capital stock11,087 9,524 2,763 
Payments for repurchases/redemptions of capital stock(10,460)(6,633)(2,659)
Payments for repurchases/redemptions of mandatorily redeemable capital stock(7)(19)(104)
Cash dividends paid(442)(202)(167)
Net cash provided by (used in) financing activities17,531 77,918 (2,066)
Net increase (decrease) in cash and due from banks(58)(206)(683)
Cash and due from banks at beginning of the period89 295 978 
Cash and due from banks at end of the period$31 $89 $295 
SUPPLEMENTAL DISCLOSURES
Cash transactions:
Interest paid$7,512 $1,292 $528 
Affordable Housing Program payments49 44 54 
Non-cash transactions:
Capitalized interest on reverse mortgage investment securities210 54 20 
Capital stock reclassified to (from) mandatorily redeemable capital stock, net4 5 81 
Traded but not settled investment security purchases691 181 291 
Traded but not settled investment security payments/calls
65   
The accompanying notes are an integral part of these financial statements.
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FEDERAL HOME LOAN BANK OF DES MOINES
NOTES TO THE FINANCIAL STATEMENTS

These Notes to the Financial Statements should be read in conjunction with the Statements of Condition as of December 31, 2023 and 2022, and the Statements of Income, Comprehensive Income, Capital, and Cash Flows for the years ended December 31, 2023, 2022, and 2021. Acronyms and terms used throughout these Notes to the Financial Statements are defined in the Glossary of Terms. Unless the context otherwise requires, the term “Bank” refers to the Federal Home Loan Bank of Des Moines or its management.

Background Information

The Bank is a federally chartered corporation that is exempt from all federal, state, and local taxation (except real property taxes and certain employer payroll taxes) and is one of 11 district FHLBanks. The FHLBanks are GSEs and were created under the authority of the FHLBank Act in order to serve the public by enhancing the availability of funds for residential mortgages and targeted community development. The Bank is regulated by the Finance Agency.

The Bank is a cooperative, meaning it is owned by its customers, whom the Bank calls members. As a condition of membership in the Bank, all members must purchase and maintain capital stock to support business activities with the Bank. In return, the Bank provides a readily available source of funding and liquidity to its member institutions and eligible housing associates in Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming, and the U.S. Pacific territories of American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. Commercial banks, savings institutions, credit unions, insurance companies, and CDFIs may apply for membership. State and local housing associates that meet certain statutory criteria may also borrow from the Bank; while eligible to borrow, housing associates are not members of the Bank and, as such, are not permitted to hold capital stock. All stockholders, including current and former members, may receive dividends on their capital stock investment to the extent declared by the Bank’s Board of Directors.

Note 1 — Summary of Significant Accounting Policies

BASIS OF PRESENTATION

    The Bank prepares its financial statements in accordance with GAAP.

SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make subjective assumptions and estimates that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income and expense. The most significant of these estimates include those used in conjunction with fair value estimates. Actual results could significantly differ from these estimates.
Fair Value. The fair value amounts, recorded on the Bank’s Statements of Condition and presented in the footnote disclosures, have been determined by the Bank using available market information and management’s best judgment of appropriate valuation methods. Although management uses its best judgment in estimating the fair value of financial instruments, there are inherent limitations in any valuation technique. Therefore, these fair values may not be indicative of the amounts that would have been realized in market transactions at the reporting dates. See “Note 13 — Fair Value” for more information.

Financial Instruments Meeting Netting Requirements

The Bank has certain financial instruments, including derivative instruments and securities purchased under agreements to resell, that may be presented on a net basis when there is a legal right of offset and all other requirements for netting are met (collectively referred to as the netting requirements). The Bank has elected to offset its derivative instruments, related cash collateral, and associated accrued interest when it has met the netting requirements.


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The net exposure for these financial instruments can change on a daily basis and, therefore, there may be a delay between the time this exposure change is identified and additional collateral is requested, and the time when this collateral is received or pledged. Likewise, there may be a delay for excess collateral to be returned. For derivative instruments that meet the requirements for netting, any excess cash collateral received or pledged is recognized as a derivative liability or derivative asset. Additional information regarding these agreements is provided in “Note 7 — Derivatives and Hedging Activities.

At December 31, 2023 and 2022, the Bank had $11.4 billion and $12.6 billion in securities purchased under agreements to resell. There were no offsetting liabilities related to these securities at December 31, 2023 and 2022.

Interest-Bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold
The Bank invests in interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold. Interest-bearing deposits include deposits held with banks or counterparties that do not meet the definition of a security. The Bank treats securities purchased under agreements to resell as short-term collateralized loans. Federal funds sold consist of short-term, unsecured loans generally transacted by counterparties that are considered investment quality by the Bank. All of these investments provide short-term liquidity and are carried at amortized cost. Accrued interest receivable is recorded separately on the Statements of Condition.
These investments are evaluated quarterly for expected credit losses. If applicable, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The Bank uses the collateral maintenance provision practical expedient for securities purchased under agreements to resell. Consequently, a credit loss would be recognized if there is a collateral shortfall which the Bank does not believe the counterparty will replenish in accordance with its contractual terms. The credit loss would be limited to the difference between the fair value of the collateral and the investment’s amortized cost. See “Note 4 — Investments” for details on the allowance methodologies relating to these investments.

Debt Securities
The Bank classifies investment securities as trading, AFS, or HTM at the date of acquisition. Purchases and sales of investment securities are recorded on a trade date basis. The Bank records interest on investment securities to interest income as earned. The Bank generally amortizes/accretes premiums and discounts on AFS and HTM investment securities to income using the contractual level-yield method (level-yield method). In addition, the Bank uses this method to amortize/accrete fair value hedging adjustments. The level-yield method recognizes the income effects of these adjustments over the contractual life of the securities based on the actual behavior of the underlying assets, including adjustments for actual prepayment activities, and reflects the contractual terms of the securities without regard to changes in estimated prepayments based on assumptions about future borrower behavior. For callable AFS and HTM non-MBS purchased at a premium, the Bank amortizes the premium to the next contractual call date. The Bank computes gains and losses on sales of investment securities using the specific identification method and includes these gains and losses in other income (loss).
Trading. Securities classified as trading are carried at fair value and generally entered into for liquidity purposes. In addition, the Bank classifies certain securities as trading that do not qualify for hedge accounting, primarily in an effort to mitigate the potential income statement volatility that can arise when an economic derivative is adjusted for changes in fair value but the related hedged item is not. The Bank records changes in the fair value of these securities through other income (loss) as “Net gains (losses) on trading securities.” The Bank does not participate in speculative trading practices and generally holds these investments until maturity, except to the extent management deems necessary to manage the Bank’s liquidity portfolio.
Available-for-Sale. Securities that are not classified as trading or HTM are classified as AFS and carried at fair value. The Bank records changes in the fair value of these securities through AOCI as “Net unrealized gains (losses) on available-for-sale securities.” For AFS securities that have been hedged and qualify as a fair value hedge, the Bank records the portion of the change in the fair value of the security related to the risk being hedged in AFS interest income together with the related change in fair value of the derivative, and records the remainder of the change in fair value through AOCI as “Net unrealized gains (losses) on available-for-sale securities.”
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The Bank evaluates its individual AFS securities for impairment quarterly by comparing the security’s fair value to its amortized cost. Accrued interest receivable is recorded separately on the Statements of Condition. Impairment may exist when the fair value of the investment is less than its amortized cost (i.e., in an unrealized loss position). In assessing whether a credit loss exists on an impaired security, the Bank considers whether there would be a shortfall in receiving all cash flows contractually due. When a shortfall is considered possible, the Bank compares the present value of cash flows to be collected from the security with the amortized cost basis of the security. If the present value of cash flows is less than amortized cost, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The allowance is limited by the amount of the unrealized loss. The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately, if applicable.
If management intends to sell an impaired security classified as AFS, or more likely than not will be required to sell the security before expected recovery of its amortized cost basis, any allowance for credit losses is written off and the amortized cost basis is written down to the security’s fair value at the reporting date with any incremental impairment reported in other income (loss). If management does not intend to sell an impaired security classified as AFS and it is not more likely than not that management will be required to sell the debt security, then the credit portion of the difference is recognized as an allowance for credit losses and any remaining difference between the security’s fair value and amortized cost is recorded to
“Net unrealized gains (losses) on available-for-sale securities” within AOCI.
Held-to-Maturity. Securities that the Bank has both the ability and intent to hold to maturity are classified as HTM and carried at amortized cost, which represents the amount at which an investment is acquired, adjusted for periodic principal repayments, amortization of premiums, and accretion of discounts. Accrued interest receivable is recorded separately on the Statements of Condition.
Certain changes in circumstances may cause the Bank to change its intent to hold a security to maturity without calling into question its intent to hold other debt securities to maturity in the future. Thus, the sale or transfer of a HTM security due to certain changes in circumstances, such as evidence of significant deterioration in the issuer’s creditworthiness or changes in regulatory requirements, is not considered to be inconsistent with its original classification. Other events that are isolated, non-recurring, and unusual for the Bank that could not have been reasonably anticipated may cause the Bank to sell or transfer an HTM security without necessarily calling into question its intent to hold other debt securities to maturity. In addition, the sale of a debt security that meets either of the following two conditions would not be considered inconsistent with the original classification of that security: (i) the sale occurs near enough to its maturity date (for example, within three months of maturity), or call date if exercise of the call is probable, that interest rate risk is substantially eliminated as a pricing factor and the changes in market interest rates would not have a significant effect on the security’s fair value or (ii) the sale occurs after the Bank has already collected a substantial portion (at least 85 percent) of the principal outstanding at acquisition due either to prepayments on the debt security or to scheduled payments on the debt security payable in equal installments (both principal and interest) over its term.
The Bank evaluates its HTM securities for impairment quarterly on a collective, or pooled, basis unless an individual assessment is deemed necessary because the securities do not possess similar risk characteristics. An allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately, if applicable. If management intends to sell an impaired security classified as HTM, any allowance for credit losses is written off and the amortized cost basis is written down to the security’s fair value at the reporting date with any incremental impairment reported in other income (loss).
See “Note 4 — Investments” for details on the allowance methodologies relating to AFS and HTM securities.
Advances
Advances (secured loans to members, former members, or eligible housing associates) are carried at amortized cost,
which is net of premiums, discounts, and fair value hedging adjustments unless the Bank has elected the fair value option, in which case, the advances are carried at fair value. For advances carried at amortized cost, accrued interest receivable is recorded separately on the Statements of Condition. The Bank records interest on advances to interest income as earned. The Bank amortizes/accretes premiums, discounts, and fair value hedging adjustments on advances to income using the level-yield method over the contractual life of the advances.


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Advances carried at amortized cost are evaluated quarterly for expected credit losses. If deemed necessary, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately, if applicable. See “Note 5 — Advances” for details on the allowance methodology relating to advances.

Past Due and Non-Accrual Advances. An advance is considered past due for financial reporting purposes if default of contractual principal or interest exists for a period of 30 days or more. Past due advances may consist of advances still accruing interest or advances on non-accrual status. An advance is placed on non-accrual status when full payment of principal and interest is not reasonably assured, regardless of delinquency status, or when principal or interest has been in default for a period of 90 days or more, unless the advance is both well-secured and in the process of collection. In general, the Bank would not expect advances to be placed on non-accrual status as they are required by regulation to be fully secured by underlying collateral.

Prepayment Fees. The Bank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity. For advances with symmetrical prepayment features, the Bank may charge the borrower a prepayment fee or pay the borrower a prepayment credit, depending on certain circumstances, such as movements in interest rates, when the advance is prepaid. Prepayment fees and credits are recorded net of the hedged item fair value hedging adjustments, if applicable, in advance interest income on the Statements of Income.

Advance Modifications. In cases in which the Bank funds a new advance to a borrower concurrently with or within a short period of time before or after the prepayment of an existing advance, the Bank evaluates whether the new advance meets the accounting criteria to qualify as a modification of an existing advance or whether it constitutes a new advance. The Bank compares the present value of cash flows on the new advance to the present value of cash flows remaining on the existing advance. If there is at least a ten percent difference in the present value of the cash flows or if the Bank concludes the difference between the advances is more than minor based on a qualitative assessment of the modifications made to the original contractual terms, then the advance is accounted for as a new advance and all prepayment fees or credits net of fair value hedging adjustments are recognized immediately to advance interest income on the Statements of Income. In all other instances, the advance is accounted for as a modification.

When a new advance qualifies as a modification of an existing advance, any prepayment fee, net of the hedged item fair value hedging adjustments, as well as any outstanding premiums, discounts, or other adjustments on the prepaid advance, are deferred, recorded in the basis of the modified advance, and amortized over the contractual life of the modified advance using a level-yield methodology to advance interest income.

Mortgage Loans Held for Portfolio
The Bank classifies mortgage loans that it has the intent and ability to hold for the foreseeable future, or until maturity or payoff, as held for portfolio. Accordingly, these mortgage loans are reported net of premiums, discounts, basis adjustments from mortgage loan purchase commitments, charge-offs, and the allowance for credit losses. The Bank records interest on mortgage loans to interest income as earned. The Bank amortizes/accretes premiums, discounts, and basis adjustments on mortgage loan purchase commitments to income using the level-yield method over the contractual life of the mortgage loans. Accrued interest receivable is recorded separately on the Statements of Condition.
The Bank performs a quarterly assessment of its mortgage loans held for portfolio to estimate expected credit losses. If deemed necessary, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses.
The Bank measures expected credit losses on mortgage loans on a collective basis, pooling loans with similar risk characteristics. If a mortgage loan no longer shares risk characteristics with other loans, it is removed from the pool and evaluated for expected credit losses on an individual basis. When developing the allowance for credit losses, the Bank measures the estimated loss over the remaining life of a mortgage loan, which also considers how the Bank’s credit enhancements mitigate credit losses. The Bank includes estimates of expected recoveries within the allowance for credit losses. The allowance excludes uncollectible accrued interest receivable, as the Bank writes off accrued interest receivable by reversing interest income if a mortgage loan is placed on non-accrual status. The Bank does not purchase mortgage loans with credit deterioration at the time of purchase. See “Note 6 — Mortgage Loans” for details on the allowance methodology relating to mortgage loans.


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Past Due and Non-Accrual Loans. A mortgage loan is considered past due if the borrower has failed to make contractual principal and/or interest payments for a period of 30 days or more. The Bank places a conventional mortgage loan on non-accrual status if it is determined that either the collection of interest or principal is doubtful or interest or principal is 90 days or more past due. The Bank does not place a government-insured mortgage loan on non-accrual status due to the U.S. Government guarantee or insurance on the loan and contractual obligation of the loan servicer to repurchase the loan when certain criteria are met. For those mortgage loans placed on non-accrual status, accrued but uncollected interest is reversed against interest income and cash payments received are recorded as a reduction of principal. In addition, premiums, discounts, and basis adjustments from mortgage loan purchase commitments are not amortized while a loan is on non-accrual status. A loan on non-accrual status may be restored to accrual status when none of its contractual principal and interest is due and unpaid and the Bank expects repayment of the remaining contractual principal and interest.

Modifications. Generally, the Bank only grants mortgage loan modifications to borrowers experiencing financial difficulty. If the terms of the modified loan are at least as favorable to the lender as the terms offered to borrowers with similar collection risks for comparable loans and the modification to the terms of the loan is more than minor, the loan meets the accounting criteria for a new loan. Generally, a modification would not result in a new loan because the modified terms are not as favorable to the lender as terms for comparable loans that would be offered to similar borrowers. The Bank does not consider changes to the terms of government-insured mortgage loans to be modifications due to the U.S. Government guarantee or insurance on the loan and contractual obligation of the loan servicer to repurchase the loan when certain criteria are met. The Bank places all modified loans on non-accrual status at the time of modification; however, these loans may be subsequently restored to accrual status if they meet the criteria noted in the non-accrual section above.

Individually Evaluated Loans. The Bank individually evaluates all collateral-dependent loans for expected credit losses. Collateral-dependent loans are loans in which repayment is expected to be provided solely by the sale of the underlying collateral. The Bank’s collateral-dependent loans include loans in process of foreclosure, loans 180 days or more past due, bankruptcy loans 60 days or more past due, and modified loans on non-accrual status. The Bank measures these individually evaluated loans for expected credit loss based on the estimated fair value of the underlying property, less estimated selling costs and expected proceeds from PMI. All collateral-dependent loans are initially placed on non-accrual status; however, they may be subsequently restored to accrual status if they meet the criteria noted in the non-accrual section above.

Charge-Off Policy. A charge-off is recorded if it is estimated that the amortized cost in a loan will not be recovered. The Bank evaluates whether to record a charge-off on a conventional mortgage loan upon the occurrence of a confirming event. Confirming events include but are not limited to, the occurrence of foreclosure or when a loan is deemed collateral-dependent. The Bank charges-off the portion of the outstanding conventional mortgage loan balance in excess of the fair value of the underlying collateral, which is determined using property values, less estimated selling costs and expected proceeds from PMI.

Derivatives
All derivatives are recognized on the Statements of Condition at their fair values and reported as either derivative assets or derivative liabilities, net of cash collateral and accrued interest received from or pledged to clearing agents and/or counterparties. The fair values of derivatives are netted by clearing agent and/or counterparty when the netting requirements have been met. If these netted amounts result in a receivable to the Bank, they are classified as a derivative asset and, if classified as a payable to the clearing agent or counterparty, they are classified as a derivative liability. Cash flows associated with a derivative are reflected as cash flows from operating activities on the Statements of Cash Flows unless the derivative meets the criteria to be a financing derivative.
The Bank transacts most of its derivative transactions with large banks and major broker-dealers. Over-the-counter derivative transactions may be either executed directly with a counterparty, referred to as uncleared derivatives, or cleared through a clearing agent with a clearinghouse, referred to as cleared derivatives. Once a derivative transaction has been accepted for clearing by a clearinghouse, the derivative transaction is novated and the executing counterparty is replaced with the clearinghouse. The Bank is not a derivative dealer and does not trade derivatives for short-term profit.
For uncleared derivatives, the Dodd-Frank Act imposes two-way initial margin requirements, which are required to be satisfied with securities collateral. In addition, uncleared derivative agreements are generally fully collateralized with a zero unsecured threshold, which can be satisfied with cash or securities collateral, in accordance with variation margin requirements issued by the U.S. federal bank regulatory agencies and the CFTC.

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For cleared derivatives, the clearinghouse is the Bank’s counterparty. The Bank utilizes two clearinghouses, CME Clearing and LCH Ltd., for all cleared derivative transactions. CME Clearing and LCH Ltd. notify the clearing agent of the required initial margin and daily variation margin payments, and the clearing agent in turn notifies the Bank. Each clearinghouse determines initial margin requirements, which are considered collateral and can be satisfied with cash or securities. Variation margin requirements with each clearinghouse are based on changes in the fair value of cleared derivatives and are legally characterized as daily settlement payments, which are a component of the derivative fair value, rather than cash collateral.
Derivative Designations. Derivative instruments are designated by the Bank as:
a fair value hedge of an associated financial instrument or firm commitment (fair value hedge); or
an economic hedge to manage certain defined risks on the Bank’s Statements of Condition (economic hedge). These hedges are primarily used to: (i) manage mismatches between the coupon features of the Bank’s assets and liabilities, (ii) offset prepayment risk in certain assets, (iii) mitigate the income statement volatility that occurs when financial instruments are recorded at fair value and hedge accounting is not permitted by accounting guidance, or (iv) reduce exposure to interest reset risk.
Accounting for Fair Value Hedges. If hedging relationships meet certain criteria, including, but not limited to, formal documentation of the fair value hedging relationship and an expectation to be highly effective, they qualify for fair value hedge accounting. At the inception of each fair value hedge transaction, the Bank formally documents the hedge relationship and its risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk will be assessed. This process includes linking all derivatives that are designated as fair value hedges to assets and liabilities on the Statements of Condition and firm commitments.
Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability (or firm commitment) that are attributable to the hedged risk, are recorded in net interest income in the same line as the earnings effect of the hedged item.
Two approaches to fair value hedge accounting include:
Long-haul hedge accounting. The application of long-haul hedge accounting requires the Bank to formally assess (both at the hedge’s inception and at least quarterly) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value of hedged items due to benchmark interest rate changes and whether those derivatives are expected to remain highly effective in future periods. The Bank uses regression analyses to assess the effectiveness of its long-haul hedges.
Short-cut hedge accounting. Transactions that meet certain criteria qualify for short-cut hedge accounting in which an assumption can be made that the change in fair value of a hedged item due to changes in the hedged risk, exactly offsets the change in fair value of the related derivative. Under the short-cut method, the entire change in fair value of the interest rate swap is considered to be highly effective at achieving offsetting changes in fair value of the hedged asset or liability. If documented at the time of hedge designation, a derivative relationship no longer qualifying for short-cut hedge accounting can fall back to the long-haul accounting method.

Derivatives are typically executed at the same time as the hedged item, and the Bank designates the hedged item in a fair value hedging relationship at the trade date. In many hedging relationships, the Bank may designate the fair value hedging relationship upon its commitment to disburse an advance, or trade a consolidated obligation in which settlement occurs within the shortest period of time possible for the type of instrument based on market settlement conventions. The Bank then records the changes in fair value of the derivative and the hedged item beginning on the trade date.

Accounting for Economic Hedges. An economic hedge is defined as a derivative hedging specific or non-specific underlying assets, liabilities, or firm commitments that does not qualify or was not designated for fair value hedge accounting, but is an acceptable hedging strategy under the Bank’s risk management program. Changes in the fair value of derivatives that are designated as economic hedges are recorded in other income (loss) as “Net gains (losses) on derivatives” with no offsetting fair value adjustments for the underlying assets, liabilities, or firm commitments, unless changes in the fair value of the those items are normally marked to fair value through earnings (e.g., trading securities and fair value option instruments).

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Accrued Interest Receivables and Payables. The net settlements of interest receivables and payables related to derivatives designated as fair value hedges are recognized as adjustments to the interest income or interest expense of the designated hedged item. The net settlements of interest receivables and payables related to derivatives designated as economic hedges are recognized in other income (loss) as “Net gains (losses) on derivatives.”
Discontinuance of Hedge Accounting. The Bank discontinues fair value hedge accounting prospectively when either (i) it determines that the derivative is no longer highly effective in offsetting changes in the fair value of a hedged item due to changes in the benchmark interest rate, (ii) the derivative and/or the hedged item expires or is sold, terminated, or exercised, or (iii) management determines that designating the derivative as a hedging instrument is no longer appropriate.
When fair value hedge accounting is discontinued, the Bank either terminates the derivative or continues to carry the derivative on the Statements of Condition at its fair value. For any remaining hedged item, the Bank ceases to adjust the hedged item for changes in fair value and amortizes the cumulative basis adjustment on the hedged item into earnings over the remaining contractual life of the hedged item using the level-yield method.
Embedded Derivatives. The Bank may issue debt, make advances, or purchase financial instruments in which a derivative instrument is embedded. Upon execution of these transactions, the Bank assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the debt, advance, or purchased financial instrument (the host contract) and whether a separate, non-embedded instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. If the Bank determines that the embedded derivative has economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate, stand-alone instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract, carried at fair value, and designated as an economic derivative instrument. However, if the Bank elects to carry the entire contract (the host contract and the embedded derivative) at fair value on the Statements of Condition, changes in fair value of the entire contract will be reported in current period earnings.

Consolidated Obligations
The Bank reports consolidated obligations at amortized cost, which is net of premiums, discounts, concessions, and fair value hedging adjustments unless the Bank has elected the fair value option, in which case the consolidated obligations are carried at fair value. The Bank records interest on consolidated obligations bonds to interest expense as incurred. The Bank amortizes/accretes premiums, discounts, concessions, and fair value hedging adjustments on consolidated obligations to expense using the level-yield method over the contractual life of the consolidated obligations.
Concessions. The Bank pays concessions to dealers in connection with the issuance of certain consolidated obligations. The Office of Finance prorates the amount of the concession to each FHLBank, based upon the percentage of the debt issued that is attributed to that FHLBank. Concessions paid on consolidated obligations designated under the fair value option are expensed as incurred and recorded in other expense. Concessions paid on consolidated obligations not designated under the fair value option are deferred and amortized over the contractual life of the consolidated obligations using the level-yield method. Unamortized concessions are included as a direct deduction from the carrying amount of “Consolidated obligation discount notes” or “Consolidated obligation bonds” on the Statements of Condition and the amortization of those concessions is included in consolidated obligation interest expense.
Off-Balance Sheet Credit Exposures

The Bank evaluates its off-balance sheet credit exposures on a quarterly basis for expected credit losses. If deemed necessary, an allowance for expected credit losses on these off-balance sheet exposures is recorded in other liabilities, with a corresponding adjustment to the provision (reversal) for credit losses. See “Note 14 — Commitments and Contingencies for additional information.


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Mandatorily Redeemable Capital Stock
The Bank reclassifies capital stock subject to redemption from equity to MRCS at the time shares meet the definition of a mandatorily redeemable financial instrument. This occurs after a member provides written notice of redemption, gives notice of intention to withdraw from membership, becomes ineligible for continuing membership, or attains non-member status by merger or consolidation, charter termination, or other involuntary termination from membership. Shares meeting this definition are reclassified to a liability at fair value. Dividends on MRCS are classified as interest expense on the Statements of Income. The repurchase or redemption of MRCS is transacted at par value and is reflected as a cash outflow in the financing activities section of the Statements of Cash Flows. If a member cancels its written notice of redemption or notice of withdrawal, the Bank will reclassify MRCS from a liability to equity. After the reclassification, dividends on the capital stock will no longer be classified as interest expense.
Restricted Retained Earnings
The Bank entered into a JCE Agreement with all of the other FHLBanks in 2011. The JCE Agreement, as amended, is intended to enhance the capital position of the FHLBanks over time. Under the JCE Agreement, each FHLBank is required to allocate 20 percent of its quarterly net income to a restricted retained earnings account until the balance of that account, calculated as of the last day of each calendar quarter, equals at least one percent of its average balance of outstanding consolidated obligations for the calendar quarter. The restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

Affordable Housing Program Assessments
The FHLBank Act requires each FHLBank to establish and fund an AHP, which provides subsidies in the form of direct grants and below-market interest rate advances to members who use the funds to assist in the purchase, construction, or rehabilitation of housing for very low-, low-, or moderate-income households. Annually, each FHLBank must set aside for the AHP the greater of 10 percent of its annual income subject to assessment, or its prorated sum required to ensure the aggregate contribution by the FHLBanks is no less than $100 million per year. For purposes of the AHP assessment, income subject to assessment is defined as net income before assessments, plus interest expense related to MRCS. The Bank accrues this expense monthly based on its income subject to assessment. In addition to the required AHP assessment, the Bank’s Board of Directors may elect to make voluntary contributions to the AHP. The Bank reduces its AHP liability as program funds are distributed.

Note 2 — Recently Adopted and Issued Accounting Guidance

Segment Reporting (ASU 2023-07)

On November 27, 2023, the FASB issued guidance improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance became effective for the Bank for the annual period beginning on January 1, 2024, and for the interim periods beginning on January 1, 2025. The adoption of this guidance is not expected to have any effect on the Bank’s financial condition, results of operations, or cash flows; however, it may increase certain disclosures.

Disclosure Improvements in Response to SEC Initiative (ASU 2023-06)

On October 9, 2023, the FASB issued guidance amending various disclosure requirements in response to the SEC’s initiative to update and simplify disclosures. This guidance will become effective for the Bank on the date the SEC removes the related disclosure requirements from its existing regulations, to avoid duplication in FASB codification. The adoption of this guidance is not expected to have any effect on the Bank’s financial condition, results of operations, or cash flows; however, it may impact certain disclosures.

Troubled Debt Restructurings and Vintage Disclosures (ASU 2022-02)

On March 31, 2022, the FASB issued guidance eliminating the accounting requirements for TDRs by creditors that have adopted the current expected credit losses methodology, while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Additionally, this guidance requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2023, and was adopted on a prospective basis. The adoption of this guidance did not have a material effect on the Bank’s financial condition, results of operations, or cash flows.


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Fair Value Hedging – Portfolio Layer Method (ASU 2022-01)

On March 28, 2022, the FASB issued guidance expanding the current last-of-layer method to apply fair value hedging by allowing multiple hedged layers of a single closed portfolio under the method. To reflect that expansion, the last-of-layer method is renamed “the portfolio layer method”. Among other things, this guidance (i) expands the scope of the portfolio layer method to include non-prepayable assets, (ii) specifies eligible hedging instruments in a single-layer hedge, (iii) provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, and (iv) specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. This guidance became effective for the interim and annual periods beginning on January 1, 2023. The Bank does not currently utilize the last-of-layer hedging method and therefore this guidance did not have any impact on the Bank’s financial condition, results of operations, or cash flows.

Reference Rate Reform (ASU 2020-04)

On March 12, 2020, the FASB issued temporary guidance to ease the potential burden in accounting for reference rate reform related to the transition from LIBOR. The guidance provided optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform, if certain criteria were met. These transactions included contract modifications, hedging relationships, and the sale/transfer of HTM debt securities.

During the first half of 2023, the Bank elected the contractual modification and hedging relationship optional expedients and transitioned all of its outstanding LIBOR-indexed instruments to reference SOFR immediately after June 30, 2023, or at the beginning of the next reset period following LIBOR cessation. The election of the expedients did not have a material effect on the Bank’s financial condition, results of operations, or cash flows. As of September 30, 2023, all of the Bank’s qualifying contracts had fully transitioned to SOFR.

Note 3 — Cash and Due from Banks

    Cash and due from banks includes cash on hand, cash items in the process of collection, compensating balances, and amounts due from the Federal Reserve Bank.
COMPENSATING BALANCES
The Bank maintains collected cash balances with commercial banks in return for certain services. These arrangements contain no legal restrictions on the withdrawal of funds. Average collected cash balances were $35 million and $36 million for the years ended December 31, 2023 and 2022.

Note 4 — Investments

The Bank makes short-term investments in interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold, and makes other investments in debt securities, which are classified as either trading, AFS, or HTM.

INTEREST-BEARING DEPOSITS, SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL, AND FEDERAL FUNDS SOLD

The Bank invests in interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold to provide short-term liquidity. These investments are generally transacted with counterparties that have received a credit rating of triple-B or greater (investment grade) by an NRSRO. At December 31, 2023 and 2022, none of these investments were with counterparties rated below triple-B; however, as of December 31, 2023 and 2022, approximately 35 percent and nine percent were secured securities purchased under agreements to resell with unrated counterparties. These NRSRO ratings may differ from any internal ratings of the investments by the Bank.

Federal funds sold are unsecured loans that are generally transacted on an overnight term. Finance Agency regulations include a limit on the amount of unsecured credit the Bank may extend to a counterparty. At December 31, 2023 and 2022, no allowance for credit losses was recorded for interest-bearing deposits and federal funds sold, as all assets were repaid or expected to be repaid according to their contractual terms. The carrying values of interest-bearing deposits and federal funds sold exclude accrued interest receivable of $22 million and $11 million at December 31, 2023 and 2022.


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Securities purchased under agreements to resell are secured, short-term, and are structured such that they are evaluated regularly to determine if the market value of the underlying securities decreases below the market value required as collateral (i.e., subject to collateral maintenance provisions). If so, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash, generally by the next business day. Based upon the collateral held as security and collateral maintenance provisions with its counterparties, the Bank determined that no allowance for credit losses was needed for its securities purchased under agreements to resell at December 31, 2023 and 2022. The carrying value of securities purchased under agreements to resell excludes accrued interest receivable of $5 million and $3 million at December 31, 2023 and 2022.

DEBT SECURITIES

The Bank invests in debt securities, which are classified as either trading, AFS, or HTM. The Bank is prohibited by Finance Agency regulations from purchasing certain higher-risk securities, such as equity securities and debt instruments that are not investment quality. A security is considered to be investment quality if it has adequate financial backing so that full and timely payment of principal and interest is expected and there is minimal risk that the timely payment of principal and interest would not occur because of adverse changes in economic and financial conditions during the projected life of the security. Exceptions are allowed for certain investments targeted at low-income persons or communities, and instruments that experience credit deterioration after their purchase by the Bank.

Trading Securities

Trading securities by major security type were as follows (dollars in millions):
December 31,
20232022
Non-mortgage-backed securities
U.S. Treasury obligations1
$2,925 $2,501 
Other U.S. obligations1
68 76 
GSE and Tennessee Valley Authority obligations49 49 
Other2
110 146 
     Total non-mortgage-backed securities3,152 2,772 
Mortgage-backed securities
GSE multifamily  45 
Total fair value$3,152 $2,817 

1    Represents investment securities backed by the full faith and credit of the U.S. Government.

2    Consists of taxable municipal bonds.


Net Gains (Losses) on Trading Securities

The following table summarizes the components of “Net gains (losses) on trading securities” as presented on the Statements of Income (dollars in millions):
For the Years Ended December 31,
202320222021
Net unrealized gains (losses) on trading securities held at period-end$67 $(85)$(28)
Net gains (losses) on trading securities no longer held at period-end26 (10)(10)
Net gains (losses) on trading securities$93 $(95)$(38)


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AFS Securities

AFS securities by major security type were as follows (dollars in millions):
December 31, 2023
Amortized
Cost
1
Gross
Unrealized
Gains
Gross
Unrealized
Losses

Fair
Value
Non-mortgage-backed securities
Other U.S. obligations2
$331 $ $(3)$328 
GSE and Tennessee Valley Authority obligations324 20  344 
State or local housing agency obligations461 2 (5)458 
Other3
157 3  160 
Total non-mortgage-backed securities1,273 25 (8)1,290 
Mortgage-backed securities
U.S. obligations single-family2
4,421 1 (24)4,398 
GSE single-family 183  (3)180 
GSE multifamily18,124 15 (184)17,955 
Total mortgage-backed securities22,728 16 (211)22,533 
Total$24,001 $41 $(219)$23,823 

December 31, 2022
Amortized
Cost
1
Gross
Unrealized
Gains
Gross
Unrealized
Losses

Fair
Value
Non-mortgage-backed securities
Other U.S. obligations2
$759 $1 $(2)$758 
GSE and Tennessee Valley Authority obligations459 12 (1)470 
State or local housing agency obligations454  (5)449 
Other3
234 6  240 
Total non-mortgage-backed securities1,906 19 (8)1,917 
Mortgage-backed securities
U.S. obligations single-family2
3,693 1 (18)3,676 
GSE single-family212 1 (3)210 
GSE multifamily9,866 10 (116)9,760 
Total mortgage-backed securities13,771 12 (137)13,646 
Total$15,677 $31 $(145)$15,563 

1    Amortized cost includes adjustments made to the cost basis of an investment for accretion, amortization, and/or fair value hedge accounting adjustments, and excludes accrued interest receivable of $82 million and $49 million at December 31, 2023 and 2022.

2    Represents investment securities backed by the full faith and credit of the U.S. Government.

3    Consists primarily of taxable municipal bonds.


The Bank had no sales of AFS securities during the years ended December 31, 2023, 2022, and 2021.
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Unrealized Losses

The following tables summarize AFS securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position (dollars in millions). In cases where the gross unrealized losses for an investment category are less than $1 million, the losses are not reported.
December 31, 2023
Less than 12 Months12 Months or MoreTotal
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Non-mortgage-backed securities
Other U.S. obligations1
$87 $(3)$42 $ $129 $(3)
State or local housing agency obligations  380 (5)380 (5)
Total non-mortgage-backed securities87 (3)422 (5)509 (8)
Mortgage-backed securities
U.S. obligations single-family1
1,813 (8)2,410 (16)4,223 (24)
GSE single-family25  112 (3)137 (3)
GSE multifamily8,768 (70)5,722 (114)14,490 (184)
Total mortgage-backed securities10,606 (78)8,244 (133)18,850 (211)
Total$10,693 $(81)$8,666 $(138)$19,359 $(219)

December 31, 2022
Less than 12 Months12 Months or MoreTotal
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Non-mortgage-backed securities
Other U.S. obligations1
$428 $(1)$63 $(1)$491 $(2)
GSE and Tennessee Valley Authority obligations84 (1)  84 (1)
State or local housing agency obligations35 (1)403 (4)438 (5)
Total non-mortgage-backed securities547 (3)466 (5)1,013 (8)
Mortgage-backed securities
U.S. obligations single-family1
3,094 (17)122 (1)3,216 (18)
GSE single-family138 (3)  138 (3)
GSE multifamily5,471 (97)2,012 (19)7,483 (116)
Total mortgage-backed securities8,703 (117)2,134 (20)10,837 (137)
Total$9,250 $(120)$2,600 $(25)$11,850 $(145)

1    Represents investment securities backed by the full faith and credit of the U.S. Government.


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Contractual Maturity

The following table summarizes AFS securities by contractual maturity. Expected maturities of some securities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without call or prepayment fees (dollars in millions):
December 31, 2023December 31, 2022
Year of Contractual MaturityAmortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Non-mortgage-backed securities
Due in one year or less$214 $212 $293 $295 
Due after one year through five years417 417 832 833 
Due after five years through ten years243 245 330 333 
Due after ten years399 416 451 456 
Total non-mortgage-backed securities1,273 1,290 1,906 1,917 
Mortgage-backed securities22,728 22,533 13,771 13,646 
Total$24,001 $23,823 $15,677 $15,563 

HTM Securities

HTM securities by major security type were as follows (dollars in millions):
December 31, 2023
Amortized
Cost
1
Gross
Unrecognized
Gains
Gross
Unrecognized
Losses
Fair
Value
Non-mortgage-backed securities
GSE and Tennessee Valley Authority obligations$364 $11 $(3)$372 
State or local housing agency obligations31   31 
Total non-mortgage-backed securities395 11 (3)403 
Mortgage-backed securities
U.S. obligations single-family2
1   1 
GSE single-family453  (10)443 
Private-label3   3 
Total mortgage-backed securities457  (10)447 
Total$852 $11 $(13)$850 

December 31, 2022
Amortized
Cost
1
Gross
Unrecognized
Gains
Gross
Unrecognized
Losses
Fair
Value
Non-mortgage-backed securities
GSE and Tennessee Valley Authority obligations$369 $10 $(4)$375 
State or local housing agency obligations33   33 
Total non-mortgage-backed securities402 10 (4)408 
Mortgage-backed securities
U.S. obligations single-family2
2   2 
GSE single-family557  (12)545 
Private-label4   4 
Total mortgage-backed securities563  (12)551 
Total$965 $10 $(16)$959 

1    Amortized cost includes adjustments made to the cost basis of an investment for accretion or amortization and excludes accrued interest receivable of $5 million at both December 31, 2023 and 2022.

2    Represents investment securities backed by the full faith and credit of the U.S. Government.


The Bank had no sales of HTM securities during the years ended December 31, 2023, 2022, and 2021.
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Contractual Maturity

The following table summarizes HTM securities by contractual maturity. Expected maturities of some securities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without call or prepayment fees (dollars in millions):
December 31, 2023December 31, 2022
Year of Contractual MaturityAmortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Non-mortgage-backed securities
Due after one year through five years$249 $249 $254 $254 
Due after five years through ten years73 76 71 73 
Due after ten years73 78 77 81 
Total non-mortgage-backed securities395 403 402 408 
Mortgage-backed securities457 447 563 551 
Total$852 $850 $965 $959 

ALLOWANCE FOR CREDIT LOSSES ON AFS AND HTM SECURITIES

The Bank evaluates AFS and HTM investment securities for credit losses on a quarterly basis. The Bank’s AFS and HTM securities may include, but are not limited to, certificates of deposit, commercial paper, U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, taxable municipal bonds, and MBS. The Bank only purchases securities considered investment quality. At both December 31, 2023 and 2022, over 99 percent of the Bank’s AFS and HTM securities, based on amortized cost, were rated single-A or above by an NRSRO, based on the lowest long-term credit rating for each security. These NRSRO ratings may differ from any internal ratings of the securities by the Bank.

The Bank evaluates its individual AFS securities for impairment by comparing the security’s fair value to its amortized cost. Impairment may exist when the fair value of the investment is less than its amortized cost (i.e., in an unrealized loss position). At December 31, 2023 and 2022, certain AFS securities held by the Bank were in an unrealized loss position. These losses are considered temporary as the Bank expects to recover the entire amortized cost basis on these AFS investment securities and neither intends to sell these securities nor considers it more likely than not that it will be required to sell these securities before its anticipated recovery of each security's remaining amortized cost basis. In addition, substantially all of these securities are high-quality GSE securities or carry an explicit government guarantee. In the case of GSE securities, they are purchased under an assumption that the issuers’ obligation to pay principal and interest on those securities will be honored, taking into account their status as GSEs. As a result, no allowance for credit losses was recorded on these AFS securities at December 31, 2023 and 2022.

The Bank evaluates its HTM securities for impairment on a collective, or pooled, basis unless an individual assessment is deemed necessary because the securities do not possess similar risk characteristics. At December 31, 2023 and 2022, the Bank had no allowance for credit losses recorded on its HTM securities because the securities: (i) were all highly-rated, (ii) had not experienced, nor did the Bank expect, any material payment default on the instruments, (iii) in the case of U.S. obligations, carry an explicit government guarantee, and (iv) in the case of GSE securities, they are purchased under an assumption that the issuers’ obligation to pay principal and interest on those securities will be honored, taking into account their status as GSEs.
















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Note 5 — Advances

The Bank offers a wide range of fixed and variable rate advance products with different maturities, interest rates, payment characteristics, and optionality. Fixed rate advances generally have maturities ranging from overnight to 30 years. Variable rate advances generally have maturities ranging from one month to ten years, where the interest rates reset periodically to a specified interest rate index such as SOFR or consolidated obligation yields.

REDEMPTION TERM

The following table summarizes the Bank’s advances outstanding by redemption term (dollars in millions):
December 31, 2023December 31, 2022
Redemption Term
Amount1
Weighted
Average
Interest
Rate
Amount1
Weighted
Average
Interest
Rate
Overdrawn demand deposit accounts$2 7.14 %$1 6.10 %
Due in one year or less52,890 5.34 61,578 4.26 
Due after one year through two years14,866 4.12 23,026 4.25 
Due after two years through three years13,230 3.95 10,790 3.47 
Due after three years through four years8,689 4.35 7,149 3.03 
Due after four years through five years30,189 5.55 6,047 3.89 
Thereafter3,355 3.51 3,783 3.03 
Total par value123,221 4.98 %112,374 4.04 %
Premiums6 11 
Fair value hedging adjustments(697)(1,183)
Total$122,530 $111,202 

1    Excludes accrued interest receivable of $392 million and $271 million at December 31, 2023 and 2022.


The Bank offers advances to members and eligible housing associates that may be prepaid on predetermined dates (call dates) prior to maturity without incurring prepayment fees (callable advances). Other advances may require a prepayment fee or credit that makes the Bank financially indifferent to the prepayment of the advance. At December 31, 2023 and 2022, the Bank had callable advances outstanding totaling $31.8 billion and $23.4 billion.

The following table summarizes advances by year of redemption term or next call date for callable advances (dollars in millions):
Redemption Term
or Next Call Date
December 31,
2023
December 31,
2022
Overdrawn demand deposit accounts$2 $1 
Due in one year or less82,983 73,765 
Due after one year through two years12,136 20,883 
Due after two years through three years10,584 6,218 
Due after three years through four years5,980 4,468 
Due after four years through five years8,228 3,228 
Thereafter3,308 3,811 
Total par value$123,221 $112,374 

PREPAYMENT FEES

The Bank generally charges a prepayment fee for advances that a borrower elects to terminate prior to the stated maturity or outside of a predetermined call date. The fees charged are priced to make the Bank financially indifferent to the prepayment of the advance. For certain advances with symmetrical prepayment features, the Bank may charge the borrower a prepayment fee or pay the borrower a prepayment credit, depending on certain circumstances, such as movements in interest rates, when the advance is prepaid. Prepayment fees and credits are recorded net of the hedged item fair value hedging adjustments, if applicable, in advance interest income on the Statements of Income.

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ADVANCE CONCENTRATIONS

The Bank’s advances are primarily concentrated in commercial banks and insurance companies. At December 31, 2023 and 2022, the Bank had outstanding advances of $37.0 billion and $32.0 billion to Wells Fargo Bank, N.A., which represented 30 percent and 28 percent of the total principal amount of outstanding advances.

ALLOWANCE FOR CREDIT LOSSES

The Bank evaluates advances for credit losses on a quarterly basis and manages its credit exposure to advances through an approach that includes establishing a credit limit for each borrower. This approach includes an ongoing review of each borrower’s financial condition in conjunction with the Bank’s collateral and lending policies to limit risk of loss while balancing borrowers’ needs for a reliable source of funding. In addition, the Bank lends to eligible borrowers in accordance with the FHLBank Act, Finance Agency regulations, and other applicable laws.

The Bank is required by regulation to obtain sufficient collateral to fully secure its advances. The estimated value of the collateral required to secure each borrower’s advances is calculated by applying collateral discounts, or haircuts, to the unpaid principal balance or market value, as applicable, of the collateral. The Bank also has policies and procedures for validating the reasonableness of the Bank’s collateral valuations. In addition, collateral verifications and on-site reviews are performed by the Bank based on the risk profile of the borrower. Management believes that these policies effectively manage the Bank’s credit risk from advances.

Eligible collateral includes:

fully disbursed whole first mortgages on improved residential real property or securities representing a whole interest in such mortgages;

loans and securities issued, insured, or guaranteed by the U.S. Government or any agency thereof, including MBS issued or guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae;

cash deposited with the Bank; and

other real estate-related collateral acceptable to the Bank, such as second lien mortgages, home equity lines of credit, municipal securities, and commercial real estate mortgages, provided such collateral has a readily ascertainable value and the Bank can perfect a security interest in it.

CFIs may also pledge collateral consisting of secured small business, small agri-business, or small farm loans. As additional security, the FHLBank Act provides that the Bank has a lien on each member’s capital stock investment; however, capital stock cannot be pledged as collateral to secure advances.

Collateral arrangements may vary depending upon borrower credit quality, financial condition and performance, borrowing capacity, and overall credit exposure to the borrower. The Bank can also require additional or substitute collateral to protect its security interest. The Bank periodically evaluates and makes changes to its collateral guidelines and collateral haircuts.

Borrowers may pledge collateral to the Bank by executing a blanket pledge agreement, specifically assigning collateral, or placing physical possession of collateral with the Bank or its custodians. The Bank perfects its security interest in all pledged collateral by filing Uniform Commercial Code financing statements or by taking possession or control of the collateral. Under the FHLBank Act, any security interest granted to the Bank by its members, or any affiliates of its members, has priority over the claims and rights of any party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), unless those claims and rights would be entitled to priority under otherwise applicable law and are held by actual purchasers or by parties that have perfected security interests.

Under a blanket pledge agreement, the Bank is granted a security interest in all financial assets of the borrower to fully secure the borrower’s obligation. Other than securities and cash deposits, the Bank does not initially take delivery of collateral from blanket pledge agreement borrowers. In the event of a default or a deterioration in the financial condition of a blanket pledge agreement borrower, the Bank has the ability to require delivery of pledged collateral sufficient to secure the borrower’s obligation. With respect to non-blanket pledge agreement borrowers that are federally insured, the Bank generally requires collateral to be specifically assigned. With respect to non-blanket pledge agreement borrowers that are not federally insured (typically insurance companies, CDFIs, and housing associates), the Bank generally takes control of collateral through the delivery of cash, securities, or loans to the Bank or its custodians.
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Using a risk-based approach and taking into consideration each borrower’s financial strength, the Bank considers the types and level of collateral to be the primary indicator of credit quality on its advances. At December 31, 2023 and 2022, the Bank had rights to collateral on a borrower-by-borrower basis with an unpaid principal balance or market value, as applicable, in excess of its outstanding advances.

At December 31, 2023 and 2022, none of the Bank’s advances were past due, on non-accrual status, or considered impaired. The Bank considers its advances past due if a default of contractual principal or interest exists for a period of 30 days or more. In addition, there were no modifications related to advances resulting from a borrower experiencing financial difficulties during the years ended December 31, 2023 and 2022.

The Bank has never experienced a credit loss on its advances. Based upon the Bank’s collateral and lending policies, the collateral held as security, and the repayment history on advances, management has determined that there were no expected credit losses on its advances at December 31, 2023 and 2022.

Note 6 — Mortgage Loans Held for Portfolio

Mortgage loans held for portfolio include conventional mortgage loans and government-guaranteed or -insured mortgage loans obtained primarily through the MPF program. The Bank’s mortgage loan program involves investment by the Bank in single-family mortgage loans held for portfolio that are purchased from PFIs. Mortgage loans may also be acquired through participations in pools of eligible mortgage loans purchased from other FHLBanks. The Bank’s PFIs generally originate, service, and credit enhance mortgage loans that are sold to the Bank. PFIs participating in the servicing release program do not service the loans owned by the Bank. The servicing on these loans is sold concurrently by the PFI to a designated mortgage service provider.

The following table presents information on the Bank’s mortgage loans held for portfolio (dollars in millions):
December 31,
20232022
Fixed rate, long-term1 single-family mortgage loans
$8,939 $7,244 
Fixed rate, medium-term2 single-family mortgage loans
945 1,033 
Total unpaid principal balance9,884 8,277 
Premiums113 96 
Discounts(11)(11)
Basis adjustments from mortgage loan purchase commitments(13)(9)
Total mortgage loans held for portfolio3
9,973 8,353 
Allowance for credit losses(6)(5)
Total mortgage loans held for portfolio, net$9,967 $8,348 

1    Long-term is defined as an original term of greater than 15 years and up to 30 years.

2    Medium-term is defined as an original term of 15 years or less.

3    Excludes accrued interest receivable of $58 million and $42 million at December 31, 2023 and 2022.

The following table presents the Bank’s mortgage loans held for portfolio by collateral or guarantee type (dollars in millions):
December 31,
20232022
Conventional mortgage loans$9,506 $7,890 
Government-insured mortgage loans378 387 
Total unpaid principal balance$9,884 $8,277 
PAYMENT STATUS OF MORTGAGE LOANS

Payment status is the key credit quality indicator for conventional mortgage loans and allows the Bank to monitor borrower performance. Past due loans are those where the borrower has failed to make contractual principal and/or interest payments for a period of 30 days or more. Other delinquency statistics include non-accrual loans and loans in process of foreclosure.


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The following tables present the payment status for conventional mortgage loans (dollars in millions):
December 31, 2023
Origination Year
Prior to 2019
2019 to 2023
Total
Past due 30 - 59 days$20 $30 $50 
Past due 60 - 89 days6 6 12 
Past due 90 - 179 days5 7 12 
Past due 180 days or more4 1 5 
Total past due mortgage loans35 44 79 
Total current mortgage loans1,752 7,758 9,510 
Total amortized cost of mortgage loans1
$1,787 $7,802 $9,589 

December 31, 2022
Origination Year
Prior to 2018
2018 to 2022
Total
Past due 30 - 59 days$21 $22 $43 
Past due 60 - 89 days5 6 11 
Past due 90 - 179 days3 2 5 
Past due 180 days or more7 2 9 
Total past due mortgage loans36 32 68 
Total current mortgage loans1,764 6,128 7,892 
Total amortized cost of mortgage loans1
$1,800 $6,160 $7,960 

1    Amortized cost represents the unpaid principal balance adjusted for unamortized premiums, discounts, price adjustment fees, basis adjustments, and direct write-downs. Amortized cost excludes accrued interest receivable.

The following tables present other delinquency statistics for mortgage loans (dollars in millions):
December 31, 2023
Amortized CostConventionalGovernment-InsuredTotal
In process of foreclosure1
$2 $1 $3 
Serious delinquency rate2
 %1 % %
Past due 90 days or more and still accruing interest3
$ $5 $5 
Non-accrual mortgage loans4
$40 $ $40 

December 31, 2022
Amortized CostConventionalGovernment- InsuredTotal
In process of foreclosure1
$4 $1 $5 
Serious delinquency rate2
 %2 % %
Past due 90 days or more and still accruing interest3
$ $8 $8 
Non-accrual mortgage loans4
$40 $ $40 

1    Includes loans where the decision of foreclosure or similar alternative such as pursuit of deed-in-lieu has been reported.

2    Represents mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of total mortgage loans. Serious delinquency rate on conventional loans was less than one percent at December 31, 2023 and 2022.

3    Represents government-insured mortgage loans that are 90 days or more past due.

4    Represents conventional mortgage loans that are 90 days or more past due or for which the collection of interest or principal is doubtful. At December 31, 2023 and 2022, $24 million and $29 million of conventional mortgage loans on non-accrual status were evaluated individually and do not have a related allowance for credit losses because these loans were either previously charged off to the expected recoverable value and/or the fair value of the underlying collateral is greater than the amortized cost of the loans.



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ALLOWANCE FOR CREDIT LOSSES

The Bank evaluates mortgage loans for credit losses on a quarterly basis.

Conventional Mortgage Loans

Conventional mortgage loans are evaluated collectively when similar risk characteristics exists. Conventional loans that do not share risk characteristics with other pools are evaluated for expected credit losses on an individual basis. The Bank determines its allowances for credit losses on conventional loans through analyses that include consideration of various loan portfolio and collateral-related characteristics, such as past performance, current conditions, and reasonable and supportable forecasts of expected economic conditions. At December 31, 2023 and 2022, the Bank’s allowance for credit losses on conventional mortgage loans remained relatively stable at $6 million and $5 million.

For collectively evaluated loans, the Bank uses a projected cash flow model to estimate expected credit losses over the life of the loans. This model relies on a number of inputs, such as current and projected property values and interest rates, as well as historical borrower behavior experience. The Bank also incorporates associated credit enhancements when determining its estimate of expected credit losses. The Bank may incorporate a management adjustment in the allowance for credit losses for conventional mortgage loans due to changes in economic and business conditions or other factors that may not be fully captured in its model.

For individually evaluated loans, the Bank uses the practical expedient for collateral-dependent assets. A mortgage loan is considered collateral-dependent when repayment is expected to be provided solely by the sale of the underlying collateral. The Bank estimates the fair value of this collateral using a property valuation model. The expected credit loss of a collateral- dependent mortgage loan is equal to the difference between the amortized cost of the loan and the estimated fair value of the collateral, less estimated selling costs and expected proceeds from PMI. The Bank records a direct charge-off of the loan balance if certain triggering criteria are met. Expected recoveries of prior charge-offs are included in the allowance for credit losses.

Government-Insured Mortgage Loans

The Bank invests in government-insured fixed rate mortgage loans portfolios that are insured or guaranteed by the FHA, the Department of Veterans Affairs, Department of Housing and Urban Development, and/or the Rural Housing Service of the Department of Agriculture. The servicer or PFI obtains and maintains insurance or a guaranty from the applicable government agency. The servicer or PFI is responsible for compliance with all government agency requirements and for obtaining the benefit of the applicable guarantee or insurance with respect to defaulted government-insured mortgage loans. Any losses incurred on these loans that are not recovered from the insurer/guarantor are absorbed by the servicers. As such, the Bank only has credit risk for these loans if the servicer or PFI fails to pay for losses not covered by the guarantee or insurance, but in such instance, the Bank would have recourse against the servicer for such failure.

The Bank has never experienced a credit loss on its government-insured mortgage loans. At December 31, 2023 and 2022, the Bank assessed its servicers and determined there was no expectation that a servicer would fail to remit payments due until paid in full. As a result, the Bank did not establish an allowance for credit losses for its government-insured mortgage loans at December 31, 2023 and 2022. Furthermore, none of these mortgage loans have been placed on non-accrual status because of the U.S. Government guarantee or insurance on these loans and the contractual obligation of the loan servicer to repurchase the loans when certain criteria are met.

Note 7 — Derivatives and Hedging Activities

NATURE OF BUSINESS ACTIVITY

The Bank is exposed to interest rate risk primarily from the effect of interest rate changes on its interest-earning assets and its related funding sources. The goal of the Bank’s interest rate risk management strategy is not to eliminate interest rate risk, but to manage it within appropriate limits. To mitigate the risk of loss, the Bank has established policies and procedures which include guidelines on the amount of exposure to interest rate changes it is willing to accept.

The Bank enters into derivative contracts to manage the interest rate risk exposures inherent in its otherwise unhedged assets and funding positions. Finance Agency regulations and the Bank’s risk management policies establish guidelines for derivatives, prohibit the speculative use of derivatives, and limit credit risk arising from derivatives.

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Derivative financial instruments are used by the Bank to achieve its financial and risk management objectives. The Bank reevaluates its hedging strategies periodically and may change the hedging techniques it uses or may adopt new strategies. The most common ways in which the Bank uses derivatives are to:
reduce the interest rate sensitivity and repricing gaps of assets and liabilities;

preserve an interest rate spread between the yield of an asset and the cost of the related liability. Without the use of derivatives, this interest rate spread could be reduced or eliminated when a change in the interest rate on the asset does not match a change in the interest rate on the liability;

mitigate the adverse earnings effects of the shortening or extension of certain assets and liabilities;

manage embedded options in assets and liabilities; and

reduce funding costs by combining a derivative with a consolidated obligation, as the cost of a combined funding structure can be lower than the cost of a comparable consolidated obligation.

TYPES OF DERIVATIVES

The Bank may use the following derivative instruments:

Interest Rate Swaps. An interest rate swap is an agreement between two entities to exchange cash flows in the future. The agreement sets the dates on which the cash flows will be exchanged and the manner in which the cash flows will be calculated. One of the simplest forms of an interest rate swap involves the promise by one party to pay cash flows equivalent to the interest on a notional amount at a predetermined fixed rate for a given period of time. In return for this promise, this party receives cash flows equivalent to the interest on the same notional amount at a variable interest rate index for the same period of time. The variable interest rate received or paid by the Bank in derivative transactions is primarily the OIS rate, based on either federal funds or SOFR.

Options. An option is an agreement between two entities that conveys the right, but not the obligation, to engage in a future transaction on some underlying security or other financial asset at an agreed-upon price during a certain period of time or on a specific date. Premiums or swap fees paid to acquire options are considered the fair value of the option at inception of the hedge and are reported as derivative assets on the Statements of Condition.

Swaptions. A swaption is an option on a swap that gives the buyer the right to enter into a specified interest rate swap at a certain time in the future. When used as a hedge, a swaption can protect the Bank against future interest rate changes. The Bank may enter into both payer and receiver swaptions. A payer swaption is the option to make fixed interest payments at a later date and a receiver swaption is the option to receive fixed interest payments at a later date.

Interest Rate Caps and Floors. In an interest rate cap agreement, a cash flow is generated if the price or interest rate of an underlying variable rises above a certain threshold (or “cap”) price. In an interest rate floor agreement, a cash flow is generated if the price or interest rate of an underlying variable falls below a certain threshold (or “floor”) price. Interest rate caps and floors are designed as protection against the interest rate on a variable rate asset or liability rising above or falling below a certain level.

Futures/Forwards Contracts. Futures and forwards contracts give the buyer the right to buy or sell a specific type of asset at a specific time at a given price. For example, certain mortgage loan purchase commitments entered into by the Bank are considered derivatives. The Bank may hedge these commitments by selling TBA MBS for forward settlement. A TBA MBS represents a forward contract for the sale of MBS at a future agreed-upon date for an established price.


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TYPES OF HEDGED ITEMS

The Bank may have the following types of hedged items:

Investment Securities. The Bank primarily invests in U.S. Treasury obligations, other U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, and agency MBS, and classifies them as either trading, AFS, or HTM. The interest rate and prepayment risk associated with these investment securities is managed through a combination of debt issuance and derivatives. To manage interest rate risk, the Bank may fund investment securities with callable consolidated obligations or utilize interest rate swaps, caps, floors, or swaptions. Derivatives held by the Bank that are associated with trading and HTM securities, if applicable, are economic hedges and derivatives held by the Bank associated with AFS securities are generally fair value hedges.

Advances. The Bank offers a wide range of fixed and variable rate advance products with different maturities, interest rates, payment characteristics, and optionality. The Bank may use derivatives to adjust the repricing and/or option characteristics of advances in order to more closely match the characteristics of its funding liabilities. In general, whenever a borrower executes a fixed rate advance or a variable rate advance with embedded options, the Bank may simultaneously execute a derivative with terms that offset the terms and embedded options, if any, in the advance. For example, the Bank may hedge a fixed rate advance with an interest rate swap where the Bank pays a fixed rate coupon and receives a variable rate coupon, effectively converting the fixed rate advance to a variable rate advance. This type of hedge is typically treated as a fair value hedge. In addition, the Bank may hedge a callable advance, which gives the borrower the option to extinguish the fixed rate advance, by entering into a cancelable interest rate swap.

Mortgage Loans. The Bank invests in fixed rate mortgage loans. The prepayment options embedded in mortgage loans can result in extensions or contractions in the expected repayment of these investments, depending on changes in actual and estimated prepayment speeds. The Bank manages the interest rate risk associated with mortgage loans through a combination of debt issuance and derivatives. The Bank may issue both callable and non-callable debt to achieve cash flow patterns and liability durations similar to those expected on the mortgage loans. The Bank may also purchase interest rate caps, floors, or swaptions to minimize the interest rate risk embedded in mortgage assets. Although these derivatives are valid economic hedges, they are not specifically linked to individual mortgage assets and, therefore, do not receive fair value hedge accounting.

Consolidated Obligations. The Bank may enter into derivatives to hedge the interest rate risk associated with its consolidated obligations. For example, the Bank may issue and hedge a fixed rate consolidated obligation with an interest rate swap where the Bank receives a fixed rate coupon and pays a variable rate coupon, effectively converting the fixed rate consolidated obligation to a variable rate consolidated obligation. This type of hedge is typically treated as a fair value hedge. The Bank may also issue variable interest rate consolidated obligations and simultaneously execute interest rate swaps to manage the interest rate risk of the variable interest rate debt. Interest rate swaps used to hedge variable interest rate debt do not qualify for hedge accounting and are treated as economic hedges. This strategy of issuing consolidated obligations while simultaneously entering into derivatives enables the Bank to offer a wider range of attractively priced advances to its borrowers and may allow the Bank to reduce its funding costs.
Firm Commitments. Certain mortgage loan purchase commitments are considered derivatives. The Bank normally hedges these commitments by selling TBA MBS for forward settlement. A TBA MBS represents a forward contract for the sale of MBS at a future agreed-upon date for an established price. The mortgage loan purchase commitment and the TBA used in the firm commitment hedging strategy are considered economic hedges. When the mortgage loan purchase commitment derivative settles, the current market value of the commitment is included with the basis of the mortgage loan and amortized over the contractual life of the mortgage loan using the level-yield method. The Bank may also hedge a firm commitment for a forward-starting advance through the use of an interest-rate swap, which is considered a fair value hedge.

For additional information on the Bank’s derivatives, see “Note 1 — Summary of Significant Accounting Policies.”


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FINANCIAL STATEMENT EFFECT AND ADDITIONAL FINANCIAL INFORMATION

The notional amount of derivatives serves as a factor in determining periodic interest payments and cash flows received and paid. However, the notional amount of derivatives represents neither the actual amounts exchanged nor the overall exposure of the Bank to credit and market risk. The risks of derivatives can be measured meaningfully on a portfolio basis that takes into account the counterparties, the types of derivatives, the items being hedged, and any offsets between the derivatives and the items being hedged.

The following table summarizes the Bank’s notional amount and fair value of derivative instruments and total derivative assets and liabilities. Total derivative assets and liabilities include the effect of netting adjustments and cash collateral. For purposes of this disclosure, the derivative values include the fair value of derivatives and the related accrued interest (dollars in millions):
December 31, 2023December 31, 2022
Notional
Amount
Derivative
Assets
Derivative
 Liabilities
Notional
Amount
Derivative
Assets
Derivative
 Liabilities
Derivatives designated as hedging instruments (fair value hedges)
Interest rate swaps$112,954 $290 $98 $53,136 $226 $205 
Derivatives not designated as hedging instruments (economic hedges)
Interest rate swaps53,050 1 2 48,347 11 13 
Forward settlement agreements115  1 46   
Mortgage loan purchase commitments112 1  46   
Total derivatives not designated as hedging instruments53,277 2 3 48,439 11 13 
Total derivatives before netting and collateral adjustments$166,231 292 101 $101,575 237 218 
Netting adjustments and cash collateral1
975 (94)406 (214)
Total derivative assets and derivative liabilities$1,267 $7 $643 $4 

1    Amounts represent the application of the netting requirements that allow the Bank to net settle positive and negative positions and also cash collateral, including accrued interest, held or placed with the same clearing agent and/or counterparty. At December 31, 2023 and 2022, cash collateral, including accrued interest, posted by the Bank was $1.3 billion and $739 million. At December 31, 2023 and 2022, the Bank held cash collateral, including accrued interest, from clearing agents and/or counterparties of $197 million and $119 million.

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The following tables summarize the net gains (losses) on qualifying and discontinued fair value hedging relationships recorded in net interest income, including the net interest settlements on derivatives, as well as total income (expense) by hedged product recorded on the Statements of Income (dollars in millions):
For the Year Ended December 31, 2023
Interest Income (Expense)
AdvancesAFS SecuritiesConsolidated Obligation Bonds
Total interest income (expense) recorded on the Statements of Income1
$6,533 $1,203 $(5,392)
Gains (losses) on fair value hedging relationships
Interest rate contracts
Derivatives2
$328 $119 $(37)
Hedged items3
486 245 (243)
Net gains (losses) on fair value hedging relationships$814 $364 $(280)

For the Year Ended December 31, 2022
Interest Income (Expense)
AdvancesAFS SecuritiesConsolidated Obligation Bonds
Total interest income (expense) recorded on the Statements of Income1
$1,750 $354 $(1,128)
Gains (losses) on fair value hedging relationships
Interest rate contracts
Derivatives2
$1,232 $773 $(350)
Hedged items3
(1,143)(745)304 
Net gains (losses) on fair value hedging relationships$89 $28 $(46)

For the Year Ended December 31, 2021
Interest Income (Expense)
AdvancesAFS SecuritiesConsolidated Obligation Bonds
Total interest income (expense) recorded on the Statements of Income1
$472 $101 $(452)
Gains (losses) on fair value hedging relationships
Interest rate contracts
Derivatives2
$246 $127 $(23)
Hedged items3
(467)(267)146 
Net gains (losses) on fair value hedging relationships$(221)$(140)$123 

1    Amounts shown to give context to the disclosure and include total interest income (expense) of the products indicated, including coupon, prepayment fees, amortization, and derivative net interest settlements. Interest income (expense) amounts also include gains and losses on derivatives and hedged items in fair value hedging relationships.

2    Includes changes in fair value and net interest settlements on derivatives.

3    Includes changes in fair value and amortization/accretion of basis adjustments on closed hedge relationships.

    
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The following tables summarize cumulative fair value hedging adjustments and the related amortized cost of the hedged items (dollars in millions):
December 31, 2023
AdvancesAFS SecuritiesConsolidated Obligation Bonds
Amortized cost of hedged asset/liability1
$43,584 $16,749 $51,393 
Fair value hedging adjustments
Changes in fair value for active hedging relationships included in amortized cost$(645)$(395)$(17)
Basis adjustments for discontinued hedging relationships included in amortized cost(52)(32)(8)
Total amount of fair value hedging adjustments$(697)$(427)$(25)

December 31, 2022
AdvancesAFS SecuritiesConsolidated Obligation Bonds
Amortized cost of hedged asset/liability1
$21,832 $8,606 $22,205 
Fair value hedging adjustments
Changes in fair value for active hedging relationships included in amortized cost$(1,109)$(671)$(297)
Basis adjustments for discontinued hedging relationships included in amortized cost(74)(1)(1)
Total amount of fair value hedging adjustments$(1,183)$(672)$(298)

1    Represents the portion of amortized cost designated as a hedged item in an active or discontinued fair value hedging relationship. Amortized cost includes fair value hedging adjustments.

The following table summarizes the components of “Net gains (losses) on derivatives” as presented on the Statements of Income (dollars in millions):
For the Years Ended December 31,
202320222021
Derivatives not designated as hedging instruments (economic hedges)
Interest rate swaps$45 $6 $31 
Forward settlement agreements2 14 3 
Mortgage loan purchase commitments(4)(15)(3)
Net interest settlements(52)(58)(17)
Total net gains (losses) related to derivatives not designated as hedging instruments(9)(53)14 
Price alignment amount1
(32)(11) 
Net gains (losses) on derivatives$(41)$(64)$14 

1    This amount represents interest on variation margin, which is a component of the derivative fair value for cleared transactions, and reflects the price alignment amount on variation margin for daily settled derivative contracts not designated as hedging instruments. The price alignment amount on variation margin for daily settled derivative contracts designated as hedging instruments is recorded in the same line item as the earnings effect of the hedged item.


MANAGING CREDIT RISK ON DERIVATIVES

The Bank is subject to credit risk due to the risk of nonperformance by counterparties to its derivative contracts. The Bank manages credit risk through credit analysis of derivative counterparties, collateral requirements, and adherence to the requirements set forth in the Bank’s policies, CFTC regulations, and Finance Agency regulations.


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The Bank transacts most of its derivative transactions with large banks and major broker-dealers. Over-the-counter derivative transactions may be either executed directly with a counterparty, referred to as uncleared derivatives, or cleared through a clearing agent with a clearinghouse, referred to as cleared derivatives. Once a derivative transaction has been accepted for clearing by a clearinghouse, the derivative transaction is novated and the executing counterparty is replaced with the clearinghouse. The Bank is not a derivative dealer and does not trade derivatives for short-term profit.

For uncleared derivatives, the degree of credit risk is impacted by the extent to which master netting arrangements are included in the derivative contracts to mitigate the risk. The Bank requires collateral agreements on its uncleared derivatives.

Uncleared derivative transactions executed on or after September 1, 2022 are subject to two-way initial margin requirements as mandated by the Dodd-Frank Act, if the Bank’s aggregate uncleared derivative transactions exposure to a counterparty exceeds a specified threshold. The initial margin is required to be held at a third-party custodian and does not change ownership. Rather, the party in respect of which the initial margin has been posted to the third-party custodian will have a security interest in the amount of initial margin required under the uncleared margin rules and can only take ownership upon the occurrence of certain events, including an event of default due to bankruptcy, insolvency, or similar proceeding. As of December 31, 2023, the Bank was not required to post initial margin on its uncleared derivative transactions in accordance with the noted regulation.

For uncleared transactions, the derivative agreements are generally fully collateralized with a zero unsecured threshold in accordance with variation margin requirements issued by the U.S. federal bank regulatory agencies and the CFTC.

For cleared derivatives, the clearinghouse is the Bank’s counterparty. The Bank utilizes two clearinghouses, CME Clearing and LCH Ltd., for all cleared derivative transactions. CME Clearing and LCH Ltd. notify the clearing agent of the required initial margin and daily variation margin requirements, and the clearing agent in turn notifies the Bank.

Each clearinghouse determines initial margin requirements which are considered cash collateral. Generally, credit ratings are not factored into the initial margin. However, clearing agents may require additional initial margin to be posted based on credit considerations, including, but not limited to, credit rating downgrades. The Bank was not required to post additional initial margin by its clearing agent, based on credit considerations, at December 31, 2023. Variation margin requirements with each clearinghouse are based on changes in the fair value of cleared derivatives and are legally characterized as daily settlement payments, rather than cash collateral.

The requirement that the Bank post initial and variation margin through the clearing agent, to the clearinghouse, exposes the Bank to institutional credit risk if the clearing agent or the clearinghouse fails to meet its obligations. The use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral/payments for changes in the fair value of cleared derivatives is posted daily through a clearing agent.

OFFSETTING OF DERIVATIVE ASSETS AND DERIVATIVE LIABILITIES

The Bank presents derivative instruments, related cash collateral received or pledged, and associated accrued interest on a net basis by clearing agent and/or by counterparty when it has met the netting requirements. Additional information regarding these agreements is provided in “Note 1 — Summary of Significant Accounting Policies.”

The Bank has analyzed the enforceability of offsetting rights incorporated in its cleared derivative transactions and has determined that the exercise of those offsetting rights by a non-defaulting party under these transactions should be upheld under applicable law upon an event of default, including a bankruptcy, insolvency, or similar proceeding involving the clearinghouse or the clearing agent, or both. Based on this analysis, the Bank presents a net derivative receivable or payable for all of its transactions through a particular clearing agent with a particular clearinghouse.

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The following tables present the fair value of derivative instruments meeting or not meeting the netting requirements and the related collateral received from or pledged to counterparties (dollars in millions):
December 31, 2023
Derivative Instruments Meeting Netting Requirements
Gross Amount Recognized1
Gross Amounts of Netting Adjustments and Cash Collateral
Derivative Instruments Not Meeting Netting Requirements2
Total Derivative Assets and Total Derivative Liabilities
Derivative Assets
  Uncleared derivatives $248 $(245)$1 $4 
  Cleared derivatives43 1,220  1,263 
Total$291 $975 $1 $1,267 
Derivative Liabilities
  Uncleared derivatives$95 $(88)$ $7 
  Cleared derivatives6 (6)  
Total$101 $(94)$ $7 

December 31, 2022
Derivative Instruments Meeting Netting Requirements
Gross Amount Recognized1
Gross Amounts of Netting Adjustments and Cash Collateral
Derivative Instruments Not Meeting Netting Requirements2
Total Derivative Assets and Total Derivative Liabilities
Derivative Assets
  Uncleared derivatives$195 $(194)$ $1 
  Cleared derivatives42 600  642 
Total$237 $406 $ $643 
Derivative Liabilities
  Uncleared derivatives$200 $(196)$ $4 
  Cleared derivatives18 (18)  
Total$218 $(214)$ $4 

1    Represents derivative assets and derivative liabilities prior to netting adjustments and cash collateral, including accrued interest.

2     Represents mortgage loan purchase commitments not subject to enforceable netting requirements.


Note 8 — Deposits
The Bank offers demand and overnight deposits as well as short-term interest-bearing deposits to members and to qualifying non-members. Deposits classified as demand and overnight pay interest based on a daily interest rate. Short-term interest-bearing deposits pay interest based on a fixed rate determined at the issuance of the deposit.
The following table details the Bank’s interest-bearing and non-interest-bearing deposits (dollars in millions):
December 31,
 20232022
Interest-bearing  
Demand and overnight$932 $977 
Term27 29 
Non-interest-bearing
Demand80 70 
Total$1,039 $1,076 
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Note 9 — Consolidated Obligations

    Consolidated obligations consist of bonds and discount notes. The FHLBanks issue consolidated obligations through the Office of Finance as their agent. Bonds are issued primarily to raise intermediate- and long-term funds for the Bank and are not subject to any statutory or regulatory limits on their maturity. Discount notes are issued primarily to raise short-term funds for the Bank and have original maturities of up to one year. Discount notes sell at or below their face amount and are redeemed at par value when they mature.

    Although the Bank is primarily liable for the portion of consolidated obligations issued on its behalf, it is also jointly and severally liable with the other FHLBanks for the payment of principal and interest on all FHLBank System consolidated obligations. The Finance Agency, at its discretion, may require any FHLBank to make principal and/or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that consolidated obligation. The Finance Agency has never exercised this discretionary authority. At December 31, 2023 and 2022, the total par value of outstanding consolidated obligations of the FHLBanks was $1,204.3 billion and $1,181.7 billion.

DISCOUNT NOTES

The following table summarizes the Bank’s discount notes (dollars in millions):
December 31, 2023December 31, 2022
AmountWeighted
Average
Interest
Rate
AmountWeighted
Average
Interest
Rate
Par value$55,288 5.15 %$70,002 3.79 %
Discounts and concessions1
(736)(725)
Fair value option adjustments(15)(107)
Total$54,537 $69,170 

1    Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation discount notes.


BONDS

The following table summarizes the Bank’s bonds outstanding by contractual maturity (dollars in millions):
December 31, 2023December 31, 2022
Year of Contractual MaturityAmountWeighted
Average
Interest
Rate
AmountWeighted
Average
Interest
Rate
Due in one year or less$63,887 5.10 %$55,421 4.01 %
Due after one year through two years39,323 5.38 20,665 3.79 
Due after two years through three years4,159 4.00 1,175 2.23 
Due after three years through four years1,416 3.28 1,210 1.97 
Due after four years through five years2,507 4.19 865 2.42 
Thereafter5,671 3.14 5,236 2.61 
Total par value116,963 5.02 %84,572 3.80 %
Premiums52 86 
Discounts and concessions1
(29)(23)
Fair value hedging adjustments(25)(298)
Total$116,961 $84,337 

1    Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation bonds.
Bonds are issued with fixed or variable rate payment terms, such as SOFR. To meet the specific needs of certain investors, both fixed and variable rate bonds may also contain certain embedded features, which result in complex coupon payment terms and call features. When these consolidated bonds are issued, the Bank may enter into derivatives containing features that offset the terms and embedded options, if any, of the consolidated bond obligations.

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The following table summarizes the Bank’s bonds outstanding by call features (dollars in millions):
December 31,
20232022
Non-callable or non-putable$77,731 $73,578 
Callable39,232 10,994 
Total par value$116,963 $84,572 

The following table summarizes the Bank’s bonds outstanding by year of contractual maturity or next call date (dollars in millions):
December 31,
Year of Contractual Maturity or Next Call Date20232022
Due in one year or less$76,142 $62,033 
Due after one year through two years33,413 19,141 
Due after two years through three years3,479 850 
Due after three years through four years880 753 
Due after four years through five years1,819 324 
Thereafter1,230 1,471 
Total par value$116,963 $84,572 

Note 10 — Affordable Housing Program

The FHLBank Act requires each FHLBank to establish and fund an AHP, which provides subsidies in the form of direct grants or below-market interest rates on advances to members who provide the funds to assist in the purchase, construction, or rehabilitation of housing for very low-, low-, or moderate-income households. Each FHLBank recognizes AHP assessment expense equal to the greater of 10 percent of its annual income subject to assessment, or its prorated sum required to ensure the aggregate contribution by the FHLBanks is no less than $100 million for each year. For purposes of the statutory AHP assessment, income subject to assessment is defined as net income before AHP assessments, plus interest expense related to MRCS. The exclusion of interest expense related to MRCS is a regulatory interpretation of the Finance Agency. The Bank accrues the AHP assessment monthly based on its income subject to assessment and reduces the AHP liability as program funds are distributed.

If the Bank experienced a net loss for a full year, it would have no obligation to the AHP for the year, because its required annual AHP contribution is limited to its annual income subject to AHP assessment. If the aggregate 10 percent AHP calculation previously discussed was less than $100 million for the FHLBanks (i.e., a shortfall), each FHLBank would be required to contribute a prorated sum to ensure that the aggregate contribution by the FHLBanks equals $100 million. The pro-ration would be made on the basis of an FHLBank’s income in relation to the income of all FHLBanks for the year, subject to the annual income limitation previously discussed. In addition to the required AHP assessment, the Bank’s Board of Directors may elect to make voluntary contributions to the AHP.

There was no contribution shortfall, as described above, in 2023, 2022, or 2021. If an FHLBank finds that its required contributions are contributing to its financial instability, it may apply to the Finance Agency for a temporary suspension of its contributions under the FHLBank Act. The Bank did not make any such application in 2023, 2022, or 2021.

The following table presents a rollforward of the Bank’s AHP liability (dollars in millions):
For the Years Ended December 31,
 202320222021
Balance, beginning of year$135 $131 $162 
Assessments107 48 23 
Voluntary contributions
5   
Disbursements(49)(44)(54)
Balance, end of year$198 $135 $131 
.
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Note 11 — Capital

CAPITAL STOCK

The Bank’s capital stock has a par value of $100 per share, and all shares are issued, redeemed, and repurchased only at the stated par value. The Bank issues a single class of capital stock (Class B capital stock) and has two subclasses of Class B capital stock: membership and activity-based. Effective December 15, 2023, each member must purchase and hold membership capital stock in an amount equal to 0.06 percent of its total assets as of the preceding December 31st, subject to a cap of $10 million and a floor of $10,000. In addition, each member is required to purchase activity-based capital stock equal to 4.50 percent of its outstanding advances, 4.00 percent of its outstanding mortgage loans, and 0.10 percent of its outstanding standby letters of credit. Prior to December 15, 2023, members were required to purchase and hold membership capital stock in an amount equal to 0.12 percent of their total assets as of the preceding December 31st, subject to a cap of $10 million and a floor of $10,000. They were also required to purchase activity-based capital stock equal to 4.00 percent of their outstanding advances and mortgage loans and 0.10 percent of their outstanding standby letters of credit. All capital stock issued is subject to a notice of redemption period of five years.

The capital stock requirements established in the Bank’s Capital Plan are designed so that the Bank can remain adequately capitalized as member activity changes. The Bank’s Board of Directors may make adjustments to the capital stock requirements within ranges established in the Capital Plan.

EXCESS STOCK

Capital stock owned by members in excess of their investment requirement is deemed excess capital stock. Under its Capital Plan, the Bank, at its discretion and upon 15 days written notice, may repurchase excess membership capital stock. The Bank, at its discretion, may also repurchase excess activity-based capital stock to the extent that (i) the excess capital stock balance exceeds an operational threshold set forth in the Capital Plan, which is currently set at zero, or (ii) a member submits a notice to redeem all or a portion of the excess activity-based capital stock. At December 31, 2023 and 2022, the Bank had no excess capital stock outstanding.

MANDATORILY REDEEMABLE CAPITAL STOCK

The Bank reclassifies capital stock subject to redemption from equity to a liability, which represents MRCS, at the time shares meet the definition of a mandatorily redeemable financial instrument. This occurs after a member provides written notice of intention to withdraw from membership, becomes ineligible for continuing membership, or attains non-member status by merger or consolidation, charter termination, or other involuntary termination from membership. Dividends on MRCS are classified as interest expense on the Statements of Income. The Bank recorded interest expense on MRCS of $1 million, $1 million, and $2 million for the years ended December 31, 2023, 2022, and 2021.

As a result of the final rule on membership issued by the Finance Agency effective February 19, 2016, the eligibility requirements for FHLBank members were changed, rendering captive insurance companies ineligible for FHLBank membership. On the effective date of the final rule, the Bank reclassified the total outstanding capital stock held by all of the captive insurance companies that were Bank members to MRCS. On February 19, 2021, all remaining captive insurance company members that were admitted as members prior to September 12, 2014 had their membership terminated. The Bank immediately redeemed all membership stock from these captive insurance companies; however, the remaining activity-based stock is subject to the five year redemption period.

The following table summarizes changes in MRCS (dollars in millions):
For the Years Ended December 31,
202320222021
Balance, beginning of period$15 $29 $52 
Capital stock reclassified to (from) MRCS, net4 5 81 
Net payments for repurchases/redemptions of MRCS(7)(19)(104)
Balance, end of period$12 $15 $29 


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The following table summarizes the Bank’s MRCS by year of contractual redemption (dollars in millions):
December 31,
Year of Contractual Redemption1
20232022
Due after two years through three years$6 $ 
Due after three years through four years 8 
Past contractual redemption date due to outstanding activity with the Bank6 7 
Total$12 $15 

1    At the Bank’s election, MRCS may be redeemed prior to the expiration of the five year redemption period that commences on the date of the notice of redemption.

RESTRICTED RETAINED EARNINGS

The Bank entered into a JCE Agreement with all of the other FHLBanks in 2011. The JCE Agreement, as amended, is intended to enhance the capital position of the FHLBanks over time. Under the JCE Agreement, each FHLBank is required to allocate 20 percent of its quarterly net income to a separate restricted retained earnings account until the balance of that account, calculated as of the last day of each calendar, equals at least one percent of its average balance of outstanding consolidated obligations for the calendar quarter. The restricted retained earnings are not available to pay dividends. At December 31, 2023 and 2022, the Bank’s restricted retained earnings account totaled $896 million and $703 million.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes changes in AOCI (dollars in millions):
Net unrealized gains (losses) on AFS securities (Note 4) Pension and postretirement benefits Total AOCI
Balance, December 31, 2020
$52 $(4)$48 
Other comprehensive income (loss) before reclassifications
Net unrealized gains (losses) on AFS securities36 — 36 
Net current period other comprehensive income (loss)36  36 
Balance, December 31, 2021
88 (4)84 
Other comprehensive income (loss) before reclassifications
Net unrealized gains (losses) on AFS securities(202)— (202)
Net actuarial gains (losses)
— 1 1 
Net current period other comprehensive income (loss)(202)1 (201)
Balance, December 31, 2022
(114)(3)(117)
Other comprehensive income (loss) before reclassifications
Net unrealized gains (losses) on AFS securities(64)— (64)
Net actuarial gains (losses)— 1 1 
Net current period other comprehensive income (loss)(64)1 (63)
Balance, December 31, 2023
$(178)$(2)$(180)

REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to three regulatory capital requirements:

Risk-based capital. The Bank must maintain at all times permanent capital greater than or equal to the sum of its credit, market, and operational risk capital requirements, all calculated in accordance with Finance Agency regulations. Only permanent capital, defined as the amounts paid-in for Class B capital stock (including MRCS), and retained earnings can satisfy this risk-based capital requirement.

Regulatory capital. The Bank is required to maintain a minimum four percent capital-to-asset ratio, which is defined as total regulatory capital divided by total assets. Total regulatory capital includes Class B stock (including MRCS) and retained earnings.

Leverage capital. The Bank is required to maintain a minimum five percent leverage ratio, which is defined as the sum of permanent capital weighted 1.5 times and nonpermanent capital weighted 1.0 times, divided by total assets. The Bank did not hold any nonpermanent capital at December 31, 2023 and 2022.
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In addition to the requirements previously discussed, the Capital Stock AB requires each FHLBank to maintain at all times a ratio of at least two percent of capital stock to total assets. For purposes of the Capital Stock AB, capital stock includes MRCS. The capital stock to total assets ratio is measured on a daily average basis at month end.

If the Bank’s capital falls below the required levels, the Finance Agency has authority to take actions necessary to return it to levels that it deems to be consistent with safe and sound business operations.

The following table shows the Bank’s compliance with the Finance Agency’s regulatory capital requirements (dollars in millions):
December 31, 2023December 31, 2022
RequiredActualRequiredActual
Regulatory capital requirements
Risk-based capital$1,641 $10,023 $737 $8,883 
Regulatory capital$7,376 $10,023 $6,567 $8,883 
Leverage capital$9,220 $15,034 $8,208 $13,323 
Capital-to-assets ratio4.00 %5.44 %4.00 %5.41 %
Capital stock-to-assets ratio2.00 %3.59 %2.00 %3.73 %
Leverage ratio5.00 %8.15 %5.00 %8.12 %

CAPITAL CLASSIFICATION DETERMINATION

The Finance Agency determines each FHLBank’s capital classification on at least a quarterly basis. If an FHLBank is determined to be other than adequately capitalized, that FHLBank becomes subject to additional supervisory authority by the Finance Agency. Before implementing a reclassification, the Director of the Finance Agency is required to provide the FHLBank with written notice of the proposed action and an opportunity to submit a response. As of the most recent notification date by the Finance Agency, the Bank was classified as adequately capitalized.

Note 12 — Pension and Postretirement Benefit Plans
QUALIFIED DEFINED BENEFIT MULTIEMPLOYER PLAN
The Bank previously participated in the DB Plan, a tax-qualified defined benefit pension plan. In August of 2016, the Bank’s Board of Directors elected to freeze the DB Plan effective January 1, 2017. After the freeze, participants no longer accrued new benefits under the DB Plan. On May 2, 2023, the Bank completed a purchase agreement with Principal Life Insurance Company and transferred to them the future benefit obligations and annuity administration for participants under the DB Plan. As such, the Bank is no longer a party to the DB Plan. Refer to the 2022 Form 10-K for prior year details on the DB Plan.

OTHER POSTRETIREMENT BENEFIT PLANS
In addition to the DB Plan, the Bank has one qualified defined contribution benefit plan, the DC Plan. The Bank also offers the BEP, a nonqualified retirement plan which includes both a nonqualified defined contribution plan and a nonqualified defined benefit plan. In August of 2016, the Bank’s Board of Directors elected to freeze the BEP defined benefit plan effective January 1, 2017. After the freeze, participants no longer accrue new benefits under the BEP defined benefit plan.

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Note 13 — Fair Value

Fair value amounts are determined by the Bank using available market information and reflect the Bank’s best judgment of appropriate valuation methods. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., exit price). The fair value hierarchy requires an entity to maximize the use of significant observable inputs and minimize the use of significant unobservable inputs when measuring fair value. The inputs are evaluated and an overall level for the fair value measurement is determined. This overall level is an indication of market observability of the fair value measurement for the asset or liability.

The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels:

Level 1 Inputs. Quoted prices (unadjusted) for identical assets or liabilities in an active market that the Bank can access on the measurement date. An active market for an asset or liability is a market in which the transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 Inputs. Inputs other than quoted prices within Level 1 that are observable inputs for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following: (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves that are observable at commonly quoted intervals and implied volatilities), and (iv) market-corroborated inputs.

Level 3 Inputs. Unobservable inputs for the asset or liability. Valuations are derived from techniques that use significant assumptions not observable in the market, which may include pricing models, discounted cash flow models, or similar techniques.

The Bank reviews its fair value hierarchy classifications on a quarterly basis. Changes in the observability of the valuation inputs may result in a reclassification of certain assets or liabilities. The Bank had no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the years ended December 31, 2023, 2022, or 2021.
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The following table summarizes the carrying value, fair value, and fair value hierarchy of the Bank’s financial instruments (dollars in millions). The Bank records trading securities, AFS securities, derivative assets, derivative liabilities, financial instruments held under the fair value option, and certain other assets at fair value on a recurring basis, and on occasion certain impaired mortgage loans held for portfolio on a non-recurring basis. The Bank records all other financial assets and liabilities at amortized cost. The fair values do not represent an estimate of the overall market value of the Bank as a going concern, which would take into account future business opportunities and the net profitability of assets and liabilities.
December 31, 2023
Fair Value
Financial InstrumentsCarrying ValueLevel 1Level 2Level 3
Netting Adjustment and Cash Collateral1
Total
Assets
Cash and due from banks$31 $31 $ $ $— $31 
Interest-bearing deposits3,481  3,481  — 3,481 
Securities purchased under agreements to resell11,400  11,400  — 11,400 
Federal funds sold7,120  7,120  — 7,120 
Trading securities3,152  3,152  — 3,152 
Available-for-sale securities23,823  23,823  — 23,823 
Held-to-maturity securities852  847 3 — 850 
Advances122,530  122,512  — 122,512 
Mortgage loans held for portfolio, net9,967  9,051 30 — 9,081 
Accrued interest receivable582  582  — 582 
Derivative assets, net1,267  292  975 1,267 
Other assets39 39   — 39 
Liabilities
Deposits(1,039) (1,039) — (1,039)
Consolidated obligations
Discount notes(54,537) (54,534) — (54,534)
Bonds(116,961) (116,121) — (116,121)
Total consolidated obligations(171,498) (170,655) — (170,655)
MRCS(12)(12)  — (12)
Accrued interest payable(1,023) (1,023) — (1,023)
Derivative liabilities, net(7) (101) 94 (7)

1    Amounts represent the application of the netting requirements that allow the Bank to net settle positive and negative positions and also cash collateral and the related accrued interest held or placed with the same clearing agent and/or counterparty.

105

The following table summarizes the carrying value, fair value, and fair value hierarchy of the Bank’s financial instruments (dollars in millions):
December 31, 2022
Fair Value
Financial InstrumentsCarrying ValueLevel 1Level 2Level 3
Netting Adjustments and Cash Collateral1
Total
Assets
Cash and due from banks$89 $89 $ $ $— $89 
Interest-bearing deposits2,031  2,031  — 2,031 
Securities purchased under agreements to resell12,590  12,590  — 12,590 
Federal funds sold9,415  9,415  — 9,415 
Trading securities2,817  2,817  — 2,817 
Available-for-sale securities15,563  15,563  — 15,563 
Held-to-maturity securities965  955 4 — 959 
Advances111,202  110,909  — 110,909 
Mortgage loans held for portfolio, net8,348  7,316 36 — 7,352 
Accrued interest receivable389  389  — 389 
Derivative assets, net643  237  406 643 
Other assets35 35   — 35 
Liabilities
Deposits(1,076) (1,076) — (1,076)
Consolidated obligations
Discount notes(69,170) (69,162) — (69,162)
Bonds(84,337) (83,238) — (83,238)
Total consolidated obligations(153,507) (152,400) — (152,400)
MRCS(15)(15)  — (15)
Accrued interest payable(436) (436) — (436)
Derivative liabilities, net(4) (218) 214 (4)

1    Amounts represent the application of the netting requirements that allow the Bank to net settle positive and negative positions and also cash collateral and the related accrued interest held or placed with the same clearing agent and/or counterparty.

SUMMARY OF VALUATION TECHNIQUES AND PRIMARY INPUTS
The valuation techniques and primary inputs used to develop the measurement of fair value for assets and liabilities that are measured at fair value on a recurring or non-recurring basis on the Statements of Condition are outlined below.

Trading and AFS Investment Securities. The Bank’s valuation technique incorporates prices from multiple designated third-party pricing vendors, when available. The pricing vendors generally use various proprietary models to price investment securities. The inputs to those models are derived from various sources including, but not limited to, benchmark securities and yields, reported trades, dealer estimates, issuer spreads, bids, offers, and other market-related data. Since many investment securities do not trade on a daily basis, the pricing vendors use available information, as applicable, such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to determine the prices for individual securities. Each pricing vendor has an established process in place to challenge investment valuations, which facilitates resolution of questionable prices identified by the Bank. Periodically, the Bank conducts reviews of its pricing vendors to confirm and further augment its understanding of the vendors’ pricing processes, methodologies, and control procedures for investment securities.

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The Bank’s valuation technique for estimating the fair values of its investment securities first requires the establishment of a median price for each security. All prices that are within a specified tolerance threshold of the median price are included in the cluster of prices that are averaged to compute a default price. All prices that are outside the threshold (outliers) are subject to further analysis (including, but not limited to, comparison to prices provided by an additional third-party valuation service, prices for similar securities, and/or non-binding dealer estimates) to determine if an outlier is a better estimate of fair value. If an outlier (or some other price identified in the analysis) is determined to be a better estimate of fair value, then the outlier (or the other price as appropriate) is used as the final price rather than the default price. Alternatively, if the analysis confirms that an outlier (or outliers) is (are) in fact not representative of fair value and the default price is the best estimate, then the default price is used as the final price. In all cases, the final price is used to determine the fair value of the security. In limited instances, when no prices are available from the designated pricing services, the Bank obtains prices from dealers or uses the purchase price if the investment security is unsettled.

As of December 31, 2023 and 2022, multiple prices were received for the majority of the Bank’s trading and AFS investment securities. Based on the Bank’s review of the pricing methods and controls employed by the third-party pricing vendors and the relative lack of dispersion among the vendor prices, the Bank believes its final prices are representative of the prices that would have been received if the assets had been sold at the measurement date (i.e., exit prices) and further, that the fair value measurements are classified appropriately in the fair value hierarchy.

Impaired Mortgage Loans Held for Portfolio. The fair value of impaired mortgage loans held for portfolio is estimated by obtaining property values from an external pricing vendor. This vendor utilizes multiple pricing models that generally factor in market observable inputs, including actual sales transactions and home price indices. The Bank applies an adjustment to these values to capture certain limitations in the estimation process and takes into consideration estimated selling costs and expected PMI proceeds.

Derivative Assets and Liabilities and the Related Hedged Items. The fair value of derivatives is generally estimated using standard valuation techniques such as a discounted cash flow analysis and comparisons to similar instruments, and includes variation margin payments for daily settled contracts. In limited instances, fair value estimates for interest-rate related derivatives may be obtained using an external pricing model that utilizes observable market data. The Bank is subject to credit risk in derivatives transactions due to the potential nonperformance of its derivatives counterparties. The use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral/payments is posted daily, through a clearing agent, for changes in the fair value of cleared derivatives. To mitigate credit risk on uncleared derivatives, the Bank enters into master netting agreements with its counterparties as well as collateral agreements that have collateral delivery thresholds. The Bank has evaluated the potential for the fair value of its derivatives to be affected by counterparty credit risk and its own credit risk and has determined that no adjustments were significant to the overall fair value measurements.

The fair values of the Bank’s derivative assets and derivative liabilities include accrued interest receivable/payable and related cash collateral. The estimated fair values of the accrued interest receivable/payable and cash collateral approximate their carrying values due to their short-term nature. The fair values of derivatives are netted by clearing agent and/or counterparty if the netting requirements are met. If these netted amounts result in a receivable to the Bank, they are classified as an asset and, if classified as a payable to the clearing agent or counterparty, they are classified as a liability.

The Bank’s discounted cash flow model utilizes market-observable inputs (inputs that are actively quoted and can be validated to external sources). The Bank uses the following inputs for measuring the fair value of interest-related derivatives:

Discount rate assumption. The Bank utilizes the federal funds OIS or SOFR OIS curve depending on the terms of the derivative agreement. 

Forward interest rate assumption. The Bank utilizes the swap curve of the instrument’s index rate.

Volatility assumption. Market-based expectations of future interest rate volatility implied from current market prices for similar options.

For forward settlement agreements, the Bank utilizes TBA security prices that are determined by coupon class and expected term until settlement. For mortgage loan purchase commitments, the Bank utilizes TBA security prices adjusted for factors such as credit risk and servicing spreads.



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For the related hedged items, the fair value is estimated using a discounted cash flow analysis which typically considers the following inputs:

Discount rate assumption. The Bank utilizes the designated benchmark interest rate curve. 

Volatility assumption. Market-based expectations of future interest rate volatility implied from current market prices for similar options.

Other Assets. These represent grantor trust assets, which are carried at estimated fair value based on quoted market prices as of the last business day of the reporting period.

Consolidated Obligation Discount Notes Recorded under the Fair Value Option. The fair value of consolidated obligation discount notes recorded under the fair value option is determined by calculating the present value of the expected future cash flows. The discount rates used in the present value calculations are for consolidated obligations with similar terms. The Bank uses the consolidated obligation curve for measuring the fair value of these consolidated obligations, which is a market-observable curve constructed by the Office of Finance. This curve is constructed using the U.S. Treasury curve as a base curve which is then adjusted by adding indicative spreads obtained largely from market-observable sources.

Subjectivity of Estimates. Estimates of the fair value of financial assets and liabilities using the methods previously described are highly subjective and require judgments regarding significant matters, such as the amount and timing of future cash flows, prepayment speed assumptions, expected interest rate volatility, possible distributions of future interest rates used to value options, and the selection of discount rates that appropriately reflect market and credit risks. The use of different assumptions could have a material effect on the fair value estimates.


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FAIR VALUE ON A RECURRING BASIS

The following table summarizes, for each hierarchy level, the Bank’s assets and liabilities that are measured at fair value on the Statements of Condition (dollars in millions):
December 31, 2023
Recurring Fair Value MeasurementsLevel 1Level 2Level 3
Netting Adjustments and Cash Collateral1
Total
Assets
Trading securities
U.S. Treasury obligations$ $2,925 $ $— $2,925 
Other U.S. obligations 68  — 68 
GSE and TVA obligations 49  — 49 
Other non-MBS
 110  — 110 
Total trading securities 3,152  — 3,152 
Available-for-sale securities
Other U.S. obligations 328  — 328 
GSE and TVA obligations 344  — 344 
State or local housing agency obligations 458  — 458 
Other non-MBS 160  — 160 
U.S. obligations single-family MBS 4,398  — 4,398 
GSE single-family MBS 180  — 180 
GSE multifamily MBS 17,955  — 17,955 
Total available-for-sale securities 23,823  — 23,823 
Derivative assets, net
Interest-rate related 291  975 1,266 
Mortgage loan purchase commitments 1  — 1 
Total derivative assets, net 292  975 1,267 
Other assets39   — 39 
Total recurring assets at fair value$39 $27,267 $ $975 $28,281 
Liabilities
Discount notes2
$ $(47,442)$ $— $(47,442)
Derivative liabilities, net
Interest-rate related (100) 94 (6)
Forward settlement agreements (TBAs) (1) — (1)
Total derivative liabilities, net (101) 94 (7)
Total recurring liabilities at fair value$ $(47,543)$ $94 $(47,449)

1    Amounts represent the application of the netting requirements that allow the Bank to net settle positive and negative positions and also cash collateral and the related accrued interest held or placed with the same clearing agent and/or counterparty.

2    Represents financial instruments recorded under the fair value option.



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The following table summarizes, for each hierarchy level, the Bank’s assets and liabilities that are measured at fair value on the Statements of Condition (dollars in millions):
December 31, 2022
Recurring Fair Value MeasurementsLevel 1Level 2Level 3
Netting Adjustments and Cash Collateral1
Total
Assets
Trading securities
U.S Treasury obligations$ $2,501 $ $— $2,501 
Other U.S. obligations 76  — 76 
GSE and TVA obligations 49  — 49 
Other non-MBS
 146  — 146 
GSE multifamily MBS 45  — 45 
Total trading securities 2,817  — 2,817 
Available-for-sale securities
Other U.S. obligations 758  — 758 
GSE and TVA obligations 470  — 470 
State or local housing agency obligations 449  — 449 
Other non-MBS 240  — 240 
U.S. obligations single-family MBS 3,676  — 3,676 
GSE single-family MBS 210  — 210 
GSE multifamily MBS 9,460  — 9,460 
Total available-for-sale securities 15,263  — 15,263 
Derivative assets, net
Interest-rate related 237  406 643 
Other assets35   — 35 
Total recurring assets at fair value$35 $18,317 $ $406 $18,758 
Liabilities
Discount notes2
$ $(44,531)$ $— $(44,531)
Derivative liabilities, net
Interest-rate related (218) 214 (4)
Total recurring liabilities at fair value$ $(44,749)$ $214 $(44,535)

1    Amounts represent the application of the netting requirements that allow the Bank to net settle positive and negative positions and also cash collateral and the related accrued interest held or placed with the same clearing agent and/or counterparty.

2    Represents financial instruments recorded under the fair value option.


FAIR VALUE ON A NON-RECURRING BASIS

The Bank measures certain impaired mortgage loans held for portfolio at Level 3 fair value on a non-recurring basis. These assets are subject to fair value adjustments in certain circumstances. At both December 31, 2023 and 2022, impaired mortgage loans held for portfolio recorded at fair value as a result of a non-recurring change in fair value were $1 million. These fair values were as of the date the fair value adjustment was recorded during the years ended December 31, 2023 and 2022.

FAIR VALUE OPTION

The fair value option provides an irrevocable option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments not previously carried at fair value. It requires entities to display the fair value of those assets and liabilities for which it has chosen to use fair value on the face of the Statements of Condition. Fair value is used for both the initial and subsequent measurement of the designated assets, liabilities, and commitments, with the changes in fair value recognized in net income.

The Bank elects the fair value option for certain financial instruments when a hedge relationship does not qualify for hedge accounting. These fair value elections are made primarily in an effort to mitigate the potential income statement volatility that can arise when an economic derivative is adjusted for changes in fair value but the related hedged item is not.

110

For financial instruments recorded under the fair value option, the related contractual interest income, interest expense, and the discount amortization on fair value option discount notes are recorded as part of net interest income on the Statements of Income. The remaining changes are recorded as “Net gains (losses) on financial instruments held under fair value option” on the Statements of Income.

For the year ended December 31, 2023, net losses on financial instruments held under fair value option (i.e., discount notes) were $92 million compared to net gains of $106 million and $1 million in 2022 and 2021. The Bank determined no credit risk adjustments for nonperformance were necessary. In determining that no credit risk adjustments were necessary, the Bank considered the following factors:

The Bank is a federally chartered GSE, and as a result of this status, the Bank’s consolidated obligations have historically received the same credit rating as the government bond credit rating of the United States, even though they are not obligations of the United States and are not guaranteed by the United States.

The Bank is jointly and severally liable with the other FHLBanks for the payment of principal and interest on all consolidated obligations of the FHLBanks.

The following table summarizes the difference between the unpaid principal balance and fair value of outstanding instruments for which the fair value option has been elected (dollars in millions):

December 31, 2023
Unpaid Principal BalanceFair ValueFair Value Over (Under) Unpaid Principal
Discount notes$48,164 $47,442 $(722)

December 31, 2022
Unpaid Principal BalanceFair ValueFair Value Over (Under) Unpaid Principal
Discount notes$45,244 $44,531 $(713)









111

Note 14 — Commitments and Contingencies

Joint and Several Liability. The FHLBanks have joint and several liability for all consolidated obligations issued. Accordingly, if an FHLBank were unable to repay any consolidated obligation for which it is the primary obligor, each of the other FHLBanks could be called upon by the Finance Agency to repay all or part of such obligations. No FHLBank has ever been asked or required to repay the principal or interest on any consolidated obligation on behalf of another FHLBank. At December 31, 2023 and 2022, the total par value of outstanding consolidated obligations issued on behalf of other FHLBanks for which the Bank is jointly and severally liable was $1,032.1 billion and $1,027.1 billion.

The following table summarizes additional off-balance sheet commitments for the Bank (dollars in millions):
December 31, 2023December 31, 2022
Expire
within one year
Expire
after one year
TotalTotal
Standby letters of credit1,2
$9,278 $118 $9,396 $6,566 
Standby bond purchase agreements2
83 769 852 736 
Commitments to purchase mortgage loans112  112 46 
Commitments to issue bonds47  47 3,200 
Commitments to issue discount notes551  551 202 
Commitments to fund advances2
2,123 40 2,163 128 
1    Excludes commitments to issue standby letters of credit, when applicable. At both December 31, 2023 and 2022, the Bank had no commitments to issue standby letters of credit.

2    The Bank has deemed it unnecessary to record any liability for credit losses on these agreements at December 31, 2023 and 2022, based on its credit extension and collateral policies.

Standby Letters of Credit. The Bank issues standby letters of credit on behalf of its members to support certain obligations of the members to third-party beneficiaries. Standby letters of credit may be offered to assist members and non-member housing associates in facilitating residential housing finance, community lending, and asset-liability management, and to provide liquidity. In particular, members often use standby letters of credit as collateral for deposits from federal and state government agencies. Standby letters of credit are executed with members for a fee. If the Bank is required to make payment for a beneficiary’s draw, the member either reimburses the Bank for the amount drawn or, subject to the Bank’s discretion, the amount drawn may be converted into a collateralized advance to the member. The maturities of standby letters of credit outstanding at December 31, 2023 are currently no later than 2038. The carrying values of guarantees related to standby letters of credit are recorded in “Other liabilities” on the Statements of Condition and amounted to $4 million and $2 million at December 31, 2023 and 2022.

The Bank monitors the creditworthiness of its members and non-member housing associates that have standby letters of credit. The Bank has established parameters for the measurement, review, classification, and monitoring of credit risk related to these standby letters of credit. All standby letters of credit, similar to advances, are fully collateralized at the time of issuance and subject to member borrowing limits as established by the Bank.

Standby Bond Purchase Agreements. The Bank has entered into standby bond purchase agreements with state housing finance agencies within its district pursuant to which, for a fee, it agrees to serve as a standby liquidity provider if required, to purchase and hold the bonds until the designated marketing agent can find a suitable investor or the state housing finance agency repurchases the bonds according to a schedule established by the agreement. Each standby bond purchase agreement includes the provisions under which the Bank would be required to purchase the bonds and typically allows the Bank to terminate the agreement upon the occurrence of a default event of the issuer. At December 31, 2023, the Bank had standby bond purchase agreements with seven state housing finance agencies. The maturities of standby bond purchase agreements outstanding at December 31, 2023 are currently no later than 2028. During the years ended December 31, 2023, 2022, and 2021, the Bank was not required to purchase any bonds under these agreements.

Commitments to Purchase Mortgage Loans. The Bank enters into commitments that unconditionally obligate it to purchase mortgage loans from its members. These commitments are considered derivatives and their estimated fair value at December 31, 2023 and 2022 is reported in “Note 7 — Derivatives and Hedging Activities” as mortgage loan purchase commitments.

Commitments to Issue Consolidated Obligations. The Bank enters into commitments to issue consolidated obligations in the normal course of its business, generally that settle within 30 calendar days. At December 31, 2023, the Bank had commitments to issue $47 million and $551 million of consolidated obligation bonds and discount notes. At December 31, 2022, the Bank had commitments to issue $3.2 billion and $202 million of consolidated obligation bonds and discount notes.
112

Commitments to Fund Advances. The Bank enters into commitments to fund additional advances up to 24 months in the future. At December 31, 2023 and 2022, the Bank had commitments to fund advances of $2.2 billion and $128 million.

Other Commitments. For each MPF master commitment, the Bank’s potential loss exposure prior to the PFI’s credit enhancement obligation is estimated and tracked in a FLA. For absorbing certain losses in excess of the FLA, PFIs are paid a credit enhancement fee, a portion of which may be performance-based. To the extent the Bank experiences losses under the FLA, it may be able to recapture performance-based credit enhancement fees paid to the PFI to offset these losses. The FLA balance for all MPF master commitments with a PFI credit enhancement obligation was $178 million and $162 million at December 31, 2023 and 2022.
Legal Proceedings. The Bank is subject to various pending legal proceedings arising in the normal course of business. The Bank is not currently aware of any pending or threatened legal proceedings to which it is a party that it believes could have a material impact on its financial condition, results of operations, or cash flows.

Note 15 — Activities with Stockholders

The Bank is a cooperative. This means the Bank is owned by its customers, whom the Bank calls members. As a condition of membership in the Bank, all members must purchase and maintain membership capital stock based on a percentage of their total assets, subject to a minimum and maximum amount, as of the preceding December 31st. Each member is also required to purchase and maintain activity-based capital stock to support certain business activities with the Bank. All transactions with stockholders are entered into in the ordinary course of business. Refer to “Note 11 Capital” for more information on our capital stock requirements

TRANSACTIONS WITH DIRECTORS’ FINANCIAL INSTITUTIONS

In the normal course of business, the Bank extends credit to its members whose directors and officers serve as Bank directors (Directors’ Financial Institutions). Finance Agency regulations require that transactions with Directors’ Financial Institutions be made on the same terms and conditions as those with any other member.

The following table summarizes the Bank’s outstanding transactions with Directors’ Financial Institutions (dollars in millions):
December 31, 2023December 31, 2022
Amount% of TotalAmount% of Total
Advances$739 1 $317  
Mortgage loans124 1 143 2 
Deposits8 1 4  
Capital stock50 1 40 1 

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BUSINESS CONCENTRATIONS

The Bank considers itself to have business concentrations with stockholders owning 10 percent or more of its total capital stock outstanding (including MRCS). At December 31, 2023 and 2022, the Bank had the following business concentrations with stockholders (dollars in millions):
December 31, 2023
Capital StockMortgageInterest
StockholderAmount
% of Total1
AdvancesLoans
Income2
Wells Fargo Bank, N.A.3
$1,676 24 $37,000 $7 $1,687 
Superior Guaranty Insurance Company4
6   137  
Total$1,682 24 $37,000 $144 $1,687 

December 31, 2022
Capital StockMortgageInterest
StockholderAmount
% of Total1
AdvancesLoans
Income2
Wells Fargo Bank, N.A.3
$1,290 21 $32,000 $9 $336 
Superior Guaranty Insurance Company4
7   162  
Total$1,297 21 $32,000 $171 $336 
1    Pursuant to applicable Finance Agency regulations, the Bank’s voting structure limits the voting rights of these stockholders and other members holding a significant amount of the Bank’s capital stock.

2    Represents interest income earned on advances during the years ended December 31, 2023 and 2022. Interest income on mortgage loans is excluded from this table as this interest relates to the borrower, not to the stockholder.

3    Wells Fargo Bank, N.A. had standby letters of credit outstanding totaling $900 million as of December 31, 2023 and had no standby letters of credit outstanding as of December 31, 2022.

4    Superior Guaranty Insurance Company is an affiliate of Wells Fargo Bank, N.A. and had no standby letters of credit outstanding as of December 31, 2023 and 2022.

Note 16 — Activities with Other FHLBanks

Overnight Funds. The Bank may lend or borrow unsecured overnight funds to or from other FHLBanks. All such transactions are at current market rates. The following table summarizes loan activity to other FHLBanks during the years ended December 31, 2023, 2022, and 2021 (dollars in millions):
Other FHLBankBeginning
Balance
LoansPrincipal
Repayment
Ending
Balance
2023
Chicago
$ $2,005 $(2,005)$ 
New York
 500 (500) 
San Francisco
 2,655 (2,655) 
$ $5,160 $(5,160)$ 
2022
Chicago$ $1 $(1)$ 
San Francisco 2,030 (2,030) 
$ $2,031 $(2,031)$ 
2021
Chicago$ $301 $(301)$ 


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The following table summarizes borrowing activity from other FHLBanks during the years ended December 31, 2023, 2022, and 2021 (dollars in millions):
Other FHLBankBeginning
Balance
BorrowingPrincipal
Payment
Ending
Balance
2023
Boston
$ $450 $(450)$ 
Cincinnati
 750 (750) 
San Francisco
 500 (500) 
Topeka
 565 (565) 
$ $2,265 $(2,265)$ 
2022
Chicago$ $250 $(250)$ 
San Francisco 500 (500) 
$ $750 $(750)$ 
2021
Chicago$ $5 $(5)$ 


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
Management is responsible for establishing and maintaining disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our President and CEO, and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of our President and CEO, and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the annual period covered by this report. Based on that evaluation, our President and CEO, and CFO have concluded that our disclosure controls and procedures were effective as of December 31, 2023.
Report of Management on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are made only in accordance with authorizations of management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the framework established in “Internal Control - Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Based on its assessment, management determined that our internal control over financial reporting was effective as of December 31, 2023. Additionally, the effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by PwC, our independent registered public accounting firm. Refer to “Item 8. Financial Statements and Supplementary Data — Report of Independent Registered Public Accounting Firm” for their audit report.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2023, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.
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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
The Board of Directors is responsible for monitoring our compliance with Finance Agency regulations and establishing policies and programs that carry out our mission. The Board of Directors adopts, reviews, and oversees the implementation of policies governing our advance, mortgage loan, investment, and funding activities. Additionally, the Board of Directors adopts, reviews, and oversees the implementation of policies that are designed to manage our exposure to various risks, including interest rate, liquidity, credit, operational, model, information security, legal, regulatory and compliance, DEI, strategic, and reputational, as well as capital adequacy.
Our Board is comprised of Member Directors elected by our member institutions on a state-by-state basis and Independent Directors elected by all of our members. Our Board includes thirteen Member Directors and nine Independent Directors, two of whom serve as public interest directors. Under the FHLBank Act, the only matters submitted to shareholders for votes are (i) the annual election of our Directors and (ii) any proposed agreement to merge with one or more FHLBanks. Finance Agency regulations generally require all of our Directors to be elected by our members. In the event of a vacancy, Finance Agency regulations require the Board of Directors to elect a director to serve the remaining term. No member of management may serve as a director of an FHLBank.
Pursuant to the passage of the Housing Act, both Member and Independent Directors serve four-year terms. If any person has been elected to three consecutive full terms as a Member or Independent Director of our Board of Directors, the individual is not eligible for election to a Member or Independent Directorship for a term which begins earlier than two years after the expiration of the last expiring four-year term.
Member Directorships are allocated by the Finance Agency to the 13 states in our district and a member institution is eligible to participate in the election for the state in which it is located. Candidates for Member Directorships are not nominated by the Board. As provided for in the FHLBank Act, Member Directors are nominated by the members eligible to participate in the election in the relevant state. A member is entitled to cast, for each applicable Member Directorship, one vote for each share of capital stock that the member is required to hold as of the record date for voting, subject to a statutory limitation. Under this limitation, the total number of votes that each member may cast is limited to the average number of shares of our capital stock that were required to be held by all members in that state as of the record date for voting.
Member Directors are required, by statute and regulation, to meet certain eligibility requirements to serve as a director. To qualify as a Member Director an individual must (i) be an officer or director of a member institution in compliance with the minimum capital requirements established by its regulator and located in the state in which there is an open directorship and (ii) be a U.S. citizen. We are not permitted to establish additional qualifications to define eligibility criteria for Member Directors or nominees. Because of the structure of FHLBank Member Director nominations and elections, we may not know what factors our member institutions considered in selecting Member Director nominees or electing Member Directors.
Independent Directors are nominated by our Board of Directors after consultation with our Advisory Council, and then voted upon by all members within our 13 state district. For each Independent Directorship, a member is entitled to cast the same number of votes as it would for a Member Directorship.
In order to be eligible to serve as an Independent Director on our Board, an individual must (i) be a U.S. citizen and (ii) maintain a principal residence in a state in our district (or own or lease a residence in the district and be employed in the district). In addition, the individual may not be an officer of any FHLBank or a director, officer, or employee of any member institution or of any recipient of our advances. By regulation, we are required to have at least two public interest Independent Directors, each of whom must have more than four years of personal experience in representing consumer or community interests in banking services, credit needs, housing, or financial consumer protection. Each Independent Director, other than a public interest Independent Director, must have knowledge of, or experience in, financial management, auditing or accounting, risk management practices, derivatives, project development, organizational management, or the law.

117

On an annual basis, our Board of Directors performs an assessment of the directors’ backgrounds, expertise, and qualifications against the skills and qualifications it desires on the Board of Directors. Furthermore, each director annually certifies that he/she continues to meet all applicable statutory and regulatory eligibility and qualification requirements. In connection with the election or appointment of Independent Directors, the Independent Director completes an application to serve on the Board of Directors. As a result of the assessment and as of the filing date of this Form 10-K, nothing has come to the attention of the Board of Directors or management to indicate that any of the current directors do not continue to possess the necessary experience, qualifications, attributes, or skills, as described in each director’s biography.

Information regarding our current directors and executive officers is provided in the following sections. There are no family relationships among our directors or executive officers. The table below shows membership information for our Board of Directors at February 29, 2024:
    Expiration of 
    Current Term As 
  Member or Director as ofBoard
DirectorAgeIndependentDirector SinceDecember 31Committees
Karl A. Bollingberg (chair)
61MemberJanuary 1, 2019
2026
a
John A. Klebba (vice chair)
67MemberJanuary 1, 20182025
a
Ruth B. Bennett71IndependentJune 1, 20152024a, b, d, h
Steven L. Bumann70MemberJanuary 1, 20152025
b, c, d
Cleon P. Butterfield *69IndependentJanuary 1, 2020
2027
d, g, h
Douglas L. DeFries67MemberJanuary 1, 20222025
a, d, e, f
Kim R. DeVore53MemberJanuary 1, 20232026
d, g, h
Edward A. Garding74IndependentAugust 30, 2021
2027
b, h
James W. Hunt59MemberJanuary 1, 20212024
b, c
Amy K. Johnson58IndependentJanuary 1, 2020
2027
a, d, f, g
Jon M. Jones62MemberJanuary 1, 20212024
b, f
Joe R. Kesler68MemberMarch 9, 2018
2027
a, e, h
Wan-Chong Kung63IndependentJanuary 19, 20222026e, h
Russell J. Lau71MemberJanuary 1, 20222025
b, c, d
Lauren M. MacVay55MemberJanuary 1, 20182025a, c, g
Elsie M. Meeks *70IndependentJanuary 1, 20152026a, b, d, f
Jason A. Meyerhoeffer57MemberJune 25, 20192026
 a, e, h
Siva G. Narendra52IndependentJanuary 1, 20222025c, g
Carol K. Nelson67IndependentJanuary 1, 20212024f, g
Jeff L. Plagge
68
Member
January 1, 2024
2027
c, e
Lisa A. Stange
59
Independent
January 1, 2024
2027
c, g
Robert J. Vogel
72
Member
January 1, 2024
2027
e, f

a)     Executive and Governance Committee

b)    Audit Committee

c)    Risk and Compliance Committee

d)    Housing and Community Investment Committee

e)     Member Committee

f)    Compensation Committee

g)    Technology Committee

h)    Finance Committee

*    Public Interest Independent Director

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The following describes the principal occupation, business experience, qualifications, and skills, among other matters of the 22 directors who currently serve on our Board of Directors. Except as otherwise indicated, each Director has been engaged in the principal occupation indicated for at least the past five years.
Karl A. Bollingberg, the Board’s chair, has served as a director for Cornerstone Bank in Fargo, North Dakota, since June 2022. Mr. Bollingberg retired from Alerus Financial in July 2022. While at Alerus Financial, Mr. Bollingberg served as loan participation advisor from 2018 to 2022, and in various other roles, including director of lending, director of banking services, and regional president, since 1987. Prior to that, Mr. Bollingberg worked for U.S. Bank, N.A. from 1985 to 1987. Mr. Bollingberg is active in a number of civic organizations including advisory board member and chair for the Bank of North Dakota, and member and past chair of the Regional Airport Authority in Grand Forks, North Dakota. In addition, he previously served as a member and chair for the Regional Economic Development Corporation in Grand Forks, North Dakota and was campaign chairperson for the Community Violence and Intervention Center Shelter Project in Grand Forks, North Dakota. He earned his bachelor’s degree in agricultural economics from North Dakota State University and completed Louisiana State University School of Banking in 2000. Mr. Bollingberg’s position as a director of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors. He currently serves as the chair of the Executive and Governance Committee.
John A. Klebba, the Board’s vice chair, has been the CEO and chairman of the board of Legends Bank in Linn, Missouri, and its holding company, Linn Holding Company, since April 2018. He previously served as the president, CEO, and chairman of the board of Legends Bank and its holding company, Linn Holding Company, since February 2004. Mr. Klebba has been with Legends Bank since 1991. Prior to that, he was a partner in the Kansas City office of the law firm of Lewis Rice and Fingersh, where his practice concentrated on corporate and banking law. He is also the managing member of JHK Farm, LLC, a family-owned cow/calf operation in Osage County, Missouri. Mr. Klebba is a former member of the board of the American Bankers Association and a former chairman of the Missouri Bankers Association. He is currently the chairman of the Board of Regents of the State Technical College of Missouri, a member of the board of the Missouri Higher Education Savings Program, as well as a board member of a number of charitable organizations. Mr. Klebba holds both a Juris Doctor degree and MBA degree from the University of Notre Dame. Mr. Klebba’s position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors. He currently serves as the vice chair of the Executive and Governance Committee.
Ruth B. Bennett has served as principal of RB Bennett Enterprises LLC, a real estate brokerage firm and property development company in Oregon and Washington, since 2008. In her role at RB Bennett Enterprises LLC, she develops, builds, and manages affordable housing. From 1973 to 2007, she served in various capacities at the Bonneville Power Administration, a federal electrical utility in Portland, Oregon, including COO from 2003 to 2007. She is a former board member of Vancouver Affordable Housing, Pacific Northern Environmental, First Independent Bank, the regional Columbia-Willamette YMCA, and Pacific Health SW Medical Center where she was a hospital board chair for three years. Ms. Bennett was elected to the board of the Seattle Bank in 2014 and served on the Seattle Bank’s board until the merger with the Bank in 2015. Ms. Bennett’s experience, as indicated by her background, support her qualifications to serve as an Independent Director on our Board of Directors. She currently serves as chair of the Audit Committee and vice chair of the Housing and Community Investment Committee.
Steven L. Bumann has served as chief investment officer at BankWest, Inc. in Pierre, South Dakota, since January of 2022. He previously served as CFO from 1995 to 2021. Mr. Bumann has more than 38 years of banking experience and has held various leadership roles within the financial industry, including vice president and senior vice president roles at BankWest, Inc. He also earned his CPA license while working for a local CPA firm and spent time working for the South Dakota Department of Legislative Audit. Mr. Bumann served as chairman of the board of directors of the South Dakota Bankers Association in 2021. Past leadership roles include the Pierre School Board, the Pierre Chamber of Commerce and the South Dakota Retirement System Board of Trustees. Mr. Bumann’s position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors.

Cleon P. Butterfield has served as a senior vice president and CFO for the Utah Housing Corporation since 2001. Mr. Butterfield joined the Utah Housing Corporation in 1979 and has held various leadership capacities during his tenure including treasurer, director of operations, and director of program development among others. Mr. Butterfield is a licensed CPA. Mr. Butterfield has served on multiple affordable housing councils and committees. He is also a former member of the State of Utah Alternative Dispute Resolution Council. Additionally, he is a guest lecturer teaching about how low-income housing tax credits and tax-exempt bond financing produce a viable solution for low-income housing needs. Mr. Butterfield’s experience, as indicated by his background, support his qualifications to serve as a Public Interest Independent Director on our Board of Directors.


119

Douglas L. DeFries retired as the president and CEO of both BOU Bancorp, Inc. and the Bank of Utah in December 2022, positions he held since 2011. Mr. DeFries continues to serve as a director of both BOU Bancorp, Inc. and the Bank of Utah. Mr. DeFries joined Bank of Utah in 1986 as vice president-controller and was named executive vice president and CFO in 1992. In 2005, he was elected to the board of directors of Bank of Utah. From 1984 to 1986, Mr. DeFries served as vice president-controller at American Savings and Loan Association. Mr. DeFries was a staff accountant and manager with Peat Marwick, Mitchell & Co (now KPMG LLC) from 1980 to 1984. His finance industry service includes involvement in several state and national organizations. Mr. DeFries has served on the Community Bank Council of the American Bankers Association as Utah Representative and administrative committee member from 2016 to present. Mr. DeFries was chairman of the Money Management Council for the Utah State Treasurer. Over the past 30 years, Mr. DeFries has had multiple appointments on the board of directors for the Utah Bankers Association including chairman in 2018 to 2019. Mr. DeFries has served on the Board of Trustees of Utah Housing Corporation from 2011 to 2016 and as chairman in 2016. Mr. DeFries was also the chairman of the American Institute of Banking from 1995 to 1996. Mr. DeFries is also actively involved in the community and volunteers on several boards and organizations. Mr. DeFries’ past contributions include serving on the board of directors of the Ogden/Weber Chamber of Commerce, United Way of Northern Utah, and the Institutional Review Board for Intermountain Healthcare. Mr. DeFries holds a BA degree in Accounting from Utah State University, graduating magna cum laude. He also earned an MBA degree from Utah State University. Mr. DeFries’ position as a director of a member institution and his experience, as indicated by his background, support his qualification to serve on our Board of Directors. He currently serves as chair of the Compensation Committee.

Kim R. DeVore has served as the president and CEO of Jonah Bank in Cheyenne, Wyoming since 2020. Ms. DeVore previously served as CFO of Jonah Bank, since 2006. Ms. DeVore’s previous banking responsibilities include teller, operations, new accounts, cash management, as well as numerous other positions. Ms. DeVore is active in community organizations including the Two Fly Foundation, The Lyric, and the Central Wyoming Boys & Girls Club. She was the chair of the capital fundraising and development of WyoTowne at AmeriTowne; a program to teach fifth graders about civic and financial responsibility along with America’s free enterprise system and their important role in its success. Ms. DeVore has served on the Wyoming Business Council since 2015. Ms. DeVore is vice president of the Federal Reserve Bank’s Community Depository Institution Advisory Council for the Federal Reserve Bank. Ms. DeVore’s position as an officer of a member institution and her experience, as indicated by her background, support her qualifications to serve on our Board of Directors.

Edward A. Garding retired as president and CEO of First Interstate BancSystems, in Billings, MT in 2016. Mr. Garding spent more than 40 years with First Interstate BancSystems during which he held many management positions including chief credit officer, CRO, COO and corporate and government relations officer. Mr. Garding has served on several banking industry boards including serving as chairman of the Wyoming Bankers Association, Pacific Coast Banking School Board, and Montana Bankers Association. He was also a member of the Fannie Mae Western Region Advisory Board. He served as the Interim Dean of the College of Business at Montana State University Billings, a position he held during the 2018 to 2023 fiscal years, and is now retired from that position. Mr. Garding’s experience, as indicated by his background, support his qualifications to serve as an Independent Director on our Board of Directors.
James W. Hunt has served as senior vice president and CFO of OnPoint Community Credit Union in Portland, Oregon, since May of 2009. Prior to joining OnPoint, Mr. Hunt spent eight years serving in several positions within the finance division of Washington Mutual in Seattle, most recently as a senior vice president within the treasury department. From 1987 to 2001, he held a variety of finance positions within Fleet Mortgage Group in Columbia, South Carolina. For seven years, Mr. Hunt served on the board of directors of Financial Beginnings, a non-profit financial education organization benefiting students and young adults in Oregon and Washington. He earned a Bachelor of Business Administration in Finance from Francis Marion College in South Carolina in 1987, and is a CPA (inactive) in Oregon and CFA. Mr. Hunt’s position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors.
Amy K. Johnson retired from her position as global head of operations for Columbia Threadneedle Investments, the investment management division of Ameriprise Financial, Inc. in Minneapolis, Minnesota, in June 2019. Ms. Johnson held her position as global head of operations for Columbia Threadneedle Investments from April 2016 to June 2019 and previously served in several positions at Columbia Threadneedle Investments and its predecessors and affiliates since 2001. Her most recent roles included president of Ameriprise Trust Company from November 2006 to April 2017 and Columbia Threadneedle Investments COO - North America from May 2010 to April 2016. Ms. Johnson has been a board member of Friends of Ngong Road since 2009 and currently serves as COO, a volunteer position. Based in Minneapolis, Minnesota, its mission is to transform the lives of children impacted by AIDS and HIV in Nairobi, Kenya, through education and support. Ms. Johnson has served as a member of the Board of Trustees for Parnassus Funds since 2022. Ms. Johnson’s experience, as indicated by her background, support her qualifications to serve as an Independent Director on our Board of Directors. She currently serves as chair of the Technology Committee.


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Jon M. Jones has served as the president and CEO of Washington Business Bank in Olympia, Washington since 2007. Prior to joining Washington Business Bank, Mr. Jones worked for his own company, Jones Financial Strategies, as a bank consultant and commodities trader. He previously worked for Venture Bank in Olympia, Washington in various roles for 15 years. Mr. Jones started his career in finance at Peoples Bank and Trust in Waterloo, Iowa, where he worked as a credit analyst. Mr. Jones then moved on to be a commercial lending officer at Northwest Bank and Trust in Davenport, Iowa before moving to Washington in 1990. Mr. Jones is a member and past chairman of the board of the Washington Bankers Association. Additionally, he is a past chairman of both the Thurston County Chamber of Commerce and the South Sound YMCA. Mr. Jones is also a member of the Olympia Roundtable. Mr. Jones is a 1984 graduate of the University of Northern Iowa with a BA in Finance and is a 1996 graduate of the Pacific Coast Banking School at the University of Washington. Mr. Jones’ position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors. He currently serves as vice chair of the Audit Committee and vice chair of the Compensation Committee.
Joe R. Kesler has served as a director of First Montana Bank in Missoula, Montana, and its holding company, First National Bancorp, Inc., since 2005. Mr. Kesler served as the president and CEO of First Montana Bank from 2005 to February 2018 and has over 40 years of experience in the banking industry. Mr. Kesler has served in various community leadership roles, including president of the Chamber of Commerce, director of a small business incubator, director of business development corporations, director of state banking trade associations, member of service clubs such as Rotary, and leader or director for community nonprofits like symphony boards and churches. Mr. Kesler’s position as a director of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors. He currently serves as chair of the Member Committee.
Wan-Chong Kung has served as funds director of Securian Funds Trust since October 2022. Ms. Kung has served as an independent trustee on a multiple series trust with US Bancorp Global Fund Services, where she has been a member of the audit and governance committees, since 2020. Ms. Kung served as the senior vice president, senior fund manager, head of rates strategy at Nuveen Asset Management from 2011 to 2019. Prior to that, Ms. Kung spent 12 years serving as a managing director and fund manager at US Bancorp Asset Management. Ms. Kung is a CFA and holds an MBA in management information systems from the University of Minnesota. Ms. Kung’s experience, as indicated by her background, support her qualifications to serve as an Independent Director on our Board of Directors. She currently serves as vice chair of the Finance Committee.

Russell J. Lau has served as the chairman and CEO of Finance Factors Limited, a minority depository FDIC insured institution based in Honolulu, Hawaii, since 1998. Mr. Lau has served as the chairman, president, and CEO of Finance Enterprises, Ltd., the parent company, since 2004. In connection with his service with Finance Enterprises, he is the chairman and CEO of Finance Insurance, Ltd., a Hawaii independent insurance agency and chairman and CEO of Finance Realty, Ltd., and Waipono Inc., real estate investment/development and management companies. Mr. Lau previously served on the boards of both the Federal Home Loan Bank of Seattle from 2005 to 2015 and Des Moines from 2015 to 2017. Mr. Lau is a member and former president of the Hawaii Bankers Association Executive Committee. Mr. Lau is a member of the Financial Executives Institute. Mr. Lau is active in the community and is a member of the American Judicature Society (treasurer 2008 to 2023), Assets School (former treasurer), and is the current president of the Chinese Chamber of Commerce of Hawaii. Mr. Lau was formerly the chair of the East West Center Foundation and secretary of Catholic Charities, Palolo Chinese Home, St. Andrew’s Schools (former chair), and member of Aloha Council Boy Scouts of America, American Youth Soccer Organization, Leahi Soccer Coach, The Early School, and Junior Achievement. Mr. Lau became a member of the FDIC’s Minority Depository Institutions Subcommitteee to the Advisory Committee on Community Bank in May 2022. Mr. Lau has a bachelor’s and master’s degree in finance from the University of Puget Sound and the University of Oregon, respectively. He also graduated from Pacific Coast Banking School at the University of Washington. Mr. Lau’s position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors.

Lauren M. MacVay is currently the CEO of True North Federal Credit Union in Juneau, Alaska, a position she has held since 2004. Ms. MacVay has 28 years of banking experience. Prior to her current role, she held various leadership and management roles after joining True North Federal Credit Union in 1995. Before relocating to Alaska and beginning her banking career, Ms. MacVay was a practicing attorney in Pennsylvania for several years. Ms. MacVay has held numerous board positions and currently serves on the board of directors of the Alaska Credit Union League and the Financial Reality Foundation. Ms. MacVay’s position as an officer of a member institution and her experience, as indicated by her background, support her qualifications to serve on our Board of Directors. She currently serves as chair of the Risk and Compliance Committee.


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Elsie M. Meeks served as state director of the United States Department of Agriculture in South Dakota from July of 2009 to 2015. Prior to joining the United States Department of Agriculture, Ms. Meeks was the president and CEO of First Nations Oweesta Corporation. She was active in the development and management of Lakota Funds, a small business and micro-enterprise development financial institution on the Pine Ridge Indian Reservation in South Dakota and has served as its board chair since 2015. Ms. Meeks served on the U.S. Commission on Civil Rights, completing a six-year term. She currently serves on the board of the Native American Agricultural Fund, a national trust established through the federal court as a result of proven discrimination by the United States Department of Agriculture against Native American ranchers and farmers. She is a past director of the Northwest Area Foundation based in St. Paul, Minnesota. She has served as a director or council member of several national Native American organizations. Ms. Meeks’ experience, as indicated by her background, support her qualifications to serve as a Public Interest Independent Director on our Board of Directors. She currently serves as chair of the Housing and Community Investment Committee.

Jason A. Meyerhoeffer has served as president and CEO of First Federal Savings Bank of Twin Falls in Twin Falls, Idaho since 2017. Prior to his current position, Mr. Meyerhoeffer held various leadership roles at First Federal Savings Bank of Twin Falls since 1996, including serving as executive vice president and chief lending officer from 2002 to 2016. Mr. Meyerhoeffer’s banking career began in 1995 as a regional credit officer with West One Bank N.A. Mr. Meyerhoeffer has served as director of several business development corporations and state banking trade associations. Mr. Meyerhoeffer’s position as an officer of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors. He currently serves as chair of the Finance Committee and vice chair of the Member Committee.

Siva G. Narendra is CEO of tyfone, Inc., a digital banking technology company in Portland, Oregon, he co-founded in 2004. Dr. Narendra has served as its CEO since 2011. Dr. Narendra is an inventor with more than 100 patents. Inventions he patented have led to the launch of OneIDLab, a digital security company, and iCashe, a digital payment fintech. Prior to becoming an entrepreneur, Dr. Narendra was a Senior Staff Scientist at Intel’s Corporate Technology Group where his contributions led to the issuance of 75 patents. Dr. Narendra is a published author and has more than 60 peer-reviewed papers. In addition to serving on the boards of the two technology companies he co-founded, tyfone, Inc. and iCashe, Dr. Narendra is on the board of OnPoint Community CU Foundation and was a board member at OnPoint Community Credit Union from 2017 to 2020. Dr. Narendra holds a Ph.D. in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology in Cambridge, Massachusetts. Dr. Narendra’s experience, as indicated by his background, support his qualifications to serve as an Independent Director on our Board of Directors. He currently serves as vice chair of the Risk and Compliance Committee.

Carol K. Nelson served as CEO and president of Monzo, Inc. from 2021 to 2022. Ms. Nelson served as a strategic advisor to Monzo in its application for a national bank charter for Monzo Bank USA N.A from 2019 to 2021. She was an executive for KeyBank from 2015 to 2019. Ms. Nelson served as KeyBank’s pacific region executive and market president, was a member of KeyBank’s executive council, and director and trustee for the KeyBank Foundation. Ms. Nelson was appointed by Governor Inslee to serve as the CEO of the Washington State Department of Revenue from January 2013 to 2015. She served as the CEO and president of Cascade Bank in Everett, Washington from January 2001 to June 2011. She began her banking career at Seafirst Bank which was acquired by Bank of America in 1982 and served in several positions culminating as senior vice president and northern region executive. Ms. Nelson currently serves as chair of the board of the Washington State Major League Baseball Public Facilities District and as vice chair of the board of Delta Dental of Washington. She is a past chair of the board for United Way of King County and is a former director of the Federal Reserve Bank of San Francisco, Seattle Branch, serving two terms (2007 to 2009 and 2015 to 2017). She is a past board member of Pacific Coast Banking School and a past board chair of the Washington Bankers Association. She earned a BA in Finance and an MBA from Seattle University. Ms. Nelson’s experience, as indicated by her background, support her qualifications to serve as an Independent Director on our Board of Directors. She currently serves as vice chair of the Technology Committee.


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Jeff L. Plagge has served as a director for Northwest Bank in Spencer, Iowa since 2009. Mr. Plagge has worked in the banking industry for over 42 years. Mr. Plagge served as president and CEO of Northwest Financial Corporation in Arnolds Park, Iowa from 2009 to 2019. Prior to that, Mr. Plagge served as president and CEO of First National Bank in Waverly, Iowa and president, CEO and chairman of Midwest Heritage Bank in West Des Moines, Iowa. Mr. Plagge served as the Iowa Superintendent of Banking for the Iowa Division of Banking, a Governor-appointed position he held from 2019 to 2023. Mr. Plagge also serves on the boards of the Conference of State Bank Supervisors in Washington, D.C. and American Bankers Mutual Insurance, LTD., in Cleveland, Ohio. Mr. Plagge served as chairman of the Iowa Bankers Association, chairman of the American Bankers Association, and former board member of the Chicago Federal Reserve Bank. Additionally, Mr. Plagge served as chairman of the Federal Reserve Bank of Chicago Community Depository Institution Advisory Council, was a member of the Federal Reserve Board of Governors Community Depository Institution Advisory Council, chairman of the Clearing House Faster Payments Task Force, chairman of Delta Dental of Iowa, and many other industry, non-industry and community-related boards, committees, and task forces throughout his career. Mr. Plagge received his bachelor’s degree in agriculture business from Iowa State University and is a graduate of the Graduate School of Banking at the University of Colorado - Boulder. Mr. Plagge’s position as a director of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors.
Lisa A. Stange is strategic advisor to Clearwater Analytics, an investment accounting and analytics software provider, in Boise, Idaho. She has held this position since 2020, where she provides consulting services to insurance companies, asset managers and government entities on topics including investment accounting and risk management. With over 25 years of experience in insurance company leadership positions, Ms. Stange previously served as chief investment officer of Homesteaders Life Company from 2017 to 2019, chief investment officer and treasurer of EMC Insurance Companies from 2009 to 2014, and in investment roles including portfolio manager at Principal Global Investors from 1989 to 2008. During her career, Ms. Stange has gained valuable leadership experience and knowledge in the areas of operations and business-risk management, mortgages and other related investments, derivatives, and capital markets. Ms. Stange served as a Governor-appointed trustee on the board of the Iowa Public Employees’ Retirement System for 12 years ending in 2023. Ms. Stange currently serves on the Investment Board of the Des Moines Art Center Foundation and the Finance Advisory Board at the University of Iowa Tippie School of Business. Ms. Stange received her Bachelor of Business Administration degree in 1988 and MBA in Finance in 1989 from the University of Iowa. She holds the CFA designation. Ms. Stange’s experience, as indicated by her background, support her qualifications to serve as an Independent Director on our Board of Directors.
Robert J. Vogel is chairman of the board for New Market Bank in Elko New Market, Minnesota, a position he has held since 2014. Mr. Vogel joined New Market Bank in 1975 as a cashier. During his tenure, Mr. Vogel held multiple positions including executive vice president and served as president and CEO for 26 years. Mr. Vogel also currently serves as president and chairman for Market Bancorporation, New Market Bank’s holding company, a position he has held since 1987. Mr. Vogel has extensive public service experience including serving in the Minnesota House of Representatives beginning in 2014, where he was re-elected for two additional terms before his retirement in 2021. His major committee assignments included chief author, initial chair of the legislative budget office, labor - minority lead, ways and means - vice chair, commission on pensions and retirements, and the commission on employee relations. He also served on the Scott County Board of Commissioners from 2002 to 2009. Other experience includes Mr. Vogel’s time serving as a strategic plan consultant, facilitating more than 25 strategic plans over 15 years, for both the private and public sector. Mr. Vogel is an active member in several organizations, including the Lions Club, New Prague Rotary Club, and Lakeville Chamber of Commerce. In 2000, Mr. Vogel was honored with the University of St. Thomas Business Excellence Award in Community Service. Mr. Vogel earned his BA in Finance from the College of St. Thomas in St. Paul, Minnesota. Mr. Vogel’s position as a director of a member institution and his experience, as indicated by his background, support his qualifications to serve on our Board of Directors.

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Executive Officers
The following persons currently serve as executive officers of the Bank:
   Position Held
Executive OfficerAgePosition HeldSince
Kristina K. Williams59President and Chief Executive OfficerJanuary 2020
James G. Livingston58Chief Financial OfficerJanuary 2023
Joelyn R. Jensen-Marren58Chief Risk and Compliance OfficerJanuary 2023
William W. Osborn58Chief Business OfficerAugust 2020
Kevin T. Larkin55Chief Information OfficerMarch 2020
Katherine A. Steinke55Chief Human Resources OfficerDecember 2021
Robert W. Dixon49General Counsel and Corporate SecretarySeptember 2022
Kelly E. Rasmuson61Chief Audit ExecutiveJune 2016
Deborah G. Baldwin62Chief Diversity, Equity, and Inclusion OfficerMay 2020
Cherie Schuler59Senior Director of Member and Financial Operations June 2022

Kristina K. Williams is currently serving as President and CEO, a position she has held since January 2020. She began her association with the Federal Home Loan Bank System in 2004. Prior to her current role, she served as the COO of the Pittsburgh Bank, a position she held from 2011 to 2019. In that role, Ms. Williams had responsibility for all member-facing departments, including community investment, communications, product delivery, member services, and IT. In her 15 years with the Pittsburgh Bank she also held positions of chief accounting officer, CFO, and acting CRO. Prior to working for the Pittsburgh Bank, Ms. Williams spent 12 years with PNC Financial Services in its wholesale bank and six years in public accounting. She is currently serving on the boards of Greater Des Moines Habitat for Humanity and the Greater Des Moines Partnership. She formerly served as vice chair of the West Liberty University Board of Governors. Ms. Williams also previously served as the development committee chair of the board of directors for Strong Women Strong Girls of Pittsburgh. Ms. Williams has an undergraduate degree from West Liberty University and Masters of Professional Accountancy from West Virginia University. She is also a CPA (inactive) and received an honorary Doctor of Humane Letters degree from West Liberty University in 2015.

James G. Livingston is currently serving as CFO, a position he has held since January 2023. In his role, Mr. Livingston has management responsibility for the accounting and financial reporting, capital markets, financial controls, and strategic planning functions. He previously served as executive vice president and Director of Municipal & Institutional Services, senior vice president, and vice president at Zions Bancorporation, National Association, located in Salt Lake City, Utah, since 2017, 2011 and 2005, respectively. Prior to joining Zions in 2005, Mr. Livingston worked for Ziff Brothers Investments, in New York City, as a quantitative strategist and as Director of Financial Research. Mr. Livingston was elected to the Seattle Bank’s board from the state of Utah in 2007. After the merger with the Bank in 2015, he served as a director on the Bank’s Board until 2021. Mr. Livingston served as the Board Chair from 2020 to 2021. He also previously served as an assistant professor of accounting at Southern Methodist University in Dallas, Texas.

Joelyn R. Jensen-Marren is currently serving as CRCO, a position she has held since January 2023. In her role, Ms. Jensen-Marren has responsibility for the Bank’s enterprise risk management area, including credit risk, market risk, operational risk, and model risk. Ms. Jensen-Marren previously served as the CFO beginning in June 2019. Prior to serving as CFO, Ms. Jensen-Marren served as senior vice president, director of portfolio strategy from 2014 to 2019. Ms. Jensen-Marren joined the Bank in 1999 and has served in various leadership roles. She currently serves on the Polk County Housing Trust Fund Board. Ms. Jensen-Marren received her undergraduate degree from Iowa State University with a Master’s degree from the University of Colorado, Denver.

William W. Osborn is currently serving as CBO, a position he has held since August 2020. Mr. Osborn is responsible for the Bank’s member-facing departments, including community investment, funding product group, member strategies and marketing, and the mortgage product group. Prior to joining the Bank, he served as senior vice president and CFO of the Topeka Bank, a position he held from 2010 to 2020. Mr. Osborn also served as director of product profitability and pricing of the Topeka Bank from 2006 to 2007. Mr. Osborn was promoted to director of banking strategies in January 2008, to first vice president in April 2008, and to senior vice president in April 2009. Mr. Osborn is a CFA and member of the CFA Institute. Mr. Osborn received his undergraduate degree from Brigham Young University and MBA degree from Westminster College.


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Kevin T. Larkin is currently serving as CIO, a position he has held since March 2020. Mr. Larkin oversees the Bank’s IT, information security, enterprise procurement and vendor management, and business resiliency and facility management departments. Prior to joining the Bank, Mr. Larkin served as vice president, managing director, IT operations of the Chicago Bank since 2019. He previously served as the vice president, managing director, IT risk, compliance, and administration of the Chicago Bank from 2018 to 2019. Prior to joining the Chicago Bank, Mr. Larkin served as assistant vice president of business systems and IT governance for Illinois Mutual Life Insurance from 2014 to 2018. In addition, Mr. Larkin previously served as the director of business solutions for the Pittsburgh Bank from 2001 to 2014. He has earned a bachelors degree from Gannon University and both an MBA degree and Master’s in Information Systems Management from Duquesne University.

Katherine A. Steinke is currently serving as CHRO, a position she has held since December 2021. Ms. Steinke has management responsibility for the human resources department. Prior to joining the Bank, Ms. Steinke previously served as vice president, human resources, for Farm Credit Services of America in Omaha, Nebraska from 2017 to 2021. Prior to her tenure at Farm Credit Services of America, she served as director, human resources at Glacial Lakes Energy in Watertown, South Dakota from 2011 to 2017. Ms. Steinke earned her undergraduate degree from the University of Nebraska Medical Center and a Master’s in HR Management/Labor and Employment Relations from Penn State University.

Robert W. Dixon is currently serving as General Counsel and Corporate Secretary, a position he has held since September 2022. Mr. Dixon has management responsibility for the Bank’s legal department and government relations. He advises management and the Board of Directors on all legal matters impacting the Bank, including those involved with establishing or changing business direction, as well as all matters concerning SEC reporting and corporate governance. Mr. Dixon previously served as Vice President and Deputy General Counsel from 2021 to 2022 and Vice President and Associate General Counsel from 2013 to 2021. Prior to joining the Bank, Mr. Dixon practiced law at Davis Brown Law Firm in Des Moines, Iowa from 2010 to 2013 and at Vedder Price P.C. in Chicago, Illinois from 2001 to 2010. Mr. Dixon received his undergraduate degree from the University of Iowa and his Juris Doctor degree from Drake University Law School. He graduated from the Greater Des Moines Leadership Institute in 2013 and served as Board President for Big Brothers Big Sisters of Central Iowa from 2021 to 2023.

Kelly E. Rasmuson is currently serving as Chief Audit Executive, a position he has held since 2016. Mr. Rasmuson joined the Bank in 2006 as director of Internal Audit and became Senior Vice President in 2007. Mr. Rasmuson has management responsibility for the internal audit department. Prior to joining the Bank, Mr. Rasmuson held positions of increasing responsibility with the internal audit department at Principal Financial Group in Des Moines, Iowa from 1997 to 2006. Before moving to Iowa, he worked in a variety of positions at multiple companies in Columbus, Ohio, including audit roles with one of the large international accounting firms. Mr. Rasmuson received his undergraduate degree from the University of Northern Iowa and his MBA from Xavier University. He is also a Certified Internal Auditor and CPA.

Deborah G. Baldwin is currently serving as Chief DEI Officer, a position she has held since May 2020. In this role, Ms. Baldwin oversees all aspects of the Banks’ DEI efforts, as well as the Bank’s OMWI. Prior to joining the Bank, she consulted on diversity and inclusion strategy development and execution from 2018 to 2020. Prior to consulting, Ms. Baldwin was the deputy director, OMWI, at the National Credit Union Administration from 2016 to 2018. In addition, Ms. Baldwin previously served as assistant vice president, diversity and inclusion, at the Federal Reserve Bank of Chicago from 2011 to 2014. Ms. Baldwin received her undergraduate degree from Georgia State University and holds certifications in unconscious bias training and the Intercultural Development Inventory designed to assess cross-cultural competence.

Cherie Schuler is currently serving as the Senior Director of Member and Financial Operations, a position she has held since June 2022. Ms. Schuler previously served as Director of Member Financial Operations from 2018 to 2022, and has held various roles since joining the Bank in 1984. In her role, Ms. Schuler oversees the member and financial operations of the Bank, which includes the advance funding desk, membership, collateral management, and other bank operations. She also serves as the Office of Foreign Assets Control officer. Ms. Schuler earned her business degree from Upper Iowa University and obtained a certification from the Banking Administration Institute Graduate School of Operations and Payments. Ms. Schuler is also an Accredited Automated Clearing House Professional.

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Code of Ethics
We have adopted a Code that sets forth the guiding principles and rules of conduct by which we operate and conduct our daily business with our customers, vendors, shareholders, and fellow employees. The Code applies to all of our directors, officers, and employees. The purpose of the Code is to promote honest and ethical conduct and compliance with the law, particularly as it relates to the maintenance of our financial books and records and the preparation of our financial statements. The Code can be found on our website at www.fhlbdm.com. We disclose on our website any amendments to, or waivers of, the Code. The information contained in or connected to our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this or any report filed with the SEC.

Audit Committee
The purpose of the Audit Committee is to assist the Board of Directors in fulfilling its review and oversight responsibilities for (i) the integrity of the Bank’s financial statements and financial reporting process and systems of internal accounting and financial reporting controls, (ii) the independence, scope of audit services, and performance of the Bank’s internal audit function as well as the appointment or replacement of the Bank’s chief audit executive, (iii) the selection and replacement, qualifications, independence, scope of audit, and performance of the Bank’s external auditor, (iv) the Bank’s compliance with laws, regulations and policies, including the Code of Ethics, and (v) the policy for complaints regarding questionable accounting, internal accounting controls, and auditing matters, and oversight of fraud investigations. The Audit Committee has adopted a charter outlining its roles and responsibilities, which is available on our website at www.fhlbdm.com. The information contained in or connected to our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this or any report filed with the SEC.
The members of our Audit Committee for 2024 are Ruth Bennett (chair), Jon Jones (vice chair), Steven Bumann, Edward Garding, James Hunt, Russell Lau, and Elsie Meeks. The Audit Committee held a total of 13 meetings in 2023. As of February 29, 2024, the Audit Committee has held one meeting in 2024 and is scheduled to hold 11 meetings throughout the remainder of 2024. Refer to Exhibit 99.1 of this 2023 Annual Report for the Audit Committee Report.
Audit Committee Financial Expert
Our Board of Directors determined that all of the members of its Audit Committee qualify as audit committee financial experts under Item 407(d)(5) of Regulation S-K. Refer to “Item 13. Certain Relationships and Related Transactions, and Director Independence” for details on our director independence. For information concerning the experience through which these individuals acquired the attributes required to be deemed financial experts, refer to the biographical information in this Item 10.
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ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section provides information related to the administration of our executive compensation policies and programs. We believe we have historically taken a prudent and effective approach to executive compensation with practices aligned with the Finance Agency’s guidance on FHLBank executive compensation.

This section describes and analyzes our 2023 executive compensation program for:

the executive officer serving as CEO during 2023;

the executive officer serving as CFO during 2023; and

the three other most highly compensated executive officers who were serving as executive officers on December 31, 2023.

These executive officers are collectively referred to as our NEOs.

During 2023, we had certain changes to our executive team. On January 1, 2023, Ms. Jensen-Marren, formerly CFO, became CRCO. Effective January 17, 2023, Mr. Livingston became CFO.

This Compensation Discussion and Analysis includes the following parts:


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Compensation Philosophy
 
Our compensation philosophy, practices, and principles are important to our business strategy. Our philosophy assists us in attracting, retaining, and engaging employees with the skills and talent we need to create and implement strategies critical to our long-term success, ensuring we bring value for our members. Our executive compensation practices provide a framework to ensure an appropriately balanced approach to compensation through a combination of base salary, benefits, and annual and deferred cash incentive awards. Although we refine our compensation programs as economic conditions and competitive practices change, we strive to maintain consistency in our philosophy and approach with respect to executive compensation.
 
We believe our current employees and those individuals in our potential talent pool are highly marketable and can be attracted to opportunities across a broad spectrum of U.S. financial services businesses. Our competition for talent primarily includes FHLBanks, commercial banks, and other financial services companies, such as insurance companies.
 
We have designed our executive compensation program to motivate our NEOs to achieve our objectives for delivering value to our members, as customers and as shareholders, without taking undue risk.
 
Our executive compensation program is designed to do the following: 

i.Attract, motivate, reward, and retain the talent and skill sets important to run our business and execute our short- and long-term strategic objectives.
 
ii.    Link executive compensation to Bank performance while monitoring the Bank’s exposure to risk.
 
iii.    Structure our total compensation package for NEOs so that it is competitive relative to market. Our competitive market primarily consists of FHLBanks, commercial banks, and other financial services companies. We consider total compensation to be competitive at the 50th percentile of the market data.

iv.     Align with the Bank’s mission and culture.

In 2023, we executed on our executive compensation philosophy to provide competitive compensation to our NEOs that was aligned to the achievement of business objectives and Bank performance.

Elements of Executive Compensation

Our executive compensation program is comprised of the following elements: (i) base salary, (ii) an EIP that includes a 50 percent annual cash award and a 50 percent deferral of the incentive award, (iii) retirement benefits, (iv) health and welfare benefits, (v) the potential for payments in the event of termination, (vi) limited perquisites, and (vii) other amounts as defined. The following discussion provides more detail for each of these elements.
 
BASE SALARY
 
Base salary is a fixed component of our NEOs’ total compensation that is intended to provide a level of compensation necessary to attract and retain highly qualified executives. The Compensation Committee generally reviews the level of base salaries annually for all of our NEOs and approves and recommends to the Board of Directors adjustments to base salary for our President and CEO.

Our President and CEO is the only NEO with an employment agreement with us that sets forth minimum base salary. This employment agreement provides that we shall initially pay our President and CEO an annualized base salary of not less than the amount set forth in the agreement. Base salary may only be adjusted upward based on an annual review by the Board of Directors and may not be adjusted downward unless such downward adjustment is part of a nondiscriminatory cost reduction plan applicable to our total compensation budget. Base salary for all other NEOs is established by the President and CEO. For additional information regarding base salary, see the section entitled “Base Salary Levels” in this Item 11.


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EXECUTIVE INCENTIVE PLAN
 
In December 2022, the Compensation Committee approved the 2023 EIP, and in February 2023, approved the Bank-wide goal measures. In addition, we received a non-objection letter from the Finance Agency for our 2023 EIP in March 2023. The EIP includes an annual cash incentive and a deferred cash incentive. The Compensation Committee considers a variety of safety and soundness measures to determine the appropriate incentive payouts, such as (i) operational errors or omissions that result in material revisions to the financial results, information submitted to the Finance Agency, or data used to determine incentive payouts, (ii) untimely submission of information to the SEC, Office of Finance, or Finance Agency, (iii) failure to make sufficient progress, as determined by the Finance Agency, in the timely remediation of examination, monitoring, and other supervisory findings and matters requiring attention, (iv) failure to make sufficient progress in improving Finance Agency examination ratings, or (v) whether the Bank has sufficient capital to pay dividends and repurchase member stock. If one of the above occurs, the Compensation Committee will consider the facts and circumstances and reduce incentive awards commensurate with the materiality of the exception relative to our financial and operational performance and financial reporting responsibilities.

Under the EIP, our NEOs are required to defer 50 percent of their total cash incentive for three years following the end of the performance plan period. The 2023 deferred opportunities are payable in 2027. Beginning in 2021, the deferred opportunities include a four percent interest rate, credited annually. All deferred opportunities, including interest, are subject to the Bank’s sustained achievement of the safety and soundness measures described above and approvals by the Compensation Committee and Board of Directors. Prior to 2021, the deferred opportunities were also subject to the quarterly average of our MVCS. For more information on the calculation of deferred awards prior to 2021, refer to “Item 11. Executive Compensation — Elements of Executive Compensation” in our 2020 Form 10-K.

The 2023 EIP provides that unless otherwise directed by the Compensation Committee, payments under the EIP shall be made in a lump sum through regular payroll distribution, typically within 75 days after the end of the calendar year for which the performance or deferral period is ended, but in any event by the end of the calendar year following the performance or deferral period.

Under the EIP, the Compensation Committee may determine an NEO is not eligible to receive an incentive payout if the respective NEO (i) has not achieved a performance level of “meets expectations” or higher evaluation of overall performance during a performance period or deferred performance period, (ii) is subject to any disciplinary action or probationary status at the time of payout, or (iii) fails to comply with regulatory requirements or standards, internal control standards, professional standards or any internal standard, or fails to perform responsibilities assigned under our SBP.

For additional information about our EIP, see “EIP Award Opportunities” and “EIP Performance Measures and Results” in this Item 11.

RETIREMENT BENEFITS
We have one qualified defined contribution benefit plan, the DC Plan. We also offer the BEP, a nonqualified retirement plan which includes a nonqualified defined contribution plan. The BEP allows the NEOs to receive amounts they would have been entitled to receive under the DC Plan had the plan not been subject to Internal Revenue Code contribution limitations.
We previously participated in the DB Plan, a tax-qualified defined benefit pension plan. In August of 2016, our Board of Directors elected to freeze the DB Plan effective January 1, 2017. After the freeze, participants no longer accrued new benefits under the DB Plan. On May 2, 2023, we completed a purchase agreement with Principal Life Insurance Company pursuant to which we transferred to them the future benefit obligations and annuity administration for participants under the DB Plan. As such, we are no longer a party to the DB Plan. For additional information, refer to the purchase agreement set forth in “Item 15. Exhibits and Financial Statements Schedules.”


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The table below shows which retirement plans each NEO participates in:
NEOPrincipal PositionRetirement Plans
Kristina K. WilliamsPresident and CEO
DC Plan, BEP DC Plan
James G. Livingston
CFO
DC Plan, BEP DC Plan
William W. OsbornCBO
DC Plan, BEP DC Plan
Joelyn R. Jensen-Marren
CRCO
DC Plan, BEP DC Plan
Kevin T. Larkin1
CIO
DC Plan

1    Mr. Larkin has previously participated in the BEP DC Plan; however, he did not contribute to the BEP DC Plan during 2023.

For additional information about our retirement benefits, see “Benefits and Retirement Philosophy” in this Item 11.

HEALTH AND WELFARE BENEFITS
 
Our NEOs are eligible for the same medical, dental, life insurance, and other benefits available to our full-time employees.
 
PAYMENTS IN THE EVENT OF TERMINATION
 
Our President and CEO has an employment agreement with us, which provides for payments in the event of termination based on certain triggering events. All other NEOs are subject to the Bank’s Executive Severance Plan, set forth in “Item 15. Exhibits and Financial Statements Schedules.” For additional details, see “Potential Payments Upon Termination or Change of Control” in this Item 11.

PERQUISITES
 
Our NEOs are eligible to receive perquisites as a convenience associated with their overall duties and responsibilities. Our President and CEO was eligible to receive a monthly car allowance. All NEOs generally qualify for certain other perquisites, such as financial planning assistance, mobile technology allowance, and/or relocation reimbursements. For additional details, see “Components of All Other Compensation” in this Item 11.

OTHER

Our NEOs may be eligible to receive a hiring bonus and other benefits. Ms. Williams received an additional contribution to her BEP DC Plan in 2021 after the completion of her first year of employment. Mr. Livingston received a hiring bonus in 2023. Mr. Osborn and Mr. Larkin each received a bonus in 2021 after the completion of their first year of employment.

Finance Agency Oversight - Executive Compensation
 
In addition to our internal processes, the Finance Agency has oversight authority over our executive compensation. The FHLBanks provide all compensation actions affecting their NEOs to the Finance Agency for review and non-objection.

Applicable rules also establish the following principles for executive compensation:
 
i.executive compensation must be reasonable and comparable to that offered to executives in similar positions at comparable financial institutions;
 
ii.    executive compensation should be consistent with sound risk management and preservation of the par value of the FHLBank’s capital stock;

iii.    a significant percentage of an executive’s incentive-based compensation should be tied to longer-term performance and outcome indicators and be deferred and made contingent upon performance over several years; and
 
iv.    the Board of Directors should promote accountability and transparency in the process of setting compensation.

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Roles and Responsibilities of the Board of Directors, Compensation Committee and Management in Establishing Executive Compensation
 
Merit increases are based upon an evaluation of an NEO’s overall performance. Because of our size and the number of NEOs involved, our President and CEO recommends to the Compensation Committee merit increases for the other NEOs. The Board of Directors completes an evaluation of our President and CEO’s performance and the Compensation Committee recommends compensation for our President and CEO to the Board of Directors for approval. The Compensation Committee and our President and CEO consider overall performance in key focus areas aligned with our SBP for the year, and review NEO compensation relative to the market, in analyzing merit increases. Any employment or severance agreement for our President and CEO is also approved by the Board of Directors.

Throughout the year, the Board of Directors reviews our Bank-wide goals and achievement levels. When final Bank performance metrics for a calendar year are determined, the Compensation Committee reviews the performance results to determine the level of performance that has been achieved for purposes of making incentive compensation decisions for our NEOs. Our Compensation Committee approves the Bank-wide goals framework and approves the incentive awards comprised of Bank-wide goals.

Analysis Tools the Compensation Committee Uses
 
For 2023, the Compensation Committee engaged McLagan Partners to conduct an assessment and make recommendations regarding compensation for our executives based on the results of their competitive analysis. This included identification of sources of market data for purposes of the competitive compensation assessments of base pay and annual and deferred cash incentives. This analysis compared the compensation of our executives utilizing the following sources:

Public disclosures (e.g., proxy statements and annual reports) for the top five highest paid executives at banks with assets between $10 billion and $20 billion;

the FHLBank System; and

Commercial banks included in the McLagan assessment.

The primary market comparison for their assessment was commercial banks from the McLagan data and the other FHLBanks. This was used to determine the market median for each position, which the Compensation Committee and President and CEO used to inform themselves regarding trends in compensation practices and as a comparison check against general market data. When using FHLBank System comparisons, our executives are compared to the same position within the FHLBanks. When using commercial bank comparisons, our executive positions are compared to roles with similar overall responsibility.

Compensation Decisions in 2023
 
How we compensate our NEOs sets the tone for how we administer pay throughout the entire Bank. For 2023, our Compensation Committee considered numerous factors (including those previously discussed) before deciding on the appropriate total compensation for our NEOs, in the context of the current business, operating, and regulatory environment, which are more fully described in the following narrative.

BASE SALARY LEVELS
 
The Compensation Committee followed its historical practice of adjusting base salaries after a review of individual performance and current compensation of our NEOs. The Compensation Committee determined that an increase in our President and CEO’s base salary for 2023 was appropriate and, based on the President and CEO’s recommendations, that increases for the other NEOs were appropriate based on (i) each NEOs’ individual performance, contributions to the Bank, length of time in position, and changes in responsibilities, if applicable, and (ii) a review of the McLagan Partners’ executive compensation survey data. The NEOs’ base salaries, presented in the “Summary Compensation Table” in this Item 11, become effective January 1st of each year, unless described otherwise.


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EIP AWARD OPPORTUNITIES 
EIP pay targets established for our NEOs take into consideration total compensation practices (base salary and incentives) of the survey data reviewed. Under the EIP, our NEOs are assigned target award opportunities, stated as percentages of base salary. The target award opportunities are determined based on market data and level of responsibility and are approved by our Compensation Committee.

Awards are paid to our NEOs based upon the achievement level of Bank-wide goals as determined by the Compensation Committee. In addition, 50 percent of the incentive award for NEOs is deferred for three years following the end of the performance period, and subject to the Bank’s sustained achievement of the applicable safety and soundness measures, as defined in the EIP, and the Compensation Committee’s and Board of Directors’ approvals at the time of payment.

The annual and deferred EIP award opportunities for our NEOs in 2023 were a percentage of base salary as follows:
TitleIncentive
Plan
ThresholdTargetMaximum
President and CEO Annual25.0%42.5%50.0%
Deferred25.0%42.5%50.0%
Other NEOsAnnual20.0%30.0%40.0%
Deferred20.0%30.0%40.0%


The following table provides estimated potential payouts under our EIP:
2023 Grants of Plan-Based Awards
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards1
NEOThresholdTargetMaximum
Kristina K. Williams$525,283 $892,981 $1,050,566 
James G. Livingston
162,327 243,490 324,654 
William W. Osborn186,000 279,000 372,000 
Joelyn R. Jensen-Marren170,000 255,000 340,000 
Kevin T. Larkin170,000 255,000 340,000 

1    Amounts consist of the annual incentive (50 percent of total incentive) and deferred incentive (50 percent of total incentive). The total deferred award payout may include four percent interest, credited annually, which is not included in the table above. All deferred incentive and interest payments are subject to the Bank’s sustained achievement of the 2023 safety and soundness measures and Compensation Committee’s and Board of Directors’ approvals at the time of payment.

EIP PERFORMANCE MEASURES AND RESULTS
 
In December 2022, the Compensation Committee approved the Bank-wide goals framework for 2023. In February 2023, the Compensation Committee approved the Bank-wide goal measures for 2023, which are summarized below:

i.Improvement of Advance Penetration is measured by the dollar amount of advance usage relative to each member’s total assets in the Bank’s district. The goal will be measured in comparison to the other Federal Home Loan Banks.

ii.Core Product Utilization is measured by the utilization of core products by all Bank members, including all advances, standby letters of credit, and MPF (including on balance sheet and off balance sheet).

iii.Reduction of Operational Risk is measured by the completion of projects and initiatives in 2023 according to scope, timelines and success measures approved by management.

iv.Spread Between AROCS and SOFR While Maintaining Market Value Sensitivity within Limits is a measure of profitability in which GAAP net income is adjusted for certain non-routine or unpredictable items. For additional information on our adjusted earnings measure, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Adjusted Earnings.”

v.DEI is a measure of our progress on DEI initiatives.

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The Bank’s EIP design has historically included Bank-wide goals. This plan design has resulted in reasonable payouts to our NEOs. We believe this plan design has accomplished and driven the behaviors of all employees, including our NEOs, in accordance with our Board of Directors’ expectations.

For 2023, NEO incentive awards are tied entirely to the achievement of Bank-wide goals, with weighting determined by the Compensation Committee based upon the need for our NEOs to focus on certain strategic imperatives and/or strategies contained in our SBP.

When establishing the Bank-wide goals, the Compensation Committee and the Board of Directors anticipated that we would reasonably achieve the target level of performance aligned with objectives contained in our SBP. The maximum level provides a goal that is anticipated to be more challenging to reach, based on the previous year’s performance results and current market trends and conditions. The Bank-wide goal incentive awards are paid based on the actual results we achieve. The weightings for each goal area are generally aligned with our SBP and areas of key focus. The 2023 to 2025 SBP was approved by the Board of Directors in December 2022.

On a regular basis during 2023, management provided updates to the Board of Directors on the status of performance relative to Bank-wide goals. The following table provides the 2023 EIP Bank-wide goals for our NEOs as well as our performance results, which were approved by the Board of Directors in February 2024:
Bank-wide Goals
 2023 Results
ThresholdTargetMaximum
Improvement of Advance Penetration (20% Weight)
6th in the FHLBank System
9th in the FHLBank System7th in the FHLBank System5th in the FHLBank System
Core Product Utilization (10% Weight)
73 %63 %66 %69 %
Reduction of Operational Risk (30% Weight)
5/7
2/74/76/7
Spread Between AROCS and SOFR While Maintaining Market Value Sensitivity within Limits (30% Weight)
9.16 %5.05 %6.05 %7.05 %
DEI (10% Weight)
5/52/53/55/5

The overall weighted achievement of the Bank-wide goals was 113.24 percent of target for our President and CEO and 125.00 percent of target for all other NEOs. Based on these results, the Compensation Committee awarded each NEO the amounts identified in the following table. We received a non-objection letter from the Finance Agency for the Bank-wide Performance awards in February 2024:
NEO
Annual Incentive1
Deferred Incentive1
Interest Earned on Deferred Incentive2
Total Bank-wide Performance Award
Kristina K. Williams$505,606 $505,606 $33,080 $1,044,292 
James G. Livingston
152,181 152,181 — 304,362 
William W. Osborn174,375 174,375 12,221 360,971 
Joelyn R. Jensen-Marren159,375 159,375 10,077 328,827 
Kevin T. Larkin159,375 159,375 9,851 328,601 
1    Bank-wide performance award consists of an annual incentive (50 percent of total incentive), paid in 2024 and a deferred incentive (50 percent of total incentive). The deferred incentive amounts were earned as of December 31, 2023, but will not be paid until 2027, and remain subject to the Bank’s sustained achievement of the 2023 safety and soundness measures and Compensation Committee’s and Board of Directors’ approvals at the time of payment.
2    Represents four percent compounded interest earned on the 2021 deferred incentive, which will be paid in 2025, and four percent interest earned on the 2022 deferred incentive, which will be paid in 2026, subject to the Bank’s sustained achievement of all applicable safety and soundness measures and Compensation Committee’s and Board of Directors’ approvals at the time of payment.


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The following table illustrates for each NEO the maximum amount of unpaid deferred awards as of December 31, 2023 distributable under the EIP for 2020, 2021, 2022, and 2023, assuming the Bank achieved all applicable safety and soundness measures and no additional discretion is exercised by the Board of Directors:
NEO
Amount Distributable in 20241
Amount Distributable in 20252
Amount Distributable in 20262
Amount Distributable in 20272
Total
Kristina K. Williams$404,713 $393,480 $521,052 $568,738 $1,887,983 
James G. Livingston
— — — 171,183 171,183 
William W. Osborn68,419 145,485 192,357 196,148 602,409 
Joelyn R. Jensen-Marren131,364 120,407 158,159 179,275 589,205 
Kevin T. Larkin98,724 116,354 156,023 179,275 550,376 
1     Represents the 2020 deferred incentive awards payable in 2024, and includes the maximum MVCS multiplier of 110 percent.
2    Represents the 2021, 2022, and 2023 deferred incentive awards payable in 2025, 2026, and 2027, and includes four percent interest, compounded annually, over the three-year deferral period.

SUMMARY COMPENSATION TABLE

The following table provides compensation information for our NEOs, as applicable, for the years ended December 31, 2023, 2022, and 2021:
Summary Compensation Table
Name and Principal PositionYearSalaryBonus
Non-Equity Incentive Plan Compensation1
Change in Pension Value and Non-Qualified Deferred Compensation Earnings2
All Other
Compensation3
Total
Kristina K. Williams4
2023$1,050,566 $— $1,044,292 $— $145,302 $2,240,160 
President and CEO2022955,060 — 940,419 — 94,851 1,990,330 
2021901,000 — 699,604 — 623,518 2,224,122 
James G. Livingston5
2023405,817 150,000 304,362 — 233,430 1,093,609 
CFO
William W. Osborn6
2023465,000 — 360,971 — 65,278 891,249 
CBO2022450,000 — 347,182 — 53,856 851,038 
2021425,000 50,000 258,672 — 41,375 775,047 
Joelyn R. Jensen-Marren2023425,000 — 328,827 — 43,835 797,662 
CRCO
2022370,000 — 285,489 — 30,500 685,989 
2021351,740 — 214,084 — 29,000 594,824 
Kevin T. Larkin6
2023425,000 — 328,601 — 36,558 790,159 
CIO2022365,000 — 281,545 — 39,038 685,583 
2021339,900 125,000 206,876 — 31,000 702,776 

1    For 2023, represents incentive compensation earned in 2023, including annual incentive (50 percent of total incentive), payable in 2024, and deferred incentive (50 percent of total incentive), payable in 2027. In addition, incentive compensation includes four percent compounded interest earned on the 2021 deferred incentive, and four percent interest earned on the 2022 deferred incentive, as applicable. Both the deferred incentive and interest remain subject to the Bank’s sustained achievement of all applicable safety and soundness measures and Compensation Committee’s and Board of Directors’ approvals at the time of payment.

2    All earnings on non-qualified deferred compensation are at the market rate and therefore are not required to be included in this table.

3    The components of this column for 2023 are provided in the “Components of All Other Compensation” table within this Item 11.

4    Ms. Williams received an additional BEP DC Plan contribution of $525,000 in 2021 following the completion of one year of employment with the Bank, which is reflected in the “All Other Compensation” column.

5    Mr. Livingston’s 2023 salary, non-equity incentive, and all other compensation are based on the period of his employment with the Bank from January 17, 2023 through December 31, 2023. Mr. Livingston also received a one-time bonus in 2023 related to the start of his employment with the Bank.

6    Mr. Osborn and Mr. Larkin each received a one-time bonus in 2021 following the completion of one year of employment with the Bank.


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COMPONENTS OF ALL OTHER COMPENSATION
Bank Contributions to Vested Defined Contribution Plans
NEODC PlanBEP DC Plan
Perquisites and Other Personal Benefits1
Total
Kristina K. Williams$33,000 $102,462 $9,840 $145,302 
James G. Livingston
21,700 18,456 193,274 233,430 
William W. Osborn30,141 34,297 840 65,278 
Joelyn R. Jensen-Marren
26,842 16,153 840 43,835 
Kevin T. Larkin2
33,000 — 3,558 36,558 

1    Perquisites and other personal benefits for Mr. Livingston included relocation expenses of $192,469 and a mobile technology allowance of $805.

2    Mr. Larkin has previously participated in the BEP DC Plan; however, he did not contribute to the BEP DC Plan during 2023.


Benefits and Retirement Philosophy

We consider benefits to be an important aspect of our ability to attract and retain qualified employees and therefore we design our programs to be competitive with financial services businesses. The following is a summary of the retirement benefits that NEOs were eligible to receive.

QUALIFIED DEFINED CONTRIBUTION PLAN

All employees who have met the eligibility requirements may elect to participate in our DC Plan, a retirement savings plan qualified under the Internal Revenue Code. Employees (including NEOs) may receive a match on employee contributions at 100 percent up to six percent of eligible compensation. Employees are eligible for the match immediately and all matching contributions are immediately 100 percent vested. Effective January 1, 2017, all employees also began receiving a discretionary Bank contribution of eligible compensation (generally four percent) to the DC Plan following the end of each calendar year. Vesting in the discretionary contribution is 100 percent at the completion of three years of service.

NON-QUALIFIED DEFINED CONTRIBUTION PLAN

Our NEOs are eligible to participate in the BEP DC Plan, a non-qualified defined contribution plan that is similar to the DC Plan. The BEP DC Plan ensures, among other things, that participants whose benefits under the DC Plan would otherwise be restricted by certain provisions of the Internal Revenue Code are able to make elective pre-tax deferrals and to receive a matching contribution relating to such deferrals. The investment returns credited to a participating NEO’s account are at the market rate for the NEO’s selected investment. The selections may be altered at any time. Aggregate earnings are calculated by subtracting the 2022 year-end balance from the 2023 year-end balance, less the NEO’s and Bank’s contributions. The Bank matches 100 percent of NEOs’ contributions up to six percent of salary for salary and annual incentive deferrals. Effective January 1, 2021, participants also began receiving a discretionary Bank contribution (generally four percent) of eligible compensation above the limits set by the Internal Revenue Code into the BEP DC Plan following the end of each calendar year. In addition, we may elect to provide a discretionary contribution to an executive upon approval by the Board of Directors and subject to non-objection by the Finance Agency.

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2023 Non-Qualified Deferred Compensation Table
NEO
Executive
Contributions
In Last FY1
Bank
Contributions
In Last FY2
Aggregate
Earnings (Losses)
In Last FY3
Aggregate Withdrawals/Distributions In Last FY
Aggregate
Balance
At Last FYE4
Kristina K. Williams$105,057 $102,462 $120,887 $— $2,185,498 
James G. Livingston
257,047 18,456 46,597 (12,796)391,402 
William W. Osborn51,150 34,297 27,435 — 168,456 
Joelyn R. Jensen-Marren
8,500 16,153 678 — 8,824 
Kevin T. Larkin5
— — 1,561 — 9,835 

1    Amounts represent NEOs’ contributions for 2023, which include the base salary deferral into the BEP during 2023 as well as the amount of the 2023 incentive the NEO deferred into the BEP in 2024. Amounts shown are included in both the “Salary” and “Non-Equity Incentive” columns of the “Summary Compensation Table” in this Item 11.

2    Amounts represent the Bank’s contributions for 2023, which include the base salary match, the 2023 incentive match , and a discretionary contribution. Amounts shown are included in the “All Other Compensation” column of the “Summary Compensation Table” in this Item 11.

3    All earnings on non-qualified deferred compensation are at the market rate. As a result, these amounts are not shown in the “Summary Compensation Table” in this Item 11.

4    Amounts represent the NEOs’ balances on December 31, 2023, and do not include contributions deposited into the NEOs’ account subsequent to the last fiscal year-end. Ms. Williams’ aggregate balance includes $1,957,956 of contributions reported in a prior year “Summary Compensation Table”. Mr. Osborn’s aggregate balance includes $102,652 of contributions reported in a prior year “Summary Compensation Table”. Mr. Larkin’s aggregate balance includes $8,607 of contributions reported in a prior year “Summary Compensation Table”. Mr. Livingston’s aggregate balance also includes contributions from when he served on the Bank’s Board of Directors.

5    Mr. Larkin has previously participated in the BEP DC Plan; however, he did not contribute to the BEP DC Plan during 2023.


CEO Compensation Pay Ratio

As required by Item 402(u) of Regulation S-K, we are providing the following information:

For 2023, our last completed fiscal year:

i.The median of the annual total compensation of all employees of the Bank (other than Ms. Williams), was $142,436; and
ii.The annual total compensation of Ms. Williams, our President and CEO, was $2,240,160.

Based on this information, the ratio for 2023 of the annual total compensation of our President and CEO to the median of the annual total compensation of all employees is 16 to 1.

We identified our median employee and calculated our pay ratio in accordance with SEC rules and methods for disclosure as described below.

i.SEC rules allow us to identify our median employee once every three years unless there has been a change in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change in our pay ratio disclosure. We last identified our median employee in 2021; however, as a result of changes in our median employee’s position and compensation, we were required to identify a new median employee in 2023.

ii.We identified our employee population as of December 31, 2023, including any full-time, part-time, temporary, and seasonal employees employed on that date. This date was selected because it aligned with the calendar and fiscal year end and allowed us to identify employees in a reasonably efficient manner.

iii.To find our median employee, excluding our President and CEO, we reviewed the 2023 annual salary for each employee that was employed as of December 31, 2023, and ranked all employees by that consistently applied compensation measure. In making this determination, we annualized the salary of full-time and part-time employees who were employed on December 31, 2023, but did not work for us the entire year. No full-time equivalent adjustments were made for part-time employees. Using this population, we then identified the initial median employee, and the next five employees lower and higher than that initial median employee, resulting in a total pool of 11 employees. We then calculated the 2023 total compensation, annualized if applicable, for each of these 11 employees in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K and in the same manner as for our President and CEO. We ranked the 2023 total compensation for each of these 11 employees, and identified our median employee.

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iv.With respect to the annual total compensation of our President and CEO, we used the 2023 amount reported in the “Total” column of our “Summary Compensation Table” in this Item 11.

Potential Payments Upon Termination or Change of Control

The definitions below are applicable to our President and CEO, who is the only NEO with an employment agreement. For purposes of the following discussion regarding potential payments upon termination or change of control, the following are the definitions of “Cause,” “Good Reason,” “Disability,” and “Change of Control.”

“Cause” generally means a felony conviction, a willful act of misconduct that materially impairs the Bank’s business or goodwill or causes material damage, a willful breach of certain representations in the employment agreement, a willful and continued failure to perform material duties, a willful material violation of the Bank’s Code of Ethics, or receipt by the Bank of any regulatory order that the NEO be terminated or the NEO’s authority be materially reduced.

“Good Reason” generally means a reduction in the NEO’s base salary or incentive plan bonus opportunity, unless as part of a nondiscriminatory cost reduction applicable to the Bank’s total compensation budget; a reduction in the NEO’s corporate officer title, a material change by the Bank in the geographic location in which the NEO is required to perform services, or a material breach of the employment agreement, as applicable, by the Bank.

“Disability” means the NEO is receiving benefits under a disability plan sponsored by the Bank for a period of not less than three months by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months and which has rendered the NEO incapable of performing their duties.

“Change of Control” means a merger, reorganization, or consolidation of the Bank with or into another FHLBank or other entity, a sale or transfer of all or substantially all of the business or assets of the Bank to another FHLBank or other entity, the purchase by the Bank or transfer to the Bank of all or substantially all of the business or assets of another FHLBank, or the liquidation of the Bank.

All NEOs other than our President and CEO are subject to the Bank’s Executive Severance Plan and other Bank policies. Copies of the employment agreement for our President and CEO, as well as the Executive Severance Plan, are set forth in “Item 15. Exhibits and Financial Statements Schedules”, and summarized below.

TERMINATION FOR CAUSE OR WITHOUT GOOD REASON

If an NEO’s employment is terminated by us for Cause or by the NEO without Good Reason, the NEO may be entitled to the following:
 
i.    Base salary accrued through the date of termination;
 
ii.    Accrued but unpaid incentive plan award(s) earned in a year prior to the year of termination and due to be paid in the year in which termination occurs;

iii.    Accrued and earned vacation through the date of termination; and/or
 
iv.    All other vested benefits under the terms of our employee benefit plans, subject to the terms of such plans.


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Assuming one or more of the previously discussed events triggering receipt of termination payments had occurred as of December 31, 2023, the total amounts payable to our NEOs are outlined in the table below:
Termination For Cause or Without Good Reason
NEO
Severance Pay1
Annual Incentive2
Deferred Incentive2
Vacation Payout3
Total
Kristina K. Williams$— $— $— $54,549 $54,549 
James G. Livingston
— — — 2,043 2,043 
William W. Osborn
— — — 35,769 35,769 
Joelyn R. Jensen-Marren
— — — 6,538 6,538 
Kevin T. Larkin
— — — 2,861 2,861 

1    Termination under these circumstances would not result in severance payments from the Bank but would result in payment of salary earned through December 31, 2023, as reflected under the “Salary” column of the “Summary Compensation Table” in this Item 11.

2    Termination under these circumstances would not result in an incentive award payment since the award would have already been received as of December 31, 2023.

3    This amount represents accrued but unused vacation and would be paid in a lump sum upon termination. All NEOs are eligible to receive a payout in connection with unused vacation according to Bank policies.


TERMINATION WITHOUT CAUSE, FOR GOOD REASON, OR FOLLOWING A CHANGE IN CONTROL

If, however, the NEO’s employment is terminated by us without Cause, by the NEO for Good Reason, or following a Change in Control, in addition to the payouts previously mentioned, the NEO may be entitled to the following:
 
i.    Two times the annual base salary in effect on the date of termination for the President and CEO, or, in the case that the termination occurs within 24 months following a Change of Control, 2.99 times the annual base salary in effect on the date of termination for the President and CEO;

ii.     Minimum of 26 weeks of base salary for NEOs other than the President and CEO;

iii.    One times the targeted non-deferred EIP award in effect for the calendar year in which the date of termination occurs, or, in the case that the termination occurs within 24 months following a Change of Control, 2.99 times the targeted non-deferred plan award in effect for the calendar year in which the date of termination occurs for the President and CEO;
 
iv.    The EIP award for the calendar year in which the date of termination occurs for the President and CEO and prorated for the portion of the calendar year in which the President and CEO was employed;
 
v.    The accrued but unpaid incentive plan awards covering periods prior to the one in which the President and CEO’s employment was terminated, calculated in accordance with the terms of the EIP; and
 
vi.    Any benefits mandated under any applicable health care continuation laws, provided that the Bank will continue paying its portion of the medical and/or dental insurance premiums for the President and CEO for the one-year period following the date of termination, and medical benefits continuation for six months following the date of termination for all other NEOs.

Payments of all accrued amounts, other than EIP award amounts, shall generally be paid in a lump sum within ten days or no later than the first payroll date on or after the NEO’s date of termination. Payment of all EIP award amounts, if any, shall be paid as otherwise provided under the EIP.


138


Assuming one or more of the previously discussed events triggering receipt of termination payments had occurred as of December 31, 2023, the total amounts payable to our NEOs are outlined in the table below:

Termination Without Cause or For Good Reason
NEOSeverance PayAnnual IncentiveDeferred Incentive
Vacation Payout1
Total
Kristina K. Williams$2,101,132 $952,097 $1,887,983 $54,549 $4,995,761 
James G. Livingston
212,500 — — 2,043 214,543 
William W. Osborn
232,500 — — 35,769 268,269 
Joelyn R. Jensen-Marren
212,500 — — 6,538 219,038 
Kevin T. Larkin
212,500 — — 2,861 215,361 

1     This amount represents accrued but unused vacation and would be paid in a lump sum upon termination. All NEOs are eligible to receive a payout in connection with unused vacation in accordance with the Bank’s Executive Severance Plan.


Assuming one or more of the previously discussed events triggering receipt of termination payments had occurred as of December 31, 2023, the total amounts payable to our NEOs are outlined in the table below:

Termination Following Change in Control
NEOSeverance PayAnnual IncentiveDeferred Incentive
Vacation Payout1
Total
Kristina K. Williams$3,141,192 $1,840,613 $1,887,983 $54,549 $6,924,337 
James G. Livingston
212,500 — — 2,043 214,543 
William W. Osborn
232,500 — — 35,769 268,269 
Joelyn R. Jensen-Marren
212,500 — — 6,538 219,038 
Kevin T. Larkin
212,500 — — 2,861 215,361 

1    This amount represents accrued but unused vacation and would be paid in a lump sum upon termination. All NEOs are eligible to receive a payout in connection with unused vacation in accordance with the Bank’s Executive Severance Plan.


TERMINATION FOR DEATH, DISABILITY, OR RETIREMENT

If the NEO’s employment is terminated due to death, disability, or qualifying retirement, in addition to the payouts previously mentioned under the section entitled “Termination For Cause or Without Good Reason,” the NEO may be entitled to the following:
 
i.    The EIP award for the calendar year in which the date of termination occurs and prorated for the portion of the calendar year in which the NEO was employed;
 
ii.    To the extent not already paid to the NEO, the accrued but unpaid incentive plan awards covering periods prior to the one in which the NEO’s employment was terminated; and
 
iii.    Other coverage continuation rights that are available to such employees upon death, disability, or retirement, as provided for under the terms of such plans.

Payment of all accrued amounts, other than EIP award amounts, shall be paid in a lump sum within ten days or no later than the first payroll date on or after the NEO’s date of termination. Payment of all EIP award amounts, if any, shall be paid as otherwise provided under the applicable EIP.


139


Assuming one or more of the previously discussed events for the receipt of termination payments had occurred as of December 31, 2023, the total amounts payable to our NEOs are outlined in the table below:
Termination by Death, Disability, or Retirement
NEOSeverance PayAnnual IncentiveDeferred Incentive
Vacation Payout1
Total
Kristina K. Williams$— $505,606 $1,887,983 $54,549 $2,448,138 
James G. Livingston
— 152,181 171,183 2,043 325,407 
William W. Osborn
— 174,375 602,409 35,769 812,553 
Joelyn R. Jensen-Marren
— 159,375 589,205 6,538 755,118 
Kevin T. Larkin
— 159,375 550,376 2,861 712,612 

1    This amount represents accrued but unused vacation and would be paid in a lump sum upon termination. All NEOs are eligible to receive the amounts disclosed in accordance with Bank policies.


EMPLOYMENT AGREEMENT BETWEEN KRISTINA K. WILLIAMS AND THE BANK

The Bank entered into an employment agreement with Kristina K. Williams, effective January 20, 2020, in order to establish her duties and compensation and to provide for her employment as President and CEO of the Bank.

The employment agreement provides that the Bank would initially pay Ms. Williams a base salary of $850,000, subject to adjustment as described in the employment agreement.

Subject to review by the Finance Agency, Ms. Williams’ incentive target will generally not be set lower than 85 percent of her base salary. The Bank paid, or reimbursed Ms. Williams for, all reasonable relocation expenses incurred by Ms. Williams in relocation to the Des Moines area up to the maximum of $250,000. Ms. Williams is also eligible for certain perquisites, including a car allowance in the amount of $750 per month.

Ms. Williams’ employment agreement provides that:

the Bank or Ms. Williams may terminate employment for any reason (other than Good Reason or Cause) following 60 days’ written notice to the other party;

the Bank may terminate for Cause immediately following written notice to Ms. Williams; and

Ms. Williams may terminate for Good Reason following written notice to the Bank;
in each case, in accordance with the procedures set forth in the employment agreement.

Amounts payable under the employment agreement are subject to reduction in the event the amounts constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code.

Termination for Cause or Without Good Reason

If Ms. Williams’ employment is terminated by the Bank for Cause or by Ms. Williams without Good Reason, the employment agreement entitles Ms. Williams to the benefits set forth under the heading “Termination for Cause or Without Good Reason.”

Termination Without Cause, for Good Reason, Following a Change of Control, or Within a Specified Period of Time Following the Effective Date of the Employment Agreement

If Ms. Williams’ employment is terminated by the Bank without Cause or by Ms. Williams for Good Reason, in addition to the payouts previously mentioned under “Termination for Cause or Without Good Reason,” the employment agreement entitles Ms. Williams to additional amounts, including the benefits set forth under the heading “Termination without Cause, for Good Reason, or following a Change in Control.”
140


Termination for Death, Disability, or Retirement

If Ms. Williams’ employment is terminated due to death, disability, or qualifying retirement, in addition to the payouts described in the section entitled “Termination for Cause or Without Good Reason,” she would also be entitled to the benefits set forth under the heading “Termination for Death, Disability or Retirement.”
Director Compensation
 
During 2023, the Board of Directors held 12 board meetings and 61 committee meetings. Pursuant to our Director Fee Policy, Directors receive one quarter of the annual compensation following the end of each calendar quarter. If it is determined at the end of the calendar year that a Director has attended less than 75 percent of the meetings they were required to attend during the year, the Director will not receive the fourth quarter payment for such calendar year.

Directors are expected to attend all Board meetings and meetings of the Committees on which they serve, and to remain engaged and actively participate in all meetings. In addition to our right to withhold fourth quarter annual compensation from a Director, the Board of Directors directs the Corporate Secretary to make any other appropriate adjustments in the payments to any Director who regularly fails to attend Board meetings or meetings of Committees on which the Director serves, or who consistently demonstrates a lack of participation in or preparation for such meetings, to ensure that no Director is paid fees that do not reflect that Director’s performance of his/her duties. To assist the Board in making such determinations, the Corporate Secretary will, on a quarterly basis and prior to payment of the most recently completed quarter’s Director fees, review the attendance of each Director during the quarter and raise any attendance issues identified with the Board Chair. In the event the potential issue involves the Board Chair, the Corporate Secretary will raise such issue with the Board Vice Chair.

Directors are eligible to participate in the Bank’s Deferral Plan for Directors. Under this plan, directors may elect to defer all or a portion of their directors’ fees. See the Bank’s Deferral Plan for Directors set forth in “Item 15. Exhibits and Financial Statements Schedules”, for additional information.

The total expenses paid on behalf of the Board of Directors for travel and other reimbursed expenses for 2023 was $353 thousand and annual compensation paid to the Board of Directors, by position, for 2023 was as follows:
Board of Director Position2023
Chair$155,000 
Vice Chair140,000 
Audit, Risk and Compliance, and Compensation Committee Chairs
135,000 
All Other Committee Chairs
130,000 
All Other Directors
120,000 


141


The following table sets forth each Director’s compensation for the year ended December 31, 2023:
Director Compensation
Director Name
Fees Earned Or
Paid In Cash
Ellen Z. Lamale (Chair)$155,000 
Karl A. Bollingberg (Vice Chair)140,000 
Ruth B. Bennett135,000 
Steven L. Bumann120,000 
Cleon P. Butterfield120,000 
Douglas L. DeFries120,000 
Kim R. DeVore
120,000 
Edward A. Garding120,000 
Chris D. Grimm120,000 
James W. Hunt120,000 
Amy K. Johnson120,000 
Jon M. Jones120,000 
Teresa J. Keegan135,000 
Joe R. Kesler130,000 
John A. Klebba135,000 
Wan-Chong Kung
120,000 
Russell J. Lau120,000 
Lauren M. MacVay130,000 
Elsie M. Meeks 130,000 
Jason A. Meyerhoeffer130,000 
Siva G. Narendra120,000 
Carol K. Nelson120,000 
The Compensation Committee approved the Director Fee Policy for 2024. This policy is listed as an exhibit to this annual report on Form 10-K. Refer to “Item 15. Exhibits and Financial Statement Schedules” for additional information.

Compensation Committee Report
 
The Compensation Committee reviewed and discussed the 2023 Compensation Discussion and Analysis set forth in Item 11 with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this annual report on Form 10-K. The Compensation Committee includes the following individuals:
Compensation Committee
Douglas L. DeFries (Chair)
Jon M. Jones (Vice Chair)
Amy K. Johnson
Elsie M. Meeks
Carol K. Nelson
Robert J. Vogel

142


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table presents members (or combination of members within the same holding company) holding five percent or more of our outstanding capital stock at February 29, 2024 (shares in thousands):
NameAddressCityStateShares of Capital Stock% of Total Capital Stock
Wells Fargo Bank, N.A.101 N. Phillips AveSioux FallsSD16,335 24.5 %
Superior Guaranty Insurance Company1
76 Saint Paul St.Burlington VT55 0.1 
    16,390 24.6 
All others   50,345 75.4 
Total capital stock   66,735 100.0 %

1    Superior Guaranty Insurance Company is an affiliate of Wells Fargo Bank, N.A.


Additionally, due to the fact that a majority of our Board of Directors is nominated and elected from our membership, these member directors are officers or directors of member institutions that own our capital stock. The following table presents total outstanding capital stock owned by those members who had an officer or director serving on our Board of Directors at February 29, 2024 (shares in thousands):
NameAddressCityStateShares of Capital Stock% of Total Capital Stock
Bank of Utah2605 Washington Blvd.OgdenUT103 0.15 
BankWest, Inc.420 S. Pierre St.PierreSD88 0.13 
Northwest Bank
1607 W. 18th Street
Spencer
IA
66 0.10 
First Federal Savings Bank of Twin Falls383 Shoshone Street NTwin FallsID57 0.09 
OnPoint Community Credit Union2701 N.W. Vaughn St.PortlandOR54 0.08 
First Montana Bank201 N Higgins AveMissoulaMT43 0.06 
Cornerstone Bank2280 45th Street SFargoND26 0.04 
Finance Factors, Ltd1164 Bishop St.HonoluluHI25 0.04 
True North Federal Credit Union2777 Postal WayJuneauAK0.01 
Legends Bank200 E Main St.LinnMO0.01 
New Market Bank
101 Old Town Road
Elko New Market
MN0.01 
Jonah Bank of Wyoming777 W. 1st StreetCasperWY*
Washington Business Bank223 5th Ave. SEOlympiaWA*
483 0.72 
All others   66,252 99.28 
Total capital stock   66,735 100.00 %

*    Amount is less than 0.01 percent.
143


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

TRANSACTIONS WITH RELATED PERSONS

The Bank is a cooperative. This means the Bank is owned by its customers, whom the Bank calls members. As a condition of membership in the Bank, all members must purchase and maintain membership capital stock based on a percentage of their total assets, subject to a minimum and maximum amount, as of the preceding December 31st. Each member is also required to purchase and maintain activity-based capital stock to support certain business activities with the Bank. All transactions with stockholders are entered into in the ordinary course of business.

In the normal course of business, the Bank extends credit to its members whose directors and officers serve as Bank directors (Directors’ Financial Institutions). Finance Agency regulations require that transactions with Directors’ Financial Institutions be made on the same terms and conditions as those with any other member.

For the year ended December 31, 2023, the review and approval of transactions with related persons was governed by our Code. Under the Code, each director is required to disclose to the Board all actual or apparent conflicts of interest, including any personal financial interest that he or she has, as well as such interests of any immediate family member or business associate of the director known to the director, in any matter to be considered by the Board or in which another person does, or proposes to do, business with the Bank. Following such disclosure, the Board is empowered to determine whether an actual conflict exists. In the event the Board determines the existence of a conflict with respect to any matter, the affected director is required to be recused from all further considerations relating to that matter. The Bank’s General Counsel, CHRO, Chief Audit Executive, or the Board, as appropriate, shall be responsible for interpreting the Code and rendering final rulings regarding violations of this Code.
 
The Code requires that all directors and employees avoid conflicts of interest, or the appearance of conflicts of interest. In particular, subject to limited exceptions for interests arising through ownership of mutual funds and certain financial interests acquired prior to employment by the Bank, no employee may have a financial interest in or financial relationship with any of our members or other company doing business or considering doing business with the Bank that is not transacted in the ordinary course of the member’s business or, in the case of an extension of credit, involves more than the normal risk of repayment or of loss to the member. In addition, the Code also provides that employees and directors are expected to perform their duties fairly and impartially and without discrimination in favor of or against any member institution. Employees are required to annually certify compliance with these and all other Code provisions.
DIRECTOR INDEPENDENCE
General
As of the date of this annual report on Form 10-K, we have 22 directors, all of whom were generally elected by our member institutions in accordance with Finance Agency regulations. All directors are independent of management from the standpoint they are not our employees, officers, or stockholders. Only member institutions can own our capital stock. Thus, our directors do not personally own our stock. In addition, we are required to determine whether our directors are independent under three distinct director independence standards. Finance Agency regulations and the Exchange Act provide independence criteria for directors who serve as members of our Audit Committee. Additionally, SEC rules require our Board of Directors to apply the independence criteria of a national securities exchange or automated quotation system in assessing the independence of our directors.
Finance Agency Regulations
The Finance Agency director independence standards prohibit individuals from serving as members of our Audit Committee if they have one or more “disqualifying relationships” with us or our management that would interfere with the exercise of that individual’s independent judgment. Disqualifying relationships considered by our Board are (i) employment with us at any time during the last five years, (ii) acceptance of compensation from us other than for service as a director, (iii) being a consultant, advisor, promoter, underwriter, or legal counsel for us at any time within the last five years, and (iv) being an immediate family member of an individual who is or who has been, within the past five years, one of our executive officers. The Board assesses the independence of all directors under the Finance Agency’s independence standards, regardless of whether they serve on our Audit Committee. As of February 29, 2024, all of our directors, including all members of our Audit Committee, were independent under these criteria.
144


Exchange Act
Section 10A(m) of the Exchange Act sets forth the independence requirements of directors serving on the Audit Committee of a reporting company. Under Section 10A(m), in order to be considered independent, a member of the Audit Committee may not, other than in his or her capacity as a member of the Board or any other Board Committee (i) accept any consulting, advisory, or other compensation from us or (ii) be an affiliated person of the Bank. As of February 29, 2024, all of our directors, including all members of our Audit Committee, were independent under these criteria.
SEC Rules
In addition, pursuant to SEC rules, we adopted the independence standards of the NYSE to determine which of our directors are independent for SEC disclosure purposes. In making an affirmative determination of the independence of each director, the Board first applied the objective measures of the NYSE independence standards to assist the Board in determining whether a particular director has a material relationship with us.
Based upon the fact that each of our Member Directors are officers or directors of member institutions, and that each such member routinely engages in transactions with us, the Board affirmatively determined none of the Member Directors on the Board meet the NYSE independence standards. In making this determination, the Board recognized a Member Director could meet the NYSE objective standards on any particular day. However, because the volume of business between a Member Director’s institution and us can change frequently, and because we generally encourage increased business with all members, the Board determined to avoid distinguishing among the Member Directors based upon the amount of business conducted with us and our respective members at a specific time, resulting in the Board’s categorical finding that no Member Director is independent under an analysis using the NYSE standards.
With regard to our Independent Directors, the Board affirmatively determined Ruth Bennett, Cleon Butterfield, Edward Garding, Amy Johnson, Wan-Chong Kung, Elsie Meeks, Siva Narendra, Carol Nelson, and Lisa Stange are each independent in accordance with NYSE standards. In concluding our nine Independent Directors are independent under the NYSE rules, the Board first determined all Independent Directors met the objective NYSE independence standards. In further determining none of its Independent Directors had a material relationship with us, the Board noted the Independent Directors are specifically prohibited from being an officer of the Bank or an officer or director of a member.
Our Board has a standing Audit Committee. All Audit Committee members are independent under the Finance Agency’s independence standards and the independence standards under Section 10A(m) of the Exchange Act in accordance with the Housing Act. For the reasons described above, our Board determined none of the current Member Directors serving on the Audit Committee are independent using the NYSE independence standards. The Member Directors serving on the Audit Committee are Steven Bumann, James Hunt, Jon Jones, and Russell Lau. Our Board determined, however, the Independent Directors serving on the Audit Committee are independent under the NYSE independence standards. The Independent Directors serving on the Audit Committee are Ruth Bennett, Edward Garding, and Elsie Meeks.
Compensation Committee
The Board has a standing Compensation Committee. Our Board determined all members of the Compensation Committee are independent under the Finance Agency’s independence standards. For the reasons described above, our Board determined none of the current Member Directors serving on the Compensation Committee are independent using the NYSE independence standards. The Member Directors serving on the Compensation Committee are Douglas DeFries, Jon Jones, and Robert Vogel. Our Board determined the Independent Directors serving on the Compensation Committee are independent under the NYSE independence standards. The Independent Directors serving on the Compensation Committee are Amy Johnson, Elsie Meeks, and Carol Nelson.

145


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The Audit Committee pre-approves all audit and permitted non-audit services performed by the Bank’s external audit firm. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee for services with fees below $10,000; however any decisions made must be presented to the Audit Committee at its next regularly scheduled meeting.
The following table sets forth the aggregate fees billed or to be billed by PwC (dollars in thousands):
For the Years Ended December 31,
 20232022
Audit fees1
$1,020 $942 
Audit-related fees2
103 83 
All other fees
Total$1,126 $1,028 

1    Represents fees incurred in connection with the annual audit of our financial statements and internal control over financial reporting and quarterly review of our financial statements. In addition to these fees, we incurred assessments of $62 thousand and $53 thousand from the Office of Finance for audit fees on the Combined Financial Report for the years ended December 31, 2023 and 2022.

2    Primarily represents fees for participation in and presentations at conferences and/or technical accounting consultations.







146


PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements

The financial statements are set forth in Item 8 of this annual report on Form 10-K.

(b) Exhibits
3.1
3.2
4.1
4.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
31.1
31.2
32.1
32.2
99.1
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101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
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1    Incorporated by reference from our Form 8-K filed with the SEC on June 1, 2015 (Commission File No. 000-51999).

2    Incorporated by reference from our Form 8-K filed with the SEC on December 14, 2021 (Commission File No. 000-51999).

3    Incorporated by reference from our Form 8-K/A (Amendment No. 1) filed with the SEC on August 3, 2020 (Commission File No. 000-51999).

4    Incorporated by reference from our Form 10-K filed with the SEC on March 9, 2022 (Commission File No. 000-51999).

5    Incorporated by reference from our Form 8-K filed with the SEC on August 5, 2011 (Commission File No. 000-51999).

6    Incorporated by reference from our Form 10-K filed with the SEC on March 10, 2021 (Commission File No. 000-51999).

7     Incorporated by reference from our Form 8-K filed with the SEC on March 23, 2023 (Commission File No. 000-51999).

8    Incorporated by reference from our Form 8-K filed with the SEC on January 9, 2024 (Commission File No. 000-51999).

9    Incorporated by reference from our Form 8-K filed with the SEC on November 30, 2022 (Commission File No. 000-51999).

10    Incorporated by reference from our Form 10-K filed with the SEC on March 21, 2016 (Commission File No. 000-51999).

11    Incorporated by reference from our Form 8-K filed with the SEC on May 22, 2023 (Commission File No. 000-51999).

12    Incorporated by reference from our Form 8-K filed with the SEC on May 2, 2023 (Commission File No. 000-51999).


147


ITEM 16. FORM 10-K SUMMARY

None.
148


Glossary of Terms

2022 Form 10-K: The Bank’s 2022 Annual Report on Form 10-K filed with the SEC on March 8, 2023
AFS: Available-for-Sale
AHP: Affordable Housing Program
AOCI: Accumulated Other Comprehensive Income (Loss)
AROCS: Adjusted Return on Capital Stock
ASU: Accounting Standards Update
BA: Bachelor of Arts
BEP: Benefit Equalization Plan
BTFP: Bank Term Funding Program
Capital Stock AB: Finance Agency Advisory Bulletin on Capital Stock 2019-03
CBO: Chief Business Officer
CDFI: Community Development Financial Institution
CEO: Chief Executive Officer
CFA: Chartered Financial Analyst
CFI: Community Financial Institution
CFO: Chief Financial Officer
CFPB: Consumer Financial Protection Bureau
CFTC: Commodity Futures Trading Commission
Chicago Bank: Federal Home Loan Bank of Chicago
CHRO: Chief Human Resources Officer
CIO: Chief Information Officer
Code: Code of Ethics
Committee: Federal Open Markets Committee
Compensation Committee: Human Resources and Compensation Committee
Comptroller General: Comptroller General of the United States
COO: Chief Operating Officer
CPA: Certified Public Accountant
CRCO: Chief Risk and Compliance Officer
CRO: Chief Risk Officer
DB Plan: Pentegra Defined Benefit Plan for Financial Institutions
DC Plan: Federal Home Loan Bank of Des Moines 401(k) Savings Plan
DEI: Diversity, Equity and Inclusion
Dodd-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection Act
EIP: Executive Incentive Plan
ESG: Environmental, Social, and Governance
Exchange Act: Securities Exchange Act of 1934, as amended
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FDIC: Federal Deposit Insurance Corporation
FHA: Federal Housing Administration
FHLBank Act: Federal Home Loan Bank Act of 1932
FHLBanks: The 11 Federal Home Loan Banks or a subset thereof
Finance Agency: Federal Housing Finance Agency
149


FLA: First Loss Account
FOMC: Federal Open Markets Committee
Freddie Mac: Federal Home Loan Mortgage Corporation
GAAP: Generally Accepted Accounting Principles
Ginnie Mae: Government National Mortgage Association
GSE: Government-Sponsored Enterprise
Housing Act: Housing and Economic Recovery Act of 2008
HTM: Held-to-Maturity
IT: Information Technology
JCE Agreement: Joint Capital Enhancement Agreement
LCH: London Clearing House
LIBOR: London Interbank Offered Rate
Liquidity Guidance AB: Finance Agency Advisory Bulletin on FHLBank Liquidity 2018-07
MBA: Master of Business Administration
MBS: Mortgage-Backed Securities
MD&A: Management’s Discussion and Analysis
Moody’s: Moody’s Investors Service, Inc.
MPF: Mortgage Partnership Finance (a federally registered trademark of the Federal Home Loan Bank of Chicago)
MPP: Mortgage Purchase Program
MRCS: Mandatorily Redeemable Capital Stock
MVCS: Market Value of Capital Stock
MVE: Market Value of Equity
NEO: Named Executive Officer
NYSE: New York Stock Exchange
NRSRO: Nationally Recognized Statistical Rating Organization
OIS: Overnight Index Swap
OMWI: Office of Minority and Women Inclusion
PCAOB: Public Company Accounting Oversight Board
PFI: Participating Financial Institution
Pittsburgh Bank: Federal Home Loan Bank of Pittsburgh
PMI: Primary Mortgage Insurance
PwC: PricewaterhouseCoopers LLP
S&P: S&P Global Ratings
SBP: Strategic Business Plan
Seattle Bank: Federal Home Loan Bank of Seattle
SEC: Securities and Exchange Commission
SOFR: Secured Overnight Financing Rate
TBA: To-Be-Announced
TDR: Troubled Debt Restructuring
Topeka Bank: Federal Home Loan Bank of Topeka
TVA: Tennessee Valley Authority
150


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
    
 
FEDERAL HOME LOAN BANK OF DES MOINES
(Registrant)
 
March 7, 2024By:  
/s/ Kristina K. Williams
  Kristina K. Williams
  President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
March 7, 2024

Signature Title
Principal Executive Officer:
/s/ Kristina K. Williams
President and Chief Executive Officer
Kristina K. Williams
Principal Financial and Accounting Officer:
/s/ James G. Livingston
Chief Financial Officer
James G. Livingston
151


Signature Title
Directors:
   
/s/ Karl A. Bollingberg
 Chair of the Board of Directors
Karl A. Bollingberg  
   
/s/ John A. Klebba
 Vice Chair of the Board of Directors
John A. Klebba  
   
/s/ Ruth B. Bennett
 Director
Ruth B. Bennett  
/s/ Steven L. Bumann
 Director
Steven L. Bumann  
/s/ Cleon P. Butterfield
 Director
Cleon P. Butterfield  
/s/ Douglas L. DeFries
Director
Douglas L. DeFries
/s/ Kim R. DeVore
 Director
Kim R. DeVore  
/s/ Edward A. Garding
Director
Edward A. Garding
   
/s/ James W. Hunt
Director
James W. Hunt
/s/ Amy K. Johnson
 Director
Amy K. Johnson  
/s/ Jon M. Jones
Director
Jon M. Jones
/s/ Joe R. Kesler
Director
Joe R. Kesler
/s/ Wan-Chong Kung
Director
Wan-Chong Kung
/s/ Russell J. Lau
Director
Russell J. Lau
152


   
Signature Title
/s/ Lauren M. MacVay
Director
Lauren M. MacVay
/s/ Elsie M. Meeks
Director
Elsie M. Meeks 
/s/ Jason A. Meyerhoeffer
Director
Jason A. Meyerhoeffer
/s/ Siva G. Narendra
Director
Siva G. Narendra
/s/ Carol K. Nelson
Director
Carol K. Nelson
/s/ Jeff L. Plagge
Director
Jeff L. Plagge
/s/ Lisa A. Stange
Director
Lisa A. Stange
/s/ Robert J. Vogel
Director
Robert J. Vogel

153
EX-4.1 2 capitalplan12-2023.htm EX-4.1 - FHLB DES MOINES CAPITAL PLAN capitalplan12-2023
FHLB Des Moines Capital Plan Amended and Revised September 5, 2011 (Approved by the Federal Housing Finance Agency on August 5, 2011) Further Amended on May 31, 2015 (Approved by the Federal Housing Finance Agency on May 31, 2015)


 
TABLE OF CONTENTS Page   ‐i‐    1. Definitions ................................................................................................................................................................ 1 2. Capital Structure ....................................................................................................................................................... 2 2.1 Authorized Capital Stock ............................................................................................................................. 2 2.2 Stock Issuance and Retirement Procedures ................................................................................................. 2 2.3 Minimum Investment Requirements ............................................................................................................ 3 2.4 Membership Stock Requirements ................................................................................................................ 3 2.5 Activity Based Stock Requirements ............................................................................................................ 4 3. Rights and Preferences .............................................................................................................................................. 4 3.1 Par Value ...................................................................................................................................................... 4 3.2 Ownership of Retained Earnings ................................................................................................................. 4 3.3 Voting Rights ............................................................................................................................................... 4 3.4 Dividends and Capital Distributions ............................................................................................................ 4 3.5 Liquidation ................................................................................................................................................... 5 3.6 Merger or Consolidation .............................................................................................................................. 5 4. Redemption, Repurchase and Transfer ..................................................................................................................... 5 4.1 Capital Stock Redemption ........................................................................................................................... 5 4.2 Capital Stock Repurchases ........................................................................................................................... 7 4.3 Limitations on Capital Stock Redemption or Repurchase ........................................................................... 8 4.4 Transfer of Excess Stock ............................................................................................................................. 9 5. Termination of Membership ..................................................................................................................................... 9 5.1 Voluntary Withdrawal from Membership .................................................................................................... 9 5.2 Involuntary Termination of Membership ................................................................................................... 10 5.3 Liquidation of Claims ................................................................................................................................ 10 6. Treatment of Capital Stock in the Merger .............................................................................................................. 10 7. Retained Earnings Enhancement Implementation and Definitions......................................................................... 11 7.1 Implementation .......................................................................................................................................... 11 7.2 Definitions applicable to Sections 7 through 10 of this Capital Plan ........................................................ 11 8. Establishment of Restricted Retained Earnings ...................................................................................................... 13 8.1 Segregation of Account .............................................................................................................................. 13 8.2 Funding of Account ................................................................................................................................... 13 9. Limitation on Dividends, Stock Purchase and Stock Redemption.......................................................................... 15 9.1 General Rule on Dividends ....................................................................................................................... 15


 
TABLE OF CONTENTS (continued) Page     ‐ii‐    9.2 Limitations on Repurchase and Redemption ............................................................................................. 15 10. Termination of Retained Earnings Capital Plan Amendment Obligations ............................................................. 15 10.1 Notice of Automatic Termination Event .................................................................................................... 15 10.2 Notice of Voluntary Termination ............................................................................................................... 17 10.3 Consequences of an Automatic Termination Event or Vote to Terminate the Agreement ........................ 17 Appendix I


 
  1   1. Definitions For purposes of this Capital Plan, all capitalized terms used but not defined elsewhere have the following meanings: “Acquired Member Assets” means assets sold to the Bank pursuant to 12 C.F.R. Part 955 (as such regulation may be amended) and held on the Bank’s balance sheet. “Activity Based Stock” means a subclass of Class B Stock that is required to be purchased and held in order to obtain an advance and to engage in other transactions with the Bank. “Activity Based Stock Requirement” means the level of Activity Based Stock that must be purchased and held in order to obtain advances and engage in other transactions with the Bank. “Additional Capital” means the loss absorbing, distributable capital component created in the Merger equal to the difference between the fair value of the net assets acquired and the fair value of the Capital Stock issued in the Merger. “Bank” means the Federal Home Loan Bank of Des Moines. “Board of Directors” means the Board of Directors of the Bank. “Cancellation Fee” means the fee the Bank will impose upon a Member that cancels or revokes a Notice of Redemption or Notice of Withdrawal. “Capital Plan” means the Bank’s plan for a capital structure as required by 12 U.S.C. 1426(b) (as such may be amended), as approved by the Finance Agency. “Capital Stock” means, collectively, the Class A Stock and Class B Stock authorized under this Capital Plan. “Class A Stock” means the class A stock authorized for issuance under this Capital Plan. “Class B Stock” means the class B stock authorized for issuance under this Capital Plan. “Commitment” means any legally binding agreement that requires the Bank to make an advance, acquire Acquired Member Assets, or otherwise transact business with a Member. “Excess Shares” or “Excess Stock” means the amount or shares of each class or subclass of the Bank’s Capital Stock held by a Member that exceeds or does not count towards that Member’s Minimum Investment. “Finance Agency” means the Federal Housing Finance Agency, the regulator of the Federal Home Loan Bank System, or any successor thereto. “Member” means any institution that has been approved for membership in the Bank and has purchased the required amount of Membership Stock. “Membership Stock” means a subclass of Class B Stock that is required to be purchased and held as a condition of membership in the Bank. “Merger” means the merger of the Bank and the Federal Home Loan Bank of Seattle. “Merger Effective Time” means the effective time of the Merger.


 
  2   “Membership Stock Requirement” means the level of Membership Stock that must be purchased and maintained as a condition of membership. “Minimum Investment” means the amount of Membership Stock necessary for a stockholder to satisfy its Membership Stock Requirement and the amount of Activity Based Stock necessary for a stockholder to satisfy its Activity Based Stock Requirement. “Notice of Redemption” means any written request by a Member to the Bank to redeem Capital Stock. “Notice of Withdrawal” means the written notice by a Member to the Bank of that Member’s intention to withdraw from membership in the Bank. “Total Assets” means a Member’s total assets as reported to the Member’s primary regulator or on its audited financial statement. 2. Capital Structure 2.1 Authorized Capital Stock The Bank issues Capital Stock only in accordance with 12 C.F.R. Section 931.2 (as such regulation may be amended) and in accordance with this Capital Plan. Capital Stock is composed of the following classes: • Class A Stock; and • Class B Stock. The Class B Stock is composed of the following sub-classes: • Membership Stock; and • Activity Based Stock. 2.2 Stock Issuance and Retirement Procedures The Bank acts as its own transfer agent and issues all stock in book-entry form. The Bank does not issue fractional shares of Capital Stock. A Minimum Investment shall be rounded up to the next $100. Any dividend declared in the form of Capital Stock shall be rounded down to the next $100 and any fractional shares shall be distributed in the form of a cash dividend. Capital Stock may be purchased and held only by Members, former Members that are required to hold Capital Stock after their membership has terminated in order to support outstanding advances and other transactions with the Bank, and entities that acquire Members, such as through mergers or consolidations, but which themselves are not Members.


 
  3   The Bank issues Capital Stock in a stockholder’s name, credits the stockholder’s Class A Stock, Membership Stock or Activity Based Stock balance, as appropriate, and debits the stockholder’s demand deposit account for any payment due. Upon redemption or repurchase of Capital Stock, the Bank retires the stock, debits the stockholder’s Class A Stock, Membership Stock or Activity Based Stock balance, as appropriate, and credits the stockholder’s demand deposit account with any proceeds. The Bank shall not permit a stockholder to convert any Excess Shares of Capital Stock between classes or sub- classes of Capital Stock. 2.3 Minimum Investment Requirements The Board of Directors has a continuing obligation to review and adjust the Minimum Investment as necessary to ensure that the Bank remains in compliance with its capital requirements. The Bank shall provide notice to each stockholder of any adjustment to the Minimum Investment and the effective date of any such adjustment at least 15 days prior to the effective date of any such adjustment. Upon the effective date of any such adjustment, the Bank shall, as applicable, issue any Capital Stock in accordance with section 2.2 or repurchase any Capital Stock in accordance with section 4. A stockholder must comply promptly with any adjustments the Board of Directors makes to the Minimum Investment. 2.4 Membership Stock Requirements The Board of Directors has established a Membership Stock Requirement identified in Appendix I. The Board of Directors may adjust the Membership Stock Requirement within the ranges specified in Appendix I. Each Member is required to purchase and maintain Membership Stock in an amount equal to its Membership Stock Requirement, as calculated by the Bank. At least annually, the Bank calculates each Member’s Membership Stock Requirement as a percentage of Total Assets as of the preceding December 31st. The Bank will notify each Member of its Membership Stock Requirement at least 15 days prior to the effective date of any adjustments that the Bank shall make to the Member’s Membership Stock balance as a result of such annual calculation. If a Member’s Membership Stock Requirement has increased since the last time the Bank calculated the Member’s Membership Stock Requirement, the Bank shall issue Membership Stock in accordance with section 2.2. The Bank, in its discretion, may recalculate any Member’s Membership Stock Requirements more often than annually if the Bank deems it appropriate. The Bank may recalculate a Member’s Membership Stock Requirement if requested by the Member, or in the Bank’s discretion. In each of these cases, the Bank will calculate the Membership Stock Requirement based on the Member’s Total Assets as of the end of the most recent calendar quarter for which financial information is available. Notwithstanding any other provision of this Capital Plan, in the event that (a) a Member becomes insolvent or otherwise subject to the appointment of a conservator, receiver or other legal custodian under federal or state law, and (b) the Bank has terminated the Member’s membership, then that Member’s Membership Stock Requirement shall be zero.


 
  4   2.5 Activity Based Stock Requirements The Board of Directors has established an Activity Based Stock Requirement identified in Appendix I. The Board of Directors may adjust the Activity Based Stock Requirement within the ranges specified in Appendix I. The Board of Directors may apply changes in the Activity Based Stock Requirement to any advances, whether new or existing, and other transactions. Each stockholder is required to purchase and maintain Activity Based Stock in an amount equal to its Activity Based Stock Requirement, as calculated by the Bank, as long as the advance or other transaction remains recorded on the Bank’s books and records. The Bank calculates each stockholder’s Activity Based Stock Requirement daily. The Bank shall notify each stockholder of any increase in its Activity Based Stock Requirement and issue Activity Based Stock to the stockholder in accordance with section 2.2. 2.6 Class A Stock No shares of Class A Stock shall be issued by the Bank except upon the automatic conversion, at the Merger Effective Time, of any shares of Class A Stock of the Federal Home Loan Bank of Seattle issued and outstanding immediately prior to the Merger Effective Time into the shares of Class A Stock. Shares of Class A Stock cannot be used to satisfy the Minimum Investment of any stockholder. All issued and outstanding shares of Class A Stock shall constitute Excess Stock, subject to repurchase by the Bank as provided in section 4.2.3. 3. Rights and Preferences 3.1 Par Value Capital Stock shall be issued, transferred, redeemed, and repurchased at a par value of $100. 3.2 Ownership of Retained Earnings The retained earnings, paid-in surplus, Additional Capital, undivided profits and equity reserves, if any, of the Bank are owned by the stockholders of Class B Stock in an amount proportional to the stockholder’s share of the total shares of issued and outstanding Class B Stock. Such stockholders have no right to receive any portion of these items except through the declaration of a dividend or capital distribution approved by the Board of Directors or upon liquidation of the Bank. 3.3 Voting Rights The voting rights associated with Capital Stock are defined in and governed by the Finance Agency’s regulations. No share of Capital Stock shall have any voting preference. 3.4 Dividends and Capital Distributions Except as otherwise provided herein or by regulation or statute, the Board of Directors has sole discretion to determine the amount, form, frequency and timing of dividend payments and capital distributions for each class


 
  5   and subclass of Capital Stock. The Board of Directors may declare different dividends or capital distributions for any class or subclass of Capital Stock. Dividend payments may be made in the form of cash, additional shares of Capital Stock, or a combination thereof as determined by the Board of Directors. Capital distributions may only be made in the form of cash. Unless the Board of Directors declares otherwise, dividends and capital distributions are non-cumulative. Dividends may only be paid from current earnings, previously retained earnings or, subject to the approval of the Finance Agency, Additional Capital. Capital distributions may only be paid from Additional Capital. The Board of Directors may not declare or pay any dividends or make any capital distributions if the Bank is not in compliance with its capital requirements or, if after paying the dividend or making the capital distribution, the Bank would not be in compliance with its capital requirements. Each stockholder will be entitled to receive applicable dividends and capital distributions on Capital Stock held during the applicable dividend or capital distribution period for the period of time the stockholder owned the Capital Stock. The Bank pays dividends and capital distributions on Capital Stock as long as it is issued and outstanding, regardless of whether a Member has provided a Notice of Redemption or Notice of Withdrawal or a stockholder has terminated membership for any reason. 3.5 Liquidation If the Bank is liquidated, after payment in full to the Bank’s creditors, the Bank’s stockholders shall be entitled to receive the par value of their Class B Stock, as well as any retained earnings, paid-in surplus and Additional Capital, in an amount proportional to the stockholder’s share of the total shares of Class B Stock. If any shares of Class A Stock remain outstanding at the time of liquidation, the Class A stockholders will be entitled to receive the par value of their stock (but no additional amounts), prior to the distribution of any retained earnings, paid-in surplus or Additional Capital to the Class B stockholders. A liquidation of the Bank shall also be subject to any terms and conditions imposed by the Finance Agency. 3.6 Merger or Consolidation The Board of Directors shall determine the rights and preferences of the Bank’s stockholders in connection with any merger or consolidation, subject to any terms and conditions imposed by the Finance Agency. 4. Redemption, Repurchase and Transfer 4.1 Capital Stock Redemption Class B Stock is redeemable on five years’ written notice to the Bank. Class A Stock is redeemable on six months’ written notice to the Bank. The Bank shall not be obligated to redeem a Member’s Capital Stock other than in accordance with the Capital Plan, and is not permitted to redeem Capital Stock if such redemption would cause the Member to fail to meet its Minimum Investment or is otherwise prohibited pursuant to section 4.3. 4.1.1 Notice of Redemption A Member may redeem Capital Stock by providing a Notice of Redemption to the Bank specifying the class or sub-class and the number of shares of Capital Stock to be redeemed. A Member shall not have more than one Notice of Redemption outstanding at any one time for the same shares of Capital Stock.


 
  6   The redemption period commences upon the Bank’s receipt of the Notice of Redemption. The Bank honors Notices of Redemption in the order in which the Bank receives them. The Bank shall redeem the Capital Stock identified in a Notice of Redemption following the expiration of the redemption period and pay the stated par value of that Capital Stock to the Member in cash in accordance with section 2.2 and subject to the limitations set forth in section 4.3, unless the Bank exercises its discretionary authority to repurchase Excess Stock in accordance with section 4.2 prior to that time. 4.1.2 Cancellation of Notice of Redemption A Member may cancel a Notice of Redemption prior to the end of the redemption period by providing written notice to the Bank of its intent to cancel its Notice of Redemption. The Bank will charge the Member a Cancellation Fee equal to the following: • one percent of the par value of the shares of Capital Stock subject to the Notice of Redemption if the Bank receives the cancellation of Notice of Redemption within one year of the day the Bank received the Notice of Redemption; • two percent of the par value of the shares of Capital Stock subject to the Notice of Redemption if the Bank receives the cancellation of Notice of Redemption within two years of the day the Bank received the Notice of Redemption; • three percent of the par value of the shares of Capital Stock subject to the Notice of Redemption if the Bank receives the cancellation of Notice of Redemption within three years of the day the Bank received the Notice of Redemption; • four percent of the par value of the shares of Capital Stock subject to the Notice of Redemption if the Bank receives the cancellation of Notice of Redemption within four years of the day the Bank received the Notice of Redemption; or • five percent of the par value of the shares of Capital Stock subject to the Notice of Redemption if the Bank receives the cancellation of Notice of Redemption within five years of the day the Bank received the Notice of Redemption. The Board of Directors may change the Cancellation Fee to any percentage of the par value of the shares of Capital Stock subject to the cancelled Notice of Redemption that is not less than 0.0 percent and not more than the percentages specified in the preceding paragraph. If the Board of Directors changes the Cancellation Fee, the Board of Directors will also determine whether the changed Cancellation Fee will apply to the cancellation of any previously submitted Notice of Redemption as well as those submitted in the future. Otherwise, the Cancellation Fee in effect at the time the Bank received the Notice of Redemption will apply to the cancellation of that Notice of Redemption. The Bank will notify Members in writing at least 15 days in advance of any changes in the Cancellation Fee. A Notice of Redemption by a Member (whose membership has not been terminated) shall be automatically cancelled if, within five business days after the end of the applicable redemption notice period, the Bank is prevented from redeeming the Member’s Capital Stock because the Member would fail to maintain its Minimum Investment after such redemption. The automatic cancellation (in full or to the extent required) shall have the same effect as a voluntary cancellation and the Bank shall impose the Cancellation Fee described in the preceding paragraph.


 
  7   4.1.3 Notice of Withdrawal The Bank’s receipt of a Notice of Withdrawal commences the five-year redemption period for all Class B Stock or the six-month redemption for all Class A Stock held by that Member, in each case, that is not already subject to a pending Notice of Redemption. The redemption period for Membership Stock purchased subsequent to the Bank’s receipt of a Member’s Notice of Withdrawal shall be deemed to have commenced when the Bank issued such Membership Stock. Following the expiration of the redemption period, the Bank shall pay the stated par value of the Capital Stock to the Member in cash, in accordance with section 2.2 and subject to the limitations set forth in sections 4.3 and 5.3. 4.1.4 Cancellation of Notice of Withdrawal A Member may cancel a Notice of Withdrawal prior to the end of the redemption period by providing written notice to the Bank of its intent to cancel its Notice of Withdrawal. The Bank will charge the Member a Cancellation Fee on the par value of the Member’s Capital Stock balance as described in section 4.1.2. 4.1.5 Termination of Membership If an institution’s membership has been terminated as a result of a merger or consolidation into a nonmember or into a member of another Federal Home Loan Bank, the redemption period for any Capital Stock that is not subject to a pending Notice of Redemption shall be deemed to commence on the date on which the charter of the former member is terminated. If an institution’s membership is involuntarily terminated, the redemption period for all Capital Stock owned by the former member and not already subject to a pending Notice of Redemption shall commence on the date that the Board of Directors terminates the institution’s membership. 4.2 Capital Stock Repurchases The Bank, in its discretion, may repurchase any Excess Shares without regard to any redemption period. 4.2.1 Membership Stock Upon 15 days written notice to Members, the Bank may, in its sole discretion, repurchase Membership Stock which the Bank determines is Excess Stock without regard to the five-year redemption notice period. The Bank shall repurchase any such Excess Stock in accordance with section 2.2 and subject to the limitations set forth in section 4.3. Any repurchase of Membership Stock automatically reduces the amount of Membership Stock that is the subject of any outstanding Notice of Redemption by the amount of Membership Stock repurchased. If a Member has Membership Stock that is subject to more than one Notice of Redemption, the Bank will automatically reduce the amount of Membership Stock that is subject to such outstanding Notices of Redemption in the same order in which the Bank received such Notices of Redemption. A Member’s submission of a Notice of Withdrawal in accordance with section 5.1, or its termination of membership in any other manner, will not, in and of itself, cause any Membership Stock to be deemed Excess Stock for purposes of this section.


 
  8   4.2.2 Activity Based Stock Each Member may hold Excess Shares of Activity Based Stock up to the operational threshold established in Appendix I. The Board of Directors may, from time to time, increase or decrease the operational threshold within ranges specified in Appendix I. The Bank will notify each Member of a change in the operational threshold at least 15 days prior to implementing the change. The Bank will repurchase any Excess Shares of Activity Based Stock that exceed the operational threshold established in Appendix I, on at least a scheduled, monthly basis in accordance with section 2.2 and subject to the limitations set forth in section 4.3. The Bank will notify Members at least 15 days in advance of the scheduled date(s) for repurchasing Activity Based Stock and prior to implementing any changes in the scheduled date(s) for repurchasing Activity Based Stock. 4.2.3 Class A Stock The Bank may repurchase any shares of Class A Stock at any time; provided, that the Bank will notify Members at least 15 days in advance of the scheduled date(s) for repurchasing Class A Stock and prior to implementing any changes in the scheduled date(s) for repurchasing Class A Stock. 4.3 Limitations on Capital Stock Redemption or Repurchase The Bank will not redeem or repurchase Capital Stock: • without the prior written approval of the Finance Agency, if the Finance Agency or the Board of Directors has determined that the Bank has incurred, or is likely to incur, losses that result in or are likely to result in charges against the capital of the Bank. This prohibition shall apply even if the Bank is in compliance with its capital requirements, and shall remain in effect for however long the Bank continues to incur such charges or until the Finance Agency determines that such charges are not expected to continue; or • if the redemption or repurchase would cause the Bank to be out of compliance with its capital requirements; or • if the redemption or repurchase would cause a stockholder to be out of compliance with its Minimum Investment; or • if the sum of all requested Capital Stock redemptions that the Bank is scheduled to make on any date equals or exceeds the amount that would cause the Bank to fall below its capital requirements, in which case the Bank will process redemptions in the order in which notification was received, but in no case will the Bank redeem Capital Stock to the point that it would fail to meet its capital requirements. The Bank, upon the approval of its Board of Directors, or of a subcommittee thereof, may suspend redemption of Capital Stock if the Bank reasonably believes that continued redemption of Capital Stock would cause the Bank to fail to meet its capital requirements, would prevent the Bank from maintaining adequate capital against a potential risk that may not be adequately reflected in its capital requirements, or would otherwise prevent the Bank from operating in a safe and sound manner. The Bank will notify the Finance Agency in writing within two business days of the date of the decision to suspend the redemption of Capital Stock, informing the Finance Agency of the reasons for the suspension and of the Bank’s strategies and time frames for addressing the conditions that led to the suspension. The Finance Agency may require the Bank to re-institute the redemption of Capital Stock. The


 
  9   Bank will not repurchase any Capital Stock without the written permission of the Finance Agency during any period in which the Bank has suspended redemption of Capital Stock under this paragraph. 4.4 Transfer of Excess Stock With the prior approval of the Bank, a Member may transfer Excess Stock to another Member that controls, is controlled by, or is under common control with the Member. If a Member that has filed a Notice of Redemption transfers Excess Stock that is subject to that notice to another Member, the transfer shall be deemed to be a cancellation of the Notice of Redemption on the Excess Stock transferred upon the effective date of the transfer. The transferring Member shall be responsible for paying any applicable Cancellation Fees in accordance with section 4.1.2. If a Member that has filed a Notice of Withdrawal transfers Excess Stock to another Member, the transfer shall be deemed to be a cancellation of the five-year redemption period on the Excess Stock transferred. The transferring Member shall be responsible for paying any applicable Cancellation Fees in accordance with section 4.1.2. The Bank shall transfer Capital Stock only in accordance with 12 C.F.R. Section 931.6 (as such regulation may be amended). The Bank will not approve a Capital Stock transfer if the transfer would result in the transferring Member being out of compliance with its Minimum Investment. Capital Stock may be traded only between the Bank and its Members. All Capital Stock transfers are to be at par value and are effective upon being recorded on the appropriate books and records of the Bank. 5. Termination of Membership A Member’s submission of a Notice of Withdrawal, or its termination of membership in any other manner, shall not, in and of itself, cause any Capital Stock to be deemed Excess Stock. If a former Member’s membership has been withdrawn, terminated involuntarily, or terminated as a result of a merger or consolidation, the Bank shall redeem or repurchase such former Member’s Capital Stock in accordance with section 4 and subject to the limitations in sections 4.1, 4.2, 4.3 and 5.3. 5.1 Voluntary Withdrawal from Membership Any institution may withdraw from membership by providing a Notice of Withdrawal. A Member that has submitted its Notice of Withdrawal continues to have access to the benefits of membership until the effective date of its withdrawal, but the Bank does not have to provide any further services, including advances, that would mature or otherwise terminate subsequent to the effective date of the withdrawal. The membership of an institution that has submitted a Notice of Withdrawal shall terminate five years from the date of the Bank’s receipt of the Member’s Notice of Withdrawal, unless the institution has cancelled its Notice of Withdrawal prior to that date. 5.2 Involuntary Termination of Membership The Board of Directors may terminate a Member’s membership pursuant to the Finance Agency’s regulations. A Member whose membership is terminated involuntarily shall cease being a Member as of the date on which the


 
  10   Board of Directors acts to terminate the membership, and the institution shall have no right to obtain any of the benefits of membership after that date, but shall be entitled to receive any dividends declared on its Capital Stock until the Capital Stock is redeemed or repurchased by the Bank. 5.3 Liquidation of Claims If an institution withdraws from membership or has its membership terminated, the Bank will determine an orderly manner for: • liquidating all outstanding indebtedness (including prepayment fees) owed by that Member to the Bank, and • settling all other claims against the Member. If an institution that withdraws from membership or has its membership terminated remains indebted to the Bank or has outstanding any transactions with the Bank after the effective date of its termination of membership, the Bank shall not redeem or repurchase any Activity Based Stock or Class A Stock if such redemption or repurchase is subject to any of the limitations in section 4.3. The Bank shall redeem or repurchase any Activity Based Stock and Class A Stock in accordance with section 4. 6. Treatment of Capital Stock in the Merger Each share of Capital Stock of the Bank issued and outstanding immediately prior to the Merger Effective Time will, at the Merger Effective Time, automatically and without any further action by the holder of such share, be designated as Class B Stock, of the same subclass as it was immediately prior to the Merger Effective Time. Each former stockholder of the Federal Home Loan Bank of Seattle will be required to satisfy the Minimum Investment requirements set forth in section 2 and Appendix I of this Capital Plan as of the Merger Effective Time. The Class B Stock of the Bank issued in the Merger to each former stockholder of the Federal Home Loan Bank of Seattle at the Merger Effective Time will, first, be allocated to satisfy such stockholder’s Membership Stock Requirement, and any remaining Class B Stock issued in the Merger to such former Federal Home Loan Bank of Seattle stockholders will be allocated as Activity Based Stock. If a former stockholder of the Federal Home Loan Bank of Seattle does not own sufficient Class B Stock to satisfy the Minimum Investment requirements as of the Merger Effective Time, then the Bank will issue additional shares of Class B Stock and debit such stockholder’s demand deposit account at the Bank in accordance with section 2.2.   7. Retained Earnings Enhancement Implementation and Definitions 7.1 Implementation The provisions of sections 7 through 10 shall become effective upon, and only upon, the occurrence of the Interim Capital Plan Amendment Implementation Date. Until the Restriction Termination Date, in the event of any


 
  11   conflict between sections 7 through 10 and the remainder of this Capital Plan, the applicable terms of sections 7 through 10 shall govern, and shall be interpreted in a manner such that the restrictions set forth therein are supplementary to, and not in lieu of, the requirements of the remainder of this Capital Plan. 7.2 Definitions applicable to Sections 7 through 10 of this Capital Plan As used in these sections 7 through 10, the following capitalized terms shall have the following meanings. Other capitalized terms used but not defined in these sections 7 through 10, shall have the meanings set forth in section 1 of this Capital Plan. “Act” means the Federal Home Loan Bank Act, as amended as of the Effective Date. “Adjustment to Prior Net Income” means either an increase, or a decrease, to a prior calendar quarter’s Quarterly Net Income subsequent to the date on which any allocation to Restricted Retained Earnings for such calendar quarter was made. “Agreement” means the Joint Capital Enhancement Agreement adopted by the FHLBanks on the Effective Date and amended on the date on which the FHFA has approved the Retained Earnings Capital Plan Amendments for all of the FHLBanks that have issued capital stock pursuant to a capital plan as of the Effective Date. “Allocation Termination Date” means the date the Bank’s obligation to make allocations to the Restricted Retained Earnings account is terminated permanently. That date is determined pursuant to section 10 of this Capital Plan. “Automatic Termination Event” means (i) a change in the Act, or another applicable statute, occurring subsequent to the Effective Date, that will have the effect of creating a new, or higher, assessment or taxation on net income or capital of the FHLBanks, or (ii) a change in the Act, another applicable statute, or the Regulations, occurring subsequent to the Effective Date, that will result in a higher mandatory allocation of an FHLBank’s Quarterly Net Income to any Retained Earnings account than the annual amount, or total amount, specified in an FHLBank’s capital plan as in effect immediately prior to the Automatic Termination Event. “Automatic Termination Event Declaration Date” means the date specified in section 10.1.1 or 10.1.2 of this Capital Plan. “Bank’s Total Consolidated Obligations” means the daily average carrying value for the calendar quarter, excluding the impact of fair value adjustments (i.e., fair value option and hedging adjustments), of the Bank’s portion of outstanding System Consolidated Obligations for which it is the primary obligor. “Declaration of Automatic Termination” means a signed statement, executed by officers authorized to sign on behalf of each FHLBank that is a signatory to the statement, in which at least 2/3 of the then existing FHLBanks declare their concurrence that a specific statutory or regulatory change meets the definition of an Automatic Termination Event. “Dividend” means a distribution of cash, other property, or stock to a Stockholder with respect to its holdings of Capital Stock. “Dividend Restriction Period” means any calendar quarter: (i) that includes the REFCORP Termination Date, or occurs subsequent to the REFCORP Termination Date; (ii) that occurs prior to an Allocation Termination Date; and (iii) during which the amount of the Bank’s Restricted Retained Earnings is less than the amount of the Bank’s RREM. If the amount of the Bank’s Restricted Retained Earnings is at least equal to the amount of the


 
  12   Bank’s RREM, and subsequently the Bank’s Restricted Retained Earnings becomes less than its RREM, the Bank shall be deemed to be in a Dividend Restriction Period (unless an Allocation Termination Date has occurred). “Effective Date” means February 28, 2011. “GAAP” means accounting principles generally accepted in the United States as in effect from time to time. “FHFA” means the Federal Housing Finance Agency, or any successor thereto. “FHLBank” means a Federal Home Loan Bank chartered under the Act. “Interim Capital Plan Amendment Implementation Date” means 31 days after the date by which the FHFA has approved a capital plan amendment substantially the same as the Retained Earnings Capital Plan Amendment for all of the FHLBanks that have issued capital stock pursuant to a capital plan as of the Effective Date. “Net Loss” means that the Quarterly Net Income of the Bank is negative, or that the annual net income of the Bank calculated on the same basis is negative. “Quarterly Net Income” means the amount of net income of an FHLBank for a calendar quarter calculated in accordance with GAAP, after deducting the FHLBank’s required contributions for that quarter to the Affordable Housing Program under section 10(j) of the Act, as reported in the FHLBank’s quarterly and annual financial statements filed with the Securities and Exchange Commission. “REFCORP Termination Date” means the last day of the calendar quarter in which the FHLBanks” final regular payments are made on obligations to REFCORP in accordance with Section 997.5 of the Regulations and Section 21B(f) of the Act. “Regular Contribution Amount” means the result of (i) 20 percent of Quarterly Net Income; plus (ii) 20 percent of a positive Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter; minus (iii) 20 percent of the absolute value of a negative Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter. “Regulations” mean: (i) the rules and regulations of the Federal Housing Finance Agency (except to the extent that they may be modified, terminated, set aside or superseded by the Director of the FHFA) in effect on the Effective Date; (ii) the rules and regulations of the FHFA, as amended from time to time. “Restricted Retained Earnings” means the cumulative amount of Quarterly Net Income and Adjustments to Prior Net Income allocated to the Bank’s Retained Earnings account restricted pursuant to the Retained Earnings Capital Plan Amendment, and does not include amounts retained in: (i) any accounts in existence at the Bank on the Effective Date; or (ii) any other Retained Earnings accounts subject to restrictions that are not part of the terms of the Retained Earnings Capital Plan Amendment. “Restricted Retained Earnings Minimum” (“RREM”) means a level of Restricted Retained Earnings calculated as of the last day of each calendar quarter equal to one percent of the Bank’s Total Consolidated Obligations.


 
  13   “Restriction Termination Date” means the date the restriction on the Bank paying Dividends out of the Restricted Retained Earnings account, or otherwise reallocating funds from the Restricted Retained Earnings account, is terminated permanently. That date is determined pursuant to section 10 of this Capital Plan. “Retained Earnings” means the retained earnings of an FHLBank calculated pursuant to GAAP. “Retained Earnings Capital Plan Amendment” means the amendment to this Capital Plan, made a part thereof, adopted effective on the Interim Capital Plan Amendment Implementation Date adding sections 7 through 10 to this Capital Plan. “Special Contribution Amount” means the result of: (i) 50 percent of Quarterly Net Income; plus (ii) 50 percent of a positive Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter; minus (iii) 50 percent of the absolute value of a negative Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made by the current calendar quarter. “Stockholder” means: (i) a Member; (ii) a former Member that continues to own Capital Stock; or (iii) a successor to an entity that was a Member that continues to own Capital Stock. “System Consolidated Obligation” means any bond, debenture, or note authorized under the Regulations to be issued jointly by the FHLBanks pursuant to Section 11(a) of the Act, as amended, or any bond or note previously issued by the Federal Housing Finance Agency on behalf of all FHLBanks pursuant to Section 11(c) of the Act, on which the FHLBanks are jointly and severally liable, or any other instrument issued through the Office of Finance, or any successor thereto, under the Act, that is a joint and several liability of all the FHLBanks. “Total Capital” means Retained Earnings, the amount paid-in for Capital Stock, the amount of any Additional Capital, the amount of any general allowance for losses, and the amount of other instruments that the FHFA has determined to be available to absorb losses incurred by the Bank. 8. Establishment of Restricted Retained Earnings 8.1 Segregation of Account No later than the REFCORP Termination Date, the Bank shall establish an account in its official books and records in which to allocate its Restricted Retained Earnings, with such account being segregated on its books and records from the Bank’s Retained Earnings that are not Restricted Retained Earnings for purposes of tracking the accumulation of Restricted Retained Earnings and enforcing the restrictions on the use of the Restricted Retained Earnings imposed in the Retained Earnings Capital Plan Amendment. 8.2 Funding of Account 8.2.1 Date on which Allocation Begins The Bank shall allocate to its Restricted Retained Earnings account an amount at least equal to the Regular Contribution Amount beginning on the REFCORP Termination Date. The Bank shall allocate amounts to the Restricted Retained Earnings account only through contributions from its Quarterly Net Income or Adjustments to Prior Net Income occurring on or after the REFCORP Termination Date, but nothing in the Retained Earnings Capital Plan Amendment shall prevent the Bank from allocating a


 
  14   greater percentage of its Quarterly Net Income or positive Adjustment to Prior Net Income to its Restricted Retained Earnings account than the percentages set forth in the Retained Earning Capital Plan Amendment. 8.2.2 Ongoing Allocation During any Dividend Restriction Period that occurs before the Allocation Termination Date, the Bank shall continue to allocate its Regular Contribution Amount (or when and if required under subsection 8.2.4 below, its Special Contribution Amount) to its Restricted Retained Earnings account. 8.2.3 Treatment of Quarterly Net Losses and Annual Net Losses In the event the Bank sustains a Net Loss for a calendar quarter, the following shall apply: (i) to the extent that its cumulative calendar year-to-date net income is positive at the end of such quarter, the Bank may decrease the amount of its Restricted Retained Earnings such that the cumulative addition to the Restricted Retained Earnings account calendar year-to-date at the end of such quarter is equal to 20 percent of the amount of such cumulative calendar year-to-date net income; (ii) to the extent that its cumulative calendar year-to-date net income is negative at the end of such quarter (a) the Bank may decrease the amount of its Restricted Retained Earnings account such that the cumulative addition calendar year-to-date to the Restricted Retained Earnings at the end of such quarter is zero, and (b) the Bank shall apply any remaining portion of the Net Loss for the calendar quarter first to reduce Retained Earnings that are not Restricted Retained Earnings until such Retained Earnings are reduced to zero, and thereafter may apply any remaining portion of the Net Loss for the calendar quarter to reduce Restricted Retained Earnings; and (iii) for any subsequent calendar quarter in the same calendar year, the Bank may decrease the amount of its quarterly allocation to its Restricted Retained Earnings account in that subsequent calendar quarter such that the cumulative addition to the Restricted Retained Earnings account calendar year-to-date is equal to 20 percent of the amount of such cumulative calendar year-to-date net income. In the event the Bank sustains a Net Loss for a calendar year, any such Net Loss first shall be applied to reduce Retained Earnings that are not Restricted Retained Earnings until such Retained Earnings are reduced to zero, and thereafter any remaining portion of the Net Loss for the calendar year may be applied to reduce Restricted Retained Earnings. 8.2.4 Funding at the Special Contribution Amount If during a Dividend Restriction Period, the amount of the Bank’s Restricted Retained Earnings decreases in any calendar quarter, except as provided in subsections 8.2.3(i) and (ii)(a) above, the Bank shall allocate the Special Contribution Amount to its Restricted Retained Earnings account beginning at the following calendar quarter-end (except as provided in the last sentence of this subsection). Thereafter, the Bank shall continue to allocate the Special Contribution Amount to its Restricted Retained Earnings account until the cumulative difference between: (i) the allocations made using the Special Contribution Amount; and (ii) the allocations that would have been made if the Regular Contribution Amount applied, is equal to the amount of the prior decrease in the amount of its Restricted Retained Earnings account arising from the application of subsection 8.2.3(ii)(b). If at any calendar quarter-end the allocation of the Special Contribution Amount would result in a cumulative allocation in excess of such prior decrease in the amount of Restricted Retained Earnings: (i) the Bank may allocate such percentage of Quarterly Net Income to the Restricted Retained Earnings account that shall exactly restore the amount of the prior decrease, plus the amount of the Regular Contribution Amount for that quarter; and (ii) the Bank in subsequent quarters shall revert to paying at least the Regular Contribution Amount.


 
  15   8.2.5 Release of Restricted Retained Earnings If the Bank’s RREM decreases from time to time due to fluctuations in the Bank’s Total Consolidated Obligations, amounts in the Restricted Retained Earnings account in excess of 150 percent of the RREM may be released by the Bank from the restrictions otherwise imposed on such amounts pursuant to the provisions of the Retained Earnings Capital Plan Amendment, and reallocated to its Retained Earnings that are not Restricted Retained Earnings. Until the Restriction Termination Date, the Bank may not otherwise reallocate amounts in its Restricted Retained Earnings account (provided that a reduction in the Restricted Retained Earnings account following a Net Loss pursuant to subsection 8.2.3 is not a reallocation). 8.2.6 No Effect on Rights of Shareholders as Owners of Retained Earnings In the event of the liquidation of the Bank, or a taking of the Bank’s Retained Earnings by any future federal action, nothing in the Retained Earnings Capital Plan Amendment shall change the rights of the holders of the Bank’s Class B stock that confer ownership of Retained Earnings, including Restricted Retained Earnings, as granted under Section 6(h) of the Act. 9. Limitation on Dividends, Stock Purchase and Stock Redemption 9.1 General Rule on Dividends From the REFCORP Termination Date through the Restriction Termination Date, the Bank may not pay Dividends, or otherwise reallocate funds (except as expressly provided in subsection 8.2.5, and further provided that a reduction in the Restricted Retained Earnings account following a Net Loss pursuant to subsection 8.2.3 is not a reallocation), out of Restricted Retained Earnings. During a Dividend Restriction Period, the Bank may not pay Dividends out of the amount of Quarterly Net Income required to be allocated to Restricted Retained Earnings. 9.2 Limitations on Repurchase and Redemption From the REFCORP Termination Date through the Restriction Termination Date, the Bank shall not engage in a repurchase or redemption transaction if following such transaction the Bank’s Total Capital as reported to the FHFA falls below the Bank’s aggregate paid-in amount of Capital Stock. 10. Termination of Retained Earnings Capital Plan Amendment Obligations 10.1 Notice of Automatic Termination Event 10.1.1 Action by FHLBanks If the Bank desires to assert that an Automatic Termination Event has occurred (or will occur on the effective date of a change in a statute or the Regulations), the Bank shall provide prompt written notice to all of the other FHLBanks (and provide a copy to the FHFA) identifying the specific statutory or regulatory change that is the basis for the assertion. For the purposes of this section, “prompt written notice” means notice delivered no later than 90 calendar days subsequent to: (1) the date the specific statutory change takes effect; or (2) the date an interim final rule or final rule effecting the specific regulatory change is published in the Federal Register.


 
  16   If within 60 calendar days of transmission of such written notice to all of the other FHLBanks, at least 2/3 of the then existing FHLBanks (including the Bank)execute a Declaration of Automatic Termination concurring that the specific statutory or regulatory change identified in the written notice constitutes an Automatic Termination Event, then the Declaration of Automatic Termination shall be delivered by the Bank to the FHFA within 10 calendar days of the date that the Declaration of Automatic Termination is executed. After the expiration of a 60 calendar day period that begins when the Declaration of Automatic Termination is delivered to the FHFA, or is delivered to the FHFA by another FHLBank pursuant to the terms of its capital plan, an Automatic Termination Event Declaration Date shall be deemed to occur (except as provided in subsection 10.1.3). If a Declaration of Automatic Termination concurring that the specific statutory or regulatory change identified in the written notice constitutes an Automatic Termination Event has not been executed by at least the required 2/3 of the then existing FHLBanks within 60 calendar days of transmission of such notice to all of the other FHLBanks, the Bank may request a determination from the FHFA that the specific statutory or regulatory change constitutes an Automatic Termination Event. Such request must be filed with the FHFA within 10 calendar days after the expiration of the 60 calendar day period that begins upon transmission of the written notice of the basis of the assertion to all of the other FHLBanks. 10.1.2 Action by FHFA The Bank may request a determination from the FHFA that a specific statutory or regulatory change constitutes an Automatic Termination Event, and may claim that an Automatic Termination Event has occurred, or will occur, with respect to a specific statutory or regulatory change only if the Bank has complied with the time limitations and procedures of subsection 10.1.1. If within 60 calendar days after the Bank delivers such a request to the FHFA, or another FHLBank delivers such a request pursuant to its capital plan, the FHFA provides the requesting FHLBank with a written determination that a specific statutory or regulatory change is an Automatic Termination Event, then an Automatic Termination Event Declaration Date shall be deemed to occur as of the expiration of such 60 calendar day period (except as provided in subsection 10.1.3). The date of the Automatic Termination Event Declaration Date shall be as of the expiration of such 60 calendar day period (except as provided in subsection 10.1.3) no matter on which day prior to the expiration of the 60 calendar day period the FHFA has provided its written determination. If the FHFA fails to make a determination within 60 calendar days after an FHLBank delivers such a request to the FHFA, then an Automatic Termination Event Declaration Date shall be deemed to occur as of the date of the expiration of such 60 calendar day period (except as provided in subsection 10.1.3); provided, however, that the FHFA may make a written request for information from the requesting FHLBank, and toll such 60 calendar day period from the date that the FHFA transmits its request until that FHLBank delivers to the FHFA information responsive to its request. If within 60 calendar days after an FHLBank delivers to the FHFA a request for determination that a specific statutory or regulatory change constitutes an Automatic Termination Event (or such longer period if the 60 calendar day period is tolled pursuant to the preceding sentence), the FHFA provides that FHLBank with a written determination that a specific statutory or regulatory change is not an Automatic Termination Event, then an Automatic Termination Event shall not have occurred with respect to such change. 10.1.3 Proviso as to Occurrence of Automatic Termination Event Declaration Date


 
  17   In no case under this subsection 10.1 may an Automatic Termination Event Declaration Date be deemed to occur prior to: (1) the date the specific statutory change takes effect; or (2) the date an interim final rule or final rule effecting the specific regulatory change is published in the Federal Register. 10.2 Notice of Voluntary Termination If the FHLBanks terminate the Agreement, then the FHLBanks shall provide written notice to the FHFA that the FHLBanks have voted to terminate the Agreement. 10.3 Consequences of an Automatic Termination Event or Vote to Terminate the Agreement 10.3.1 Consequences of Voluntary Termination In the event the FHLBanks deliver written notice to the FHFA that the FHLBanks have voted to terminate the Agreement, then without any further action by the Bank or the FHFA: (i) the date of delivery of such notice shall be an Allocation Termination Date; and (ii) one year from the date of delivery of such notice shall be a Restriction Termination Date. 10.3.2 Consequences of an Automatic Termination Event Declaration Date If an Automatic Termination Event Declaration Date has occurred, then without further action by the Bank or the FHFA: (i) the date of the Automatic Termination Event Declaration Date shall be an Allocation Termination Date; and (ii) one year from the date of the Automatic Termination Event Declaration Date shall be a Restriction Termination Date. 10.3.3 Deletion of Operative Provisions of Retained Earnings Capital Plan Amendment Without any further action by the Bank or the FHFA, on the Restriction Termination Date, sections 7 through 10 of this Capital Plan shall be deleted.


 
Appendix I   Membership Stock Requirement Each Member is required to purchase and maintain Membership Stock equal to the following: Membership Stock Requirement2 Minimum Investment Range1 Minimum Maximum % of Total Assets3 0.06% 0.05% 0.25% Membership Stock Cap $10 million $1 million $30 million Membership Stock Floor $10,000 $10,000 $30,000 Activity Based Stock Requirement Each Member is required to purchase and maintain Activity Based Stock issued in accordance with section 2.5 of this Capital Plan equal to the percentage of the book value on the Bank’s books and records of the following transactions as shown in the table below. Transaction Activity Based Stock Requirement2 Minimum Investment Range1 Minimum Maximum Outstanding Advances3 4.50% 2.00% 5.00% Outstanding Acquired Member Assets4 4.00% 0.00% 5.00% Outstanding Letters of Credit5 0.10% 0.00% 0.175% Advance Commitments 0.00% 0.00% 0.35% Acquired Member Asset Commitments 0.00% 0.00% 0.60% Operational Threshold Each Member is permitted to retain Excess Shares of Activity Based Stock in an amount not to exceed the following operational threshold, designed to minimize the number of repurchase transactions for the Bank and its Members. Current Operational Threshold2 Operational Threshold Range1 Minimum Maximum Operational Threshold $06 $0 $250,000 1 Changes to the Minimum Investment and operational threshold ranges constitute amendments to the Capital Plan and requires approval by the Finance Agency. 2 The Board of Directors reviews and adjusts the Membership Stock Requirement, Activity Based Stock Requirement and the Current Operational Threshold within the established ranges, subject to the Member notification requirements in section 2.3. 3 Board of Directors approved change to Membership Stock Requirement from 0.12% to 0.06% and Activity Based Stock Requirement for Advances from 4.00% to 4.50% effective December 15, 2023. 4 Board of Directors approved change to Activity Based Stock Requirement for Acquired Member Assets from 4.45% to 4.00% effective August 1, 2013. 5 Board of Directors approved change to Activity Based Stock Requirement for Letters of Credit from 0.00% to 0.10% effective October 1, 2020. 6 Board of Directors approved change to current Operational Threshold for Excess Shares of Activity Based Stock effective January 4, 2012.


 
EX-4.2 3 exhibit42-descriptionoffhl.htm EX-4.2 - DESCRIPTION OF FHLB DES MOINES CAPITAL STOCK Document

Exhibit 4.2
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934


The Federal Home Loan Bank of Des Moines ( the “Bank”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): our Class B Stock, par value $100 per share (the “Class B Stock”), which is registered under Section 12(g) of the Exchange Act.

Description of Class B Stock
The following description of our Class B Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the Organization Certificate of the Federal Home Loan Bank of Des Moines, as amended and restated effective May 31, 2015 (the “Organization Certificate”), the Bylaws of the Federal Home Loan Bank of Des Moines, as amended and restated effective December 8, 2021 (the “Bylaws”) and the Federal Home Loan Bank of Des Moines Capital Plan, as amended, approved by the Federal Housing Finance Agency on May 31, 2015 (the “Capital Plan”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read the Organization Certificate, the Bylaws, the Capital Plan and the applicable provisions of the Federal Home Loan Bank Act, as amended (the “FHLBank Act”), and related regulations of the Federal Housing Finance Agency (the “Finance Agency”) for additional information.

General

The Federal Home Loan Banks (“FHLBanks”), including the Bank, have a unique cooperative structure. To access Bank products and services, a financial institution must be approved for membership and purchase our capital stock. The members’ stock requirement is based on the amount of total assets on the member’s balance sheet and its use of certain Bank products, as prescribed by the FHLBank Act; this reflects the value of having ready access to the Bank as a reliable source of low-cost funds.

Under the Capital Plan, our Class B Stock consists of two sub-classes: membership stock and activity-based stock. Membership stock is required to be purchased and held as a condition of membership in the Bank. Activity-based stock is required to be purchased and held in order to obtain an advance and/or engage in other transactions with the Bank.

We may issue Class B Stock only in accordance with the terms of the Capital Plan and the regulations of the Finance Agency. We may issue Class B Stock only to members.

The shares of Class B Stock offered to members are only issued at par value and do not trade in any market. Redemptions and repurchases of such stock by the Bank, and any transfers of such stock, are also only made at par value.

Each Bank member is required to maintain a certain minimum investment in our Class B Stock. The minimum investment is determined by a membership stock purchase requirement (the “Membership Stock Purchase Requirement”) and an activity-based stock purchase requirement (the “Activity Stock Purchase Requirement” and, together, the “Minimum Stock Investment Requirement”). Each member is required to maintain a certain minimum investment in membership stock for as long as the institution remains a Bank member. In addition, each member is required to purchase activity-based stock in proportion to the volume of certain transactions between the member and the Bank. We may adjust these investment requirements from time to time within the limits established in the Capital Plan.

Voting Rights for Election of Directors

Our Board of Directors (the “Board”) is comprised of member directors elected by our member institutions on a state-by-state basis and independent directors elected by all of our members. The Board includes 13 member directors and nine independent directors, two of whom serve as public interest directors. Under the FHLBank Act, the only matters submitted to shareholders for votes are (i) the annual election of our directors and (ii) any proposed agreement to merge with one or more FHLBanks.

Member directorships are allocated by the Finance Agency to the 13 states in our district and a member institution is eligible to participate in the election for the state in which it is located. Candidates for member directorships are not nominated by the Board. As provided for in the FHLBank Act, member director candidates are nominated by the members eligible to participate in the election in the relevant state. Independent director candidates are nominated by the Board.




Voting rights with regard to the election of directors are set forth in 12 C.F.R. Part 1261. Each member is eligible to vote for the number of open member director seats in the state in which its principal place of business is located and any open independent director seats. Each member is entitled to cast one vote for each share of Class B Stock that the member was required to hold under the Capital Plan as of a record date of December 31 of the year preceding the election date, except that the number of votes that each member may cast for each directorship shall not exceed the average number of shares of Class B Stock that were required to be held by all members located in that state on the record date. No shares of Class B Stock have any voting preference. We annually calculate each member’s Minimum Stock Investment Requirement for purposes of determining its voting shares based on its preceding December 31st balance sheet, outstanding advances, and any other activity or product that requires a capital stock purchase under the Capital Plan. Member directors are elected based on the votes of the members whose principal place of business is located in a particular state. Independent directors are elected based on votes of the members at large.

Redemption Rights

From time to time, we may issue or repurchase Class B Stock to or from new members, current members, or former members or their successors in accordance with the Capital Plan, and as necessary to allow the Bank to satisfy the minimum capital requirements established by the FHLBank Act. The Class B Stock issued or repurchased may be membership stock, activity-based stock, or both.

Under the FHLBank Act and related Finance Agency regulations, Class B Stock is subject to redemption upon the expiration of a five-year redemption period (the “Stock Redemption Period”). Only Class B Stock in excess of the Minimum Stock Investment Requirement of a member or former member (including successors) may be redeemed at the end of the Stock Redemption Period. Further, we may repurchase excess activity-based and membership stock in our sole discretion, without regard to any redemption period. However, there is no guarantee that a member will be able to redeem its investment even at the end of a Stock Redemption Period. If the redemption of Class B Stock, or the repurchase of such stock by the Bank, would cause us to fail to meet our minimum regulatory capital requirements, then such redemption or repurchase would be prohibited. Likewise, we would not honor a redemption request if such redemption would cause the member to fail to maintain its required Minimum Stock Investment Requirement.

We may also decide to suspend the redemption of Class B Stock if we reasonably believe that such redemption would cause us to fail to meet our minimum regulatory capital requirements, would prevent the Bank from maintaining adequate capital against a potential risk or would otherwise prevent the Bank from operating in a safe and sound manner. In addition, approval from the Finance Agency for redemptions or repurchases would be required if the Finance Agency or the Board were to determine that the Bank has incurred, or is likely to incur, losses that result in, or are likely to result in, charges against the Bank’s capital. Under such circumstances, there can be no assurance that the Finance Agency would grant such approval or, if it did, upon what terms it might do so.

Accordingly, notwithstanding the expiration of the Stock Redemption Period, there are a variety of circumstances that would preclude the Bank from redeeming or repurchasing the Class B Stock of a member. Since there is no public market for the Class B Stock and transfers of Class B Stock between members are generally prohibited under the Capital Plan, there can be no assurance that a member’s purchase of Class B Stock would not effectively become an illiquid investment in the Bank.

Increases in the Minimum Amount of Class B Stock Required to be Purchased

Under the Capital Plan, the Board may increase the Minimum Stock Investment Requirement of members within certain specified ranges. The Minimum Stock Investment Requirement may also be increased pursuant to an amendment to the Capital Plan, which must be approved by the Finance Agency. The Bank must provide members with notice prior to the effective date of any increase in their Minimum Stock Investment Requirement. Under the Capital Plan, members are required to purchase additional Bank stock as necessary to comply with such new requirements.

Limitations on Payment of Dividends

Under the FHLBank Act and Finance Agency regulations, we may pay dividends on our stock only out of previously retained earnings or current net earnings. However, we may not pay dividends to members if, after doing so, we would fail to meet minimum regulatory capital requirements. Moreover, we may not pay dividends if any principal and interest due on our consolidated obligations have not been paid in full.

Capital Plan Amendments Subject to Finance Agency Approval

The Finance Agency must approve all amendments to the Capital Plan before they may become effective. Such amendments to the Capital Plan are not subject to member consent or approval. While amendments must be consistent with the FHLBank Act and Finance Agency regulations, it is possible that they would result in changes to the Capital Plan that could adversely affect the rights and obligations of members.

Vote on Voluntary Merger

In the event of a voluntary merger between the Bank and another FHLBank, applicable regulatory rules require that the merger agreement be ratified a majority of votes cast in favor of ratification by Bank members.




Each Bank member that is entitled to participate in the voting will be able to vote the shares representing the member’s Minimum Stock Investment Requirement held by the member on the record date, subject to the limitation that no member may cast a number of votes that exceeds the average number of shares representing the Minimum Stock Investment Requirement of all Bank members entitled to vote, calculated on a district-wide basis, as of the record date.

Uncertain Impact of a Liquidation, Merger or Consolidation of the Bank

Under the FHLBank Act, holders of Class B Stock own the retained earnings, surplus, undivided profits, and equity reserves of the Bank. The Capital Plan provides with respect to a liquidation that after payment of creditors, all Class B Stock will be redeemed at par. Any remaining assets will be distributed to stockholders in proportion to their stock holdings relative to the total outstanding Class B Stock of the Bank. Under the Capital Plan, in the event the Bank is merged or consolidated into another FHLBank, the holders of the outstanding Class B Stock of the Bank will be entitled to the rights and benefits determined by the Board and set forth in any applicable plan of merger, subject to any terms and conditions imposed by the Finance Agency.

However, the Finance Agency has the statutory authority to prescribe regulations or orders governing liquidations or reorganizations of an FHLBank that may modify, restrict or eliminate any of the rights set forth above. We cannot predict how the Finance Agency might exercise its authority with respect to liquidations or reorganizations or whether any actions taken by the Finance Agency in this regard would be inconsistent with the provisions of the Capital Plan or the rights of holders of Class B Stock in the Bank’s retained earnings.


EX-31.1 4 exhibit311q423certofpresid.htm EX-31.1 - CERTIFICATION OF PRESIDENT AND CEO PURSUANT TO SECTION 302 Document

EXHIBIT 31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
for the President and Chief Executive Officer

    I, Kristina K. Williams, certify that:
1I have reviewed this annual report on Form 10-K of the Federal Home Loan Bank of Des Moines;
2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 7, 2024
/s/ Kristina K. Williams
Kristina K. Williams
President and Chief Executive Officer




EX-31.2 5 exhibit312q423certofcfopur.htm EX-31.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 302 Document

EXHIBIT 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
for the Chief Financial Officer

    I, James G. Livingston, certify that:
1I have reviewed this annual report on Form 10-K of the Federal Home Loan Bank of Des Moines;
2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 7, 2024
/s/ James G. Livingston
James G. Livingston
Chief Financial Officer


EX-32.1 6 exhibit321q423certofpresid.htm EX-32.1 - CERTIFICATION OF THE PRESIDENT AND CEO PURSUANT TO SECTION 906 Document

EXHIBIT 32.1

Certification by the President and Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Kristina K. Williams, President and Chief Executive Officer of the Federal Home Loan Bank of Des Moines (“Registrant”) certify that, to the best of my knowledge:
1
The Registrant's Annual Report on Form 10-K for the period ended December 31, 2023 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: March 7, 2024
/s/ Kristina K. Williams
Kristina K. Williams
President and Chief Executive Officer




EX-32.2 7 exhibit322q423certofcfopur.htm EX-32.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 906 Document

EXHIBIT 32.2

Certification by the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, James G. Livingston, Chief Financial Officer of the Federal Home Loan Bank of Des Moines (“Registrant”) certify that, to the best of my knowledge:
1
The Registrant's Annual Report on Form 10-K for the period ended December 31, 2023 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: March 7, 2024
/s/ James G. Livingston
James G. Livingston
Chief Financial Officer




EX-99.1 8 exhibit991-auditcommitteer.htm EX-99.1 - AUDIT COMMITTEE REPORT 2023 Document

EXHIBIT 99.1

Audit Committee Report

March 7, 2024

The Audit Committee is composed of seven directors, three serving as independent directors, and four serving as member directors. The Committee operates under a written charter adopted by the Board of Directors that was last amended on February 15, 2024. Our Board of Directors determined that each of the Audit Committee members is considered an “Audit Committee financial expert” for purposes of SEC requirements. Our Board of Directors elected to use the New York Stock Exchange definition of “independence” and, in doing so, concluded that three of the Directors on the Audit Committee, during 2023 and four currently, are not independent as they are officers or directors of member institutions which do business with the Bank. Directors Bennett, Garding, and Meeks do not serve as officers or directors of a Bank member and are independent. Under Federal Housing Finance Agency (Finance Agency) regulations applicable to members of the Audit Committee, each of the Audit Committee members is independent. For further discussion about the Board’s analysis of director independence under the New York Stock Exchange rules, see “Director Independence” in Item 13.
In accordance with its written charter adopted by the Board of Directors, the Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the Bank’s accounting, reporting, and financial practices, including the integrity of its financial statements, among other areas. The Audit Committee Charter is available in full on our website at www.fhlbdm.com.
The Audit Committee is directly responsible for the appointment and oversight of our independent auditors, PricewaterhouseCoopers LLP (PwC), including review of their qualifications, independence, and performance. Among other duties, the Audit Committee also oversees:
The integrity of the Bank’s financial statements and financial reporting process and systems of internal accounting and financial reporting controls.

The independence, scope of audit services, and performance of the Bank’s internal audit function as well as the appointment or replacement of the Chief Audit Executive.

The selection and replacement, qualifications, independence, scope of audit, and performance of the Bank’s external auditor.

The Bank’s compliance with laws, regulations and policies, including the Code of Ethics.

The policy for complaints regarding questionable accounting, internal accounting controls, and auditing matters, and oversight of fraud investigations.

The Bank is one of 11 district Federal Home Loan Banks (FHLBanks), that together with the Office of Finance, comprise the Federal Home Loan Bank System (System). Each FHLBank operates as a separate entity with its own management, employees, and board of directors and each is regulated by the Finance Agency. The Office of Finance has responsibility for the issuance of consolidated obligations on behalf of the FHLBanks, and for publishing the System’s combined financial reports (CFRs). Accordingly, the System has determined that it is optimal to have the same independent audit firm to coordinate and perform the separate audits of the Office of Finance and annual financial statements of each FHLBank and the Office of Finance’s annual CFRs. The FHLBanks and Office of Finance collaborate in selecting, approving the compensation of, and evaluating the performance of the independent auditor, but the responsibility for the appointment of and oversight of the independent auditor remains solely with the audit committees of each FHLBank and the Office of Finance.



PwC has been the independent auditor for the System and the Bank since 1990. The Audit Committee engages in evaluations of the independent auditor. In connection with the appointment of the Bank’s independent auditor, the Audit Committee’s evaluation included coordination with the audit committees of the other FHLBanks and the Office of Finance. Specific considerations included:
an analysis of the risks and benefits of retaining the same firm as independent auditor versus engaging a different firm, including consideration of:

PwC engagement audit partner, engagement quality review partner, and audit team rotation;
PwC’s tenure as the Bank’s and the System’s independent auditor;
benefits associated with engaging a different firm as independent auditor; and
potential disruption and risks associated with changing the Bank’s auditor.

the firm’s depth and breath of understanding of our business, operations, and accounting policies and practices;

PwC’s historical and recent performance on the Bank’s audit, including the results of an internal survey of PwC service and quality;

an analysis of PwC’s known legal risks and significant proceedings;

external data relating to audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) audit quality inspection reports on PwC and its peer firms as well as metrics indicative of audit quality;

the appropriateness of PwC’s fees, on both an absolute basis and as compared to its peer firms; and

the diversity of PwC’s ownership and staff assigned to the engagement.

Audit fees represent fees for professional services provided in connection with the audit of the Bank’s annual financial statements and internal control over financial reporting and reviews of the Bank’s quarterly financial statements, regulatory filings, consents and other SEC matters. The Committee has reviewed and approved the fees paid to the independent auditor for audit, audit related, and other services, and believes that PwC is independent.
In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to the Bank. For lead partners, the maximum number of consecutive years of service in that capacity is five years.
Based on its reviews discussed above, the Audit Committee recommended to the Board of Directors the appointment of PwC as the Bank’s independent registered public accounting firm for 2023.
The Audit Committee annually reviews its written charter and practices, and has determined that its charter and practices are consistent with the applicable Finance Agency regulations and the provisions of the Sarbanes-Oxley Act of 2002.
Among other matters, the Audit Committee also:
reviewed the scope of and overall plans for the external and internal audit program;
discussed with management and the independent auditor significant matters, including Critical Audit Matters, if any, arising during the audit;
reviewed and approved the Audit Committee's oversight of external auditor policy;
reviewed and approved, as needed, non-audit services performed by Big Four firms;
performed oversight that management establishes, implements, and maintains accounting policies;
discussed with management the use of any non-GAAP measures in the financial statements; and



established Audit Quality Indicators to be used in the assessment of independent auditor performance.
The Audit Committee has established a policy for the receipt, retention, and treatment, on a confidential basis, of any complaints the Bank receives. The Bank encourages employees and third-party individuals and organizations to report concerns regarding questionable accounting, internal accounting controls, or auditing matters.
Management has the primary responsibility for the preparation and integrity of the Bank’s financial statements, accounting and financial reporting principles, and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Bank's independent auditor, PwC, is responsible for performing an independent audit of the Bank’s financial statements and of the effectiveness of internal control over financial reporting in accordance with auditing standards promulgated by the PCAOB and the U.S. Government Accountability Office. The internal auditors are responsible for preparing an annual audit plan and conducting internal audits under the control of the Chief Audit Executive, who reports to the Audit Committee. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee met 13 times during 2023, and has regular executive sessions with both internal and independent auditors.
In this context, prior to their issuance, the Audit Committee reviewed and discussed the quarterly and annual earnings releases, financial statements (including the presentation of non-GAAP financial information) and disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (including significant accounting policies and estimates) with management, the Bank’s internal auditors, and PwC. The Audit Committee discussed with PwC matters required to be discussed by applicable requirements of the PCAOB. The Audit Committee has also received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence [Item 407(d)(3) of Reg. S-X]. The Audit Committee met with PwC and with the Bank’s internal auditors, in each case, with and without other members of management present, to discuss the results of their respective examinations, the evaluations of the Bank’s internal controls, and the overall quality and integrity of the Bank’s financial reporting. Management represented to the Audit Committee that the Bank's financial statements were prepared in accordance with accounting principles generally accepted in the United States of America.

Based on the reviews and discussions with management, the internal auditors, and PwC, as well as the review of the representations of management and PwC’s report, the Audit Committee recommended to the Board of Directors, and the Board of Directors has approved, to include the audited financial statements in the Bank's Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the Securities and Exchange Commission.
As of the date of filing for this Annual Report on Form 10-K, the members of the Audit Committee are:
Ruth B. Bennett, Chair
Jon M. Jones, Vice Chair
Steven L. Bumann
Edward A. Garding
James W. Hunt
Russell J. Lau
Elsie M. Meeks



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Unrealized Losses Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value [Table Text Block] Principal collected Proceeds from Principal Repayments on Loans and Leases Held-for-investment Schedule of Assets Sold under Agreements to Repurchase [Table] Schedule of Assets Sold under Agreements to Repurchase [Table] Financial Standby Letter of Credit [Member] Financial Standby Letter of Credit [Member] Entity Address, Postal Zip Code Entity Address, Postal Zip Code Premiums Federal Home Loan Bank, Advances, Premium Derivative Offsetting Derivatives, Offsetting Fair Value Amounts, Policy [Policy Text Block] Trading securities Trading Securities Debt Securities, Trading, and Equity Securities, FV-NI Regulatory Capital, Required Federal Home Loan Bank, Regulatory Capital, Required Gross Unrealized Gains Debt Securities, Held-to-Maturity, Accumulated Unrecognized Gain Property, Plant and Equipment [Abstract] Property, Plant and Equipment [Abstract] Assets Sold under Agreements to Repurchase [Line Items] Assets Sold under Agreements to Repurchase [Line Items] Debt Instrument [Axis] Debt Instrument [Axis] Gains (Losses) on Derivatives Change in Unrealized Gain (Loss) on Fair Value Hedging Instruments Average Collected Cash Balances with Commercial Banks, Federal Home Loan Bank Average Collected Cash Balances with Commercial Banks, Federal Home Loan Bank Cash dividends paid Payments of Ordinary Dividends, Common Stock Hedged Asset, Fair Value Hedge Hedged Asset, Fair Value Hedge Receivable [Domain] Receivable [Domain] Debt Instrument, Fair Value Disclosure Debt Instrument, Fair Value Disclosure Regulatory Capital Ratio, Actual Federal Home Loan Bank, Regulatory Capital Ratio, Actual Mortgage Loans, Percent Loans and Leases Receivable, Gross, Consumer, Mortgage, Percent The gross carrying amount of mortgage loans to individuals. This item excludes subordinated loans such as home equity lines of credit expressed as a percent. Contractual Maturities, Due after Ten Years, Fair Value Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years, Fair Value Mandatorily redeemable capital stock MRCS Interest Expense Interest Expense, Capital Securities Fair Value Fair Value of Financial Instruments, Policy [Policy Text Block] Purchased Payments to Acquire Loans Held-for-investment Derivative Asset, Collateral, Obligation to Return Cash, Offset Derivative Asset, Subject to Master Netting Arrangement, Collateral, Obligation to Return Cash, Offset Against Derivative Asset Advances, Weighted Average Interest Rate, Maturing in Rolling Year Five Federal Home Loan Bank, Advances, Weighted Average Interest Rate, Maturing in Rolling Year Five Fair Value Measurement [Domain] Fair Value Measurement [Domain] Financial Asset, Period Past Due [Domain] Financial Asset, Aging [Domain] Financial Instruments [Domain] Financial Instruments [Domain] Federal Home Loan Bank, Advances, Option [Axis] Federal Home Loan Bank, Advances, Option [Axis] Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items] Other investing activities, net Payments for (Proceeds from) Other Investing Activities Number of Subclasses of Capital Stock Number of Subclasses of Capital Stock Number of Subclasses of Capital Stock Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] Statistical Measurement [Domain] Statistical Measurement [Domain] Debt Securities, Held-to-Maturity, Excluded Accrued Interest [true false] Debt Securities, Held-to-Maturity, Excluded Accrued Interest [true false] Class of Financing Receivable [Domain] Class of Financing Receivable [Domain] Short-term Debt, Type [Axis] Short-Term Debt, Type [Axis] Derivative Instrument Gain (Loss) [Table] Derivative Instruments, Gain (Loss) [Table Text Block] Number of Housing Authorities For Which the Bank Has Standby Bond Purchase Agreements Number of Housing Authorities For Which the Bank Has Standby Bond Purchase Agreements Number of Housing Authorities For Which the Bank Has Standby Bond Purchase Agreements Loans Insured or Guaranteed by Government Authorities [Axis] Loans Insured or Guaranteed by Government Authorities [Axis] Contractual Maturities, Due in One Year or Less, Fair Value Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling within One Year, Fair Value Activities with Other FHLBanks [Text Block] Transactions with other FHLBanks [Text Block] Transactions with other FHLBanks Cumulative Effect, Period of Adoption [Axis] Cumulative Effect, Period of Adoption [Axis] Bonds by Contractual Maturity Schedule of Maturities of Long-Term Debt [Table Text Block] Subsequent Event Type [Axis] Subsequent Event Type [Axis] Advances, Weighted Average Interest Rate, Maturing in Rolling Year Three Federal Home Loan Bank Advances, Weighted Average Interest Rate, Maturing in Rolling Year Three Equity Component [Domain] Equity Component [Domain] Subsequent Event Type [Domain] Subsequent Event Type [Domain] Fair Value, Nonrecurring [Member] Fair Value, Nonrecurring [Member] Discount notes (includes $47,442 and $44,531 at fair value held under the fair value option) Total Federal Home Loan Bank, Consolidated Obligations, Discount Notes Interest Expense [Member] Interest Expense [Member] Scenario [Axis] Scenario [Axis] Assets, Fair Value Disclosure Total non-recurring assets Assets, Fair Value Disclosure Loans from Other Federal Home Loan Banks Loans from Other Federal Home Loan Banks Federal funds sold Federal Funds Sold, Fair Value Disclosure This element represents the portion of the balance sheet assertion valued at fair value by the entity whether such amount is presented as a separate caption or as a parenthetical disclosure. Additionally, this element may be used in connection with the fair value disclosures required in the footnote disclosures to the financial statements. The element may be used in both the balance sheet and disclosure in the same submission. This item represents funds lent to other depository institutions, securities brokers, or securities dealers in the form of Federal Funds sold; for example, immediately available funds lent under agreements or contracts that mature in one business day or roll over under a continuing contract, regardless of the nature of the transaction or the collateral involved, excluding overnight lending for commercial and industrial purposes. Also include Federal Funds sold under agreements to resell on a gross basis, excluding (1) sales of term Federal Funds, (2) due bills representing purchases of securities or other assets by the reporting bank that have not yet been delivered and similar instruments, (3) resale agreements that mature in more than one business day involving assets other than securities, and (4) yield maintenance dollar repurchase agreements. Debt and Equity Securities, FV-NI [Line Items] Debt and Equity Securities, FV-NI [Line Items] Advances, Earlier of Contractual Maturity or Next Call Date, in Next Rolling Twelve Months Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, in Next Rolling 12 Months State or Local Housing Agency Obligations [Member] US States and Political Subdivisions Debt Securities [Member] Related Party [Domain] Related Party [Domain] Hedged Liability, Active Fair Value Hedge, Cumulative Increase (Decrease) Hedged Liability, Active Fair Value Hedge, Cumulative Increase (Decrease) Amount of cumulative increase (decrease) in fair value of hedged liability in fair value hedge, attributable to hedged risk, active as of the balance sheet date. Net gains (losses) on trading securities Net (gains) losses on trading securities Debt Securities, Trading, Gain (Loss) Risk-Based Capital, Actual Federal Home Loan Bank, Risk-Based Capital, Actual Advances, Weighted Average Interest Rate, Maturing in Rolling Year Two Federal Home Loan Bank Advances, Weighted Average Interest Rate, Maturing in Rolling Year Two Standby Letters of Credit [Member] Standby Letters of Credit [Member] Other, net Noninterest Income, Other Operating Income Hedging Designation [Domain] Hedging Designation [Domain] Financing Receivable, Excluding Accrued Interest, Originated, More than Five Years before Current Fiscal Year Financing Receivable, Excluding Accrued Interest, Originated, More than Five Years before Current Fiscal Year Redemption Period Under Bank Capital Plan Redemption Period Under Fhlbank Capital Plan The five year period after the Bank receives notification that a member would like to redeem capital stock or withdrawal capital stock. SUPPLEMENTAL DISCLOSURES Supplemental Cash Flow Information [Abstract] Derivative Instrument [Axis] Derivative Instrument [Axis] Derivative Liability, Collateral, Right to Reclaim Cash, Offset Derivative Liability, Subject to Master Netting Arrangement, Collateral, Right to Reclaim Cash Offset Non-interest-bearing Noninterest-Bearing Deposit Liabilities, Domestic Financial Instruments Subject to Mandatory Redemption, Past Contractual Redemption Date, Due to Outstanding Activity Financial Instruments Subject to Mandatory Redemption, Past Contractual Redemption Date, Due to Outstanding Activity Debt Securities, Available-for-Sale, Excluded Accrued Interest from Amortized Cost [true false] Debt Securities, Available-for-Sale, Excluded Accrued Interest from Amortized Cost [true false] Statement of Cash Flows [Abstract] Statement of Cash Flows [Abstract] Common Stock, Value, Outstanding Common Stock, Value, Outstanding Entity Address, State or Province Entity Address, State or Province Fair Value, Inputs, Level 1 [Member] Fair Value, Inputs, Level 1 [Member] Par Weighted Average Interest Rate Short-Term Debt, Weighted Average Interest Rate, at Point in Time Restricted Retained Earnings Restricted Retained Earnings, Policy [Policy Text Block] Disclosure of accounting policy for its recognition of restricted retained earnings. Federal Home Loan Bank, Advances, Valuation Adjustments for Hedging Activities Federal Home Loan Bank, Advances, Valuation Adjustments for Hedging Activities Contractual Maturities, Due in One Year or Less, Amortized Cost Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling within One Year, Amortized Cost Summary of Significant Accounting Policies [Text Block] Basis of Presentation and Significant Accounting Policies [Text Block] Financial Asset, Amortized Cost, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Financial Asset, Amortized Cost, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Affordable Housing Program [Table] Affordable Housing Program [Table] Affordable Housing Program [Table] Schedule of Short-term and Long-term Debt [Table] Schedule of Short-term and Long-term Debt [Table] A table or schedule providing information pertaining to long-term and short-term debt instruments or arrangements, including identification, terms, features and other information necessary to a fair presentation. These are debt arrangements that originally required repayment of either less than twelve months or more than twelve months after issuance. Net cash provided by (used in) operating activities Net Cash Provided by (Used in) Operating Activities GSE MBS [Member] Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member] Accounts, Notes, Loans and Financing Receivable [Line Items] Accounts, Notes, Loans and Financing Receivable [Line Items] Payments for repurchases/redemptions of mandatorily redeemable capital stock Net Repayments for Repurchases/Redemption of Mandatorily Redeemable Capital Stock Repayments of Mandatory Redeemable Capital Securities Derivative assets, net (Note 7) Derivative assets, net Derivative Asset Derivative Asset Non-Mortgage-Backed Securities [Member] Other Than Mortgage Backed Securities [Member] Represents the total of non-mortgage backed debt and equity instruments issued by federal, state or local government and/or by other non-mortgage related entities. Fair Value Option, Principal Balance, Consolidated Obligation Discount Notes Fair Value Option, Principal Balance, Consolidated Obligation Discount Notes Represents the outstanding amount of the unpaid principal balance of Consolidated Obligation Discount Notes for which the fair option has been elected. Financial Instruments Subject to Mandatory Redemption, Redeemable in Year Three Financial Instrument Subject to Mandatory Redemption, Maturity, Year Three Contractual Maturities, Due after Five Years through Ten Years, Fair Value Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after 5 through 10 Years, Fair Value Other liabilities Other Liabilities Financial Asset, Past Due Financial Asset, Past Due [Member] Transaction [Domain] Transaction [Domain] Contractual Maturities, Due after One Year through Five Years, Fair Value Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after One Through Five Years, Fair Value Financing Receivable, Allowance for Credit Losses Allowance for credit losses on mortgage loans Financing Receivable, Allowance for Credit Loss, Excluding Accrued Interest Financing Receivable, Allowance for Credit Loss, Excluding Accrued Interest Receivables [Abstract] Receivables [Abstract] Due after one year through two years Long-Term Debt, Maturities, Repayments of Principal in Rolling Year Two Total other income (loss) Noninterest Income Document Annual Report Document Annual Report Schedule of Other Transactions [Table] Schedule of Other Transactions [Table] Schedule of Other Transactions [Table] Legal Entity [Axis] Legal Entity [Axis] Pension and postretirement benefits Other Comprehensive (Income) Loss, Defined Benefit Plan, before Tax, after Reclassification Adjustment, Attributable to Parent Thereafter, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal After Year Five, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturities after year five following the date of the latest balance sheet, redeemable at fixed of determinable prices and dates. TOTAL LIABILITIES Liabilities INVESTING ACTIVITIES Net Cash Provided by (Used in) Investing Activities [Abstract] Proceeds from issuance of capital stock Stock Issued During Period, Value, New Issues Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset Entity Common Stock, Shares Outstanding Entity Common Stock, Shares Outstanding Fair Value Hierarchy and NAV [Domain] Fair Value Hierarchy and NAV [Domain] Hedged Asset, Active Fair Value Hedge, Cumulative Increase (Decrease) Hedged Asset, Active Fair Value Hedge, Cumulative Increase (Decrease) Amount of cumulative increase (decrease) in fair value of hedged asset in fair value hedge, attributable to hedged risk, active as of the balance sheet date. Advances Federal Home Loan Bank Advances [Policy Text Block] Disclosure of accounting policy for Federal Home Loan Bank advances. Leverage Capital, Actual Federal Home Loan Bank, Leverage Capital, Actual Accumulated Net Unrealized Investment Gain (Loss) [Member] AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent [Member] New Accounting Pronouncements and Changes in Accounting Principles [Abstract] Accounting Standards Update and Change in Accounting Principle [Abstract] Available-for-sale securities Payments for (Proceeds from) Investments [Abstract] Document Type Document Type Related Party Transactions, by Balance Sheet Grouping - Directors Related Party Transactions, by Balance Sheet Grouping - Directors [Table Text Block] Related Party Transactions, by Balance Sheet Grouping - Directors Financial Asset, Period Past Due [Axis] Financial Asset, Aging [Axis] Concentration Risk Benchmark [Domain] Concentration Risk Benchmark [Domain] Gross Unrealized Losses Debt Securities, Held-to-Maturity, Accumulated Unrecognized Loss Assets Assets, Fair Value Disclosure [Abstract] Net change in deposits Increase (Decrease) in Deposits Consolidated Obligations [Text Block] Debt Disclosure [Text Block] Due after one year through two years, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal in Year Two, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturing in year two following the date of the latest balance sheet, redeemable at fixed or determinable prices and dates. Common Class B [Member] Common Class B [Member] Entity Shell Company Entity Shell Company Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Minimum Capital Stock Required to be Held by Members as a Percent of Total Assets at Preceeding Fiscal Year End, Subject to Cap and Floor Minimum Capital Stock Required to be Held by Members as a Percent of Total Assets at Preceeding Fiscal Year End, Subject to Cap and Floor Minimum Capital Stock Required to be Held by Members as a Percent of Total Assets at Preceeding Fiscal Year End, Subject to Cap and Floor Offsetting Liabilities [Table Text Block] Offsetting Liabilities [Table Text Block] Affordable Housing Program payments Payments for Affordable Housing Programs Payments for Affordable Housing Programs Financial Asset, Equal to or Greater than 90 Days Past Due Financial Asset, Equal to or Greater than 90 Days Past Due [Member] NET INCOME Net income Net Income (Loss) Attributable to Parent, Net of Federal Home Loan Bank Assessments Advances Interest Income, Federal Home Loan Bank Advances Financial Instrument [Axis] Financial Instrument [Axis] Leverage Capital, Required Federal Home Loan Bank, Leverage Capital, Required Payments for maturing and retiring consolidated obligations Repayments of Long-Term Debt [Abstract] Document Period End Date Document Period End Date Commitments to Fund Advances [Member] Loan Origination Commitments [Member] Affordable Housing Program [Abstract] Affordable Housing Program [Abstract] Affordable Housing Program [Abstract] Exchange Cleared [Member] Exchange Cleared [Member] Federal Home Loan Bank of New York Federal Home Loan Bank of New York [Member] Debt Securities, Available-for-sale [Table] Debt Securities, Available-for-Sale [Table] Financing Receivable, Non-Accrual Financing Receivable, Excluding Accrued Interest, Nonaccrual Derivative Instruments, Gain (Loss) by Hedging Relationship, by Income Statement Location, by Derivative Instrument Risk [Table] Derivative Instruments, Gain (Loss) [Table] Accumulated Other Comprehensive Income Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] TOTAL ASSETS Assets Debt Disclosure [Abstract] Debt Disclosure [Abstract] Major Security Types Debt Securities, Held-to-Maturity [Table Text Block] Premiums Debt Instrument, Unamortized Premium Income Statement Location [Axis] Income Statement Location [Axis] Federal Home Loan Bank Advances Federal Home Loan Bank Advances [Member] Federal Home Loan Bank, Advances [Line Items] Federal Home Loan Bank, Advances [Line Items] Net unrealized gains (losses) on available-for-sale securities OCI, Unrealized Holding Gain (Loss) on Securities OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment and Tax Schedule of Held-to-maturity Securities [Line Items] Schedule of Held-to-Maturity Securities [Line Items] Interest Rate Swap [Member] Interest Rate Swap [Member] Balance (shares) Balance (shares) Shares, Issued Securities purchased under agreements to resell (Note 4) Securities Purchased under Agreements to Resell Securities Purchased under Agreements to Resell Contractual Maturities, Rolling Year Six Through Ten, Amortized Cost Debt Securities, Held-to-Maturity, Amortized Cost, after Allowance for Credit Loss, Maturity, Allocated and Single Maturity Date, Rolling after 5 through 10 Years Federal Home Loan Banks, Membership Requirements, Capital Stock Federal Home Loan Banks, Membership Requirements, Capital Stock Federal Home Loan Banks, Membership Requirements, Capital Stock Net cash provided by (used in) financing activities Net Cash Provided by (Used in) Financing Activities Accounting Policies [Abstract] Accounting Policies [Abstract] Mandatorily Redeemable Capital Stock Shares Subject to Mandatory Redemption, Changes in Redemption Value, Policy [Policy Text Block] Schedule of Short-term and Long-term Debt [Line Items] Schedule of Short-term and Long-term Debt [Line Items] Schedule of Short-term and Long-term Debt [Line Items] Percentage of Activity Based Capital Stock Required by Members as a Percent of Total Standby Letters of Credit Percentage of Activity Based Capital Stock Required by Members as a Percent of Total Standby Letters of Credit Percentage of Activity Based Capital Stock Required by Members as a Percent of Total Standby Letters of Credit Federal Home Loan Bank, Leverage Ratio, Actual Federal Home Loan Bank, Leverage Ratio, Actual NET INCOME BEFORE ASSESSMENTS Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest CAPITAL (Note 11) Stockholders' Equity Attributable to Parent [Abstract] Derivative Instruments By Hedge Type in Statement of Financial Performance Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] Cumulative Effect, Period of Adoption [Domain] Cumulative Effect, Period of Adoption [Domain] Mortgage Loans in Process of Foreclosure, Amount Mortgage Loans in Process of Foreclosure, Amount Forward Contracts [Member] Forward Contracts [Member] Net change in interest-bearing deposits Proceeds from (Payments for) in Interest-Bearing Deposits in Banks Discount Notes Schedule of Short-Term Debt [Table Text Block] Advance Percent Advance Percent Concentration of advances by percent Interest Income, Loans to Other Federal Home Loan Banks Interest Income, Loans to Other Federal Home Loan Banks Related Party Transaction [Line Items] Related Party Transaction [Line Items] Derivative Instruments in Statement of Financial Position Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] Residential Mortgage Backed Securities [Member] Residential Mortgage-Backed Securities [Member] Loans And Leases Receivable Modification Policy Loans And Leases Receivable Modification Policy [Policy Text Block] The Bank only grants mortgage loan modifications to borrowers experiencing financial difficulty. If the terms of the modified loan are at least as favorable to the lender as the terms offered to borrowers with similar collection risks for comparable loans and the modification to the terms of the loan is more than minor, the loan meets the accounting criteria for a new loan. The Bank places all modified loans on non-accrual status at the time of modification; however, these loans may be subsequently restored to accrual status if they meet the criteria noted in the non-accrual section above. Financing Receivable, Practical Expedient, Accrued Interest Exclusion [true false] Financing Receivable, Practical Expedient, Accrued Interest Exclusion [true false] Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss Debt Securities, Available-for-Sale, Unrealized Loss Position, Accumulated Loss Gain (Loss) on Extinguishment of Debt Gain (Loss) on Extinguishment of Debt Gain (Loss) on Extinguishment of Debt Quarterly Net Income Allocated to Restricted Retained Earnings Quarterly Net Income Allocated to Restricted Retained Earnings Quarterly Net Income Allocated to Restricted Retained Earnings Number of Finance Agency Regulatory Capital Requirements Number of Finance Agency Regulatory Capital Requirements Number of Finance Agency Regulatory Capital Requirements Fair Value Summary Fair Value, by Balance Sheet Grouping [Table Text Block] Derivative Contract [Domain] Derivative Contract [Domain] Capitalized interest on reverse mortgage investment securities Capitalized Interest on Reverse Mortgage Securities Capitalized Interest on Reverse Mortgage Securities Entity Registrant Name Entity Registrant Name Total adjustments Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities Proceeds from issuance of capital stock (shares) Stock Issued During Period, Shares, New Issues Mortgage loans held for portfolio Interest and Fee Income, Loans, Consumer, Real Estate Capital Stock, Percent Capital Stock, Percent Value of shares of other common stock instruments held by shareholders, such as exchangeable shares. May be all or portion of the number of common shares authorized expressed as a percent. Loans and Leases Receivable, Net Amount Financing Receivable, Excluding Accrued Interest, after Allowance for Credit Loss Activities with Other FHLBanks [Abstract] Activities with Other FHLBanks [Abstract] Activities with Other FHLBanks [Abstract] Debt Securities, Held-to-Maturity, Allowance for Credit Loss, Excluding Accrued Interest Debt Securities, Held-to-Maturity, Allowance for Credit Loss, Excluding Accrued Interest Net gains (losses) on financial instruments held at fair value Fair Value, Option, Changes in Fair Value, Gain (Loss) Offsetting Assets and Liabilities [Line Items] Offsetting Assets [Line Items] Over the Counter [Member] Over-the-Counter [Member] Entity Address, Address Line Two Entity Address, City or Town Impairment of Financing Receivables Impaired Financing Receivable, Policy [Policy Text Block] Pension and Other Postretirement Benefits Disclosure [Text Block] Retirement Benefits [Text Block] INTEREST INCOME Interest and Dividend Income, Operating [Abstract] Debt Securities, Available-for-Sale, Maturity, without Single Maturity Date, Fair Value Debt Securities, Available-for-Sale, Maturity, without Single Maturity Date, Fair Value Transactions with Directors' Financial Institutions Related Party Transactions, by Balance Sheet Grouping [Table Text Block] Related Party Transactions, by Balance Sheet Grouping [Table Text Block] Non-Accrual Loans Loans and Leases Receivable, Nonaccrual Loan and Lease Status, Policy [Policy Text Block] Additional Collateral, Aggregate Fair Value Additional Collateral, Aggregate Fair Value FHLBanks [Member] FHLBanks [Member] Represents all 12 Federal Home Loan Banks [Member] Minimum [Member] Minimum [Member] Statement of Financial Position [Abstract] Statement of Financial Position [Abstract] Entity Emerging Growth Company Entity Emerging Growth Company Financing Receivable, Modification Financing Receivable, Modification Loan modifications result from a borrower experiencing financial difficulties during the period. Capital stock - Class B putable, par value per share Common Stock, Par or Stated Value Per Share Advances, Maturing in Rolling Year Five Federal Home Loan Bank, Advances, Maturities Summary, in Rolling Year Five Payments for Federal Home Loan Bank Loans Payments for Federal Home Loan Bank Loans Amounts for the payment of Federal Home Loan Bank loans. Due after two years through three years Long-Term Debt, Maturities, Repayments of Principal in Rolling Year Three Net change in derivatives and hedging activities Unrealized Gain (Loss) on Derivatives Commitments and Contingencies Disclosure [Abstract] Commitments and Contingencies Disclosure [Abstract] Advances, Maturing in Next Rolling Twelve Months Federal Home Loan Bank, Advances, Maturities Summary, in Next Rolling 12 Months Proceeds from sales Proceeds from Sale of Debt and Equity Securities, FV-NI, Held-for-investment Auditor Name Auditor Name Fair Value [Text Block] Fair Value Disclosures [Text Block] Adjustments for New Accounting Pronouncements [Axis] Accounting Standards Update [Axis] Entity File Number Entity File Number Change in Accounting Principle, Type [Axis] Change in Accounting Principle, Type [Axis] Accumulated Other Comprehensive Income (Loss) [Line Items] Accumulated Other Comprehensive Income (Loss) [Line Items] Discount notes Proceeds from Other Short-Term Debt Transaction Type [Axis] Transaction Type [Axis] Financing Receivable, Originated, Current Fiscal Year and Preceeding Four Preceeding Fiscal Years Financing Receivable, Excluding Accrued Interest, Originated, Current Fiscal Year and Preceding Four Fiscal Years Amortized cost excluding accrued interest of financing receivable originated in current fiscal year and preceding four fiscal years. Excludes net investment in lease. Commitments to Issue Bonds [Member] Commitments to Issue Bonds [Member] An agreement to issue consolidated debentures issued by the Federal Home Loan Banks. Derivative Instruments and Hedging Activities Disclosures [Table] Derivative Instruments and Hedging Activities Disclosures [Table] Restricted Retained Earnings, Appropriated Retained Earnings, Appropriated Derivatives Derivatives, Policy [Policy Text Block] Derivative Item Hedged [Domain] Derivative Item Hedged [Domain] Derivative Item Hedged [Domain] Concentration Risk Benchmark [Axis] Concentration Risk Benchmark [Axis] Financing Receivable, Past Due Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability Fair Value Disclosure, off-Balance-Sheet Risks, Face Amount, Liability Consolidated Obligation Bonds [Member] Consolidated Obligation Bonds [Member] Consolidated Obligation Bonds [Member] This item represents Federal Home Loan Bank consolidated obligation bonds. [Member] Accumulated other comprehensive income (loss) Accumulated Other Comprehensive Income (Loss), before Federal Home Loan Bank Assessments Regulatory Capital Requirements Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block] Use of Estimates Use of Estimates, Policy [Policy Text Block] Investment Debt Securities Table [Line Items] Investment Debt Securities Table [Line Items] Investment Debt Securities Table Interest Expense, Loans from Other Federal Home Loan Banks Interest Expense, Loans from Other Federal Home Loan Banks Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease) Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease) Business Concentration Percentage Concentration Risk, Percentage Fair Value Option, Disclosures [Table] Fair Value Option, Disclosures [Table] Subsequent Events [Abstract] Subsequent Events [Abstract] Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, Fee, and Loan in Process Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, Fee, and Loan in Process Principal Owner [Member] Principal Owner [Member] Schedule of Available-for-sale Securities [Table] Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value [Table] Advances, Percent Federal Home Loan Bank Advances, Percent The aggregate carrying amount of all Federal Home Loan Bank loans (advances) expressed as a percent. Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] Securities purchased under agreements to resell Interest Income, Securities Purchased under Agreements to Resell Traded Note Settled Investment Payments or Calls Traded Note Settled Investment Payments or Calls Traded Note Settled Investment Payments or Calls Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, 12 Months or Longer Debt Securities, Trading, and Equity Securities, FV-NI [Table] Debt Securities, Trading, and Equity Securities, FV-NI [Table] OTHER EXPENSE Noninterest Expense [Abstract] Due after three years through four years, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal in Year Four, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturing in year four following the date of the latest balance sheet, redeemable at fixed of determinable prices and dates. Interest paid Interest Paid, Excluding Capitalized Interest, Operating Activities Superior Guaranty Insurance Company Superior Guaranty Insurance Company [Member] Superior Guaranty Insurance Company Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset Debt Securities, Held-to-Maturity, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Debt Securities, Held-to-Maturity, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Deposit Liabilities Deposit Liabilities, Type [Table Text Block] Accumulated Defined Benefit Plans Adjustment [Member] Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] Available-for-sale securities, amortized cost Debt Securities, Available-for-Sale, Amortized Cost, Excluding Accrued Interest, after Allowance for Credit Loss Debt Securities, Available-for-Sale, Amortized Cost, Excluding Accrued Interest, after Allowance for Credit Loss Off-Balance Sheet Commitments Off-Balance Sheet Commitments [Table Text Block] Tabular disclosure of short-term or long-term contractual arrangements and obligations that, in accordance with GAAP, are not recognized on the balance sheet or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transactions. Concentration Risk Type [Domain] Concentration Risk Type [Domain] Earlier of Contractual Maturity or Next Call Date [Member] Earlier of Contractual Maturity or Next Call Date [Member] Earlier of Contractual Maturity or Next Call Date [Member] Schedule of Accounts, Notes, Loans and Financing Receivable [Table] Schedule of Accounts, Notes, Loans and Financing Receivable [Table] TOTAL CAPITAL Beginning Balance Ending Balance Stockholders' Equity Attributable to Parent Derivatives and Hedging Activities [Text Block] Derivative Instruments and Hedging Activities Disclosure [Text Block] Director [Member] Director [Member] Advances (Note 5) Advances Total Advances Federal Home Loan Bank, Advance Financing Receivable Portfolio Segment [Domain] Financing Receivable Portfolio Segment [Domain] Repurchase Agreements Repurchase Agreements [Member] Affordable Housing Program, Contribution Requirement, Amount Affordable Housing Program, Contribution Requirement, Amount The minimum annual amount of the obligation related to Affordable Housing Program (AHP) assessments, set aside by all Federal Home Loan Banks in the aggregate, as required by the Federal Home Loan Bank Act of 1932. These AHP funds provide subsidies to members to assist in the purchase, construction or rehabilitation of housing for very low-, low-, and moderate-income households. Derivative Instruments, Gain (Loss) [Line Items] Derivative Instruments, Gain (Loss) [Line Items] Held-to-Maturity Securities [Member] Held-to-Maturity Securities [Member] Entity Interactive Data Current Entity Interactive Data Current Fair Value, by Balance Sheet Grouping [Table] Fair Value, by Balance Sheet Grouping [Table] Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities Amortized Cost, Percentage Rated Single-A Or Above Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities Amortized Cost, Percentage Rated Single-A Or Above Percentage of available for sale debt securities and held-to-maturity debt securities amortized cost, with counterparties rated single-A or above by a nationally recognized statistical rating organization. Mortgage loans held for portfolio, net of allowance for credit losses of $6 and $5 (Note 6) Loans and Leases Receivable, Net Amount Loans and Leases Receivable, Net Amount Property, Plant and Equipment [Table] Property, Plant and Equipment [Table] Regulatory Capital, Actual Federal Home Loan Bank, Regulatory Capital, Actual US Government-sponsored Enterprises Debt Securities [Member] GSE Obligations [Member] US Government-sponsored Enterprises Debt Securities [Member] Net change in: Increase (Decrease) in Operating Capital [Abstract] Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss Portion at Fair Value Measurement [Member] Portion at Fair Value Measurement [Member] Retained Earnings [Member] Retained Earnings [Member] Deposits Deposits, Fair Value Disclosure Cash dividends on capital stock Dividends, Common Stock, Cash Available-for-sale Securities [Member] Available-for-Sale Securities [Member] Available-for-Sale Securities [Member] Private-Label MBS [Member] Mortgage-Backed Securities, Issued by Private Enterprises [Member] Capital Stock (putable) [Member] Common Stock [Member] Receivable Type [Axis] Receivable Type [Axis] Payments for repurchases/redemptions of capital stock Payments for Repurchase of Common Stock Class of Stock [Axis] Class of Stock [Axis] Derivative Liability, Not Subject to Master Netting Arrangement Derivative Liability, Not Subject to Master Netting Arrangement Hedged Asset, Discontinued Fair Value Hedge, Cumulative Increase (Decrease) Hedged Asset, Discontinued Fair Value Hedge, Cumulative Increase (Decrease) Statement [Table] Statement [Table] Bonds Repayments of Other Long-Term Debt Capital Stock Value Including Mandatorily Redeemable Stock Percent Capital Stock Value Including Mandatorily Redeemable Stock Percent Capital Stock Value Including Mandatorily Redeemable Stock Percent Financing Receivable, Credit Quality Indicator [Line Items] Financing Receivable, Credit Quality Indicator [Line Items] Contractual Maturities, Rolling Year Six Through Ten, Fair Value Debt Securities, Held-to-Maturity, Maturity, Allocated and Single Maturity Date, Rolling after 5 through 10 Years, Fair Value FLA Balance For All Master Commitments FLA Balance For All Master Commitments Represents the potential loss exposure under each mortgage loan master commitment prior to the participating financial institution’s credit enhancement obligation. Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement Mortgage Receivable [Member] Mortgage Receivable [Member] Statistical Measurement [Axis] Statistical Measurement [Axis] Fair Value Transfers Fair Value Transfer, Policy [Policy Text Block] Debt Instrument Call Feature[Axis] Debt Instrument Call Feature [Axis] Debt Instrument Call Feature Net Interest Settlements [Member] Net Interest Settlements [Member] Net interest settlements of Economic Hedges. Total retained earnings Retained Earnings (Accumulated Deficit) Other adjustments, net Other Operating Activities, Cash Flow Statement Available-for-sale securities Interest Income, Debt Securities, Available-for-Sale, Operating Equity Components [Axis] Equity Components [Axis] Scenario [Domain] Scenario [Domain] Federal Home Loan Bank, Advances, Maturity Period, Variable Rate Federal Home Loan Bank, Advances, Maturity Period, Variable Rate Net shares reclassified (to) from mandatorily redeemable capital stock Capital stock reclassified to (from) mandatorily redeemable capital stock, net Net Shares Reclassified to Mandatorily Redeemable Capital Stock, Value Net Shares Reclassified to Mandatorily Redeemable Capital Stock, Value Fair Value, Recurring [Member] Fair Value, Recurring [Member] Retained earnings Retained Earnings (Accumulated Deficit) [Abstract] Activities with Stockholders [Text Block] Related Party Transactions Disclosure [Text Block] Advances [Abstract] Advances [Abstract] Advances [Abstract] Capital Stock Value Including Mandatorily Redeemable Stock Capital Stock Value Including Mandatorily Redeemable Stock Capital Stock Value Including Mandatorily Redeemable Stock Continuous Unrealized Loss Position, Less than 12 Months, Fair Value Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, Less than 12 Months Document Fiscal Year Focus Document Fiscal Year Focus OPERATING ACTIVITIES Net Cash Provided by (Used in) Operating Activities [Abstract] Held-to-maturity securities Interest Income, Debt Securities, Held-to-Maturity Statement [Line Items] Statement [Line Items] Bonds Proceeds from Issuance of Other Long-Term Debt Federal Home Loan Bank of San Francisco [Member] Federal Home Loan Bank of San Francisco [Member] Unrestricted Retained Earnings, Unappropriated Federal Home Loan Bank Advances Receivable Federal Home Loan Bank Advances Receivable [Member] Information about advances made and reported by FHLBanks. Fair Value Hierarchy and NAV [Axis] Fair Value Hierarchy and NAV [Axis] Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table] Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table] Recently Adopted and Issued Accounting Guidance [Text Block] Accounting Standards Update and Change in Accounting Principle [Text Block] Loss Contingencies [Table] Loss Contingencies [Table] Gross Unrealized Losses Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax Other than Temporary Impairment, Credit Losses Recognized in Earnings, Categories of Investments [Domain] Other than Temporary Impairment, Credit Losses Recognized in Earnings, Categories of Investments [Domain] Due after four years through five years Long-Term Debt, Maturities, Repayments of Principal in Rolling Year Five Repurchases/redemptions of capital stock Stock Repurchased During Period, Value Accumulated Other Comprehensive Income [Member] Accumulated Other Comprehensive Income (Loss) [Member] AOCI Attributable to Parent [Member] Loans to Other Federal Home Loan Banks Loans to Other Federal Home Loan Banks Contractual Maturities, Due after Ten Years, Amortized Cost Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years, Amortized Cost Federal Home Loan Bank Branch [Domain] Federal Home Loan Bank Branch [Domain] Financing Receivable Credit Quality Indicators Financing Receivable Credit Quality Indicators [Table Text Block] Debt Securities, Trading, Unrealized Gain Debt Securities, Trading, Unrealized Gain (Loss) Financing Receivable Portfolio Segment [Axis] Financing Receivable Portfolio Segment [Axis] Advances Federal Home Loan Bank, Advances [Table Text Block] Auditor Firm ID Auditor Firm ID Standby letter of credit fees Standby letter of credit fees Standby letter of credit fees Interest-bearing Interest-Bearing Deposit Liabilities, Domestic Document Transition Report Document Transition Report Financial Instruments Meeting Netting Requirements [Abstract] Financial Instruments Meeting Netting Requirements [Abstract] Financial Instruments Meeting Netting Requirements [Abstract] Total other comprehensive income (loss) Total other comprehensive income (loss) Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent Total consolidated obligations Federal Home Loan Bank, Consolidated Obligations Local Phone Number Local Phone Number Financing Receivable, Allowance for Credit Loss [Line Items] Financing Receivable, Allowance for Credit Loss [Line Items] New Accounting Pronouncements, Policy [Policy Text Block] New Accounting Pronouncements, Policy [Policy Text Block] Other operating expenses Other Cost and Expense, Operating Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year The fair value of financial liabilities, which are not recognized in the financial statements (off-balance sheet) because they fail to meet some other criterion for recognition, which expire within one year of the balance sheet date. Capital stock - Class B putable, outstanding shares Common Stock, Shares, Outstanding Financial and Nonfinancial Liabilities, Fair Value Disclosure Liabilities, Fair Value Disclosure Property, Plant and Equipment, Type [Axis] Long-Lived Tangible Asset [Axis] Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax Repurchases/redemptions of capital stock (shares) Stock Repurchased During Period, Shares Advances [Member] Advances [Member] This item represents Federal Home Loan Bank loans (advances). Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease) Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease) Adjustments to reconcile net income to net cash provided by (used in) operating activities Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] Trading securities Interest Income, Debt Securities, Trading, Operating Income Statement [Abstract] Income Statement [Abstract] Credit Loss [Abstract] Consolidated obligations - Bonds Consolidated obligations - Bonds Interest Expense, Other Long-Term Debt Entity Public Float Entity Public Float Balance Sheet Location [Domain] Balance Sheet Location [Domain] Document Fiscal Period Focus Document Fiscal Period Focus Federal Housing Finance Agency Regulator Expenses, Cost Assessed on Federal Home Loan Bank Multiplier for Determining Permanent Capital in Leverage Capital Calculation Multiplier for Determining Permanent Capital in Leverage Capital Calculation The weighting factor used for permanent capital when calculation total leverage capital. Financing Receivable, Excluding Accrued Interest, Nonaccrual, No Allowance Financing Receivable, Excluding Accrued Interest, Nonaccrual, No Allowance Stockholders' Capital Stock Outstanding Concenetration Risk [Member] Stockholders' Capital Stock Outstanding Concenetration Risk [Member] Stockholders' Capital Stock Outstanding Concenetration Risk [Member] Number of Federal Home Loan Banks Number of Federal Home Loan Banks Number of Federal Home Loan Banks Loans to Other Federal Home Loan Banks Schedule of Loans to Other Federal Home Loan Banks [Table Text Block] Schedule of Loans to Other Federal Home Loan Banks [Table Text Block] Derivative liabilities, net (Note 7) Derivative liabilities, net Derivative Liability Derivative Liability, Net Derivative Liability Derivative Liability Loss Contingency, Nature [Domain] Loss Contingency, Nature [Domain] Hedged Asset, Fair Value Hedge, Cumulative Increase (Decrease) Hedged Asset, Fair Value Hedge, Cumulative Increase (Decrease) Financing Receivable, Accrued Interest, after Allowance for Credit Loss Financing Receivable, Accrued Interest, after Allowance for Credit Loss Impaired Financing Receivable, Unpaid Principal Balance Impaired Financing Receivable, Unpaid Principal Balance Financing Receivable, Percent Past Due Financing Receivable, Percent Past Due Derivative Liability, Fair Value, Gross Liability Derivative Liability, Subject to Master Netting Arrangement, before Offset Interest-Bearing Domestic Deposit, Demand Interest-Bearing Domestic Deposit, Demand Loss Contingencies [Line Items] Loss Contingencies [Line Items] Conventional Mortgage Loans [Member] Conventional Mortgage Loan [Member] Federal Home Loan Bank Branch [Axis] Federal Home Loan Bank Branch [Axis] Debt Securities, Available-for-sale [Line Items] Debt Securities, Available-for-Sale [Line Items] Major Security Types Schedule of Available-for-Sale Securities Reconciliation [Table Text Block] Federal Home Loan Bank of Topeka [Member] Federal Home Loan Bank of Topeka [Member] Price Alignment Amount Price Alignment Amount [Member] Price Alignment Amount Loans and Leases Receivable, Unamortized Premiums Loans and Leases Receivable, Unamortized Premiums Reflects the cumulative amount of premiums over the face amount of loans that are being amortized into income as an adjustment to yield. ICFR Auditor Attestation Flag ICFR Auditor Attestation Flag Net proceeds from issuance of consolidated obligations Proceeds from Issuance of Long-Term Debt [Abstract] Total investment securities Marketable Securities Due in one year or less, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturing within the next twelve months following the date of the latest balance sheet, redeemable at fixed or determinable prices and dates. Reported Value Measurement [Member] Reported Value Measurement [Member] Loans and Leases Receivable, Net of Deferred Income Financing Receivable, Accrued Interest, before Allowance for Credit Loss Debt Instrument, Name [Domain] Debt Instrument, Name [Domain] Short-term Debt [Line Items] Short-Term Debt [Line Items] Advances Federal Home Loan Bank Advances, Fair Value Disclosure Federal Home Loan Bank Advances, Fair Value Disclosure Financing Receivable, Allowance for Credit Losses Financing Receivable, Allowance for Credit Loss Total deposits Deposits, Domestic Recurring Fair Value Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] MRCS by Contractual Redemption Mandatorily Redeemable Capital Stock [Table Text Block] Purchases Payments to Acquire Trading Securities Held-for-investment Due in one year or less Long-Term Debt, Maturities, Repayments of Principal in Next Rolling 12 Months Multifamily [Member] Multifamily [Member] Traded but not yet settled investment security purchases Traded Not Settled Investment Purchases Represents traded but not yet settled investments purchased by the bank during the period. Cash and due from banks at beginning of the period Cash and due from banks at end of the period Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents Federal Home Loan Bank, Capital Stock to Assets, Required Federal Home Loan Bank, Capital Stock to Assets, Required Federal Home Loan Bank, Capital Stock to Assets, Required MRCS [Abstract] MRCS AHP Voluntary Contribution Expense AHP Voluntary Contribution Expense AHP Voluntary Contribution Expense Contractual Maturities, Due after Ten Years, Fair Value Debt Securities, Held-to-Maturity, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years, Fair Value Commitments and Contingencies [Text Block] Commitments and Contingencies Disclosure [Text Block] Change in Accounting Principle, Type [Domain] Change in Accounting Principle, Type [Domain] Held-to-maturity securities Proceeds from Sale and Maturity of Held-to-Maturity Securities [Abstract] Affordable Housing Program assessments Affordable Housing Program Assessments Affordable Housing Program Assessments Debt Securities, Trading, and Equity Securities, FV-NI [Table Text Block] Debt Securities, Trading, and Equity Securities, FV-NI [Table Text Block] Income Statement Location [Domain] Income Statement Location [Domain] Financing Receivable, Originated, More than Five Years before Current Fiscal Year Financing Receivable, Originated, More than Five Years before Current Fiscal Year Contractual Maturities, Due after One Year through Five Years, Amortized Cost Debt Securities, Held-to-Maturity, Amortized Cost, after Allowance for Credit Loss, Maturity, Allocated and Single Maturity Date, Rolling after One through Five Years Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] Debt Securities, Available-for-sale, Unrealized Loss Position Debt Securities, Available-for-Sale, Unrealized Loss Position Amendment Flag Amendment Flag Mortgage Loans Financing Receivable, Held-for-investment [Policy Text Block] Net cash provided by (used in) investing activities Net Cash Provided by (Used in) Investing Activities Advances, Weighted Average Interest Rate, Maturing in Rolling Year Four Federal Home Loan Bank, Advances, Weighted Average Interest Rate, Maturing in Rolling Year Four Professional fees Professional Fees Par Value Debt Instrument, Face Amount Investment Type [Axis] Investment Type [Axis] Investments Investment, Policy [Policy Text Block] Advances, Maturing after Rolling Year Five Federal Home Loan Bank, Advances, Maturities Summary, after Rolling Year Five Callable [Member] Callable [Member] A debt obligation not collateralized by pledge, mortgage or other lien in the entity's assets and is callable. Noncallable or Nonputable [Member] Noncallable or Nonputable [Member] A debt obligation not collateralized by pledge, mortgage or other lien in the entity's assets and is neither callable or putable. Advances, Maturing in Rolling Year Two Federal Home Loan Bank, Advances, Maturities Summary, in Rolling Year Two Gross Unrealized Gains Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax Entity Current Reporting Status Entity Current Reporting Status Debt Instrument Call Feature [Domain] Debt Instrument Call Feature [Domain] Debt Instrument Call Feature Fair Value Option Election Fair Value Option Election [Member] Fair Value Option Election Leverage Ratio, Required Leverage Ratio, Required Leverage ratio requirement as defined in the regulations. Proceeds from maturities and paydowns Proceeds from Maturities, Prepayments and Calls of Held-to-Maturity Securities Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Three Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Three Activity Based Capital Stock Required by Members as a Percent of Total Advances Outstanding as Disclosed in the Statement of Condition Activity Based Capital Stock Required by Members as a Percent of Total Advances Outstanding as Disclosed in the Statement of Condition Activity Based Capital Stock Required by Members as a Percent of Total Advances Outstanding as Disclosed in the Statement of Condition Available-for-sale securities (amortized cost of $24,001 and $15,677) Available-for-Sale Securities Debt Securities, Available-for-Sale, Excluding Accrued Interest Financing Receivables, Greater than 180 Days Past Due [Member] Financing Receivables, Greater than 180 Days Past Due [Member] Financing Receivables, Greater than 180 Days Past Due [Member] Contractual Maturities, Due after Ten Years, Amortized Cost Debt Securities, Held-to-Maturity, Amortized Cost, after Allowance for Credit Loss, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years Total interest income Interest and Dividend Income, Operating Consolidated Obligation Discount Notes [Member] Consolidated Obligation Discount Notes [Member] Consolidated Obligation Discount Notes [Member] This item represents Federal Home Loan Bank consolidated obligation discount notes. Accumulated Other Comprehensive Income (Loss) [Table] Accumulated Other Comprehensive Income (Loss) [Table] Financial Asset, 30 to 59 Days Past Due [Member] Financial Asset, 30 to 59 Days Past Due [Member] Advances, Weighted Average Interest Rate on Overdrawn Demand Deposit Weighted Average Interest Rate on Overdrawn Demand Deposit Entity Incorporation, State or Country Code Entity Incorporation, State or Country Code Basis of Accounting Basis of Accounting, Policy [Policy Text Block] LIABILITIES Liabilities [Abstract] Deposits, Percent Deposits, Percent The aggregate of all deposit liabilities held by the entity, including foreign and domestic, interest and noninterest bearing; may include demand deposits, saving deposits, Negotiable Order of Withdrawal (NOW) and time deposits among others expressed as a precent. Repaid Proceeds from FHLBank Advance, Investing Activities Depreciation and amortization/(accretion) Depreciation, Amortization and Accretion, Net Compensation and benefits Labor and Related Expense Federal Home Loan Bank, Advances, Maturity Period, Fixed Rate Federal Home Loan Bank, Advances, Maturity Period, Fixed Rate Loans Insured or Guaranteed by US Government Authorities [Member] US Government Agency Insured Loans [Member] affordable housing program [Axis] affordable housing program [Axis] affordable housing program [Axis] Balance Sheet Location [Axis] Balance Sheet Location [Axis] Bonds Total Federal Home Loan Bank, Consolidated Obligations, Bonds Cash and due from banks (Note 3) Cash and due from banks Cash and Due from Banks Schedule of Related Party Transactions, by Related Party [Table] Schedule of Related Party Transactions, by Related Party [Table] Net gains (losses) on derivatives Derivatives Not Designated as Hedging Instruments, Gain (Loss), Net Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net Statement of Comprehensive Income [Abstract] Statement of Comprehensive Income [Abstract] Maximum [Member] Maximum [Member] Derivative Instruments and Hedging Activities Disclosures [Line Items] Derivative Instruments and Hedging Activities Disclosures [Line Items] Designated as Hedging Instrument [Member] Designated as Hedging Instrument [Member] Stockholders' Equity, Total [Member] Stockholders' Equity, Total [Member] Entity Small Business Entity Small Business Measurement Basis [Axis] Measurement Basis [Axis] Measurement Frequency [Domain] Measurement Frequency [Domain] Capital [Text Block] Stockholders' Equity Note Disclosure [Text Block] Embedded Derivatives Derivatives, Embedded Derivatives [Policy Text Block] Purchases Payments to Acquire Debt Securities, Available-for-Sale Debt Securities, Held-to-Maturity, Accrued Interest, after Allowance for Credit Loss Debt Securities, Held-to-Maturity, Accrued Interest, after Allowance for Credit Loss Advances, Weighted Average Interest Rate, Maturing after Rolling Year Five Federal Home Loan Bank, Advances, Weighted Average Interest Rate, Maturing after Rolling Year Five Interest Income [Member] Interest Income [Member] Debt Securities, Available-for-Sale, Maturity, without Single Maturity Date, Amortized Cost Debt Securities, Available-for-Sale, Maturity, without Single Maturity Date, Amortized Cost Property, Plant and Equipment, Type [Domain] Long-Lived Tangible Asset [Domain] Federal Home Loan Bank of Boston [Member] Federal Home Loan Bank of Boston [Member] Federal Home Loan Bank, Capital Stock to Assets, Actual [Line Items] Federal Home Loan Bank, Capital Stock to Assets, Actual Federal Home Loan Bank, Capital Stock to Assets, Actual Other Assets, Fair Value Disclosure Other Assets, Fair Value Disclosure Wells Fargo Bank N.A. Wells Fargo Bank N.A. [Member] Wells Fargo Bank N.A. Affordable Housing Program [Text Block] Affordable Housing Program [Text Block] Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Five Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Five Proceeds from FHLBank Borrowings, Financing Activities Proceeds from FHLBank Borrowings, Financing Activities Net change in securities purchased under agreements to resell Proceeds from (Payments for) Securities Purchased under Agreements to Resell Subsequent Event [Line Items] Subsequent Event [Line Items] Debt Instrument [Line Items] Debt Instrument [Line Items] Investment Debt Securities Table [Table] Investment Debt Securities Table [Table] Investment Debt Securities Table Accrued interest payable Accrued interest payable Interest Payable U.S. Obligations MBS [Member] Mortgage Backed Securities Other U.S. Obligations [Member] Mortgage Backed Securities Other U.S. Obligations [Member] Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss Percent of Average Balance of Outstanding Consolidated Obligations Prescribed per the Joint Capital Enhancement Agreement for Each Previous Quarter Percent of Average Balance of Outstanding Consolidated Obligations Prescribed per the Joint Capital Enhancement Agreement For Each Previous Quarter Represents the percentage of Federal Home Loan Bank's (FHLBank's) average balance of outstanding consolidated obligations necessary to equal the restricted retained earnings minimum. U.S. Obligations [Member] US Government Agencies Debt Securities [Member] Debt Securities, Available-for-Sale, Allowance for Credit Loss, Excluding Accrued Interest Debt Securities, Available-for-Sale, Allowance for Credit Loss, Excluding Accrued Interest Debt Security Category [Axis] Debt Security Category [Axis] Investments, Debt and Equity Securities [Abstract] Schedule of Other Transactions [Line Items] Schedule of Other Transactions [Line Items] Schedule of Other Transactions [Line Items] Payments of FHLBank Borrowings, Financing Activities Payments of FHLBank Borrowings, Financing Activities Loans Receivable With Fixed Rates Of Interest Long Term [Member] Loans Receivable With Fixed Rates Of Interest Long Term [Member] A mortgage loan issued by a bank with a fixed rate of interest and a repayment period of more than 15 years [Member] Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Two Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Two Financing Receivable, Allowance for Credit Loss [Table] Financing Receivable, Allowance for Credit Loss [Table] Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss Debt Securities, Trading, Realized Gain (Loss) Debt Securities, Trading, Realized Gain (Loss) Interest-Bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold, Percentage Rated Below Triple-B Interest-Bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold, Percentage Rated Below Triple-B Percentage of short-term investments in interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold assets with counterparties rated below triple-B by a nationally recognized statistical rating organization. Deposits [Abstract] Deposits [Abstract] Advances [Text Block] Federal Home Loan Bank, Advances [Text Block] Estimate of Fair Value Measurement [Member] Estimate of Fair Value Measurement [Member] US Treasury Securities US Treasury Securities [Member] Fair Value, Recurring and Nonrecurring [Table] Fair Value, Recurring and Nonrecurring [Table] Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year The fair value of financial liabilities, which are not recognized in the financial statements (off-balance sheet) because they fail to meet some other criterion for recognition, which expire after one year of the balance sheet date. Mortgage loans held for portfolio Payments for (Proceeds from) Loans and Leases [Abstract] Financing Receivable, Excluding Accrued Interest, 90 Days or More Past Due, Still Accruing Financing Receivable, Excluding Accrued Interest, 90 Days or More Past Due, Still Accruing TOTAL COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) Comprehensive Income (Loss), Net of Federal Home Loan Bank Assessments, Attributable to Parent Past Due Financing Receivables Financing Receivable, Past Due [Table Text Block] Other assets Increase (Decrease) in Other Operating Assets Discounts and Concessions Debt Instrument, Unamortized Discount Debt Securities, Held-to-maturity [Table] Debt Securities, Held-to-Maturity [Table] affordable housing program [Domain] affordable housing program [Domain] affordable housing program [Domain] Mortgage loans held for portfolio, net Impaired mortgage loans held for portfolio Loans Receivable, Fair Value Disclosure Interest-bearing deposits Interest-bearing Deposits, Fair Value Disclosure This element represents the portion of the balance sheet assertion valued at fair value by the entity whether such amount is presented as a separate caption or as a parenthetical disclosure. Additionally, this element may be used in connection with the fair value disclosures required in the footnote disclosures to the financial statements. The element may be used in both the balance sheet and disclosure in the same submission. This item represents interest-bearing deposits in other financial institutions for relatively short periods of time including, for example, certificates of deposits, which are presented separately from cash on the balance sheet. Investments Classified by Contractual Maturity Date [Table Text Block] Investments Classified by Contractual Maturity Date [Table Text Block] Obligation with Joint and Several Liability Arrangement, Amount Outstanding Obligation with Joint and Several Liability Arrangement, Amount Outstanding Hedging Designation [Axis] Hedging Designation [Axis] Other Expense Community Contributions Other Expense Community Contributions Other Expense Community Contributions Auditor Location Auditor Location Offsetting Assets and Liabilities [Table] Offsetting Assets [Table] Nature of Operations [Text Block] Nature of Operations [Text Block] Mortgage loan allowance for credit losses Loans and Leases Receivable, Allowance Loans and Leases Receivable, Allowance Financing Receivables, 90 to 179 Days Past Due [Member] Financing Receivables, 90 to 179 Days Past Due [Member] Financing Receivables, 90 to 179 Days Past Due [Member] Entity Filer Category Entity Filer Category Proceeds from issuance of capital stock Proceeds from Issuance of Common Stock Assessments Federal Home Loan Bank Assessments [Policy Text Block] Disclosure of accounting policy for the aggregate amount of Affordable Housing Program Assessments. Deposits Interest Expense, Domestic Deposits Held-to-maturity securities (fair value of $850 and $959) Debt Securities, Held-to-Maturity, Excluding Accrued Interest, after Allowance for Credit Loss Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement Liabilities Liabilities, Fair Value Disclosure [Abstract] Commitments and contingencies (Note 14) Commitments and Contingencies Fair value hedging adjustments Federal Home Loan Bank, Consolidated Obligations, Bonds, Adjustment for Hedging Activities Amount of unrealized gain (loss) recognized in earnings for the cumulative period of the debt obligation in a fair value hedge, as offset by the gain (loss) on the hedging instrument to the extent that the fair value hedge is determined to be effective. Due after four years through five years, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal in Year Five, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturing in year five following the date of the latest balance sheet, redeemable at fixed of determinable prices and dates. Loans and Leases Receivable, Hedging Basis Adjustment Loans and Leases Receivable, Hedging Basis Adjustment Reflects the cumulative amount of hedging adjustments that are being amortized into income as an adjustment of yield. Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Derivative, Notional Amount Derivative, Notional Amount Amortized Cost Debt Securities, Held-to-Maturity, Amortized Cost, before Other-than-temporary Impairment Accrued interest payable Increase (Decrease) in Interest Payable, Net Gain (Loss) on Fair Value Hedges Recognized in Net Interest Income Gain (Loss) on Fair Value Hedges Recognized in Net Interest Income Total amount of gain (loss) derived from fair value hedges recognized in net interest income in the period. Loans from Other Federal Home Loan Banks Schedule of Loans From Other Federal Home Loan Banks [Table Text Block] Schedule of Loans From Other Federal Home Loan Banks [Table Text Block] Activity Based Capital Stock Required by Members as a Percent of Total Mortgage Loans Outstanding as Disclosed in the Statement of Condition Activity Based Capital Stock Required by Members as a Percent of Total Mortgage Loans Outstanding as Disclosed in the Statement of Condition Activity Based Capital Stock Required by Members as a Percent of Total Mortgage Loans Outstanding as Disclosed in the Statement of Condition Property, Plant and Equipment [Line Items] Property, Plant and Equipment [Line Items] Short-term Debt, Type [Domain] Short-Term Debt, Type [Domain] Advances, Par Value Federal Home Loan Bank, Advances, Par Value Entity Well-known Seasoned Issuer Entity Well-known Seasoned Issuer Risk-Based Capital, Required Federal Home Loan Bank, Risk-Based Capital, Required Financial Asset, 60 to 89 Days Past Due [Member] Financial Asset, 60 to 89 Days Past Due [Member] Federal Home Loan Bank, Consolidated Obligations Fair Value Disclosure Federal Home Loan Bank, Consolidated Obligations Fair Value Disclosure Fair value portion of Amount of joint and several obligations consisting of consolidated obligation bonds and discount notes issued by Federal Home Loan Banks (FHLBanks). Regulatory Capital Ratio, Required Regulatory Capital Ratio, Required Regulatory capital ratio requirement as defined in the regulations. Schedule of Long-term Debt Instruments [Table] Schedule of Long-Term Debt Instruments [Table] Fair Value, Inputs, Level 3 [Member] Fair Value, Inputs, Level 3 [Member] Entity Voluntary Filers Entity Voluntary Filers Contractual Maturities, Due after One Year through Five Years, Fair Value Debt Securities, Held-to-Maturity, Maturity, Allocated and Single Maturity Date, Rolling after One Through Five Years, Fair Value Net (gains) losses on financial instruments held at fair value Increase (Decrease) in Fair Value Adjustments on Other Assets (Liabilities) Carried at Fair Value under Fair Value Option Capital stock - Class B putable ($100 par value); 63 and 34 issued and outstanding shares Capital Stock Common Stock, Other Value, Outstanding Other assets, net Other Assets Held-to-maturity securities, fair value Held-to-Maturity Securities, Fair Value Debt Securities, Held-to-Maturity, Fair Value Federal funds sold Interest Income, Federal Funds Sold Cash and Due from Banks [Abstract] Cash and Due from Banks [Abstract] Securities purchased under agreements to resell Securities Purchased under Agreements to Resell, Fair Value Disclosure This element represents the portion of the balance sheet assertion valued at fair value by the entity whether such amount is presented as a separate caption or as a parenthetical disclosure. Additionally, this element may be used in connection with the fair value disclosures required in the footnote disclosures to the financial statements. The element may be used in both the balance sheet and disclosure in the same submission. This item represents funds loaned in the form of security resale agreements if the agreement requires the purchaser to resell the identical security purchased or a security that meets the definition of "substantially the same." Also includes purchases of participations in pools of securities that are subject to a resale agreement. Investments [Domain] Investments [Domain] Mortgage Loans Held for Portfolio [Text Block] Financing Receivables [Text Block] NET INTEREST INCOME Interest Income (Expense), Net Contractual Maturities, Due after Five Years through Ten Years, Amortized Cost Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after 5 through 10 Years, Amortized Cost TOTAL LIABILITIES AND CAPITAL Liabilities and Equity Loans and Leases Receivable, Net of Deferred Income Loans and Leases Receivable, Net of Deferred Income Document and Entity Information [Abstract] Document and Entity Information [Abstract] Document and Entity Information [Abstract] Fair Value, Option, Aggregate Differences, Consolidated Obligation Discount Notes Fair Value, Option, Aggregate Differences, Consolidated Obligation Discount Notes This item represents the gain (loss) brought about by the difference between the aggregate fair value and the aggregate unpaid principal balance of Consolidated Obligations Discount Notes that have contractual principal amounts and for which the fair value option has been elected. Commitments to Issue Discount Notes Commitments to Issue Discount Notes [Member] An agreement to issue consolidated discount notes issued by the Federal Home Loan Banks. Advances, Maturing in Rolling Year Four Federal Home Loan Bank, Advances, Maturities Summary, in Rolling Year Four OTHER INCOME (LOSS) Noninterest Income [Abstract] Long-term Debt, Type [Axis] Long-Term Debt, Type [Axis] Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge Related Party [Axis] Related Party [Axis] Accrued interest receivable Interest Receivable Non-Interest-Bearing Domestic Deposit, Demand Noninterest-Bearing Domestic Deposit, Demand Deposit Liabilities Disclosures [Text Block] Deposit Liabilities Disclosures [Text Block] Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Four Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, in Rolling Year Four Not Designated as Hedging Instrument [Member] Not Designated as Hedging Instrument [Member] Consolidated obligations - Discount notes Interest Expense, Other Short-Term Borrowings Fair Value, Inputs, Level 2 [Member] Fair Value, Inputs, Level 2 [Member] Federal Home Loan Bank, Advances [Table] Federal Home Loan Bank, Advances [Table] Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax Consolidated Obligations Debt, Policy [Policy Text Block] Current Fiscal Year End Date Current Fiscal Year End Date Federal Home Loan Bank of Cincinnati Federal Home Loan Bank of Cincinnati [Member] Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] Concentration Risk Type [Axis] Concentration Risk Type [Axis] Federal funds sold (Note 4) Federal Funds Sold Debt Securities, Available-for-Sale, Amortized Cost, Excluding Accrued Interest, before Allowance for Credit Loss Debt Securities, Available-for-Sale, Amortized Cost, Excluding Accrued Interest, before Allowance for Credit Loss Originated Payments for FHLBank Advance, Investing Activities Payments for FHLBank Advance, Investing Activities Residential Portfolio Segment Residential Portfolio Segment [Member] NET INTEREST INCOME AFTER PROVISION (REVERSAL) FOR CREDIT LOSSES Interest Income (Expense), after Provision for Loan Loss Overdrawn Demand Deposit Accounts Deposit Liabilities Reclassified as Loans Receivable Contractual services Contractual Service Expense Contractual service expenses that are not separately presented in any other noninterest expense category. Advances, Maturing in Rolling Year Three Federal Home Loan Bank, Advances, Maturities Summary, in Rolling Year Three Due after three years through four years Long-Term Debt, Maturities, Repayments of Principal in Rolling Year Four Due after two years through three years, Weighted Average Interest Rate Long-term Debt, Maturities, Repayments of Principal in Year Three, Weighted Average Interest Rate Weighted average interest rate of the amount of Consolidated Oblgiations Bonds maturing in year three following the date of the latest balance sheet, redeemable at fixed of determinable prices and dates. Interest-Bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold, Percentage Unrated Interest-Bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold, Percentage Unrated Percent of short-term investments in interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold assets with counterparties unrated by a nationally recognized statistical rating organization. Fair Values Derivatives, Balance Sheet Location, by Derivative Contract Type [Table] Fair Values Derivatives, Balance Sheet Location, by Derivative Contract Type [Table] Net change in federal funds sold Increase (Decrease) in Federal Funds Sold Class of Financing Receivable [Axis] Class of Financing Receivable [Axis] Derivative Asset, Fair Value, Gross Asset Derivative Asset, Subject to Master Netting Arrangement, before Offset Entity Address, Address Line One Entity Address, Address Line One Discount notes Repayments of Other Short-Term Debt Affordable Housing Program [Line Items] Affordable Housing Program [Line Items] [Line Items] for Affordable Housing Program [Table] Short-term Debt [Member] Short-Term Debt [Member] Securities Purchased under Agreements to Resell, Allowance for Credit Loss Securities Purchased under Agreements to Resell, Allowance for Credit Loss Provision (reversal) for credit losses on mortgage loans Provision for Loan, Lease, and Other Losses Class of Stock [Domain] Class of Stock [Domain] Discount notes elected under the fair value option Discount notes Short-Term Debt, Fair Value Fair Value Disclosures [Abstract] Fair Value Disclosures [Abstract] Total interest expense Interest Expense Derivative Instruments and Hedging Activities Disclosure [Abstract] Derivative Instruments and Hedging Activities Disclosure [Abstract] Written Notice Period Required to Repurchase Excess Membership Capital Stock Written Notice Period Required to Repurchase Excess Membership Capital Stock Written Notice Period Required to Repurchase Excess Membership Capital Stock Loans Receivable With Fixed Rates Of Interest Medium Term [Member] Loans Receivable With Fixed Rates Of Interest Medium Term [Member] A mortgage loan issued by a bank with a fixed rate of interest and a repayment period of 15 years or less [Member] Proceeds from Federal Home Loan Bank Loans Proceeds from Federal Home Loan Bank Loans Proceeds from Federal Home Loan Bank Loans Affordable Housing Program payable (Note 10) Affordable Housing Program Obligation, Beginning of Year Affordable Housing Program Obligation, End of Year Affordable Housing Program Obligation Background Information [Abstract] Background Information [Abstract] Background Information [Abstract] Bonds by Call Feature Schedule of Long-Term Debt Instruments [Table Text Block] Advances, Weighted Average Interest Rate, Maturing in Next Twelve Rolling Months Federal Home Loan Bank, Advances, Weighted Average Interest Rate, Maturing in Next 12 Rolling Months Interest-bearing deposits Interest Income, Deposits with Financial Institutions Subsequent Event [Table] Subsequent Event [Table] Loans and Leases Receivable, Unamortized Discounts Loans and Leases Receivable, Unamortized Discounts Reflects the cumulative amount of discounts from the face amount of loans that are being amortized into income as an adjustment of yield. Consolidated obligations (Note 9) Federal Home Loan Bank, Consolidated Obligations [Abstract] Entity Tax Identification Number Entity Tax Identification Number Affordable Housing Program, Contribution Requirement, Percentage Affordable Housing Program, Contribution Requirement, Percentage Represents the minimum annual amount set aside by all Federal Home Loan Banks in the aggregate under the Affordable Housing Program as a percentage of the regulatory defined net income. Derivatives, Fair Value [Line Items] Derivatives, Fair Value [Line Items] Advances Proceeds From Sale of Federal Home Loan Bank Advances [Abstract] Proceeds From Sale of Federal Home Loan Bank Advances [Abstract] Capital [Abstract] Banking Regulation, Total Capital [Abstract] Schedule of Short-term Debt [Table] Schedule of Short-Term Debt [Table] Interest-bearing deposits (Note 4) Interest-Bearing Deposits in Banks and Other Financial Institutions Hedged Liability, Fair Value Hedge Hedged Liability, Fair Value Hedge Derivative Asset, Not Subject to Master Netting Arrangement Derivative Asset, Not Subject to Master Netting Arrangement Other comprehensive income (loss) Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent [Abstract] Investment securities (Note 4) Marketable Securities [Abstract] Advances, Weighted Average Interest Rate Federal Home Loan Bank, Advances, Weighted Average Interest Rate Accrued interest receivable Increase (Decrease) in Accrued Interest Receivable, Net Financial Asset, Not Past Due Financial Asset, Not Past Due [Member] Net increase (decrease) in cash and due from banks Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect Retained Earnings, Unrestricted [Member] Retained Earnings, Unappropriated [Member] Cash and Cash Equivalents Disclosure [Text Block] Cash and Cash Equivalents Disclosure [Text Block] Multiplier for Determining Nonpermanent Capital in Leverage Capital Calculation Multiplier for Determining Nonpermanent Capital in Leverage Capital Calculation The weighting factor used for nonpermanent capital when calculating total leverage capital. Entity Central Index Key Entity Central Index Key Concentration Risk, Market Risk Concentration Risk, Market Risk Fair Value Option, Disclosures Fair Value Option, Disclosures [Table Text Block] Measurement Frequency [Axis] Measurement Frequency [Axis] Interest-Bearing Domestic Deposit, Time Deposits Interest-Bearing Domestic Deposit, Time Deposits Advances, Earlier of Contractual Maturity or Next Call Date, after Rolling Year Five Federal Home Loan Bank, Advances, Earlier of Contractual Maturity or Next Call Date, after Rolling Year Five Allowance for Credit Losses Credit Loss, Financial Instrument [Policy Text Block] Loss Contingency Nature [Axis] Loss Contingency Nature [Axis] Entity [Domain] Entity [Domain] standby letters of credit issuance commitments [Domain] standby letters of credit issuance commitments [Member] A future dated irrevocable undertaking (typically by a financial institution) to guarantee payment of a specified financial obligation. Type of Adoption [Domain] Accounting Standards Update [Domain] Retained Earnings, Restricted [Member] Retained Earnings, Appropriated [Member] City Area Code City Area Code ASSETS Assets [Abstract] AHP Rollforward Activity in Affordable Housing Program Obligation [Table Text Block] Long-term Debt, Type [Domain] Long-Term Debt, Type [Domain] Derivatives Not Designated as Hedging Before Price Alignment Derivatives Not Designated as Hedging Before Price Alignment [Member] Derivatives Not Designated as Hedging Before Price Alignment Retirement Benefits [Abstract] Retirement Benefits [Abstract] Other [Member] Other Debt Obligations [Member] Loans Insured or Guaranteed by Government Authorities [Domain] Loans Insured or Guaranteed by Government Authorities [Domain] Interest-Bearing Deposits Interest-Bearing Deposits [Member] Statement of Stockholders' Equity [Abstract] Statement of Stockholders' Equity [Abstract] Financing Receivable, Credit Quality Indicator [Table] Financing Receivable, Credit Quality Indicator [Table] Proceeds from maturities and paydowns Proceeds from Maturities, Prepayments and Calls of Debt Securities, Available-for-Sale Interest-Bearing Deposits and Federal Funds Sold Interest-Bearing Deposits and Federal Funds Sold [Member] Interest-Bearing Deposits and Federal Funds Sold INTEREST EXPENSE Interest Expense [Abstract] Thereafter Long-Term Debt, Maturities, Repayments of Principal in Rolling after Year Five Mandatorily redeemable capital stock (Note 11) Financial Instruments Subject to Mandatory Redemption MRCS, Beginning of Year MRCS, End of Year Financial Instruments Subject to Mandatory Redemption Financial Instruments Subject to Mandatory Redemption, Settlement Terms, Share Value, Amount Financial Instruments Subject to Mandatory Redemption, Redeemable in Year Four Financial Instrument Subject to Mandatory Redemption, Maturity, Year Four FINANCING ACTIVITIES Net Cash Provided by (Used in) Financing Activities [Abstract] Gain (Loss) on Securities Gain (Loss) on Securities [Table Text Block] Mortgage-Backed Securities [Member] Collateralized Mortgage-Backed Securities [Member] Total par value, Weighted Average Interest Rate Long-Term Debt, Weighted Average Interest Rate, at Point in Time Interest Rate Contract [Member] Interest Rate Contract [Member] Real Estate, Type of Property [Axis] Real Estate, Type of Property [Axis] Total other expense Noninterest Expense Other, net Other Noninterest Expense Single Family [Member] Single Family [Member] Trading securities Payments to Acquire Investments [Abstract] Other liabilities Increase (Decrease) in Other Operating Liabilities Office of Finance Office of Finance, Cost Assessed on Federal Home Loan Bank Financial Asset, Amortized Cost, Accrued Interest, after Allowance for Credit Loss Financial Asset, Amortized Cost, Accrued Interest, after Allowance for Credit Loss Proceeds from maturities and paydowns Proceeds from Maturities, Repayments and Calls of Debt Securities, FV-NI, Held-for-investment Fair Value, Option, Quantitative Disclosures [Line Items] Fair Value, Option, Quantitative Disclosures [Line Items] Real Estate [Domain] Real Estate [Domain] Federal Home Loan Bank, Advances, Option [Domain] Federal Home Loan Bank, Advances, Option [Domain] Federal Home Loan Bank, Advances, Callable Option [Member] Federal Home Loan Bank, Advances, Callable Option [Member] Offsetting Assets Offsetting Assets [Table Text Block] Securities Borrowed or Purchased under Agreements to Resell Securities Borrowed or Purchased under Agreements to Resell [Member] Securities Borrowed or Purchased under Agreements to Resell EX-101.PRE 13 fhlbdm-20231231_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT GRAPHIC 14 capitalplan12-2023001.jpg begin 644 capitalplan12-2023001.jpg M_]C_X 02D9)1@ ! @ 0 ! #_VP!# @&!@<&!0@'!P<)"0@*#!0-# L+ M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0 'P$ P$! 0$! 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