10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number: 000-51845

FEDERAL HOME LOAN BANK OF ATLANTA

(Exact name of registrant as specified in its charter)

Federally chartered corporation	56-6000442
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1475 Peachtree Street, NE, Atlanta, Ga.	30309
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (404) 888-8000

____________________________

Securities registered pursuant to Section 12(b) of the Act: None

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

Class B Stock, par value $100

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ¨  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.    ¨  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    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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, 2016, the aggregate par value of the stock held by current and former members of the registrant was $5,249,367,100. At February 28, 2017, 51,578,606 total shares were outstanding.

Table of Contents

	PART I.
Item 1.	Business	5
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosure	23
	PART II.
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	25
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	62
Item 8.	Financial Statements and Supplementary Data	63
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	116
Item 9A.	Controls and Procedures	116
Item 9B.	Other Information	117
	PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	118
Item 11.	Executive Compensation	128
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	147
Item 13.	Certain Relationships and Related Transactions, and Director Independence	148
Item 14.	Principal Accountant Fees and Services	149
	PART IV.
Item 15.	Exhibits and Financial Statement Schedules	149
Item 16.	Form 10-K Summary	152
SIGNATURES		152

Important Notice About Information in this Annual Report

In this annual report on Form 10-K (Report), unless the context suggests otherwise, references to the “Bank” mean the Federal Home Loan Bank of Atlanta. “FHLBanks” means the 11 district Federal Home Loan Banks, including the Bank, and “FHLBank System” means the FHLBanks and the Federal Home Loan Banks Office of Finance (Office of Finance), as regulated by the Federal Housing Finance Agency (Finance Agency). “FHLBank Act” means the Federal Home Loan Bank Act of 1932, as amended.

The information contained in this Report is accurate only as of the date of this Report and as of the dates specified herein.

The product and service names used in this Report are the property of the Bank and, in some cases, the other FHLBanks. Where the context suggests otherwise, the products, services, and company names mentioned in this Report are the property of their respective owners.

Special Cautionary Notice Regarding Forward-looking Statements

Some of the statements made in this Report may be “forward-looking statements,” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided by the same regulations. Forward-looking statements include statements with respect to the Bank’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors, many of which may be beyond the Bank’s control and which may cause the Bank’s actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements. The reader can identify these forward-looking statements through the Bank’s use of words such as “may,” “will,” “anticipate,” “hope,” “project,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “could,” “intend,” “seek,” “target,” and other similar words and expressions of the future. Such forward-looking statements may include statements regarding any one or more of the following topics:

• the Bank’s business strategy and changes in operations, including, without limitation, product growth and change in product mix;

• future performance, including profitability, dividends, retained earnings, developments, or market forecasts;

• forward-looking accounting and financial statement effects; and

• those other factors identified and discussed in the Bank’s public filings with the Securities and Exchange Commission (SEC).

It is important to note that the description of the Bank’s business is a statement about the Bank’s operations as of a specific date. It is not meant to be construed as a policy, and the Bank’s operations, including the portfolio of assets held by the Bank, are subject to reevaluation and change without notice.

The forward-looking statements may not be realized due to a variety of factors, including, without limitation, any one or more of the following factors:

• future economic and market conditions, including, for example, inflation and deflation, the timing and volume of market activity, general consumer confidence and spending habits, the strength of local economies in which the Bank conducts its business, and interest-rate changes that affect the housing markets;

• demand for Bank advances resulting from changes in members’ deposit flows and credit demands, as well as from changes in other sources of funding and liquidity available to members;

• volatility of market prices, rates, and indices that could affect the value of collateral held by the Bank as security for the obligations of Bank members and counterparties to derivatives and similar agreements;

• the risk of changes in interest rates on the Bank’s interest-rate sensitive assets and liabilities;

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• changes in various governmental monetary or fiscal policies, as well as legislative and regulatory changes, including changes in accounting principles generally accepted in the United States of America (GAAP) and related industry practices and standards, or the application thereof;

• changes in the credit ratings of the U.S. government and/or the FHLBanks;

• political, national, and world events, including acts of war, terrorism, natural disasters or other catastrophic events, and legislative, regulatory, judicial, or other developments that affect the economy, the Bank’s market area, the Bank, its members, counterparties, its federal regulators, and/or investors in the consolidated obligations of the FHLBanks;

• competitive forces, including other sources of funding available to Bank members, other entities borrowing funds in the capital markets, and the ability to attract and retain skilled individuals;

• the Bank’s ability to develop, implement, promote the efficient performance of, and support and safeguard, technology and information systems, including those provided by third-parties, sufficient to measure and effectively manage the risks of the Bank’s business without significant interruption;

• changes in investor demand for consolidated obligations of the FHLBanks and/or the terms of derivatives and similar agreements, including changes in investor preference and demand for certain terms of these instruments, which may be less attractive to the Bank, or which the Bank may be unable to offer;

• the Bank’s ability to introduce, support, and manage the growth of new products and services and to successfully manage the risks associated with those products and services;

• the Bank’s ability to successfully manage the credit and other risks associated with any new types of collateral securing advances;

• the availability from acceptable counterparties, upon acceptable terms, of swaps, options, and other derivative financial instruments of the types and in the quantities needed for investment funding and risk-management purposes;

• the uncertainty and costs of litigation, including litigation filed against one or more of the FHLBanks;

• membership changes, including changes resulting from mergers or changes in the principal place of business of Bank members, which could result in decreased advances or other business from such members;

• changes in the FHLBank Act or Finance Agency regulations that affect FHLBanks operations and regulatory oversight or changes in other statutes or regulations applicable to the FHLBanks;

• adverse developments or events, including financial restatements, affecting or involving one or more other FHLBanks or the FHLBank System in general; and

• other factors and other information discussed herein under the caption “Risk Factors” and elsewhere in this Report, as well as information included in the Bank’s future filings with the SEC.

A variety of factors could cause the Bank's actual results to differ materially from the Bank's forward-looking statements, including, without limitation, those risk factors provided under Item 1A of this Report and in future reports and other filings made by the Bank with the SEC. The Bank operates in a changing economic environment, and new risk factors emerge from time to time. Management cannot accurately predict any new factors, nor can it assess the effect, if any, of any new factors on the business of the Bank or the extent to which any factor, or combination of factors, may cause actual results to differ from those implied by any forward-looking statements.

All written or oral statements that are made by or are attributable to the Bank are expressly qualified in their entirety by this cautionary notice. The reader should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. The Bank has no obligation and does not undertake publicly to update, revise, or correct any of the forward-looking statements after the date of this Report, or after the respective dates on which these statements otherwise are made, whether as a result of new information, future events, or otherwise, except as may be required by law.

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PART I.

Item 1. Business.

Overview

General. The Bank is a federally chartered corporation that was organized in 1932 and is one of 11 district FHLBanks. The FHLBanks, along with the Office of Finance, comprise the FHLBank System. The FHLBanks are U.S. government-sponsored enterprises (GSEs) organized under the authority of the FHLBank Act. Each FHLBank operates as a separate entity within a defined geographic district and has its own management, employees, and board of directors. The Bank's defined geographic district includes Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. The Bank is supervised and regulated by the Finance Agency, an independent federal agency in the executive branch of the United States government.

Cooperative. The Bank is a cooperative owned by member institutions that are required to purchase capital stock in the Bank as a condition of membership. Federally insured depository institutions, insurance companies, privately insured, state-chartered credit unions, and community development financial institutions (CDFIs) located in the Bank's defined geographic district and engaged in residential housing finance are eligible to apply for membership. The Bank's capital stock is not publicly traded and is owned entirely by current or former members and certain non-members that own the Bank's capital stock as a result of a merger with or acquisition of a Bank member. The Bank's membership totaled 901 financial institutions, comprised of 576 commercial banks, 83 thrifts, 211 credit unions, 24 insurance companies, and seven CDFIs as of December 31, 2016.

Mission. The primary function of the Bank is to provide readily available, competitively priced funding to its member institutions. The Bank serves the public by providing its member institutions with a source of liquidity, thereby enhancing the availability of credit for residential mortgages and targeted community developments. The Bank primarily supports this mission by offering collateralized loans, known as advances, to its members. The Bank also offers other products and services, discussed below, that are intended to support the availability of residential-mortgage and community-investment credit.

The Bank's primary source of funds is proceeds from the sale of FHLBank debt instruments to the public. These debt instruments, known as “consolidated obligations,” are the joint and several obligations of all the FHLBanks. Because of the FHLBanks' GSE status, the FHLBanks are generally able to raise funds at favorable rates. The Bank's cooperative ownership structure allows the Bank to pass along the benefit of these low funding rates to its members. The U.S. government does not guarantee the debt securities or other obligations of the Bank or the FHLBank System.

Business. The Bank manages its operations as one business segment. Management and the Bank's board of directors review enterprise-wide financial information in order to make operating decisions and assess performance.

The Finance Agency assesses each FHLBank’s core mission achievement by evaluating its core mission asset ratio, calculated as the ratio of primary mission assets, which includes advances and acquired member assets, to consolidated obligations. The Bank's core mission activities primarily include the issuance of advances. This ratio is calculated annually at year-end, using annual average par values. Based on this ratio, the Finance Agency has provided the following expectations for each FHLBank’s strategic plan:

• when the ratio is at least 70 percent or higher, the strategic plan should include an assessment of the FHLBank’s prospects for maintaining this level;

• when the ratio is at least 55 percent but less than 70 percent, the strategic plan should explain the FHLBank’s plan to increase its mission focus; and

• when the ratio is below 55 percent, the strategic plan should include an explanation of the circumstances that caused the ratio to be at that level and detailed plans to increase the ratio. If the FHLBank maintains a ratio below 55 percent over the course of several consecutive reviews, then the board of directors should consider possible strategic alternatives.

5

The Bank's core mission asset ratio was 75.2 percent as of December 31, 2016.

The Bank is exempt from ordinary federal, state, and local taxation, except real property taxes. It does not have any subsidiaries nor does it sponsor any off-balance sheet special purpose entities.

For additional information regarding the Bank's financial condition, changes in financial condition, and results of operations, refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Products and Services

The Bank's products and services include the following:

• Credit Products;

• Community Investment Services; and

• Cash Management and Other Services.

Credit Products

The credit products that the Bank offers to its members include advances and standby letters of credit.

Advances

Advances are the Bank's primary product. Advances are fully secured loans made to members and eligible housing finance agencies, authorities, and organizations called “housing associates” (non-members that are approved mortgagees under Title II of the National Housing Act). The carrying value of the Bank's outstanding advances was $99.1 billion and $104.2 billion as of December 31, 2016 and 2015, respectively, and advances represented 71.5 percent and 73.2 percent of total assets as of December 31, 2016 and 2015, respectively. Advances generated 53.0 percent, 23.2 percent, and 26.5 percent of total interest income for the years ended December 31, 2016, 2015, and 2014, respectively.

Advances serve as a funding source for the Bank's members for a variety of conforming and nonconforming mortgages. Thus, advances support important housing markets, including those focused on low- and moderate-income households. For those members that choose to sell or securitize their mortgages, advances can supply interim funding.

Generally, member institutions use the Bank's advances for one or more of the following purposes:

• providing funding for mortgages held in the member's portfolio, including both conforming and nonconforming mortgages;

• providing temporary funding during the origination, packaging, and sale of mortgages into the secondary market;

• providing funding for commercial real estate loans;

• assisting with asset-liability management by matching the maturity and prepayment characteristics of mortgage loans or adjusting the sensitivity of the member's balance sheet to interest-rate changes;

• providing a cost-effective alternative to meet contingent liquidity needs and adhere to liquidity management strategies; and

• providing funding for community investment and economic development.

Pursuant to statutory and regulatory requirements, the Bank may only make long-term advances to community financial institutions for the purpose of enabling a member to purchase or fund new or existing residential housing finance assets, which may include defined small business loans, small farm loans, small agri-business loans, and community development loans. The Bank's management indirectly monitors the purpose for which members use advances through limitations on eligible collateral and as described below.

6

The Bank obtains a security interest in eligible collateral to secure a member's advance prior to the time that the Bank originates or renews an advance. Eligible collateral is defined by the FHLBank Act, Finance Agency regulations, and the Bank's credit and collateral policy. The Bank requires its borrowers to execute an advances and security agreement that establishes the Bank's security interest in all collateral pledged by the borrower. The Bank perfects its security interest in collateral prior to making an advance to the borrower. As additional security for a member's indebtedness, the Bank has a statutory and contractual lien on the member's capital stock in the Bank. The Bank may also require additional or substitute collateral from a borrower, as provided in the FHLBank Act and the financing documents between the Bank and its borrowers.

The Bank's management assesses member creditworthiness and financial condition, typically on a quarterly basis, to determine the term and maximum dollar amount of advances that the Bank will lend to a particular member. In addition, the Bank discounts eligible collateral and periodically revalues the collateral pledged by each member to secure its outstanding advances. The Bank has never experienced a credit loss on an advance.

The FHLBank Act affords any security interest granted to the Bank by any member of the Bank, or any affiliate of any such member, priority over the claims and rights of any party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), other than the claims and rights of a party that (1) would be entitled to priority under otherwise applicable law; and (2) is an actual bona fide purchaser for value or is an actual secured party whose security interest is perfected in accordance with applicable state law.

Pursuant to its regulations, the Federal Deposit Insurance Corporation (FDIC) has recognized the priority of an FHLBank's security interest under the FHLBank Act and the right of an FHLBank to require delivery of collateral held by the FDIC, as receiver, for a failed depository institution.

The Bank offers standard and customized advances to fit a variety of member needs. Generally, the Bank offers maturities as described below, but longer maturities are available, which are subject to a member's financial condition and available funding. The Bank's advances include, among other products, the following:

Adjustable- or variable-rate indexed advances. Adjustable- or variable-rate indexed advances include the following:

• Daily Rate Credit Advance (DRC Advance). The DRC Advance provides short-term funding with rate resets on a daily basis, similar to federal funds lines. The DRC Advance is available generally from one day to 12 months.

• Adjustable Rate Credit Advance (ARC Advance). The ARC Advance is a long-term advance available for a term generally of up to 10 years with rate resets at specified intervals.

• Float-to-Fixed Advance. This is an advance that floats to London Interbank Offered Rate (LIBOR) and changes to a predetermined fixed rate on a predetermined date prior to maturity. The Bank offers this product with a maturity generally of up to 15 years.

Fixed-rate advances. Fixed-rate advances include the following:

• Fixed Rate Credit Advance (FRC Advance). The FRC Advance offers fixed-rate funds with principal due at maturity generally from one month to 20 years.

• Callable Advance.The callable advance is a fixed-rate advance with a fixed maturity and the option for the borrower to prepay the advance on an option exercise date(s) before maturity without a fee. The options can be Bermudan (periodically during the life of the advance) or European (one-time). The Bank offers this product with a maturity generally of up to 10 years with options generally from three months to 10 years.

• Expander Advance. The expander advance is a fixed-rate advance with a fixed maturity and an option by the borrower to increase the amount of the advance in the future at a predetermined interest rate. The option may be Bermudan or European. The Bank has established internal limits on the amount of such options that may be sold based upon which quarter they will mature. The Bank offers this product with a maturity generally of two years to 20 years with an option exercise date that can be set generally from one month to 10 years.

• Principal Reducing Advance. The principal reducing advance is a fixed-rate advance with a final maturity generally of up to 20 years and predetermined principal reductions on specific dates. The reduction schedule is predetermined by the borrower and may be scheduled on a monthly, quarterly, semi-annual, or annual basis. Amortization options include equal payments or structures similar to a mortgage.

7

Hybrid advances.The hybrid advance is a fixed- or variable-rate advance that allows the inclusion of interest-rate caps and/or floors. The Bank offers this product with a maturity generally of up to 10 years with options generally from three months to 10 years.

Convertible advances. In a convertible advance, the Bank purchases an option from the borrower that allows the Bank to modify the interest rate on the advance from fixed to variable on certain specified dates. The Bank's option can be Bermudan or European. The Bank offers this product with a maturity generally of up to 15 years with options generally from three months to 15 years.

Forward starting advances. With the forward starting advance, the borrower may enter into the terms of any structured advance, including the fixed-rate Hybrid, ARC Advance, Expander Advance, or Float-to-Fixed Advance, with a future settlement date. Interest accrues beginning on the settlement date. A termination fee applies if the borrower voluntarily terminates the advance prior to the settlement date.

The following table presents the par value of outstanding advances by product characteristics (dollars in millions). See Note 9—Advances to the Bank's 2016 audited financial statements for further information on the distinction between par value and carrying value of outstanding advances.

	As of December 31,
	2016			2015
	Amount		Percent of Total	Amount		Percent of Total
Fixed rate (1)	$	38,941	39.62	$	35,664	34.67
Adjustable or variable rate indexed	34,930		35.54	43,425		42.22
Hybrid	21,453		21.83	19,782		19.23
Convertible	1,497		1.52	2,394		2.33
Amortizing (2)	1,467		1.49	1,599		1.55
Total par value	$	98,288	100.00	$	102,864	100.00

 ____________

⁽¹⁾ Includes convertible advances whose conversion options have expired.

⁽²⁾ Principal reducing advances, described above.

The Bank establishes interest rates on advances using the Bank's cost of funds on consolidated obligations and the interest-rate swap market. The Bank establishes an interest rate applicable to each type of advance each day and then adjusts those rates during the day to reflect changes in the cost of funds and interest rates.

The Bank includes prepayment fee provisions in most advance transactions. With respect to callable advances, prepayment fees apply to prepayments on dates other than option exercise dates. The Bank also offers variable-rate prepayable advances, in which prepayment fees apply to prepayments made on dates other than certain specified dates. As required by Finance Agency regulations, the prepayment fee is intended to make the Bank financially indifferent to a borrower's decision to prepay an advance before maturity or, with respect to a callable advance, on a date other than an option exercise date.

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The following table presents information on the Bank's 10 largest borrowers of advances (dollars in millions):

		As of December 31, 2016
Institution	State	Advances  Par Value		Percent of Total Advances	Weighted-average Interest Rate (%) (1)
Capital One, National Association	Virginia	$	17,176	17.48	0.64
Navy Federal Credit Union	Virginia	13,495		13.73	2.00
Bank of America, National Association	North Carolina	11,511		11.71	0.62
EverBank	Florida	5,506		5.60	1.29
BankUnited, National Association	Florida	5,240		5.33	0.76
Regions Bank	Alabama	4,253		4.33	0.84
Branch Banking and Trust Company	North Carolina	4,012		4.08	4.32
SunTrust Bank	Georgia	2,754		2.80	0.79
Pentagon Federal Credit Union	Virginia	2,221		2.26	2.41
Synovus Bank	Georgia	1,325		1.35	0.64
Subtotal (10 largest borrowers)		67,493		68.67	1.27
Subtotal (all other borrowers)		30,795		31.33	1.37
Total par value		$	98,288	100.00	1.30

 ____________

⁽¹⁾ The average interest rate of the member's advance portfolio weighted by each advance's outstanding balance.

A description of the Bank's credit risk management and collateral valuation methodology as it relates to its advance activity is contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Advances.

Standby Letters of Credit

The Bank issues irrevocable standby letters of credit on behalf of its members to support certain obligations of the members to third-party beneficiaries. Members may use standby letters of credit for residential housing financing and community lending or for liquidity and asset-liability management. In particular, members often use standby letters of credit as collateral for deposits from public sector entities. Standby letters of credit are generally available for nonrenewable terms of up to five years or for one-year terms that are renewable annually with a final expiration date of up to ten years after issuance. The Bank requires members to fully collateralize the face amount of any standby letter of credit issued by the Bank during the term of the standby letter of credit. The Bank also charges members a fee based on the face amount of the standby letter of credit. If the Bank is required to make a payment for a beneficiary's draw, the amount must be reimbursed by the member immediately or, subject to the Bank's discretion, may be converted into an advance to the member. The Bank's underwriting and collateral requirements for standby letters of credit are the same as they are for advances. Standby letters of credit are not subject to activity-based capital stock purchase requirements. The Bank has never experienced a credit loss related to a standby letter of credit reimbursement obligation. Unlike advances, standby letters of credit are accounted for as financial guarantees because a standby letter of credit may expire in accordance with its terms without ever being drawn upon by the beneficiary. The Bank had $32.7 billion and $32.5 billion of outstanding standby letters of credit as of December 31, 2016 and 2015, respectively.

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Advances and Standby Letters of Credit Combined

The following table presents information on the Bank's 10 largest borrowers of advances and standby letters of credit combined (dollars in millions):

		As of December 31, 2016
Institution	State	Advances Par Value and Standby Letters of Credit Balance		Percent of Total Advances Par Value and Standby Letters of Credit
Bank of America, National Association	North Carolina	$	22,774	17.39
Capital One, National Association	Virginia	17,646		13.48
Navy Federal Credit Union	Virginia	13,638		10.41
SunTrust Bank	Georgia	10,076		7.69
Compass Bank	Alabama	7,778		5.94
EverBank	Florida	5,665		4.33
BankUnited, National Association	Florida	5,244		4.01
Branch Banking and Trust Company	North Carolina	5,001		3.82
Regions Bank	Alabama	4,286		3.27
Pentagon Federal Credit Union	Virginia	4,236		3.23
Subtotal (10 largest borrowers)		96,344		73.57
Subtotal (all other borrowers)		34,612		26.43
Total advances par value and standby letters of credit		$	130,956	100.00

Community Investment Services

Each FHLBank contributes 10 percent of its income subject to assessment to the Affordable Housing Program (AHP), or such additional prorated sums as may be required so that the aggregate annual contribution of the FHLBanks is not less than $100 million. For purposes of the AHP calculation, each FHLBank's income subject to assessment is defined as the individual FHLBank's net income before assessments, plus interest expense related to mandatorily redeemable capital stock. The assessment for AHP is further discussed under the Taxation/Assessments heading below.

AHP provides no-cost or low-cost funds in the form of a direct subsidy or a subsidized advance to members to support the financing of rental and for-sale housing for very low-, low-, and moderate-income households. The Bank offers a Competitive AHP, a Set-aside AHP, and a discounted advance program that supports projects that provide affordable housing and economic development benefiting those households. A description of each program is as follows:

• the Competitive AHP is offered annually through a competitive application process and provides funds for either rental or ownership real estate projects submitted through member financial institutions;

• the Set-aside AHP currently consists of the following nine distinct products: First-time Homebuyer, Community Partners, Foreclosure Recovery, Veterans Purchase, Returning Veterans Purchase, Veterans Rehabilitation, Returning Veterans Rehabilitation, Community Rebuild and Restore, and Structured Partnership Product. The Set-aside AHP products are available on a first-come, first-served basis and provide no-cost funds through member financial institutions to be used for down payments, closing costs, and other costs associated with the purchase, purchase/rehabilitation, or rehabilitation of homes for families at or below 80 percent of the area median income; and

• the discounted advance program consists of the Community Investment Program and the Economic Development Program, which both provide the Bank's members with access to low-cost funding to create affordable rental and homeownership opportunities and to engage in commercial and economic development activities that benefit low- and moderate-income individuals and neighborhoods.

The Bank's AHP assessments were $31 million, $33 million, and $30 million, respectively, for the years ended December 31, 2016, 2015, and 2014.

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Cash Management and Other Services

The Bank provides a variety of services to help members meet day-to-day cash management needs. These services include cash management services that support member advance activity, such as daily investment accounts, automated clearing house (ACH) transactions, and custodial mortgage accounts. In addition to cash management services, the Bank provides other noncredit services, including wire transfer services and safekeeping services. These cash management, wire transfer, and safekeeping services do not generate material amounts of income and are performed primarily as ancillary services for the Bank's members.

The Bank also acts as an intermediary to meet the derivatives needs of its smaller members that have limited or no access to the capital markets. This service assists members with asset-liability management by giving them indirect access to the capital markets. These intermediary transactions involve the Bank entering into a derivative with a member and then entering into a mirror-image derivative with one of the Bank's approved counterparties. The derivatives entered into by the Bank as a result of its intermediary activities do not qualify for hedge accounting treatment and are separately marked to fair value through earnings. The Bank attempts to earn income from this service sufficient to cover its operating expenses through the minor difference in rates on these mirror-image derivatives. The net result of the accounting for these derivatives is not material to the operating results of the Bank. The Bank may require both the member and the counterparty to post collateral for any market value exposure that may exist during the life of the transaction.

Mortgage Loan Purchase Programs

The Bank’s mortgage loan purchase programs provide members an alternative to holding mortgage loans in a portfolio or selling them into the secondary market. Prior to 2008, the Bank purchased loans directly from member participating financial institutions (PFIs) through the Mortgage Partnership Finance® Program (MPF® Program), a program developed by FHLBank Chicago and the Mortgage Purchase Program (MPP), a program separately established by the Bank. The Bank ceased directly purchasing new mortgage assets under these mortgage programs in 2008. However, the Bank continues to support its existing MPP and MPF Program mortgage loan portfolios. In 2014, the Bank renewed its participation in the MPF Program. The Bank now offers MPF Program products, MPF Xtra, MPF Direct, and MPF Government MBS, through which the Bank facilitates third parties' purchases of PFI loans rather than holding such loans as Bank assets. During 2016, the Bank and FHLBank Indianapolis began participating in the funding of an MPP master commitment with a member of FHLBank Indianapolis.

MPF Program

From time to time, the Bank has offered various products to members through the MPF Program. FHLBank Chicago, as the MPF provider, is responsible for providing transaction processing services, as well as developing and maintaining the underwriting criteria and program servicing guide. The Bank pays FHLBank Chicago a fee for providing these services. Conventional loans purchased from PFIs under the MPFProgram are subject to varying levels of loss allocation and credit enhancement structures. Federal Housing Administration (FHA)-insured and Department of Veterans Affairs (VA)-guaranteed loans are not subject to the credit enhancement obligations applicable to conventional loans under the MPF Program. The PFI may retain the right and responsibility for servicing the loans or sell the servicing rights, and the PFI may be required to repurchase a loan in the event of a breach of eligibility requirement or other warranty.

Traditional MPF Products. The Bank maintains a portfolio of mortgage loans that were historically purchased directly from PFIs and are recorded on the balance sheet. Two of the Bank's PFIs under the traditional MPF products, Branch Banking and Trust Company and SunTrust Bank, were among the Bank's top 10 borrowers as of December 31, 2016.

MPF Xtra. In 2014, the Bank began to offer the MPF Xtra product to members. Under the MPF Xtra product, FHLBank Chicago purchases residential, conforming fixed-rate mortgage loans from the Bank’s PFIs and concurrently sells these loans to Fannie Mae. The Bank receives a counterparty fee from FHLBank Chicago for each PFI loan sold to FHLBank Chicago through the MPF Xtra product in exchange for the Bank's role in facilitating the sale. The MPF Xtra loans are passed through to Fannie Mae as a third-party investor and do not become Bank assets.

MPF Direct. In 2015, the Bank began to offer the MPF Direct product to members. MPF Direct is a jumbo loan product that partners the MPF program with Redwood Trust, Inc., a real estate investment trust. This partnership offers PFIs the opportunity to sell their fixed-rate mortgages with loan balances greater than the conforming loan limit up to $2.5 million into the secondary market. The Bank receives a counterparty fee from FHLBank Chicago for each PFI loan sold through the MPF Direct product in exchange for the Bank's role in facilitating the sale. The MPF Direct loans are passed through to Redwood Trust, Inc. and do not become Bank assets.

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MPF Government MBS. In 2015, the Bank began to offer the MPF Government MBS product to members. MPF Government MBS is a product whereby the FHLBank Chicago purchases government-insured and/or -guaranteed loans from eligible PFIs, and the purchased loans are aggregated as “held for sale” and pooled into securities guaranteed by the Government National Mortgage Association (Ginnie Mae). The Bank receives a counterparty fee from FHLBank Chicago for each PFI loan sold through the MPF Government MBS product in exchange for the Bank's role in facilitating the sale.

Mortgage Partnership Finance® Program, “Mortgage Partnership Finance®”, “MPF®,” and “MPF Xtra®” are registered trademarks of FHLBank Chicago.

MPP

The Bank’s MPP is independent of other FHLBanks. Therefore, the Bank has greater control over pricing, quality of customer service, relationships with any third-party service providers, and program changes. Certain benefits of greater Bank control include the Bank's ability to control operating costs and to manage its regulatory relationship directly with the Finance Agency.

There were no MPP PFIs that were among the Bank's top 10 borrowers as of December 31, 2016.

The MPF Program and MPP are authorized under applicable regulations. Regulatory interpretive guidance provides that an FHLBank may sell loans acquired through its mortgage loan purchase programs so long as it also sells the related credit enhancement obligation. The Bank currently is not selling loans it has acquired through these mortgage loan purchase programs. The contractual maturity dates of some of the purchased loans extend out to 2047.

Descriptions of the MPF Program and MPP underwriting and eligibility standards and credit enhancement structures are contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Mortgage Loan Programs.

Investments

The Bank maintains a portfolio of investment securities and other investments for liquidity purposes to provide for the availability of funds to meet member credit needs and to provide additional earnings for the Bank. As of December 31, 2016, the Bank's investment securities consist of mortgage-backed securities (MBS) issued by GSEs, U.S. government agencies, or private-label securities that, at purchase, carried the highest rating from Moody's Investors Service (Moody's) or Standard and Poor's Ratings Services (S&P); securities issued by the U.S. government or U.S. government agencies; and state and local housing agency obligations. The Bank ceased purchasing private-label MBS on January 31, 2008. The investment securities portfolio generally provides the Bank with higher returns than those available in other investments. The Bank's other investments may consist of interest-bearing deposits, overnight and term federal funds sold, and securities purchased under agreements to resell. U.S. agency and GSE securities were 65.8 percent and 66.3 percent of the Bank's total investments as of December 31, 2016 and 2015, respectively, as discussed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Investments. Investments generated 44.2 percent, 70.3 percent, and 66.2 percent of total interest income for the years ended December 31, 2016, 2015, and 2014, respectively.

The Bank's MBS investment practice is to purchase MBS from a group of Bank-approved dealers, which may include “primary dealers.” Primary dealers are banks and securities brokerages that trade in U.S. government securities with the Federal Reserve System. The Bank does not purchase MBS from its members, except in the case in which a member or its affiliate is on the Bank's list of approved dealers. In all cases, the Bank bases its investment decisions on the relative rates of return of competing investments and does not consider whether an MBS is being purchased from or issued by a member or an affiliate of a member. The MBS balance included a carrying value of $1.1 billion and $1.4 billion, respectively, of MBS that were issued by one of the Bank's members or an affiliate of a member as of December 31, 2016 and 2015. See Note 6—Available-for-sale Securities and Note 7—Held-to-maturity Securities to the Bank's 2016 audited financial statements for a tabular presentation of the available-for-sale and held-to-maturity securities issued by members or affiliates of members.

Finance Agency regulations prohibit the Bank from investing in certain types of securities. These restrictions are discussed in more detail in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Investments.

Finance Agency regulations prohibit an FHLBank from purchasing MBS and asset-backed securities if its investment in such securities exceeds 300 percent of the FHLBank’s previous month-end regulatory capital on the day it purchases the securities. Regulatory capital is defined as the sum of permanent capital, the amount paid-in for Class A stock (if any), the amount of the Bank's general allowance for losses (if any), and the amount of any other instruments identified in the capital plan and approved by the Finance Agency. For discussion regarding the Bank's compliance with this regulatory requirement, refer to

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Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Investments.

Occasionally, the Bank purchases consolidated obligations issued by other FHLBanks through third-party dealers as investment securities, consistent with the Bank's investment strategy and Finance Agency regulations and guidelines. The Bank has not purchased any additional consolidated obligations issued by other FHLBanks since 2002. The balance of these investments is presented in Note 5—Trading Securities to the Bank's 2016 audited financial statements.

The Bank is subject to credit and market risk on its investments. For discussion as to how the Bank manages these risks, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Investments.

Funding Sources

Consolidated Obligations

Consolidated obligations, consisting of bonds and discount notes, are the joint and several obligations of the FHLBanks, backed only by the financial resources of the FHLBanks. Consolidated obligations are not obligations of the U.S. government, and the United States does not guarantee the consolidated obligations. The Office of Finance has responsibility for facilitating and executing the issuance of consolidated obligations for all the FHLBanks. It also services all outstanding debt. The Bank is primarily liable for its portion of consolidated obligations (i.e., those issued on its behalf); however, the Bank is also jointly and severally liable with the other FHLBanks for the payment of principal and interest on consolidated obligations of all the FHLBanks. If the principal or interest on any consolidated obligation issued on behalf of the Bank is not paid in full when due, the Bank may not pay any extraordinary expenses or pay dividends to, or redeem or repurchase shares of capital stock from, any member of the Bank. At any time, the Finance Agency may require any FHLBank to make principal or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that obligation.

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 noncomplying FHLBank. However, if the Finance Agency determines that the noncomplying FHLBank is unable to satisfy its obligations, 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 the Finance Agency may determine.

Finance Agency regulations also state that the Bank must maintain the following types of assets that are free from any lien or pledge in an aggregate amount at least equal to the amount of the Bank's portion of the consolidated obligations outstanding, provided that any assets that are subject to a lien or pledge for the benefit of the holders of any issue of consolidated obligations shall be treated as if they were assets free from any lien or pledge for purposes of this negative pledge requirement:

• cash;

• obligations of, or fully guaranteed by, the United States;

• secured advances;

• mortgages that have any guaranty, insurance, or commitment from the United States or any agency of the United States; and

• investments described in Section 16(a) of the FHLBank Act which, among other items, include securities that a fiduciary or trust fund may purchase under the laws of the state in which the FHLBank is located.

The Bank was in compliance with this Finance Agency regulation as of December 31, 2016 and 2015.

Consolidated obligations are issued with either fixed- or variable-rate coupon payment terms that may use a variety of indices. The Bank, working through the Office of Finance, is able to customize consolidated obligations to meet investor demands. Customized features can include different indices and embedded derivatives. The Bank offsets these customized features predominantly by derivatives to reduce the market risk associated with the consolidated obligations.

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Consolidated Obligation Bonds. Consolidated obligation bonds satisfy longer-term funding requirements. Typically, the maturity of these securities ranges from one year to 10 years, but the maturity is not subject to any statutory or regulatory limit. Consolidated obligation bonds can be issued and distributed through negotiated or competitively bid transactions with approved underwriters or selling group members. The FHLBanks also use the TAP issue program for fixed-rate, noncallable bonds. Under this program, the FHLBanks offer debt obligations at specific maturities that may be reopened daily, generally during a three-month period through competitive auctions. The goal of the TAP program is to aggregate frequent smaller issues into a larger bond issue that may have greater market liquidity.

Consolidated Obligation Discount Notes. Through the Office of Finance, the FHLBanks also issue consolidated obligation discount notes to provide short-term funds for advances to members, for the Bank's other investments, and for the Bank'svariable-rate and convertible advance programs. These securities have maturities up to 366 days and are offered daily through a consolidated obligation discount note selling group. Discount notes are issued at a discount and mature at par.

Certification and Reporting Obligations. Under Finance Agency regulations, before the end of each calendar quarter and before paying any dividends for that quarter, the president of the Bank must certify to the Finance Agency that, based upon known current facts and financial information, the Bank will remain in compliance with applicable liquidity requirements and will remain capable of making full and timely payments of all current obligations (which includes the Bank's obligation to pay principal and interest on consolidated obligations issued on its behalf through the Office of Finance) coming due during the next quarter. The Bank is required to provide notice to the Finance Agency upon the occurrence of any of the following:

• the Bank is unable to provide the required certification;

• the Bank projects, at any time, that it will fail to comply with its liquidity requirements or will be unable to meet all of its current obligations due during the quarter;

• the Bank actually fails to comply with its liquidity requirements or to meet all of its current obligations due during the quarter; or

• the Bank negotiates to enter or enters into an agreement with one or more other FHLBanks to obtain financial assistance to meet its current obligations due during the quarter.

The Bank must file a consolidated obligation payment plan for Finance Agency approval upon the occurrence of any of the following:

• the Bank becomes a noncomplying FHLBank as a result of failing to provide a required certification related to liquidity requirements and ability to meet all current obligations;

• the Bank becomes a noncomplying FHLBank as a result of being required to provide notice to the Finance Agency of certain matters related to liquidity requirements or inability to meet current obligations; or

• the Finance Agency determines that the Bank will cease to be in compliance with its liquidity requirements or will lack the capacity to meet all of its current obligations due during the quarter.

Regulations permit a noncompliant FHLBank to continue to incur and pay normal operating expenses in the regular course of business. However, a noncompliant FHLBank may not incur or pay any extraordinary expenses, declare or pay dividends, or redeem any capital stock until the Finance Agency has approved the FHLBank's consolidated obligation payment plan or inter-FHLBank assistance agreement or has ordered another remedy, and the noncompliant FHLBank has paid all its direct obligations.

Deposits

The FHLBank Act allows the Bank to accept deposits from its members, any institution for which it is providing correspondent services, other FHLBanks, or other governmental instrumentalities. Deposits provide some of the Bank's funding resources while also giving members a low-risk earning asset that satisfies their regulatory liquidity requirements. The Bank had demand and overnight deposits of $1.1 billion as of December 31, 2016 and 2015.

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To support its member deposits, the FHLBank Act requires the Bank to have an amount equal to or greater than the current deposits received from its members as a reserve. These reserves are required to be invested in obligations of the United States, deposits in eligible banks or trust companies, or advances with maturities not exceeding five years. The Bank had excess deposit reserves of $88.7 billion and $80.6 billion as of December 31, 2016 and 2015, respectively.

Capital and Capital Rules

The Bank must comply with regulatory requirements for total regulatory capital, leverage capital, and risk-based capital. To satisfy these capital requirements, the Bank maintains a capital plan. Each member's minimum stock requirement is an amount equal to the sum of a “membership” stock component and an “activity-based” stock component under the plan. The FHLBank Act and applicable regulations require that the minimum stock requirement for members must be sufficient to enable the Bank to meet its minimum leverage and risk-based capital requirements. If necessary, the Bank may adjust the minimum stock requirement from time to time within the ranges established in the capital plan. Each member is required to comply promptly with any adjustment to the minimum stock requirement.

As of December 31, 2016, the membership stock requirement was 0.09 percent (nine basis points) of the member's total assets, subject to a cap of $15 million.

As of December 31, 2016, the activity-based stock requirement was the sum of the following:

• 4.25 percent of the member's outstanding par value of advances; and

• 8.00 percent of any outstanding targeted debt/equity investment (such as multifamily residential mortgage loan assets) sold by the member to the Bank on or after December 17, 2004.

In addition, the activity-based stock requirement may include a percentage of any outstanding balance of acquired member assets (such as residential mortgage loan assets), although this percentage was set at zero as of December 31, 2016. The Bank did not have any multifamily residential mortgage loan assets purchased from members or other targeted debt/equity investments outstanding; therefore, the 8.00 percent activity-based stock requirement was inapplicable as of December 31, 2016.

Although applicable regulations allow the Bank to issue Class A stock or Class B stock, or both, to its members, the Bank's capital plan allows it to issue only Class B stock.

The Bank's financial management policy contains provisions to help preserve the value of the members' investment in the Bank and reasonably mitigate the effect on capital of unanticipated operating and accounting events. For additional information regarding the Bank's capital and capital requirements, as well as information regarding the Bank's retained earnings and dividends, refer to Item 5, Market for Registrant's Common Equity—Related Stockholder Matters and Issuer Purchases of Equity Securities; Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Capital; and Note 15—Capital and Mandatorily Redeemable Capital Stock to the Bank's 2016 audited financial statements.

Derivatives

Finance Agency regulations and the Bank's Risk Management Policy (RMP) establish guidelines for derivatives. These policies and regulations prohibit the trading or speculative use of these instruments and limit permissible credit risk arising from these instruments. The Bank enters into derivatives to manage the exposure to interest-rate risk inherent in otherwise unhedged assets and funding positions and to achieve the Bank's risk management objectives. These derivatives consist of interest-rate swaps (including callable and putable swaps), swaptions, interest-rate cap and floor agreements, and forward contracts. Generally, the Bank uses derivatives in its overall interest-rate risk management to accomplish one or more of the following objectives:

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• preserve a favorable interest-rate spread between the yield of an asset (e.g., an advance) and the cost of the related liability (e.g., the consolidated obligation bond used to fund the advance) by converting both fixed-rate instruments to a variable rate using interest-rate swaps;

• reduce funding costs by combining a derivative with a consolidated obligation because the cost of a combined funding structure can be lower than the cost of a comparable consolidated obligation bond;

• reduce the interest-rate sensitivity and repricing gaps of assets and liabilities;

• mitigate the adverse earnings effects of the shortening or lengthening of certain assets (e.g., mortgage assets);

• protect the value of existing asset or liability positions;

• manage embedded options in assets and liabilities; and

• achieve overall asset/liability management objectives.

The total notional amount of the Bank's outstanding derivatives was $81.2 billion and $99.8 billion as of December 31, 2016 and 2015, respectively. The contractual or notional amount of a derivative is not a measure of the amount of credit risk from that transaction; rather, the notional amount serves as a basis for calculating periodic interest payments or cash flows.

The Bank may enter into derivatives concurrently with the issuance of consolidated obligations with embedded options. When issuing bonds, the Bank generally simultaneously enters into derivatives to, in effect, convert fixed-rate liabilities into variable-rate liabilities. The continued attractiveness of such debt depends on price relationships in both the bond market and derivatives markets. If conditions in these markets change, the Bank may alter the types or terms of the bonds issued. Similarly, the Bank may enter into derivatives in conjunction with the origination of advances with embedded options. Issuing fixed-rate advances while simultaneously entering into derivatives, in effect, converts fixed-rate advances into variable-rate earning assets.

The Bank is subject to credit risk in all derivatives due to potential nonperformance by the derivative counterparty. For further discussion as to how the Bank manages its credit risk and market risk on its derivatives, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation—Risk Management.

Competition

Advances. A number of factors affect demand for the Bank's advances, including, but not limited to, the availability and cost of other sources of liquidity for the Bank's members, such as demand deposits, brokered deposits, and the repurchase market. The Bank individually competes with other suppliers of secured and unsecured wholesale funding. Such other suppliers may include investment banks, commercial banks, and in certain circumstances, other FHLBanks. Smaller members may have access to alternative funding sources through sales of securities under agreements to repurchase, while larger members may have access to all the alternatives listed above. Larger members also may have independent access to the national and global credit markets. The availability of alternative funding sources to members can significantly influence the demand for the Bank's advances and can vary as a result of a number of factors, including market conditions, member liquidity levels, members' creditworthiness, and availability of collateral.

Debt Issuance. The Bank competes with Fannie Mae, Freddie Mac, and other GSEs, as well as corporate, sovereign, and supranational entities for funds raised through the issuance of unsecured debt in the national and global debt markets. Increases in the supply of competing debt products may, in the absence of increases in demand, result in higher debt costs or lesser amounts of debt issued at the same cost than otherwise would be the case. In addition, the availability and cost of funds raised through the issuance of certain types of unsecured debt may be affected adversely by regulatory initiatives that tend to reduce investments by certain depository institutions in unsecured debt with greater price volatility or interest-rate sensitivity than fixed-rate, fixed-maturity instruments of the same maturity. Further, a perceived or actual higher level of government support for other GSEs may increase demand for their debt securities relative to similar FHLBank securities.

Interest-rate Exchange Agreements. The sale of callable debt and the simultaneous execution of callable interest-rate swaps that mirror the debt have been important sources of competitive funding for the Bank. As such, the availability of markets for callable debt and interest-rate swaps may be an important determinant of the Bank's relative cost of funds. There is considerable competition among high credit quality issuers in the markets for these instruments.

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Regulatory Oversight, Audits, and Examinations

The Finance Agency supervises and regulates the FHLBanks. The Finance Agency is responsible for ensuring that (1) the FHLBanks operate in a safe and sound manner, including maintenance of adequate capital and internal controls; (2) the operations and activities of the FHLBanks foster liquid, efficient, competitive, and resilient national housing finance markets; (3) the FHLBanks comply with applicable laws and regulations; and (4) the FHLBanks carry out their housing finance mission through authorized activities that are consistent with the public interest. In this capacity, the Finance Agency issues regulations and policies that govern, among other things, the permissible activities, powers, investments, risk-management practices, and capital requirements of the FHLBanks, and the authorities and duties of FHLBank directors. The Finance Agency conducts annual, on-site examinations of the Bank, as well as periodic off-site reviews. In addition, the Bank must submit to the Finance Agency monthly financial information on the condition and results of operations of the Bank. The Bank is also subject to regulation by the SEC.

The Government Corporation Control Act provides that, before a government corporation (which includes each of the FHLBanks) issues and offers obligations to the public, the Secretary of the Treasury shall prescribe (1) the form, denomination, maturity, interest rate, and conditions of the obligations; (2) the time and manner in which issued; and (3) the selling price. Under the FHLBank Act, the Secretary of the Treasury has the authority, at his discretion, to purchase consolidated obligations up to an aggregate principal amount of $4.0 billion. No borrowings under this authority have been outstanding since 1977.

The Comptroller General has authority under the FHLBank Act to audit or examine the Finance Agency and the Bank 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 the financial statements conducted by an independent registered public accounting firm. If the Comptroller General conducts such a review, 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 also may conduct his or her own audit of any financial statements of the Bank.

The Bank has an internal audit department; the Bank's board of directors has an audit committee; and an independent registered public accounting firm audits the annual financial statements of the Bank. The independent registered public accounting firm conducts these audits following the standards of the Public Company Accounting Oversight Board (United States) and Government Auditing Standards issued by the Comptroller General. The Finance Agency receives the Bank's Report and audited financial statements. The Bank must 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.

Available Information

The Bank is 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 the Bank's electronic filings located at http://www.sec.gov. These reports may also be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. Further information about the operation of the Public Reference Room may be obtained at 1-800-SEC-0330.

The Bank's website is located at www.fhlbatl.com. The Bank posts its annual report on Form 10-K on its website as soon as reasonably practicable after it is filed with the SEC, and the Bank also provides a link to the SEC website that has all of the Bank's SEC filings.

The content of the websites referenced above is not incorporated by reference into this Report or in any other report or document that the Bank files with the SEC, and any references to these websites are intended to be inactive textual references only.

Personnel

As of December 31, 2016, the Bank employed 316 full-time and 4 part-time employees.

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Taxation/Assessments

The Bank is exempt from ordinary federal, state, and local taxation, except for real property tax. However, each FHLBank must set aside 10 percent of their income subject to assessment for the AHP, or such additional prorated sums as may be required so that the aggregate annual contribution of the FHLBanks is not less than $100 million. For purposes of the AHP calculation, each FHLBank's income subject to assessment is defined as the individual FHLBank's net income before assessments, plus interest expense related to mandatorily redeemable capital stock. If an FHLBank experiences a net loss for a full year, the FHLBank would have no obligation to the AHP for that year since each FHLBank's required annual AHP contribution is limited to its annual income subject to assessment. AHP assessments for the Bank were $31 million, $33 million, and $30 million for the years ended December 31, 2016, 2015, and 2014, respectively.

Item 1A. Risk Factors.

The following discussion summarizes some of the more important risks that the Bank faces. This discussion is not exhaustive, and there may be other risks that the Bank faces, which are not described below. These risks should be read in conjunction with the other information included in this Report, including, without limitation, in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial statements and notes, and “Special Cautionary Notice Regarding Forward-looking Statements.” The risks described below, if realized, could negatively impact the Bank's business operations, financial condition, and future results of operations and, among other things, could result in the Bank's inability to pay dividends on its capital stock.

Business and Regulatory Risk

The Bank is subject to a complex body of laws and regulations, which could change in a manner detrimental to the Bank's operations.

The FHLBanks are GSEs, organized under the authority of the FHLBank Act, and governed by federal laws and regulations as adopted and applied by the Finance Agency. Congress may amend the FHLBank Act or amend or adopt other statutes in ways that significantly affect the rights and obligations of the FHLBanks and the manner in which the FHLBanks carry out their housing finance mission and business operations. New or modified legislation enacted by Congress or regulations adopted by the Finance Agency or other financial services regulators could have a negative effect on the Bank's ability to conduct business or on the cost of doing business. In addition, certain regulations affecting our members could impact the extent to which they can engage in business with the Bank. Due to recent changes in the U.S. government administration and recent executive actions, there are additional uncertainties in the legislative and regulatory environment.

Changes in regulatory requirements could result in, among other things, an increase in the FHLBanks' cost of funding and regulatory compliance; a change in membership or permissible business activities; additional liquidity requirements; or a decrease in the size, scope, or nature of the FHLBanks' lending activities, any of which could negatively impact the Bank's financial condition and results of operations.

Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Legislative and Regulatory Developments for a discussion of recent legislative and regulatory activity that could affect the Bank.

Competition for advances and refinancing risk on short-term advances could have an adverse effect on earnings.

Advances represent the Bank's primary product offering. Advances represented 71.5 percent of the Bank's total assets for the year ended December 31, 2016. The Bank competes with other suppliers of wholesale funding, including investment banks, commercial banks, and in certain circumstances, other FHLBanks, which provide secured and unsecured loans to the Bank's members. From time to time, these alternative funding sources may offer more favorable terms on their loans than the Bank does on its advances. The Bank's members have continued to experience high deposit levels, which reduces member demand for advances. Any change made by the Bank in the pricing of its advances in an effort to effectively compete with these competitive funding sources may decrease the Bank's profitability on advances, which could have a material adverse impact on the Bank's financial condition and results of operations, including dividend yields to members.

The prolonged low interest rate environment has resulted in a concentration of short-term advances. Although the Federal Reserve raised interest rates in December 2016, and indicated its intention to raise rates further in 2017, the Bank expects this short-term advance preference to continue during 2017. If members do not extend or renew these short-term advances as they come due, the Bank may experience a significant reduction in advances, which could have a material adverse impact on the

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Bank's financial condition and results of operations. Advances due in one year or less comprised 48.1 percent of the Bank's total advances outstanding as of December 31, 2016.

The Bank is exposed to risks because of customer concentration.

The Bank is subject to customer concentration risk as a result of the Bank's reliance on a relatively small number of member institutions for a large portion of the Bank's total advances and resulting interest income. The Bank's largest borrowers as of December 31, 2016, were Capital One, National Association, which accounted for $17.2 billion, or 17.5 percent, Navy Federal Credit Union, which accounted for $13.5 billion, or 13.7 percent, and Bank of America, National Association, which accounted for $11.5 billion, or 11.7 percent, of the Bank's total advances then outstanding. In addition, as of December 31, 2016, ten of the Bank's member institutions (including Capital One, National Association, Navy Federal Credit Union, and Bank of America, National Association) collectively accounted for $67.5 billion of the Bank's total advances then outstanding, which represented 68.7 percent of the Bank's total advances then outstanding. If, for any reason, the Bank were to lose, or experience a decrease in the amount of, its business relationships with its largest borrower or a combination of several of its large borrowers - whether as the result of any such member becoming a party to a merger or other transaction, or as a result of market conditions, competition or otherwise - the Bank's financial condition and results of operations could be negatively affected.

Liquidity Risk

The Bank's funding depends upon its ability to regularly access the capital markets.

The Bank seeks to be in a position to meet its members' credit and liquidity needs and pay its obligations without maintaining excessive holdings of low-yielding liquid investments or being forced to incur unnecessarily high borrowing costs. The Bank's primary source of funds is from the sale of consolidated obligations in the capital markets, including the short-term discount note market. The Bank's ability to obtain funds through the sale of consolidated obligations depends in part on prevailing conditions in the capital markets (including investor demand), such as the effects of any reduced liquidity in financial markets, which are beyond the Bank's control. The failure to obtain such funds on terms and conditions favorable to the Bank could adversely impact the Bank's ability to manage its future liquidity.

Market Risk

Changes in interest rates could significantly affect the Bank's earnings.

Like many financial institutions, the Bank realizes income primarily from the spread between interest earned on the Bank's outstanding loans and investments and interest paid on the Bank's borrowings and other liabilities. Although the Bank uses a number of measures to monitor and manage changes in interest rates, the Bank may experience “gaps” in the interest-rate sensitivities of its assets and liabilities resulting from both duration and convexity mismatches. The existence of gaps in interest-rate sensitivities means that either the Bank's interest-bearing liabilities will be more sensitive to changes in interest rates than its interest-earning assets, or vice versa. In either case, if interest rates move contrary to the Bank's position, any such gap could adversely affect the net present value of the Bank's interest-sensitive assets and liabilities, which could negatively affect the Bank's financial condition and results of operations.

The Bank’s businesses and results of operations are affected by the fiscal and monetary policies of the U.S. government, foreign governments and their agencies. The Federal Reserve's policies directly and indirectly influence the yield on interest-earning assets and the cost of interest-bearing liabilities, which could affect the success of the Bank's asset and liability management activities and negatively affect the Bank's financial condition and results of operations. Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Net Interest Income for further discussion of the Bank's yield on assets and interest-rate spread.

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The Bank relies upon derivative instruments to reduce its interest-rate risk associated with certain assets and liabilities on the Bank's balance sheet, including MBS and advances, and the Bank may be required to change its investment strategies and advance product offerings if it is not able to enter into effective derivative instruments on acceptable terms.

The Bank uses a significant amount of derivative instruments to attempt to reduce its interest-rate risk and mortgage prepayment risk. The Bank determines the nature and quantity of hedging transactions based on various factors, including market conditions and the expected volume and terms of advances. As a result, the Bank's effective use of these instruments depends on the ability of the Bank to determine the appropriate hedging positions in light of the Bank's assets, liabilities, and prevailing and anticipated market conditions. In addition, the effectiveness of the Bank's hedging strategy depends upon the Bank's ability to enter into these instruments with acceptable parties, upon terms satisfactory to the Bank, and in the quantities necessary to hedge the Bank's corresponding obligations.

The Dodd-Frank Act resulted in certain changes to statutory and regulatory requirements for derivative transactions, including those transactions used by the Bank to hedge interest-rate risk and other risks. As a result of these requirements, certain interest-rate swap transactions, whether they are initially executed with a swap dealer or subject to mandatory execution through a swap execution facility, are required to be cleared through a third-party central clearinghouse. Additionally, initial margin and variation margin are required to be posted for cleared derivatives. Furthermore, certain regulators have issued final rules that would subject non-cleared swaps to a mandatory two-way initial margin requirement, and variation margin to be exchanged daily, among other things. Any of these margin and capital requirements could adversely affect the liquidity and pricing of derivative transactions entered into by the Bank, making derivative trades more costly and less attractive as risk management tools.

If the Bank is unable to manage its hedging positions properly or is unable to enter into hedging instruments upon acceptable terms, the Bank may be unable to manage its interest-rate and other risks or may be required to change its investment strategies and advance product offerings, which could affect the Bank's financial condition and results of operations.

Prepayment or refinancing of mortgage assets could affect earnings.

The Bank invests in MBS and whole mortgage loans. Changes in interest rates can significantly affect the prepayment patterns of these assets, and such prepayment patterns could affect the Bank's earnings. In the Bank's experience, it is difficult to hedge prepayment risk in mortgage loans. Therefore, prepayments of mortgage assets could have an adverse effect on the income of the Bank.

The Bank may not be able to pay dividends or to repurchase or redeem members' capital stock consistent with past practice.

The Bank's board of directors may declare dividends on the Bank's capital stock, payable to members, from the Bank's unrestricted retained earnings and current net earnings. The Bank's ability to pay dividends and to repurchase or redeem capital stock is subject to compliance with statutory and regulatory liquidity and capital requirements. The Bank's financial management policy addresses regulatory guidance issued to all FHLBanks regarding retained earnings. It requires the Bank to establish a target amount of retained earnings by considering factors such as forecasted income, mark-to-market adjustments on derivatives and trading securities, market risk, operational risk, and credit risk, all of which may be influenced by events beyond the Bank's control. The Bank's Capital Plan addresses minimum regulatory capital requirements. Events such as changes in interest rates, collateral value, credit quality of members, and any future other-than-temporary impairment losses may affect the adequacy of the Bank's retained earnings and may require the Bank to reduce its dividends, suspend dividends altogether, or limit capital stock repurchases and redemptions to achieve and maintain the targeted amount of retained earnings or regulatory capital requirements. These actions could cause a reduction in members' demand for advances, or make it difficult for the Bank to retain existing members or to attract new members.

Credit Risk

The Bank's exposure to credit risk could have an adverse effect on the Bank's financial condition and results of operations.

The Bank faces credit risk on advances, standby letters of credit, investments, derivatives, and mortgage loan assets. The Bank requires advances and standby letters of credit to be fully secured with collateral. The Bank evaluates the types of collateral pledged by the member and assigns a borrowing capacity to the collateral, based on the risk associated with that type of collateral. If the Bank has insufficient collateral before or after an event of payment default or failure of the member or the Bank is unable to liquidate the collateral for the value assigned to it in the event of a payment default or failure of a member,

20

the Bank could experience a credit loss on advances or standby letters of credit, which could adversely affect its financial condition and results of operations.

The Bank assumes secured and unsecured credit risk exposure associated with securities transactions, money market transactions, supplemental mortgage insurance agreements, and derivative contracts. The Bank routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. The insolvency or other inability of a significant counterparty to perform its obligations under a derivative contract or other agreement could have an adverse effect on the Bank's financial condition and results of operations. The Bank's credit risk may be exacerbated based on market movements that impact the value of the derivative or collateral positions, the failure of a counterparty to return collateral owed by the counterparty to the Bank, or when the collateral pledged to the Bank cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due to the Bank. Any failure to properly perfect the Bank's security interest in collateral or any disruptions in the servicing of collateral in the event of a default could create credit losses for the Bank.

The Bank invests in U.S. agency (Fannie Mae, Freddie Mac, and Ginnie Mae) MBS and has historically invested in private-label MBS rated AAA by S&P or Fitch Ratings or Aaa by Moody's at the time of purchase. As of December 31, 2016, 10.7 percent of the Bank's MBS portfolio consisted of private-label MBS. Market prices for many of these private-label MBS have continued to improve since the 2008 financial crisis; however, given continued uncertainty in market conditions and the significant judgments involved in determining market value, there is a risk that declines in fair value in the Bank's MBS portfolio may occur and that the Bank may record additional other-than-temporary impairment losses in future periods, which could materially adversely affect the Bank's financial condition and results of operation.

The Bank uses master derivative contracts that contain provisions that require the Bank to net the exposure under all transactions with a counterparty to one amount in order to calculate collateral requirements. Although the Bank attempts to monitor the creditworthiness of all counterparties, it is possible that the Bank may not be able to terminate the agreement with a foreign commercial bank before the counterparty would become subject to an insolvency proceeding.

The Bank is jointly and severally liable for payment of principal and interest on the consolidated obligations issued by the 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 all of the FHLBanks, backed only by the financial resources of the FHLBanks. Accordingly, the Bank is jointly and severally liable with the other FHLBanks for the consolidated obligations issued by the FHLBanks through the Office of Finance.

The Finance Agency by regulation, may require any FHLBank to make principal or interest payments due on any consolidated obligation at any time, whether or not the FHLBank that was the primary obligor has defaulted on the payment of that obligation. The Finance Agency may allocate the liability among one or more FHLBanks on a pro rata basis or on any other basis the Finance Agency may determine. Accordingly, the Bank could incur significant liability beyond its primary obligation under consolidated obligations due to the failure of other FHLBanks to meet their obligations, which could negatively impact the Bank's financial condition and results of operations.

Changes in the Bank's credit ratings may adversely affect the Bank's ability to issue consolidated obligations on acceptable terms, and such changes may be outside the Bank's control due to changes in the U.S. sovereign ratings.

The Bank is rated Aaa with a stable outlook by Moody's and AA+ with a stable outlook by S&P. In addition, the consolidated obligations of the FHLBanks are rated Aaa with a stable outlook/P-1 by Moody's and AA+ with a stable outlook/A-1+ by S&P. Because of the FHLBanks’ GSE status, the credit ratings of the FHLBank System and the FHLBanks are directly influenced by the sovereign credit of the U.S., which is beyond the Bank's control. Downgrades to the U.S. sovereign credit rating and outlook would likely result in downgrades in the credit ratings and outlook on the Bank and the consolidated obligations of the FHLBanks even though the consolidated obligations are not obligations of the United States.

These ratings are subject to revision or withdrawal at any time by the rating agencies; therefore, the Bank may not be able to maintain these credit ratings. Negative ratings actions or negative guidance, including as a consequence of U.S. debt levels or the U.S. fiscal budget process, may adversely affect the Bank's cost of funds and ability to issue consolidated obligations on acceptable terms, trigger additional collateral requirements under the Bank's derivative contracts, and reduce the attractiveness of the Bank's standby letters of credit. This could have a negative impact on the Bank's financial condition and results of

21

operations, including the Bank's ability to make advances on acceptable terms, pay dividends, or redeem or repurchase capital stock.

Operational Risk

The financial models and the underlying assumptions used to value financial instruments and manage risk may differ materially from actual results.

The Bank makes significant use of business and financial models for managing risk. For example, the Bank uses models to measure and monitor exposures to various risks, including interest rate, prepayment, and other market risks, as well as credit risk. The Bank also uses models in determining the fair value of certain financial instruments when independent price quotations are not available or reliable. The degree of judgment in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. If market quotes are not available, fair values are based on discounted cash flows using market estimates of interest rates and volatility, dealer prices or prices of similar instruments. Pricing models and their underlying assumptions are based on the Bank's best estimates for discount rates, prepayments, market volatility, and other factors. These assumptions may have a significant effect on the reported fair values of assets and liabilities, including derivatives, the related income and expense, and the expected future behavior of assets and liabilities.

While models used by the Bank to value instruments and measure risk exposures are subject to periodic validation by independent parties, rapid changes in market conditions could impact the value of the Bank's instruments, as well as the Bank's financial condition and results of operations. 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 from actual results.

If the models are not reliable or the Bank does not use them appropriately, the Bank could make poor business decisions, including asset and liability management decisions, or other decisions, which could result in an adverse financial impact. Further, any strategies that the Bank employs to attempt to manage the risks associated with the use of models may not be effective.

The Bank relies heavily upon information systems and other technology, and any disruption or failure of such information systems or other technology could adversely impact our reputation, financial condition, and results of operations.

The Bank relies heavily upon information systems and other technology to conduct and manage its business. The Bank owns some of these systems and technology, and third parties own and provide to the Bank some of those systems and technology. Computer systems, software, and networks can be vulnerable to failures and interruptions, including as the result of any cyberattacks (e.g., breaches, unauthorized access, misuse, computer viruses or other malicious code, and other events) or other breaches of technology security, that may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. These failures, interruptions, or cyberattacks could jeopardize the confidentiality or integrity of information, including personally identifiable information, or otherwise interrupt the Bank's ability to conduct and manage its business effectively, including, without limitation, its deposit account management, hedging activities and advances activities. The Bank can make no assurance that it or its third-party vendors will be able to prevent, timely and adequately address, or mitigate the negative effects of any such failure, interruption, or cyberattack. Like many financial institutions, the Bank has seen an increase in cyberattack attempts. For the Bank, these attempts have predominantly occurred through phishing and social engineering scams, and in particular, ransomware. Although the Bank has disaster recovery and business continuity plans in place, and cybersecurity insurance coverage, a failure, interruption or cyberattack could significantly harm the Bank's reputation, its customer relations, risk management, and profitability, and could result in financial losses, legal and regulatory sanctions, increased costs or other harm.

The Bank’s controls and procedures may fail or be circumvented, and risk management policies and procedures may be inadequate.

The Bank may fail to identify and manage risks related to a variety of aspects of its business, including operational risk, legal and compliance risk, interest-rate risk, liquidity risk, market risk, and credit risk. The Bank has adopted controls, procedures, policies, and systems to monitor and manage these risks. The Bank’s management cannot provide complete assurance that those controls, procedures, policies, and systems are adequate to identify and manage the risks inherent in the Bank’s business. In addition, because the Bank’s business continues to evolve, the Bank may fail to fully understand the implications of changes in the business, and therefore, it may fail to enhance the Bank’s risk governance framework to timely or adequately address

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those changes. Failed or inadequate controls and risk management practices could have an adverse effect on the Bank's financial condition and results of operations.

An economic downturn or natural disaster in the Bank's region could adversely affect the Bank's profitability and financial condition.

Economic recession over a prolonged period or other unfavorable economic conditions in the Bank's region (including on a state or local level) could have an adverse effect on the Bank's business, including the demand for Bank products and services, and the value of the Bank's collateral securing advances, investments, and mortgage loans held in portfolio. Portions of the Bank's region also are subject to risks from hurricanes, tornadoes, floods, or other natural disasters, and all are subject to pandemic risk. These natural disasters, including those resulting from significant climate changes, could damage or dislocate the facilities of the Bank's members, may damage or destroy collateral that members have pledged to secure advances or the mortgages the Bank holds for portfolio, or the livelihood of borrowers of the Bank's members, or otherwise could cause significant economic dislocation in the affected areas of the Bank's region.

Item 1B.Unresolved Staff Comments.

None.

Item 2.Properties.

The Bank owns approximately 235,514 square feet of office space at 1475 Peachtree Street, NE, Atlanta, Georgia 30309. The Bank occupies approximately 189,412 square feet of this space. The Bank leases 11,093 square feet of office space in an off-site backup facility located in Marietta, Georgia and 384 square feet of off-site backup space in Norcross, Georgia for the Bank's disaster recovery data center. In addition, the Bank leases approximately 5,600 square feet of off-site warehouse space in Atlanta, Georgia used to store surplus furniture and workstation product. The Bank also leases 2,993 square feet of office space located in Washington, D.C. The Bank's management believes these facilities are well maintained and are adequate for the purposes for which they currently are used.

Item 3. Legal Proceedings.

The Bank is subject to various legal proceedings and actions from time to time in the ordinary course of its business. After consultation with legal counsel, management does not anticipate that the ultimate liability, if any, arising out of those matters presently known to the Bank will have a material adverse impact on the Bank’s financial condition or results of operations.

Item 4.Mine Safety Disclosure.

Not applicable.

PART II.

Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Bank's members own substantially all of the capital stock of the Bank. Former members and certain non-members, which own the Bank's capital stock as a result of a merger or acquisition of the Bank's member, own the remaining capital stock to support business transactions still carried on the Bank's balance sheet. The Bank's capital stock is not publicly traded or quoted, and there is no established marketplace for it, nor does the Bank expect a market to develop. The FHLBank Act and the Bank's capital plan prohibit the trading of its capital stock, except in connection with merger or acquisition activity.

A member may request in writing that the Bank redeem its excess capital stock at par value. Excess capital stock is FHLBank capital stock not required to be held by the member to meet its minimum stock requirement under an FHLBank's capital plan. Any such redemption request is subject to a five year redemption period after the Bank receives the request, subject to certain regulatory requirements and to the satisfaction of any ongoing stock investment requirements applicable to the member. In addition, any member may withdraw from membership upon five years written notice to the Bank. Subject to the member's satisfaction of any outstanding indebtedness and other statutory requirements, the Bank redeems the member's capital stock at par value upon withdrawal from membership. The Bank, in its discretion, may repurchase shares held by a member in excess of

23

its required stock holdings, subject to certain limitations and thresholds in the Bank's capital plan. The par value of all capital stock is $100 per share, and the operating threshold for daily excess capital stock repurchases is $100 thousand. As of February 28, 2017, the Bank had 904 member and non-member shareholders and 52 million shares of its capital stock outstanding (including mandatorily redeemable shares).

The Bank declares and pays any dividends only after net income is calculated for the preceding quarter. The following table presents the Bank's declared quarterly cash dividends in 2016 and 2015 (dollars in millions).

	2016			2015
	Amount		Annualized Rate (%) (1)	Amount		Annualized Rate (%) (2)
First quarter	$	52	4.66	$	51	4.24
Second quarter	59		4.87	51		4.26
Third quarter	55		4.64	50		4.53
Fourth quarter	60		4.64	55		4.56

____________

⁽¹⁾ Dividend rate was equal to the average three-month LIBOR for the preceding quarter, plus 425 basis points for the first and second quarters of 2016, 400 basis points for the third quarter of 2016, and 385 basis points for the fourth quarter of 2016.

⁽²⁾ Dividend rate was equal to the average three-month LIBOR for the preceding quarter, plus 400 basis points for the first and second quarters of 2015, and 425 basis points for the third and fourth quarters of 2015.

The Bank may pay dividends on its capital stock only out of its unrestricted retained earnings account or out of its current net income. The Bank's board of directors has discretion to declare or not to declare dividends and to determine the rate of any dividends declared. The Bank's board of directors may neither declare nor require the Bank to pay dividends when it is not in compliance with all of its capital requirements or if, after giving the effect of the dividend, the Bank would fail to meet any of its capital requirements or it is determined that the dividend would create a financial safety and soundness issue for the Bank.

Finance Agency regulations prohibit any FHLBank from issuing dividends in the form of capital stock or otherwise issuing new excess capital stock if that FHLBank has excess capital stock greater than one percent of that FHLBank's total assets or if issuing such dividends or new excess capital stock would cause that FHLBank to exceed the one percent excess capital stock limitation. As of December 31, 2016, the Bank's excess capital stock did not exceed one percent of its total assets. Historically, the Bank has not issued dividends in the form of capital stock or issued new excess capital stock, and a member's existing excess activity-based stock is applied to any activity-based stock requirements related to new advances.

The Bank's board of directors has adopted a financial management policy that includes a targeted amount of retained earnings separate and apart from the restricted retained earnings account. For further discussion of those provisions of the financial management policy, dividends, and the Amended Joint Capital Enhancement Agreement (Capital Agreement) pursuant to which the restricted retained earnings account was established, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Capital.

Because only members, former members, and certain non-member institutions, not individuals, may own the Bank's capital stock, the Bank has no equity compensation plans.

The Bank also issues standby letters of credit in the ordinary course of its business. From time to time, the Bank provides standby letters of credit to support members' obligations, members' standby letters of credit, or obligations issued to support unaffiliated, third-party offerings of notes, bonds, or other securities. The Bank issued $25.1 billion, $13.8 billion, and $19.5 billion in standby letters of credit in 2016, 2015, and 2014, respectively. To the extent that these standby letters of credit are securities for purposes of the Securities Act of 1933, the issuance of the standby letter of credit by the Bank is exempt from registration pursuant to section 3(a)(2) thereof.

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Item 6.     Selected Financial Data.

The following table presents selected historical financial data of the Bank and should be read in conjunction with the Bank's 2016 audited financial statements and related notes thereto and with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, which are included elsewhere in this Report. The following data, insofar as it relates to each of the years 2012 to 2016, have been derived from annual financial statements, including the statements of condition as of December 31, 2016 and 2015 and the related statements of income for the years ended December 31, 2016, 2015, and 2014 and notes thereto appearing elsewhere in this Report. The financial information presented in the following table and in the financial statements included in this Report is not necessarily indicative of the financial condition or results of operations of any other interim or annual periods (dollars in millions):

	As of and for the Years Ended December 31,
	2016			2015			2014			2013			2012
Statements of Condition (as of year end)
Total assets (1)	$	138,671		$	142,246		$	138,344		$	122,316		$	123,705
Advances	99,077			104,168			99,644			89,588			87,503
Mortgage loans held for portfolio	524			586			749			929			1,255
Allowance for credit losses on mortgage loans	(1		)	(2		)	(3		)	(11		)	(11		)
Investments (2)	36,510			35,175			36,502			26,944			30,454
Interest-bearing deposits	1,118			1,084			1,110			1,752			2,094
Consolidated obligations, net:
Discount notes (1) (3)	41,292			69,434			37,162			32,202			31,737
Bonds (1) (3)	88,647			63,953			92,088			80,728			82,947
Total consolidated obligations, net (1) (3)	129,939			133,387			129,250			112,930			114,684
Mandatorily redeemable capital stock	1			14			19			24			40
Affordable Housing Program payable	69			63			65			74			80
Capital stock - putable	4,955			5,101			5,150			4,883			4,898
Retained earnings	1,892			1,840			1,746			1,657			1,435
Accumulated other comprehensive income (loss)	104			75			95			112			(58		)
Total capital	6,951			7,016			6,991			6,652			6,275
Statements of Income (for the year ended)
Net interest income	334			243			323			341			376
(Reversal) provision for credit losses	(1		)	(1		)	(5		)	5			6
Net impairment losses recognized in earnings	(3		)	(5		)	(3		)	—			(16		)
Net losses on trading securities	(30		)	(61		)	(60		)	(100		)	(67		)
Net gains on derivatives and hedging activities	119			261			120			204			117
Standby letters of credit fees	28			28			26			20			18
Other income (4)	(3		)	2			22			42			3
Noninterest expense	137			135			132			127			125
Income before assessments	309			334			301			375			300
Affordable Housing Program assessments	31			33			30			37			30
Net income	278			301			271			338			270
Performance Ratios (%)
Return on equity (5)	4.08			4.63			4.11			5.42			4.26
Return on assets (6)	0.20			0.23			0.21			0.28			0.22
Net interest margin (7)	0.24			0.19			0.25			0.29			0.31
Regulatory capital ratio (as of year end) (8)	4.94			4.89			5.00			5.37			5.15
Equity to assets ratio (9)	4.88			4.91			5.09			5.18			5.25
Dividend payout ratio (10)	81.08			68.48			67.30			34.52			32.82

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____________

⁽¹⁾  The Bank adopted new accounting guidance related to the presentation of debt issuance costs, as discussed in Note 3—Recently Issued and Adopted Accounting Guidance to the Bank's 2016 audited financial statements. As a result, $7 million of debt issuance costs that were included in other assets were reclassified as a reduction in the corresponding consolidated obligations balance on the Bank’s Statements of Condition as of December 31, 2015.

⁽²⁾ Investments consist of interest-bearing deposits, securities purchased under agreements to resell, federal funds sold, and securities classified as trading, available-for-sale, and held-to-maturity.

⁽³⁾ The amounts presented are the Bank’s primary obligations on consolidated obligations outstanding. The par value of the other FHLBanks’ outstanding consolidated obligations for which the Bank is jointly and severally liable was as follows (in millions):

December 31, 2016	$	859,361
December 31, 2015	771,948
December 31, 2014	718,218
December 31, 2013	654,076
December 31, 2012	574,257

⁽⁴⁾ Other income includes service fees and other. For the year ended December 31, 2016, amount includes a $6 million loss on litigation settlements, net. For the years ended December 31, 2014 and 2013, amount includes a $15 million and $6 million gain on extinguishment of debt, respectively, and a $4 million and $33 million gain on litigation settlements, net, respectively.

⁽⁵⁾ Calculated as net income, divided by average total equity.

⁽⁶⁾ Calculated as net income, divided by average total assets.

⁽⁷⁾ Net interest margin is net interest income as a percentage of average earning assets.

⁽⁸⁾ Regulatory capital ratio is regulatory capital, which does not include accumulated other comprehensive income, but does include mandatorily redeemable capital stock, as a percentage of total assets as of year end.

⁽⁹⁾ Calculated as average total equity, divided by average total assets.

⁽¹⁰⁾ Calculated as dividends declared during the year, divided by net income during the year.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis relates to the Bank's financial condition as of December 31, 2016 and 2015, and results of operations for the years ended December 31, 2016, 2015, and 2014. This section explains the changes in certain key items in the Bank's financial statements from year to year, the primary factors driving those changes, the Bank's risk management processes and results, known trends or uncertainties that the Bank believes may have a material effect on the Bank's future performance, as well as how certain accounting principles affect the Bank's financial statements.

This discussion should be read in conjunction with the Bank's audited financial statements and related notes for the year ended December 31, 2016 included in Item 8 of this Report. Readers also should carefully review “Special Cautionary Notice Regarding Forward-looking Statements” and Item 1A, Risk Factors, for a description of the forward-looking statements in this Report and a discussion of the factors that might cause the Bank's actual results to differ, perhaps materially, from these forward-looking statements.

Executive Summary

Financial Condition

As of December 31, 2016, total assets were $138.7 billion, a decrease of $3.6 billion, or 2.51 percent, from December 31, 2015. This decrease was primarily due to a $5.1 billion, or 4.89 percent, decrease in advances, partially offset by a $1.3 billion, or 3.80 percent, increase in total investments.

As of December 31, 2016, total liabilities were $131.7 billion, a decrease of $3.5 billion, or 2.60 percent, from December 31, 2015. This decrease was primarily due to a $3.4 billion, or 2.59 percent, decrease in consolidated obligations as a result of the decrease in funding needs during the year.

As of December 31, 2016 and 2015, total capital was $7.0 billion.

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Results of Operations

The Bank recorded net income of $278 million for 2016, a decrease of $23 million, or 7.52 percent, from net income of $301 million for 2015.

During 2016, net interest income was $334 million, an increase of $91 million, from net interest income of $243 million in 2015. This increase is partially due to prepayments of previously restructured and redesignated advances during 2016 and 2015. During 2016 and 2015, these prepayments resulted in $16 million and $181 million of accelerated amortization, respectively, which reduced net interest income for the respective periods. These decreases were offset by corresponding increases in net gains on derivatives and hedging activities, reflected in noninterest income. Additionally, during 2016, net interest income was adversely affected by an increase in short-term rates, which impacted consolidated obligation interest expense more than the offsetting increase in advance interest income.

One way in which the Bank analyzes its performance is by comparing its annualized return on equity (ROE) to three-month average LIBOR. The Bank has chosen to measure ROE as a spread to average three-month LIBOR because the Bank has significant assets and liabilities priced to average three-month LIBOR. The Bank’s ROE was 4.08 percent for 2016, compared to 4.63 percent for 2015. This decrease in ROE was primarily due to a decrease in net income during the year, as well as an increase in average capital. ROE spread to average three-month LIBOR decreased to 334 basis points for 2016, compared to 431 basis points for 2015. This decrease in the ROE spread to LIBOR was primarily due to the decrease in ROE.

The Bank’s interest rate spread was 21 basis points and 17 basis points for 2016 and 2015, respectively. The increase in the Bank's interest rate spread for 2016, compared to 2015, was primarily due to a decrease in prepayments on previously restructured and redesignated advances during 2016.

Business Outlook

During 2016, the Bank continued to maintain its focus on an advances-driven and conservative-risk business model, which enabled the Bank to report net income, pay dividends, and repurchase excess stock consistently throughout the year. As part of the Bank's cooperative model, the Bank has chosen to operate with narrow margins, which cause the Bank's profitability to be sensitive to changes in market conditions.

The state of the economy is a significant component in determining the Bank's overall business outlook as it impacts advance demand, asset and collateral values, member financial stability, funding costs, and many other facets of the Bank's portfolio. While the U.S. economy has generally continued to improve in recent years, factors such as interest rates, liquidity levels at member institutions, fiscal and monetary policies or performance of global economies, and regulatory changes could have a significant effect - either positive or negative - on the Bank's economic performance.

The prolonged low interest rate environment has resulted in borrowers strongly favoring short-term advances. Although the Federal Reserve raised interest rates in December 2016, and indicated its intention to raise rates further in 2017, the Bank expects this short-term advance preference to continue during 2017. This higher proportion of short-term advances will continue to subject the Bank to advance rollover risk. In addition, members continue to experience high levels of liquidity and low-to-modest loan demand, which may continue to reduce overall member demand for advances. Although a higher interest rate environment is more favorable for the Bank's total profitability, it may have a negative impact on ROE spread to LIBOR.

From a regulatory perspective, changes in money market fund investment regulations during 2016 have caused the Bank to experience increased demand from the mutual fund industry for short-term GSE debt, which the Bank expects to continue in 2017. There is uncertainty, in light of recent changes in the U.S. government administration and recent executive actions, about regulatory changes that could occur in the financial services industry, and what impact those changes could have on the Bank and/or its members.

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Financial Condition

The following table presents the distribution of the Bank’s total assets, liabilities, and capital by major class as of the dates indicated (dollars in millions). These items are discussed in more detail below.

	As of December 31,
	2016			2015			Increase (Decrease)
	Amount		Percent of Total	Amount		Percent of Total	Amount			Percent
Advances	$	99,077	71.45	$	104,168	73.23	$	(5,091	)	(4.89	)
Investment securities	26,248		18.93	26,166		18.40	82			0.32
Other investments	10,262		7.40	9,009		6.33	1,253			13.91
Mortgage loans, net	523		0.38	584		0.41	(61		)	(10.43	)
Other assets	2,561		1.84	2,319		1.63	242			10.35
Total assets	$	138,671	100.00	$	142,246	100.00	$	(3,575	)	(2.51	)
Consolidated obligations, net:
Discount notes	$	41,292	31.35	$	69,434	51.35	$	(28,142	)	(40.53	)
Bonds	88,647		67.30	63,953		47.29	24,694			38.61
Deposits	1,118		0.85	1,084		0.80	34			3.09
Other liabilities	663		0.50	759		0.56	(96		)	(12.62	)
Total liabilities	$	131,720	100.00	$	135,230	100.00	$	(3,510	)	(2.60	)
Capital stock	$	4,955	71.28	$	5,101	72.71	$	(146	)	(2.88	)
Retained earnings	1,892		27.22	1,840		26.22	52			2.86
Accumulated other comprehensive income	104		1.50	75		1.07	29			39.03
Total capital	$	6,951	100.00	$	7,016	100.00	$	(65	)	(0.93	)

Advances

The following table presents the Bank's advances outstanding by year of maturity and the related weighted-average interest rate (dollars in millions):

	As of December 31,
	2016				2015
	Amount			Weighted-average Interest Rate (%)	Amount			Weighted-average Interest Rate (%)
Overdrawn demand deposit accounts	$	—		5.80	$	16		5.49
Due in one year or less	47,325			0.86	46,673			0.58
Due after one year through two years	8,244			2.11	12,747			1.47
Due after two years through three years	5,904			1.53	6,360			2.59
Due after three years through four years	5,859			1.33	2,994			1.99
Due after four years through five years	11,846			1.68	4,616			1.43
Due after five years	19,110			1.78	29,458			1.52
Total par value	98,288			1.31	102,864			1.17
Discount on AHP advances	(5		)		(6		)
Discount on EDGE (1) advances	(4		)		(4		)
Hedging adjustments	798				1,315
Deferred commitment fees	—				(1		)
Total	$	99,077			$	104,168

____________

⁽¹⁾ Economic Development and Growth Enhancement Program

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Advances outstanding as of December 31, 2016 decreased by 4.89 percent, compared to December 31, 2015. As a result of shareholder demand, the majority of new advances in 2016 were short-term advances. As of December 31, 2016 and 2015, 64.2 percent and 57.4 percent, respectively, of the Bank's advances were fixed-rate. However, the Bank often simultaneously enters into derivatives with the issuance of advances to convert the rates on them, in effect, into short-term variable interest rates, the majority of which are based on LIBOR. As of December 31, 2016 and 2015, 44.6 percent and 48.1 percent, respectively, of the Bank's fixed-rate advances were swapped, and 0.68 percent and 0.91 percent, respectively, of the Bank's variable-rate advances were swapped. The Bank also offers variable-rate advances that may be tied to indices such as the federal funds rate, prime rate, or constant maturity swap rates.

The Bank's 10 largest borrowing member institutions had 68.7 percent of the Bank's total advances outstanding as of December 31, 2016. Further information regarding the Bank's 10 largest borrowing member institutions and breakdown of their individual advance balances as of December 31, 2016 is contained in Item 1, Business—Credit Products—Advances. Management believes that the Bank holds sufficient collateral, on a member-specific basis, to secure the advances to all borrowers, including these 10 institutions, and the Bank does not expect to incur any credit losses on these advances.

Supplementary financial data on the Bank's advances is set forth under Item 8, Financial Statements and Supplementary Information (Unaudited).

Investments

The following table presents more detailed information regarding investments held by the Bank (dollars in millions).

	As of December 31,				Increase (Decrease)
	2016		2015		Amount			Percent
Investment securities:
State or local housing agency debt obligations	$	77	$	77	$	—		(0.17	)
Government-sponsored enterprises debt obligations	6,302		6,957		(655		)	(9.40	)
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	209		279		(70		)	(25.23	)
Government-sponsored enterprises residential	10,752		11,958		(1,206		)	(10.09	)
Government-sponsored enterprises commercial	6,773		4,140		2,633			63.61
Private-label residential	2,135		2,755		(620		)	(22.51	)
Total mortgage-backed securities	19,869		19,132		737			3.85
Total investment securities	26,248		26,166		82			0.32
Other investments:
Interest-bearing deposits (1)	1,106		1,088		18			1.67
Securities purchased under agreements to resell	1,386		2,500		(1,114		)	(44.57	)
Federal funds sold	7,770		5,421		2,349			43.33
Total other investments	10,262		9,009		1,253			13.91
Total investments	$	36,510	$	35,175	$	1,335		3.80

____________

⁽¹⁾  Interest-bearing deposits include a $1.1 billion business money market account with Branch Banking and Trust Company, one of the Bank’s ten largest borrowers as of December 31, 2016 and 2015.

The increase in total investments was primarily due to an increase in total other investments from December 31, 2015 to December 31, 2016. The amount held in other investments will vary each day based on the Bank’s liquidity requirements as a result of advances demand, the earnings rates, and the availability of high quality counterparties. The Bank ceased purchasing private-label MBS on January 31, 2008.

The Finance Agency regulations prohibit an FHLBank from purchasing MBS and asset-backed securities if its investment in such securities would exceed 300 percent of the FHLBank’s previous month-end regulatory capital on the day it would purchase the securities. The Bank was in compliance with this regulatory requirement as of December 31, 2016 and 2015, as these investments amounted to 288 percent and 274 percent of regulatory capital, respectively.

Refer to Note 6—Available-for-sale Securities and Note 7—Held-to-maturity Securities to the Bank’s 2016 audited financial statements for information on securities with unrealized losses as of December 31, 2016 and 2015.

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The Bank evaluates its individual investment securities for other-than-temporary impairment on a quarterly basis, as described in Note 8—Other-than-temporary Impairment to the Bank’s 2016 audited financial statements.

Mortgage Loans Held for Portfolio

The Bank had previously ceased purchasing new mortgage loans in 2008. However, during 2016, the Bank and FHLBank Indianapolis began participating in the funding of a master commitment with a member of FHLBank Indianapolis. The decrease in mortgage loans held for portfolio from December 31, 2015 to December 31, 2016 was primarily due to the maturity and prepayments of these assets during the year, partially offset by new mortgage loans acquired through the participation in the master commitment with the FHLBank Indianapolis.

Prior to 2008, members that were selling mortgage loans to the Bank were located primarily in the southeastern United States; therefore the Bank's conventional mortgage loan portfolio is concentrated in that region as of December 31, 2016 and 2015. The following table presents the percentage of unpaid principal balance of conventional residential mortgage loans held for portfolio for the five largest state concentrations.

	As of December 31,
	2016	2015
	Percent of Total	Percent of Total
Florida	24.44	28.08
South Carolina	22.00	25.27
Georgia	11.18	13.59
Virginia	9.82	7.90
North Carolina	9.08	10.39
All other	23.48	14.77
Total	100.00	100.00

Supplementary financial data on the Bank's mortgage loans is set forth under Item 8, Financial Statements and Supplementary Data—Supplementary Financial Information (Unaudited).

Consolidated Obligations

The Bank funds its assets primarily through the issuance of consolidated obligation bonds and consolidated obligation discount notes. The decrease in consolidated obligations from December 31, 2015 to December 31, 2016 was a result of a decrease in advances outstanding during the year. Consolidated obligation issuances financed 93.7 percent of the $138.7 billion in total assets as of December 31, 2016, remaining relatively stable compared to the financing ratio of 93.8 percent as of December 31, 2015.

Consolidated obligations outstanding were primarily variable rate as of December 31, 2016, and fixed rate as of December 31, 2015. The Bank often simultaneously enters into derivatives with the issuance of consolidated obligation bonds to convert the interest rates, in effect, into short-term variable interest rates, usually based on LIBOR. As of December 31, 2016 and 2015, 78.1 percent and 82.8 percent, respectively, of the Bank’s fixed-rate consolidated obligation bonds were swapped. None of the Bank's variable-rate consolidated obligation bonds were swapped as of December 31, 2016 and 2015. As of December 31, 2016, and 2015, 38.9 percent and 22.2 percent, respectively, of the Bank's fixed-rate consolidated obligation discount notes were swapped.

Supplementary financial data on the Bank's short-term borrowings is set forth under Item 8, Financial Statements and Supplementary Data—Supplementary Financial Information (Unaudited).

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Deposits

The Bank offers demand and overnight deposit programs to members and qualifying non-members primarily as a liquidity management service. In addition, a member that services mortgage loans may deposit funds in the Bank that are collected in connection with the mortgage loans, pending disbursement of those funds to the owners of the mortgage loans. For demand deposits, the Bank pays interest at the overnight rate. Most of these deposits represent member liquidity investments, which members may withdraw on demand. Therefore, the total account balance of the Bank’s deposits may fluctuate significantly. As a matter of prudence, the Bank typically invests deposit funds in liquid short-term assets. Member loan demand, deposit flows, and liquidity management strategies influence the amount and volatility of deposit balances carried with the Bank.

Capital

The FHLBank Act and Finance Agency regulations specify that each FHLBank must meet certain minimum regulatory capital standards. The Bank must maintain (1) total regulatory capital in an amount equal to at least four percent of its total assets; (2) leverage capital in an amount equal to at least five percent of its total assets; and (3) permanent capital in an amount equal to at least its regulatory risk-based capital requirement. Permanent capital is defined by the FHLBank Act and applicable regulations as the sum of paid-in capital for Class B stock and retained earnings. Mandatorily redeemable capital stock is considered capital for regulatory purposes. These regulatory capital requirements, and the Bank's compliance with these requirements, are presented in detail in Note 15—Capital and Mandatorily Redeemable Capital Stock to the Bank's 2016 audited financial statements.

Finance Agency regulations establish criteria for four capital classifications, based on the amount and type of capital held by an FHLBank, as follows:

• Adequately Capitalized - FHLBank meets or exceeds both risk-based and minimum capital requirements;

• Undercapitalized - FHLBank does not meet one or both of its risk-based or minimum capital requirements;

• Significantly Undercapitalized - FHLBank has less than 75 percent of one or both of its risk-based or minimum capital requirements; and

• Critically Undercapitalized - FHLBank total capital is two percent or less of total assets.

Under the regulations, the Director of the Finance Agency (Director) will make a capital classification for each FHLBank at least quarterly and notify the FHLBank in writing of any proposed action and provide an opportunity for the FHLBank to submit information relevant to such action. The Director is permitted to make discretionary classifications. An FHLBank must provide written notice to the Finance Agency within 10 days of any event or development that has caused or is likely to cause its permanent or total capital to fall below the level required to maintain its most recent capital classification or reclassification. In the event that an FHLBank is not adequately capitalized, the regulations delineate the types of prompt corrective actions that the Director may order, including submission of a capital restoration plan by the FHLBank and restrictions on its dividends, stock redemptions, executive compensation, new business activities, or any other actions the Director determines will ensure safe and sound operations and capital compliance by the FHLBank. On December 14, 2016, the Bank received notification from the Director that, based on September 30, 2016 data, the Bank meets the definition of “adequately capitalized.”

All of the FHLBanks entered into a Capital Agreement, which is intended to enhance the capital position of each FHLBank. Under the Capital Agreement, each FHLBank allocates 20 percent of its net income each quarter to a separate restricted retained earnings account until the account balance equals at least one percent of the FHLBank’s average balance of outstanding consolidated obligations for the previous quarter. Restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

Finance Agency regulations require the Bank to perform annual stress tests under various scenarios and publicly disclose a summary of the stress test results for the severely adverse scenario. The Bank filed the results of its stress test with the Finance Agency on August 31, 2016, and publicly disclosed a summary of the adverse scenario results on November 17, 2016.

Under the Bank's financial management policy, the Bank targets to maintain (1) a capital-to-assets ratio of 4.50 percent to 5.00 percent; (2) a retained earnings account balance equal to the restricted retained earnings account balance, plus extremely stressed scenario losses; and (3) additional retained earnings equal to two quarters of dividends, based on the current dividend rate and current stock balance. The Bank believes that daily excess stock repurchases and consistent dividends give members greater certainty of a return of their principal or the receipt of a dividend, which in turn may have a positive impact on members' appetite for advances. The Bank seeks to pay an amount of dividends each quarter that are consistent with an

31

attractive rate of return on capital to its member shareholders relative to an established benchmark, LIBOR, after providing for retained earnings as discussed above. Historically, the Bank's dividend rate has increased with increases in LIBOR, while the spread between the dividend rate and LIBOR may shrink. Conversely, the dividend rate may decrease during periods of lower LIBOR, while the spread may increase. The Bank's ability to maintain dividends consistent with its recent trend depends on LIBOR remaining relatively stable, the Bank's actual financial performance, its ability to maintain adequate retained earnings, other factors described in Item 1A, Risk Factors, and the discretion of the Bank's board of directors. Information about the Bank's dividends declared during 2016 and 2015 is contained in Item 5, Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

32

Results of Operations

The following is a discussion and analysis of the Bank's results of operations for the years ended December 31, 2016, 2015, and 2014.

Net Income

The following table presents the Bank’s significant income items for the years ended December 31, 2016, 2015, and 2014, and provides information regarding the changes during those years (dollars in millions). These items are discussed in more detail below.

										Increase (Decrease)
	For the Years Ended December 31,									2016 vs. 2015					2015 vs. 2014
	2016			2015			2014			Amount			Percent		Amount			Percent
Net interest income	$	334		$	243		$	323		$	91		37.87		$	(80	)	(24.90	)
Reversal of provision for credit losses	(1		)	(1		)	(5		)	—			11.16		4			82.17
Noninterest income	111			225			105			(114		)	(50.54	)	120			114.83
Noninterest expense	137			135			132			2			2.22		3			2.02
Total assessments	31			33			30			(2		)	(7.60	)	3			11.11
Net income	$	278		$	301		$	271		$	(23	)	(7.52	)	$	30		11.21

Net Interest Income

The primary source of the Bank’s earnings is net interest income. Net interest income equals interest earned on assets (including member advances, mortgage loans, MBS held in portfolio, and other investments), less the interest expense incurred on liabilities (including consolidated obligations, deposits, and other borrowings). Also included in net interest income are miscellaneous related items such as prepayment fees, the amortization of debt issuance discounts, and certain derivative instruments and hedging activities related adjustments. The Bank also recognizes significant improvements in expected cash flows related to other-than-temporary impairment securities through net interest income as an adjustment to the yield on the investment securities.

Net interest income includes components of hedging activity. When hedging relationships qualify for hedge accounting, the interest components of the hedging derivatives will be reflected in interest income or expense. When a hedging relationship is discontinued, the cumulative fair value adjustment on the hedged item will be amortized into interest income or expense over the remaining life of the asset or liability. The impact of hedging on net interest income was a decrease of $442 million, $616 million, and $608 million during the years ended December 31, 2016, 2015 and 2014, respectively.

The increase in net interest income during 2016, compared to 2015, was primarily due to decreased prepayments of previously restructured advances during 2016, compared to 2015. These prepayments resulted in $16 million and $181 million of accelerated amortization during 2016 and 2015, respectively, which reduced net interest income for those years. This accelerated amortization was offset by corresponding increases in net gains on derivatives and hedging activities, reflected in noninterest income. The remaining change in net interest income was due to an increase in short-term rates, which impacted consolidated obligation interest expense more than the offsetting increase in advance interest income. This was the result of the Federal Reserve raising interest rates in December 2015.

The decrease in net interest income during 2015, compared to 2014, was primarily due to increased prepayments of previously restructured advances during 2015, compared to 2014. These prepayments resulted in $181 million and $62 million of accelerated amortization during 2015 and 2014, respectively, which reduced net interest income for those years. The remaining change in net interest income was primarily related to increased advance rates, partially offset by increased interest expense and decreased investment securities earnings.

33

The following table presents key components of net interest income for the years presented (in millions):

	For the Years Ended December 31,
	2016		2015		2014
Interest income:
Advances	$	586	$	141	$	180
Investments	489		427		448
Mortgage loans	31		40		50
Total interest income	1,106		608		678
Interest expense:
Consolidated obligations	768		364		354
Interest-bearing deposits	4		—		—
Mandatorily redeemable capital stock	—		1		1
Total interest expense	772		365		355
Net interest income	$	334	$	243	$	323

The following table presents spreads between the average yield on total interest-earning assets and the average cost of interest-bearing liabilities for the years ended December 31, 2016, 2015, and 2014 (dollars in millions). The interest-rate spread is affected by the inclusion or exclusion of net interest income or expense associated with the Bank's derivatives. For example, as discussed above, if the derivatives qualify for fair-value hedge accounting under GAAP, the interest income or expense associated with the derivatives is included in net interest income and in the calculation of interest-rate spread. If the derivatives do not qualify for fair-value hedge accounting under GAAP, the interest income or expense associated with the derivatives is excluded from net interest income and from the calculation of interest-rate spread and is recorded in noninterest income (loss) as "Net gains on derivatives and hedging activities." Amortization associated with some hedging-related basis adjustments is also reflected in net interest income, which affects interest-rate spread. The Bank's interest-rate spread was 21 basis points, 17 basis points, and 24 basis points for 2016, 2015, and 2014, respectively. The increase in interest-rate spread from 2015 to 2016, and the decrease in interest-rate spread from 2014 to 2015, is primarily due to the larger accelerated amortization related to prepayments of previously restructured and redesignated advances during 2015, compared to the accelerated amortization in 2016 and 2014.

34

	For the Years Ended December 31,
	2016						2015						2014
	Average         Balance			Interest		Yield/     Rate (%)	Average         Balance			Interest		Yield/     Rate (%)	Average         Balance			Interest		Yield/     Rate (%)
Assets
Interest-bearing deposits (1)	$	2,718		$	17	0.64	$	2,437		$	5	0.20	$	2,685		$	4	0.15
Securities purchased under agreements to resell	992			4		0.38	2,522			3		0.13	1,715			1		0.08
Federal funds sold	8,501			36		0.42	7,990			11		0.14	8,213			8		0.10
Investment securities (2)	26,696			432		1.62	25,982			408		1.57	24,220			435		1.80
Advances	98,396			586		0.60	91,405			141		0.15	90,290			180		0.20
Mortgage loans (3)	520			31		5.96	664			40		5.95	836			50		5.92
Loans to other FHLBanks	4			—		0.40	7			—		0.14	3			—		0.07
Total interest-earning assets	137,827			1,106		0.80	131,007			608		0.46	127,962			678		0.53
Allowance for credit losses on mortgage loans	(2		)				(2		)				(5		)
Other assets	1,881						1,435						1,409
Total assets	$	139,706					$	132,440					$	129,366
Liabilities and Capital
Interest-bearing deposits (4)	$	1,190		4		0.31	$	1,253		—		0.03	$	1,435		—		0.01
Consolidated obligations, net:
Discount notes	58,744			249		0.42	42,328			59		0.14	29,900			29		0.10
Bonds	70,877			519		0.73	80,267			305		0.38	89,014			325		0.37
Other borrowings	9			—		4.80	19			1		4.01	25			1		3.69
Total interest-bearing liabilities	130,820			772		0.59	123,867			365		0.29	120,374			355		0.29
Other liabilities	2,067						2,076						2,412
Total capital	6,819						6,497						6,580
Total liabilities and capital	$	139,706					$	132,440					$	129,366
Net interest income and net yield on interest-earning assets				$	334	0.24				$	243	0.19				$	323	0.25
Interest rate spread						0.21						0.17						0.24
Average interest-earning assets to interest-bearing liabilities						105.36						105.77						106.30

___________ 

⁽¹⁾  Includes amounts recognized for the right to reclaim cash collateral paid under master netting agreements with derivative counterparties.

⁽²⁾  Includes trading securities at fair value and available-for-sale securities at amortized cost.

⁽³⁾  Nonperforming loans are included in average balances used to determine average rate.

⁽⁴⁾  Includes amounts recognized for the right to return cash collateral received under master netting agreements with derivative counterparties.

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Net interest income for the years presented was affected by changes in average balances (volume change) and changes in average rates (rate change) of interest-earning assets and interest-bearing liabilities. The following table presents the extent to which volume changes and rate changes affected the Bank’s interest income and interest expense (in millions). As presented in the table below, the overall changes in net interest income between 2016 and 2015 and between 2015 and 2014, were primarily rate related.

	2016 vs. 2015								2015 vs. 2014
	Volume (1)			Rate (1)		Increase (Decrease)			Volume (1)			Rate (1)			Increase (Decrease)
Increase (decrease) in interest income:
Interest-bearing deposits	$	1		$	11	$	12		$	—		$	1		$	1
Securities purchased under agreements to resell	(3		)	4		1			1			1			2
Federal funds sold	1			24		25			—			3			3
Investment securities	11			13		24			30			(57		)	(27		)
Advances	11			434		445			2			(41		)	(39		)
Mortgage loans	(9		)	—		(9		)	(10		)	—			(10		)
Total	12			486		498			23			(93		)	(70		)
Increase (decrease) in interest expense:
Interest-bearing deposits	—			4		4			—			—			—
Consolidated obligations, net:
Discount notes	31			159		190			14			16			30
Bonds	(40		)	254		214			(32		)	12			(20		)
Other borrowings	(1		)	—		(1		)	—			—			—
Total	(10		)	417		407			(18		)	28			10
Increase (decrease) in net interest income	$	22		$	69	$	91		$	41		$	(121	)	$	(80	)

____________ 

⁽¹⁾  Volume change is calculated as the change in volume multiplied by the previous rate, while rate change is calculated as the change in rate multiplied by the previous volume. The rate/volume change, calculated as the change in rate multiplied by the change in volume, is allocated between volume change and rate change at the ratio each component bears to the absolute value of its total.

Noninterest Income (Loss)

The following table presents the components of noninterest income (loss) (dollars in millions):

										Increase (Decrease)
	For the Years Ended December 31,									2016 vs. 2015					2015 vs. 2014
	2016			2015			2014			Amount			Percent		Amount			Percent
Net impairment losses recognized in earnings	$	(3	)	$	(5	)	$	(3	)	$	2		53.90		$	(2	)	(56.62	)
Net losses on trading securities	(30		)	(61		)	(60		)	31			50.87		(1		)	(0.43	)
Net gains on derivatives and hedging activities	119			261			120			(142		)	(54.40	)	141			117.87
Gain on extinguishment of debt	—			—			15			—			—		(15		)	(100.00	)
Standby letters of credit fees	28			28			26			—			(3.15	)	2			5.91
(Loss) gain on litigation settlements, net	(6		)	—			4			(6		)	(100.00	)	(4		)	(100.00	)
Other	3			2			3			1			89.90		(1		)	(39.83	)
Total noninterest income	$	111		$	225		$	105		$	(114	)	(50.54	)	$	120		114.83

The decrease in total noninterest income during 2016, compared to 2015, was primarily due to a $142 million decrease in net gains on derivatives and hedging activities, partially offset by a $31 million decrease in net losses on trading securities.

The increase in total noninterest income during 2015, compared to 2014, was primarily due to a $141 million increase in net gains on derivatives and hedging activities, partially offset by a $15 million decrease in gain on extinguishment of debt.

The decrease in net gains on derivatives and hedging activities in 2016, compared to 2015, and the increase in derivatives and hedging activities during 2015, compared to 2014, was primarily due to restructured and redesignated advances that were prepaid prior to their maturity during 2016, 2015, and 2014, which resulted in $16 million, $181 million, and $62 million of accelerated amortization, respectively. This accelerated amortization, previously discussed, reduced net interest income for the respective years and was offset by corresponding increases in gains on derivatives and hedging activities. The remaining changes in derivatives and hedging activities and trading securities were primarily related to changes in interest rates.

36

The following tables present the net effect of derivatives and hedging activity on the Bank’s results of operations (in millions):

	For the Year Ended December 31, 2016
	Advances			Investments			Consolidated Obligation Bonds			Consolidated Obligation Discount Notes			Balance Sheet			Total
Net interest income:
Amortization or accretion of hedging activities in net interest income (1)	$	(140	)	$	—		$	—		$	—		$	—		$	(140	)
Net interest settlements included in net interest income (2)	(529		)	—			230			(3		)	—			(302		)
Total effect on net interest (expense) income	$	(669	)	$	—		$	230		$	(3	)	$	—		$	(442	)
Net gains (losses) on derivatives and hedging activities:
Gains (losses) on fair value hedges	$	131		$	—		$	(8	)	$	(3	)	$	—		$	120
(Losses) gains on derivatives not receiving hedge accounting including net interest settlements	—			(2		)	2			—			(1		)	(1		)
Total net gains (losses) on derivatives and hedging activities	131			(2		)	(6		)	(3		)	(1		)	119
Net losses on trading securities (3)	—			(30		)	—			—			—			(30		)
Total effect on noninterest income (loss)	$	131		$	(32	)	$	(6	)	$	(3	)	$	(1	)	$	89

____________ 

⁽¹⁾ Represents the amortization or accretion of hedging fair value adjustments for both open and closed hedge positions.

⁽²⁾ Represents interest income or expense on derivatives included in net interest income.

⁽³⁾ Includes only those gains or losses on trading securities or financial instruments held at fair value that have an economic derivative “assigned;” therefore, this line item may not agree to the income statement.

	For the Year Ended December 31, 2015
	Advances			Investments			Consolidated Obligation Bonds			Consolidated Obligation Discount Notes		Balance Sheet			Total
Net interest income:
Amortization or accretion of hedging activities in net interest income (1)	$	(385	)	$	—		$	4		$	—	$	—		$	(381	)
Net interest settlements included in net interest income (2)	(713		)	—			469			9		—			(235		)
Total effect on net interest (expense) income	$	(1,098	)	$	—		$	473		$	9	$	—		$	(616	)
Net gains (losses) on derivatives and hedging activities:
Gains (losses) on fair value hedges	$	279		$	—		$	(12	)	$	2	$	—		$	269
(Losses) gains on derivatives not receiving hedge accounting including net interest settlements	—			(6		)	2			—		(4		)	(8		)
Total net gains (losses) on derivatives and hedging activities	279			(6		)	(10		)	2		(4		)	261
Net losses on trading securities (3)	—			(61		)	—			—		—			(61		)
Total effect on noninterest income (loss)	$	279		$	(67	)	$	(10	)	$	2	$	(4	)	$	200

____________ 

⁽¹⁾  Represents the amortization or accretion of hedging fair value adjustments for both open and closed hedge positions.

⁽²⁾  Represents interest income or expense on derivatives included in net interest income.

⁽³⁾  Includes only those gains or losses on trading securities or financial instruments held at fair value that have an economic derivative “assigned;” therefore, this line item may not agree to the income statement.

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	For the Year Ended December 31, 2014
	Advances			Investments			Consolidated Obligation Bonds		Balance Sheet			Total
Net interest income:
Amortization or accretion of hedging activities in net interest income (1)	$	(234	)	$	—		$	4	$	—		$	(230	)
Net interest settlements included in net interest income (2)	(875		)	—			497		—			(378		)
Total effect on net interest (expense) income	$	(1,109	)	$	—		$	501	$	—		$	(608	)
Net gains (losses) on derivatives and hedging activities:
Gains on fair value hedges	$	145		$	—		$	2	$	—		$	147
(Losses) gains on derivatives not receiving hedge accounting including net interest settlements	—			(9		)	1		(19		)	(27		)
Total net gains (losses) on derivatives and hedging activities	145			(9		)	3		(19		)	120
Net losses on trading securities (3)	—			(60		)	—		—			(60		)
Total effect on noninterest income (loss)	$	145		$	(69	)	$	3	$	(19	)	$	60

____________ 

⁽¹⁾  Represents the amortization or accretion of hedging fair value adjustments for both open and closed hedge positions.

⁽²⁾  Represents interest income or expense on derivatives included in net interest income.

⁽³⁾  Includes only those gains or losses on trading securities or financial instruments held at fair value that have an economic derivative “assigned;” therefore, this line item may not agree to the income statement.

Noninterest Expense and Assessments

	For the Years Ended December 31,						Increase (Decrease)
	2016		2015		2014		2016 vs. 2015			2015 vs. 2014
Noninterest expense:
Compensation and benefits	$	79	$	76	$	73	$	3		$	3
Cost of quarters	5		5		5		—			—
Other operating expenses	32		34		36		(2		)	(2		)
Total operating expenses	116		115		114		1			1
Finance Agency and Office of Finance	15		15		14		—			1
Other	6		5		4		1			1
Total noninterest expense	137		135		132		2			3
Affordable Housing Program assessments	31		33		30		(2		)	3
Total noninterest expense and assessments	$	168	$	168	$	162	$	—		$	6

Total noninterest expense remained relatively stable during 2016, 2015, and 2014.

"Other" includes $2 million of voluntary contributions to AHP in excess of regulatory requirements during 2016.

Liquidity and Capital Resources

Liquidity is necessary to satisfy members’ borrowing needs on a timely basis, repay maturing and called consolidated obligations, and meet other obligations and operating requirements. Many members rely on the Bank as a source of standby liquidity, so the Bank attempts to be in a position to meet member funding needs on a timely basis. The Bank complies with operational liquidity and contingent liquidity, as well as other regulatory requirements. The Bank also performs a separate and independent measure of liquidity, a 45-day liquidity measurement, to validate the level of liquidity reserves.

Finance Agency regulations require the Bank to maintain operational liquidity (generally, the ready cash and borrowing capacity available to meet the Bank's intraday needs) and contingent liquidity in an amount sufficient to meet its liquidity needs for five business days if it is unable to access the capital markets. The Bank met these regulatory liquidity requirements throughout 2016. The Finance Agency has also provided liquidity guidance to the FHLBanks generally to provide ranges of days for which each FHLBank should maintain positive cash balances based upon different assumptions and scenarios. The Bank has operated within these ranges since the Finance Agency issued this guidance.

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The Bank has established an internal liquidity measurement separate from the Finance Agency requirements described above. The Bank performs a supplemental analysis to confirm that liquidity reserves are sufficient to service debt obligations for at least 45 days. This analysis assumes no access to debt market issuance and other management assumptions, which are completely independent of the operational and contingent liquidity calculation measured above. The Bank met its 45 day internal liquidity goal throughout 2016.

The Bank’s principal source of liquidity is consolidated obligation debt instruments. To provide additional liquidity, the Bank also may use other short-term borrowings, such as federal funds purchased, securities sold under agreements to repurchase, and loans from other FHLBanks. The Bank’s income and liquidity would be adversely affected if it were not able to access the capital markets at competitive rates for an extended period. Historically, the FHLBanks have had excellent capital market access although pricing and investor appetite tend to favor short-term discount notes during times of market volatility.

The Bank is focused on maintaining a liquidity and funding balance between its financial assets and financial liabilities. The

FHLBanks work collectively to manage the system-wide liquidity and funding management and the FHLBanks jointly monitor

the combined refinancing risk. In managing and monitoring the amounts of assets that require refunding, the Bank considers

contractual maturities of its financial assets, as well as certain assumptions regarding expected cash flows (i.e. estimated

prepayments and scheduled amortizations). See the notes to the Bank’s 2016 audited financial statements for more information regarding contractual maturities of certain of the Bank’s financial assets and liabilities.

Contingency plans are in place that prioritize the allocation of liquidity resources in the event of operational disruptions at the Bank or the Office of Finance, as well as systemic Federal Reserve wire transfer system disruptions. Under the FHLBank Act, the Secretary of Treasury has the authority, at his discretion, to purchase consolidated obligations up to an aggregate amount of $4.0 billion. No borrowings under this authority have been outstanding since 1977.

Off-balance Sheet Commitments

The Bank’s primary off-balance sheet commitments are as follows:

• the Bank’s joint and several liability for all FHLBank consolidated obligations; and

• the Bank’s outstanding commitments arising from standby letters of credit.

Should an FHLBank be unable to satisfy its payment obligation under a consolidated obligation for which it is the primary obligor, any of the other FHLBanks, including the Bank, could be called upon to repay all or any part of such payment obligation, as determined or approved by the Finance Agency. As of December 31, 2016, none of the other FHLBanks defaulted on their consolidated obligations; the Finance Agency was not required to allocate any obligation among the FHLBanks; and no amount of the joint and several obligation was fixed. Accordingly, the Bank has not recognized a liability for its joint and several obligations related to other FHLBanks’ consolidated obligations as of December 31, 2016 and 2015. The FHLBanks had $989.3 billion in aggregate par value of consolidated obligations issued and outstanding, $130.0 billion of which was attributable to the Bank as of December 31, 2016. No FHLBank has ever defaulted on its principal or interest payments under any consolidated obligation, and the Bank has never been required to make payments under any consolidated obligation as a result of the failure of another FHLBank to meet its obligations.

The Bank generally requires standby letters of credit to contain language permitting the Bank, upon annual renewal dates and prior notice to the beneficiary, to choose not to renew the standby letter of credit, which effectively terminates the standby letter of credit prior to its scheduled final expiration date. The Bank may issue standby letters of credit for terms of longer than one year without annual renewals or that have no stated maturity and are subject to renewal on an annual basis, based on the creditworthiness of the member applicant and appropriate additional fees.

Commitments to extend credit, including standby letters of credit, are agreements to lend. The Bank issues a standby letter of credit on behalf of a member in exchange for a fee. A member may use these standby letters of credit to facilitate a financing arrangement. Based on management’s credit analyses and collateral requirements, the Bank does not deem it necessary to have an allowance for credit losses for these unfunded standby letters of credit as of December 31, 2016. Management regularly reviews its standby letter of credit pricing in light of several factors, including the Bank’s potential liquidity needs related to draws on its standby letters of credit.

Refer to Note 20—Commitments and Contingencies to the Bank's 2016 audited financial statements for more information about the Bank's outstanding standby letters of credit.

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Contractual Obligations

The following table presents the payment due dates or expiration terms of the Bank's long-term contractual obligations and commitments as of December 31, 2016 (in millions).

	One year or less		After one year through three years		After three years through five years		After five years		Total
Consolidated obligations bonds	$	65,378	$	18,914	$	2,599	$	1,725	$	88,616
Commitments to fund additional advances	100		200		—		—		300
Pension and post-retirement contributions	13		9		11		25		58
Commitments to purchase mortgage loans	12		—		—		—		12
Operating leases	1		1		—		1		3
Mandatorily redeemable capital stock	—		—		1		—		1
Total	$	65,504	$	19,124	$	2,611	$	1,751	$	88,990

Refer to the respective footnotes in Item 8, Financial Statements and Supplementary Data for more information on each of the contractual obligations and commitments listed in the above table.

Critical Accounting Policies and Estimates

The preparation of the Bank's financial statements in accordance with GAAP requires management to make a number of judgments and assumptions that affect the Bank's reported results and disclosures. Several of the Bank's accounting policies are inherently subject to valuation assumptions and other subjective assessments and are more critical than others to the Bank's results. The Bank has identified the following policies that, given the assumptions and judgment used, are critical to an understanding of the Bank's financial condition and results of operations:

• Fair Value Measurements;

• Other-than-temporary Impairment;

• Allowance for Credit Losses; and

• Derivatives and Hedging Activities.

Fair Value Measurements

The Bank carries certain assets and liabilities, including investments classified as trading and available-for-sale, and all derivatives on the balance sheet at fair value. Fair value is defined 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, representing an exit price.

Fair values play an important role in the valuation of certain assets, liabilities, and hedging transactions of the Bank. Fair values are based on quoted market prices or market-based prices, if such prices are available, even in situations in which trading volume may be low when compared with prior periods as has been the case during the current market environment. If quoted market prices or market-based prices are not available, the Bank determines fair values based on valuation models that use discounted cash flows, using market estimates of interest rates and volatility.

Valuation models and their underlying assumptions are based on the best estimates of the Bank's management with respect to:

• market indices (primarily LIBOR and the Overnight Index Swap curve);

• discount rates;

• prepayments;

• market volatility; and

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• other factors, including default and loss rates.

These assumptions, particularly estimates of market indices and discount rates, may have a significant effect on the reported fair values of assets and liabilities, including derivatives, and the income and expense related thereto. The use of different assumptions, as well as changes in market conditions, could result in a materially different net income and retained earnings. The assumptions used in the models are corroborated by and independently verified against market observable data where possible.

The Bank categorizes its financial instruments carried at fair value into a three-level classification in accordance with GAAP. The valuation hierarchy is based upon the transparency (observable or unobservable) of inputs to the valuation of an asset or liability as of the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Bank's market assumptions. The Bank utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

Refer to Note 19—Estimated Fair Values to the Bank's 2016 audited financial statements for further discussion regarding how the Bank measures financial assets and financial liabilities at fair value.

Other-than-temporary Impairment

The Bank evaluates its individual available-for-sale and held-to-maturity investment securities that are in unrealized loss positions for other-than-temporary impairment on a quarterly basis. The Bank recognizes an other-than-temporary impairment loss when the Bank determines that it will not recover the entire amortized cost basis of a security. Securities in the Bank's private-label MBS portfolio that are in an unrealized loss position are evaluated by estimating the projected cash flows using a model that incorporates projections and assumptions based on the structure of the security and certain economic environment assumptions, such as delinquency and default rates, loss severity, home price appreciation, interest rates, and securities prepayment speeds, while factoring in the underlying collateral and credit enhancement.

If the present value of the expected cash flows of a particular security is less than the security's amortized cost basis, the security is considered to be other-than-temporarily impaired. The amount of the other-than-temporary impairment is separated into the following two components: (1) the amount of the total impairment related to credit loss; and (2) the amount of the total impairment related to all other factors. The portion of the other-than-temporary impairment loss that is attributable to the credit loss (that is, the difference between the present value of the cash flows expected to be collected and the amortized cost basis) is recognized in "Noninterest income (loss)." The credit loss on a debt security is limited to the amount of that security's unrealized loss. If the Bank does not intend to sell the security, and it is not more likely than not that the Bank will be required to sell the debt security before the anticipated recovery of its remaining amortized cost basis, the portion of the impairment loss that is not attributable to the credit loss is recognized through other comprehensive income.

If the Bank determines that an other-than-temporary impairment exists, the Bank accounts for the investment security as if it had been purchased on the measurement date of the other-than-temporary impairment loss at an amortized cost basis equal to the previous amortized cost basis, less the other-than-temporary impairment recognized in income. For debt securities classified as held-to-maturity, the difference between the new amortized cost basis and the cash flows expected to be collected is accreted into interest income prospectively over the remaining life of the security.

In periods subsequent to an other-than-temporary impairment, if the present value of cash flows expected to be collected is greater than the amortized cost by a significant amount, an adjustment is made to the security's yield on a prospective basis. Therefore, the Bank recognizes significant improvements in expected cash flows through interest income.

Allowance for Credit Losses

The Bank is required to assess potential credit losses and establish an allowance for credit losses, if required, for each identified portfolio segment of financing receivables. A portfolio segment is the level at which the Bank develops and documents a systematic method for determining its allowance for credit losses. The Bank has established a reserve methodology for each of the following portfolio segments of financing receivables: advances and standby letters of credit, conventional residential mortgage loans, government-guaranteed or -insured residential mortgage loans, term federal funds sold, and term securities purchased under agreements to resell.

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The Bank considers the application of these standards to its advances, standby letters of credit, mortgage loans, federal fund portfolio, and securities purchased under agreements to resell a critical accounting policy because determining the appropriate amount of the allowance for credit losses requires the Bank to make a number of assumptions. The Bank's assumptions are based on information available as of the date of the financial statements. Actual results may differ from these estimates.

Advances and Standby Letters of Credit

Finance Agency regulations require the Bank to obtain eligible collateral from borrowers to protect against potential credit losses. Eligible collateral is defined by statute and regulation. The Bank monitors the financial condition of borrowers and regularly verifies the existence and characteristics of a risk-based sample of mortgage collateral pledged to secure advances. Each borrower's collateral requirements and the scope and frequency of its collateral verification reviews are dependent upon certain risk factors. Since its establishment in 1932, the Bank has never experienced a credit loss on an advance or standby letter of credit. Based on the collateral held as security, the Bank's collateral policies, credit analysis, and the repayment history on advances, the Bank did not anticipate any credit losses on advances as of December 31, 2016 and 2015. Accordingly, the Bank has not recorded any allowance for credit losses on advances, nor has the Bank recorded any liability to reflect an allowance for credit losses for off-balance sheet credit exposure. Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk for further discussion regarding the Bank's credit risk policies and practice.

Conventional Residential Mortgage Loans

A modified loan that is considered a troubled debt restructuring is individually evaluated for impairment when determining its related allowance for credit losses. This credit loss is measured by factoring in expected cash shortfalls (i.e., loss severity rate) incurred as of the reporting date, as well as the economic loss attributable to delaying the original contractual principal and interest due dates.

All other conventional residential mortgage loans are evaluated collectively for impairment. The allowance for these loans is determined by an analysis (performed at least quarterly) that includes segregating the portfolio into various aging groups. For loans that are 60 days or less past due, the Bank calculates a loss severity, default rate, and the expected loss based on individual loan characteristics. For loans that are more than 60 days past due, the allowance is determined using an automated valuation model.

Government-guaranteed or -Insured Residential Mortgage Loans

The Bank also invests in government-guaranteed or -insured fixed-rate mortgage loans secured by one-to-four family residential properties. Government-guaranteed or -insured mortgage loans are mortgage loans guaranteed or insured by the VA or the FHA. Any losses from such loans are expected to be recovered from those entities. Any losses from such loans that are not recovered from those entities are absorbed by the servicers. Therefore, the Bank does not record an allowance for credit losses on government-guaranteed or -insured mortgage loans.

Term Federal Funds Sold

Term federal funds sold are generally short-term, their recorded balance approximates fair value, and they are transacted with counterparties that the Bank considers to be of investment quality. If the Bank's investment in federal funds sold is not paid when due, it is evaluated for purposes of an allowance for credit losses. All investments in federal funds sold are unsecured and were repaid or expected to be repaid according to the contracted terms as of December 31, 2016 and 2015. The Bank determined that no allowance for credit losses was needed for federal funds sold as of December 31, 2016 and 2015.

Term Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell are considered collateralized financing arrangements and effectively represent short-term loans transacted with counterparties that the Bank considers to be of investment quality. The terms of these loans are structured such that if the fair value of the underlying securities decrease below the fair value required as collateral, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash. If an agreement to resell is deemed to be impaired, the difference between the fair value of the collateral and the amortized cost of the agreement is recognized in earnings. Based upon the collateral held as security, the Bank determined that no allowance for credit losses was needed for the securities purchased under agreements to resell as of December 31, 2016 and 2015.

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See Note 2—Summary of Significant Accounting Policies—Allowance for Credit Losses to the Bank's 2016 audited financial statements and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk for a further discussion of management's estimate of credit losses.

Derivatives and Hedging Activities

General

The Bank records all derivatives at fair value on the balance sheet with changes in fair value recognized in current-period earnings. The Bank designates derivatives as either fair-value hedging instruments or non-qualifying hedging instruments for which hedge accounting is not applied. The Bank has not entered into any cash-flow hedges as of December 31, 2016 and 2015. The Bank uses derivatives in its risk management program for the following purposes:

• conversion of a fixed rate to a variable rate;

• conversion of a variable rate with a fixed component to another variable rate; and

• macro hedging of balance sheet risks.

To qualify for hedge accounting, the Bank documents the following concurrently with the execution of each hedging relationship:

• the hedging strategy;

• identification of the hedging instrument and the hedged item;

• determination of the appropriate accounting designation;

• the method used for the determination of effectiveness for transactions qualifying for hedge accounting; and

• the method for recording ineffectiveness for hedging relationships.

The Bank also evaluates each debt issuance, advance made, and financial instrument purchased to determine whether the cash item contains embedded derivatives that meet the criteria for bifurcation. If, after evaluation, it is determined that an embedded derivative must be bifurcated, the Bank will measure the fair value of the embedded derivative.

Assessment of Hedge Effectiveness

An assessment must be made to determine the effectiveness of qualifying hedging relationships. To make such an assessment, the Bank either uses (1) the short-cut method; or (2) the long-haul method.

If the hedging instrument is a swap and meets specific criteria, the hedging relationship may qualify for the short-cut method of assessing effectiveness. The short-cut method allows for an assumption of no ineffectiveness, which means that the change in the fair value of the hedged item is assumed to be equal and offsetting to the change in fair value of the hedging instrument.For periods beginning after May 31, 2005, the Bank determined that it would no longer apply the short-cut method to new hedging relationships.

The long-haul method of effectiveness is used to assess effectiveness for hedging relationships that qualify for hedge accounting but do not meet the criteria for the use of the short-cut method. The long-haul method requires separate valuations of both the hedged item and the hedging instrument. If the hedging relationship is determined to be highly effective, the change in fair value of the hedged item related to the designated risk is recognized in current period earnings in the same period as the change in fair value of the hedging instrument. If the hedging relationship is determined not to be highly effective, hedge accounting will either not be allowed or cease at that point. The Bank performs effectiveness testing on a monthly basis and uses statistical regression analysis techniques to determine whether a long-haul hedging relationship is highly effective.

Accounting for Ineffectiveness and Hedge De-designation

The Bank accounts for any ineffectiveness for all long-haul fair-value hedges using the dollar offset method. In the case of non-qualifying hedges that do not qualify for hedge accounting, the Bank reports only the change in the fair value of the derivative.

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The Bank reports all ineffectiveness for qualifying hedges and non-qualifying hedges in the "Noninterest income (loss)" section of the Statements of Income within "Net gains on derivatives and hedging activities."

The Bank may discontinue hedge accounting for a hedging transaction (de-designation) if it fails effectiveness testing or for other asset-liability-management reasons. The Bank also treats modifications to hedged items as a discontinuance of a hedging relationship. When a hedging relationship is discontinued, the Bank will cease marking the hedged item to fair value and will amortize the cumulative basis adjustment resulting from hedge accounting. The Bank reports related amortization as interest income or expense over the remaining life of the associated hedged item. The associated derivative will continue to be marked to fair value through earnings until it matures or is terminated.

Recently Issued and Adopted Accounting Guidance

See Note 3—Recently Issued and Adopted Accounting Guidance to the Bank's 2016 audited financial statements for a discussion of recently issued and adopted accounting guidance.

Legislative and Regulatory Developments

The legislative and regulatory environment in which the Bank and its members operate continues to evolve as a result of regulations enacted pursuant to the Housing Act and the Dodd-Frank Act, and recent changes in the U.S. government administration. The Bank’s business operations, funding costs, rights, obligations, and/or the environment in which the Bank carries out its housing finance and community lending mission are likely to continue to be significantly impacted by these changes. Significant regulatory actions and developments for the period covered by this report are summarized below.

Minority and Women Inclusion. On October 27, 2016, the Finance Agency proposed amendments to its Minority and Women Inclusion regulations that, if adopted, would clarify the scope of the FHLBanks’ obligation to promote diversity and ensure inclusion. These proposed amendments update existing Finance Agency regulations aimed at promoting diversity and the inclusion and utilization of minorities, women, and individuals with disabilities in all Bank business and activities, including management, employment and contracting.

The proposed amendments would:

• require the FHLBanks to develop standalone diversity and inclusion strategic plans or incorporate diversity and inclusion into their existing strategic planning processes and adopt strategies for promoting diversity and ensuring inclusion;

• encourage the FHLBanks to expand contracting opportunities for minorities, women, and individuals with disabilities through subcontracting arrangements;

• require the FHLBanks to amend their policies on equal opportunity in employment and contracting by adding sexual orientation, gender identity, and status as a parent to the list of protected classifications; and

• require the FHLBanks to provide information in their annual reports to the Finance Agency about their efforts to advance diversity and inclusion through capital market transactions, affordable housing and community investment programs, initiatives to improve access to mortgage credit, and strategies for promoting the diversity of supervisors and managers.

The Bank submitted a joint comment letter with the other FHLBanks and the Office of Finance on the proposed amendments on December 27, 2016, which primarily related to the proposed amendment’s enhanced reporting and contract requirements. The proposed amendments, if adopted, may substantially increase the amount of tracking, monitoring, and reporting that would be required of each FHLBank.

European Union (“EU”) Market Abuse Regulation. The EU issued updated Market Abuse Regulations (“MAR”) that became effective July 3, 2016 and which contain rules on insider dealing, unlawful disclosure of inside information and market manipulation for debt and equity securities on European securities exchanges, which differ in certain respects from U.S. regulations. MAR applies to issuers with securities admitted to trading on EU exchanges, including EU exchanges on which FHLBank COs are listed. The Bank anticipates that the most significant impact of the MAR on the Bank will be more stringent and detailed recordkeeping, creation of detailed lists on parties who have access to inside information, and notification requirements.

Risk Management

The Bank’s lending, investment and funding activities, and use of derivative hedge instruments expose the Bank to a number of risks. A robust risk management framework aligns risk-taking activities with the Bank’s strategies and risk appetite. A risk

44

management framework also balances risks and rewards. The Bank’s risk management framework consists of risk governance, risk appetite, and risk management policies.

The Bank’s board of directors and management recognize that risks are inherent to the Bank’s business model and that the process of establishing a risk appetite does not imply that the Bank seeks to mitigate or eliminate all risk. By defining and managing to a specific risk appetite, the board of directors and management ensure that there is a common understanding of the Bank’s desired risk profile, which enhances strategic and tactical decisions. Additionally, the Bank aspires to (1) achieve and exceed best practices in governance, ethics, and compliance; and (2) sustain a corporate culture of transparency, integrity, and adherence to legal and ethical obligations.

The Bank's board of directors and management have established a risk appetite statement and risk metrics for controlling and escalating actions based on the following eight continuing objectives that represent the foundation of the Bank's strategic and tactical planning:

• Capital Adequacy - maintain adequate levels of capital components (retained earnings and capital stock) that protect against the risks inherent on the Bank's balance sheet and provide sufficient resiliency to withstand potential stressed losses.

• Market Risk/Earnings -maintain an adequate ROE spread to average three-month LIBOR, while providing attractive funding for advance products, consistent payment of dividends, reliable access to funding, and maintenance of retained earnings in excess of stressed retained earnings targets within a conservative risk management framework.

• Liquidity Risk - maintain sufficient liquidity and funding sources to allow the Bank to meet expected and unexpected obligations.

• Credit and Concentration Risk - avoid credit losses by managing credit and collateral risk exposures within acceptable parameters. Achieve this objective through data-driven analysis (and when appropriate, perform shareholder-specific analysis), monitoring, and verification. Monitor through enhanced reporting any elevated risk concentrations, and when appropriate, manage and mitigate the increased risk.

• Governance/Compliance/Legal- compliance with all applicable laws and regulations and manage other legal exposures.

• Mission/Business Model- (1) deliver financial services and consistent access to affordable funds that are the size and structure shareholders desire, helping them to manage risk and extend credit in their communities, while achieving the Bank's affordable housing mission goals; and (2) provide value through the consistent payment of dividends and the repurchasing of excess stock.

• Operational Risk -(1) manage the key risks associated with operational availability of critical systems, the integrity and security of the Bank's information, and the alignment of technology investment with key business objectives through enterprise-wide risk management practices and governance based on industry standards; (2) deliver an employee value proposition that allows the Bank to build, retain, engage, and develop staff to meet the evolving needs of the Bank's key stakeholders and effectively manage enterprise-wide risks; and (3) manage the key risks associated with cyber security threats.

• Reputation -recognize the importance of and promote positive awareness and perception of the Bank and its mission among key external stakeholders impacting the Bank's ability to achieve its mission.

The board and management recognize that risk and risk producing events are dynamic and constantly being presented. Accordingly, the Bank believes that reporting, analyzing, and mitigating risks are paramount to successful corporate governance.

The RMP also governs the Bank's approach to managing the above risks. The Bank's board of directors reviews the RMP annually and approves amendments to the RMP from time to time as necessary. To promote compliance with the RMP, the Bank has established internal management committees to provide oversight of these risks. The Bank produces a comprehensive risk assessment report on an annual basis that is reviewed by the board of directors. In addition to the established risk appetite and the RMP, the Bank is also subject to Finance Agency regulations and policies regarding risk management.

Below is a more specific discussion of how the Bank manages its market risk, liquidity risk, credit risk, operational risk, and business risk within this risk management and appetite framework.

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Market Risk

General

The Bank is exposed to market risk because changes in interest rates and spreads can have a direct effect on the value of the Bank's assets and liabilities. As a result of the volume of its interest-earning assets and interest-bearing liabilities, the interest-rate risk component of market risk has the greatest impact on the Bank's financial condition and results of operations.

Interest-rate risk represents the risk that the aggregate market value or estimated fair value of the Bank's asset, liability, and derivative portfolios will decline as a result of interest-rate volatility or that net earnings will be affected significantly by interest-rate changes. Interest-rate risk can occur in a variety of forms including repricing risk, yield-curve risk, basis risk, and option risk. The Bank faces repricing risk whenever an asset and a liability reprice at different times and with different rates, resulting in interest-margin sensitivity to changes in market interest rates. Yield-curve risk reflects the possibility that changes in the shape of the yield curve may affect the market value of the Bank's assets and liabilities differently because a liability used to fund an asset may be short-term, while the asset is long-term, or vice versa. Basis risk occurs when yields on assets and costs on liabilities are based on different bases, such as LIBOR, versus the Bank's cost of funds. Different bases can move at different rates or in different directions, which can cause erratic changes in revenues and expenses. Option risk is presented by the optionality that is embedded in some assets and liabilities. Mortgage assets represent the primary source of option risk.

The primary goal of the Bank's interest-rate risk measurement and management efforts is to control the above risks through prudent asset-liability management strategies so that the Bank may provide members with dividends that are consistently competitive with existing market interest rates on alternative short-term and variable-rate investments. The Bank attempts to manage interest-rate risk exposure by using appropriate funding instruments and hedging strategies. Hedging may occur at the micro level, for one or more specifically identified transactions, or at the macro level. Management evaluates the Bank's macro hedge position and funding strategies on a daily basis and makes adjustments as necessary.

The Bank measures its potential market risk exposure in a number of ways. These include asset, liability, and equity duration analyses; earnings forecast scenario analyses that reflect repricing gaps; and convexity characteristics under assumed changes in interest rates, the shape of the yield curve, and market basis relationships. The Bank establishes tolerance limits for these financial metrics and uses internal models to measure each of these risk exposures at least monthly.

Use of Derivatives

The Bank enters into derivatives to reduce the interest-rate risk exposure inherent in otherwise unhedged assets and funding positions and attempts to do so in the most cost-efficient manner. The Bank does not engage in speculative trading of these instruments. The Bank's derivative position includes interest-rate swaps, options, swaptions, interest-rate cap and floor agreements, and forward contracts. These derivatives are used to adjust the effective maturity, repricing frequency, or option characteristics of financial instruments to achieve risk-management objectives. Within its risk management strategy, the Bank uses derivative financial instruments in the following two ways:

• As a fair-value hedge of an underlying financial instrument or a firm commitment. For example, the Bank uses derivatives to reduce the interest-rate net sensitivity of consolidated obligations, advances, investments, and mortgage loans by, in effect, converting them to a short-term interest rate, usually based on LIBOR. The Bank also uses derivatives to manage embedded options in assets and liabilities and to hedge the market value of existing assets and liabilities. The Bank's management reevaluates its hedging strategies from time to time and may change the hedging techniques used or adopt new strategies as deemed prudent.

• As an asset-liability management tool, for which hedge accounting is not applied (non-qualifying hedge). The Bank may enter into derivatives that do not qualify for hedge accounting. As a result, the Bank recognizes the change in fair value and interest income or expense of these derivatives in the “Noninterest income (loss)” section of the Statements of Income as “Net gains on derivatives and hedging activities” with no offsetting fair-value adjustments of the hedged asset, liability, or firm commitment. Consequently, these transactions can introduce earnings volatility.

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The following table presents the notional amounts of derivative financial instruments (in millions). The category "Fair value hedges" represents hedge strategies for which hedge accounting is achieved. The category "Non-qualifying hedges" represents hedge strategies for which the derivatives are not in designated hedging relationships that formally meet the hedge accounting requirements under GAAP.

			As of December 31,
			2016		2015
Hedged Item / Hedging Instrument	Hedging Objective	Hedge Accounting Designation	Notional Amount		Notional Amount
Advances
Pay fixed, receive variable interest rate swap (without options)	Converts the advance’s fixed rate to a variable rate index.	Fair value hedges	$	4,761	$	5,928
		Non-qualifying hedges	—		1
Pay fixed, receive variable 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 hedges	23,654		22,733
		Non-qualifying hedges	40		40
Pay variable with embedded features, receive variable interest rate swap (non-callable)	Reduces interest rate sensitivity and repricing gaps by converting the advance’s variable rate to a different variable rate index and/or offsets embedded option risk in the advance.	Fair value hedges	227		378
Pay variable, receive variable basis swap	Reduces interest rate sensitivity and repricing gaps by converting the advance’s variable rate to a different variable rate index.	Non-qualifying hedges	10		20
		Total	28,692		29,100
Investments
Pay fixed, receive variable interest rate swap	Converts the investment’s fixed rate to a variable rate index.	Non-qualifying hedges	256		1,179
Pay variable, receive variable interest rate swap	Converts the investment’s variable rate to a different variable rate index.	Non-qualifying hedges	—		50
		Total	256		1,229
Consolidated Obligation Bonds
Receive fixed, pay variable interest rate swap (without options)	Converts the bond’s fixed rate to a variable rate index.	Fair value hedges	15,201		25,469
		Non-qualifying hedges	150		1,242
Receive fixed, pay variable interest rate swap (with options)	Converts the bond’s fixed rate to a variable rate index and offsets option risk in the bond.	Fair value hedges	5,144		10,366
		Total	20,495		37,077

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			As of December 31,
			2016		2015
Hedged Item / Hedging Instrument	Hedging Objective	Hedge Accounting Designation	Notional Amount		Notional Amount
Consolidated Obligation Discount Notes
Receive fixed, pay variable interest rate swap	Converts the discount note's fixed rate to a variable rate index.	Fair value hedges	16,040		15,416
Balance Sheet
Pay fixed, receive variable interest rate swap	Converts the asset or liability fixed rate to a variable rate index.	Non-qualifying hedges	105		105
Interest rate cap or floor	Protects against changes in income of certain assets due to changes in interest rates.	Non-qualifying hedges	15,000		16,500
		Total	15,105		16,605
Intermediary Positions and Other
Pay fixed, receive variable interest rate swap, and receive-fixed, pay variable interest rate swap	To offset interest rate swaps executed with members by executing interest rate swaps with derivatives counterparties.	Non-qualifying hedges	597		371
Stand-alone derivatives
Mortgage delivery commitment	Exposed to fair-value risk associated with fixed-rate mortgage purchase commitments	N/A	12		—
Total Notional Amount			$	81,197	$	99,798

Interest-rate Risk Exposure Measurement

The Bank measures interest-rate risk exposure by various methods. The primary methods used are (1) calculating the effective duration and convexity of assets, liabilities, and equity under various scenarios; and (2) calculating the theoretical market value of equity. Effective duration, normally expressed in years or months, measures the price sensitivity of the Bank's interest-bearing assets and liabilities to changes in interest rates. As effective duration lengthens, market-value changes become more sensitive to interest-rate changes. The Bank employs sophisticated modeling systems to measure effective duration.

Effective duration of equity aggregates the estimated sensitivity of market value for each of the Bank's financial assets and liabilities to changes in interest rates. Effective duration of equity is computed by taking the market value-weighted effective duration of assets, less the market value-weighted effective duration of liabilities, and dividing the remainder by the market value of equity. Market value of equity is not indicative of the market value of the Bank as a going concern or the value of the Bank in a liquidation scenario. An effective duration gap is the measure of the difference between the estimated effective durations of portfolio assets and liabilities and summarizes the extent to which the estimated cash flows for assets and liabilities are matched, on average, over time and across interest-rate scenarios.

A positive effective duration of equity or a positive effective duration gap results when the effective duration of assets is greater than the effective duration of liabilities. A negative effective duration of equity or a negative effective duration gap results when the effective duration of assets is less than the effective duration of liabilities. A positive effective duration of equity or a positive effective duration gap generally indicates that the Bank has some exposure to interest-rate risk in a rising rate environment, and a negative effective duration of equity or a negative effective duration gap generally indicates some exposure to interest-rate risk in a declining interest-rate environment. Higher effective duration numbers, whether positive or negative, indicate greater volatility of market value of equity in response to changing interest rates.

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Bank policy requires the Bank to maintain its effective duration of equity within a range of +5 years to -5 years, assuming current interest rates, and within a range of +7 years to -7 years, assuming an instantaneous parallel increase or decrease in market interest rates of 200 basis points.

The following table presents the Bank’s effective duration exposure measurements as calculated in accordance with Bank policy (in years).

	As of December 31,
	2016				2015
	Up 200 Basis Points	Current	Down 200 Basis  Points (1)		Up 200 Basis Points	Current		Down 200 Basis  Points (1)
Assets	0.36	0.25	0.19		0.42	0.30		0.23
Liabilities	0.20	0.22	0.22		0.24	0.31		0.26
Equity	3.55	0.82	(0.32	)	3.94	0.19		(0.25	)
Effective duration gap	0.16	0.03	(0.03	)	0.18	(0.01	)	(0.03	)

____________ 

⁽¹⁾ The “down 200 basis points” scenarios shown above are considered to be “constrained shocks,” intended to prevent the possibility of negative interest rates when a designated low rate environment exists.

The Bank uses both sophisticated computer models and an experienced professional staff to measure the amount of interest-rate risk in the balance sheet, thus allowing management to monitor the risk against policy and regulatory limits. Management regularly reviews the major assumptions and methodologies used in the Bank's models and will make adjustments to the Bank's assumptions and methodologies in response to rapid changes in economic conditions.

The prepayment risk in both advances and investment assets can significantly affect the Bank's effective duration of equity and effective duration gap. Current regulations require the Bank to mitigate advance prepayment risk by establishing prepayment fees that make the Bank financially indifferent to a borrower's decision to prepay an advance that carries a rate above current market rates unless the advance contains explicit par value prepayment options. The Bank's prepayment fees for advances without embedded options are generally based on the present value of the difference between the rate on the prepaid advance and the current rate on an advance with an identical maturity date. Prepayment fees for advances that contain embedded options are generally based on the inverse of the market value of the derivative instrument that the Bank used to hedge the advance.

The prepayment options embedded in mortgage loan and mortgage security assets may shorten or lengthen both the actual and expected cash flows when interest rates change. Current Finance Agency policies limit this source of interest-rate risk by limiting the types of MBS the Bank may own to those with defined estimated average life changes under specific interest-rate shock scenarios. These limits do not apply to mortgage loans purchased from members. The Bank typically hedges mortgage prepayment uncertainty by using callable debt as a funding source and by using interest-rate cap, floor, and swaption transactions. The Bank also uses derivatives to reduce effective duration and option risks for investment securities other than MBS. Effective duration and option risk exposures are measured on a regular basis for all investment assets under alternative rate scenarios.

The Bank also analyzes its interest-rate risk and market exposure by evaluating the theoretical market value of equity. The market value of equity represents the net result of the present value of future cash flows discounted to arrive at the theoretical market value of each balance sheet item. By using the discounted present value of future cash flows, the Bank is able to factor in the various maturities of assets and liabilities, similar to the effective duration analysis discussed above. The Bank determines the theoretical market value of assets and liabilities utilizing a Level 3 pricing approach as more fully described in Note 19—Estimated Fair Values to the Bank's 2016 audited financial statements. The difference between the market value of total assets and the market value of total liabilities is the market value of equity. A more volatile market value of equity under different shock scenarios tends to result in a higher effective duration of equity, indicating increased sensitivity to interest rate changes.

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The following table presents the Bank’s market value of equity measurements as calculated in accordance with Bank policy (in millions).

	As of December 31,
	2016						2015
	Up 200 Basis Points		Current		Down 200 Basis Points (1)		Up 200 Basis Points		Current		Down 200 Basis Points (1)
Assets	$	136,659	$	137,500	$	138,439	$	139,647	$	140,659	$	141,254
Liabilities	130,111		130,660		130,985		132,943		133,655		134,061
Equity	6,548		6,840		7,454		6,704		7,004		7,193

____________ 

⁽¹⁾ The “down 200 basis points” scenarios shown above are considered to be “constrained shocks,” intended to prevent the possibility of negative interest rates when a designated low rate environment exists.

Under the Bank's RMP, the Bank's market value of equity must not decline by more than 15 percent, assuming an immediate, parallel, and sustained interest-rate shock of 200 basis points in either direction.

If effective duration of equity or market value of equity is approaching the boundaries of the Bank's RMP ranges, management will initiate remedial action or review alternative strategies at the next meeting of the board of directors or appropriate committee thereof.

The Bank supplements its interest rate risk analysis by measuring convexity, or the rate of change of effective duration given changes in interest rates. Convexity represents the majority of the change in price not explained by effective duration.

Liquidity Risk

Liquidity risk is the risk that the Bank will be unable to meet its obligations as they come due or meet the credit needs of its members and borrowers in a timely and cost-efficient manner. The Bank's objective is to meet operational and member liquidity needs under all reasonable economic and operational situations. The Bank uses liquidity to absorb fluctuations in asset and liability balances and to provide an adequate reservoir of funding to support attractive and stable advance pricing. The Bank meets its liquidity needs from both asset and liability sources.

The Bank faces the following two basic types of liquidity risk: operational and contingent. The Bank maintains operational and contingent liquidity in compliance with regulatory requirements and performs a supplemental analysis to confirm that the Bank has sufficient liquidity reserves, as discussed in further detail in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources above.

Credit Risk

The Bank faces credit risk primarily with respect to its advances, investments, derivatives, and mortgage loan assets.

Advances

Secured advances to member financial institutions account for the largest category of Bank assets; thus, advances are a major source of the Bank’s credit risk exposure. The Bank uses a risk-focused approach to credit and collateral underwriting. The Bank attempts to reduce credit risk on advances by monitoring the financial condition of borrowers and the quality and value of the assets that borrowers pledge as eligible collateral.

The Bank utilizes a credit risk rating system for its members, which focuses primarily on an institution’s overall financial health and takes into account the quality of assets, earnings, and capital position. The Bank assigns each borrower that is an insured depository institution or an insurance company a credit risk rating from one to 10 according to the relative amount of credit risk that such borrower poses to the Bank (one being the least amount of credit risk and 10 the greatest amount of credit risk). In general, borrowers in category 10 may have more restrictions on the types of collateral they may use to secure advances, may be required to maintain higher collateral maintenance levels and deliver loan collateral, may be restricted from obtaining further advances, and may face more stringent collateral reporting requirements. At times, based upon the Bank's assessment of the borrower and its collateral, the Bank may place more restrictive requirements on a borrower than those generally applicable to borrowers with the same rating. The Bank assigns each borrower that is not an insured depository institution or insurance company, such as housing associates, CDFIs, and corporate credit unions, a risk level rating based on a risk matrix developed for each entity type. Each matrix has risk levels that generally correspond to the one to 10 credit risk

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rating for insured depository institutions and insurance companies. Development of these risk matrices for borrowers that are not insured depository institutions or insurance companies enables the Bank to monitor and analyze the financial condition of these borrowers in a more consistent and complete manner. The par value of advances to these institutions totaled $755 million as of December 31, 2016.

The following table presents the number of borrowers and the par value of advances outstanding to borrowers with the specified ratings as of the specified dates (dollars in millions).

	As of December 31,
	2016			2015
Rating	Number of         Borrowers	Outstanding         Advances		Number of         Borrowers	Outstanding         Advances
1	24	$	3,424	39	$	3,757
2	42	17,447		22	17,643
3	75	18,012		77	19,943
4	95	17,605		95	28,779
5	103	17,613		121	26,125
6	80	21,466		93	3,681
7	31	1,349		38	1,477
8	8	139		9	170
9	9	98		13	243
10	23	380		28	364

The Bank establishes a credit limit for each borrower. The credit limit is not a committed line of credit, but rather an indication of the borrower’s general borrowing capacity with the Bank. The Bank determines the credit limit in its sole and absolute discretion by evaluating a wide variety of factors that indicate the borrower’s overall creditworthiness. The credit limit is generally expressed as a percentage equal to the ratio of the borrower’s total liabilities to the Bank (including the face amount of outstanding standby letters of credit, the par value of outstanding advances, and the total exposure of the Bank to the borrower under any derivative contract) to the borrower’s total assets. Generally, borrowers are held to a credit limit of no more than 30 percent. However, the Bank’s board of directors, or a relevant committee thereof, may approve a higher limit at its discretion, and such borrowers may be subject to certain additional collateral reporting and maintenance requirements. Six borrowers have been approved for a credit limit higher than 30 percent, and their total outstanding advance and standby letters of credit balance was $23.9 billion as of December 31, 2016.

The Bank obtains collateral on advances to protect against losses, but Finance Agency regulations permit the Bank to accept only certain types of collateral. Each borrower must maintain an amount of qualifying collateral that, when discounted to the lendable collateral value (LCV), is equal to at least 100 percent of the borrower's outstanding par value of all advances and other liabilities from the Bank. The LCV is the value that the Bank assigns to each type of qualifying collateral for purposes of determining the amount of credit that such qualifying collateral will support. For each type of qualifying collateral, the Bank discounts the market value of the qualifying collateral to calculate the LCV. The Bank regularly reevaluates the appropriate level of discounting. For more information about the types of collateral held for the Bank’s advances refer to Note 9—Advances to the Bank’s 2016 audited financial statements. The following table presents information about the types of collateral held for the Bank's advances (dollars in millions).

	Total Par Value of Outstanding Advances		LCV of Collateral Pledged by Members		First Mortgage Collateral (%)	Securities Collateral (%)	Other Real Estate Related Collateral (%)
As of December 31, 2016	$	98,288	$	305,884	68.29	3.77	27.94
As of December 31, 2015	102,864		285,796		71.84	3.14	25.02

For purposes of determining each member's LCV, the Bank estimates the current market value of all residential first mortgage loans, commercial real estate loans, home equity loans, and lines of credit pledged as collateral based on information provided by the member on its loan portfolio or on individual loans through the regular collateral reporting process. The estimated market value is discounted to account for the (1) price volatility of loans, (2) model data uncertainty, and (3) estimated liquidation and servicing costs in the event of the member's default. Market values, and thus LCVs, change monthly. The use of this market-based valuation methodology allows the Bank to establish its collateral discounts with greater precision and to

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provide greater transparency with respect to the valuation of collateral pledged for advances and other credit products offered by the Bank.

The FHLBank Act affords any security interest granted to the Bank by any member of the Bank, or any affiliate of any such member, priority over the claims and rights of any party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor) other than the claims and rights of a party that (1) would be entitled to priority under otherwise applicable law; and (2) is an actual bona fide purchaser for value or is an actual secured party whose security interest is perfected in accordance with applicable state law.

In its history, the Bank has never experienced a credit loss on an advance. In consideration of this and the Bank’s policies and practices detailed above, the Bank has not established an allowance for credit losses on advances as of December 31, 2016 and 2015.

Investments

The Bank is subject to credit risk on unsecured investments, such as interest-bearing deposits and federal funds sold. These investments are generally transacted with government agencies and large financial institutions that are considered to be of investment quality. The Finance Agency defines investment quality as a security with adequate financial backing, 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.

In addition to Finance Agency regulations, the Bank follows guidelines approved by its board of directors regarding unsecured extensions of credit, with respect to term limits and eligible counterparties.

Finance Agency regulations prohibit the Bank from investing in any of the following securities:

• instruments, such as common stock, that represent an ownership interest in an entity, other than stock in small business investment companies, or certain investments targeted to low-income people or communities;

• instruments issued by non-United States entities, other than those issued by United States branches and agency offices of foreign commercial banks;

• debt instruments that are not of investment quality, other than certain investments targeted to low-income people or communities and instruments that the Bank determined became less than investment quality because of developments or events that occurred after purchase by the Bank;

• whole mortgages or other whole loans, other than the following: (1) those acquired under the Bank’s mortgage purchase programs; (2) certain investments targeted to low-income people or communities; (3) certain marketable direct obligations of state, local, or tribal government units or agencies that are of investment quality; (4) MBS or asset-backed securities that are backed by manufactured housing loans or home equity loans; and (5) certain foreign housing loans that are authorized under section 12(b) of the FHLBank Act;

• interest-only or principal-only stripped MBS, collateralized mortgage obligations (CMOs), collateralized debt obligations, and real estate mortgage investment conduits (REMICs);

• residual-interest or interest-accrual classes of CMOs and REMICs;

• fixed-rate or variable-rate MBS, CMOs, and REMICs that are at rates equal to their contractual cap on the trade date and that have average lives that vary by more than six years under an assumed instantaneous interest-rate change of 300 basis points; and

• non-U.S. dollar denominated securities.

Finance Agency regulations do not permit the Bank to rely exclusively on nationally recognized statistical rating organization (NRSRO) ratings with respect to its investments. The Bank is required to make a determination of whether a security is of investment quality based on its own documented analysis, which includes the NRSRO rating as one of the factors that is assessed to determine investment quality. The Bank monitors the financial condition of investment counterparties to ensure that they are in compliance with the Bank's Risk Management Policy (RMP) and Finance Agency regulations. Unsecured credit exposure to any counterparty is limited by the credit quality and capital of the counterparty and by the capital of the Bank. On a regular basis, management produces financial monitoring reports detailing the financial condition of the Bank’s

52

counterparties. These reports are reviewed by the Bank’s board of directors. In addition to the Bank's RMP and regulatory requirements, the Bank may limit or suspend overnight and term trading. Limiting or suspending counterparties limits the pool of available counterparties, shifts the geographical distribution of counterparty exposure, and may reduce the Bank’s overall investment opportunities.

The Bank only enters into investments with U.S. counterparties or U.S. branch offices of foreign banks that have been approved by the Bank through its internal approval process, but the Bank may still have exposure to foreign entities if a counterparty’s parent entity is located in another country. The following tables present the Bank’s gross exposure, by instrument type, according to the location of the parent company of the counterparty (in millions).

	As of December 31, 2016
	Federal Funds Sold		Interest-bearing   Deposits		Net Derivative Exposure (1)		Total
Australia	$	1,855	$	—	$	—	$	1,855
Canada	350		—		—		350
France	1,250		—		—		1,250
Germany	1,185		—		—		1,185
Netherlands	1,165		—		—		1,165
Norway	1,125		—		—		1,125
Switzerland	—		—		22		22
United States of America	840		1,106		—		1,946
Total	$	7,770	$	1,106	$	22	$	8,898

____________ 

⁽¹⁾ Amounts do not reflect collateral; see the table under Risk Management–Credit Risk–Derivatives below for a breakdown of the credit ratings of and the Bank’s credit exposure to derivative counterparties, including net exposure after collateral.

	As of December 31, 2015
	Federal Funds Sold		Interest-bearing   Deposits		Net Derivative Exposure (1)		Total
Australia	$	1,000	$	—	$	—	$	1,000
Canada	901		—		—		901
Germany	1,125		—		12		1,137
Netherlands	1,140		—		—		1,140
Switzerland	—		—		12		12
United States of America	1,255		1,088		—		2,343
Total	$	5,421	$	1,088	$	24	$	6,533

____________ 

⁽¹⁾ Amounts do not reflect collateral; see the table under Risk Management–Credit Risk–Derivatives below for a breakdown of the credit ratings of and the Bank’s credit exposure to derivative counterparties, including net exposure after collateral.

The Bank experienced an increase in unsecured credit exposure in its investment portfolio related to non-U.S. government and non-U.S. government agency counterparties from $6.5 billion as of December 31, 2015 to $8.9 billion as of December 31, 2016. The following five counterparties each represented greater than 10 percent and collectively represented 65.4 percent of the total unsecured credit exposure to non-U.S. government or non-U.S. government agencies counterparties: Australia & New Zealand Banking Group, Branch Banking and Trust Company, Cooperatieve Rabobank UA, DnB Bank ASA, and Societe Generale. Branch Banking and Trust was one of the Bank's top 10 advances borrowers as of December 31, 2016 and 2015. As of December 31, 2016, this unsecured credit portfolio consisted primarily of federal funds sold with overnight maturities.

The Bank’s RMP permits the Bank to invest in U.S. agency (i.e., Fannie Mae, Freddie Mac and Ginnie Mae) obligations including the following: (1) CMOs and REMICS that are backed by such securities; and (2) other MBS, CMOs, and REMICS that are of sufficient investment quality, which are typically rated AAA by S&P or Aaa by Moody’s at the time of purchase. The private-label MBS purchased by the Bank originally attained their triple-A ratings through credit enhancements, which primarily consisted of the subordination of the claims of the other tranches of these securities. In addition to NRSRO ratings, the Bank considers a variety of credit quality factors when analyzing potential investments, such as collateral performance, marketability, asset class considerations, local and regional economic conditions, and the financial health of the underlying issuer.

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The following tables present information on the credit ratings of the Bank’s investments held as of December 31, 2016 and 2015 (in millions), based on their credit rating as of December 31, 2016 and 2015, respectively. The credit ratings reflect the lowest long-term credit ratings as reported by an NRSRO.

	As of December 31, 2016
	Carrying Value (1)
	Investment Grade								Below Investment Grade
	AAA		AA		A		BBB		BB		B		CCC		CC		C		D		Unrated		Total
Investment securities:
State or local housing agency debt obligations	$	—	$	77	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	77
Government-sponsored enterprises debt obligations	—		6,302		—		—		—		—		—		—		—		—		—		6,302
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	—		209		—		—		—		—		—		—		—		—		—		209
Government-sponsored enterprises residential	—		10,752		—				—		—		—		—		—		—		—		10,752
Government-sponsored enterprises commercial	463		6,310		—		—		—		—		—		—		—		—		—		6,773
Private-label	—		3		20		255		398		172		621		8		91		556		11		2,135
Total mortgage-backed securities	463		17,274		20		255		398		172		621		8		91		556		11		19,869
Total investment securities	463		23,653		20		255		398		172		621		8		91		556		11		26,248
Other investments:
Interest-bearing deposits	—		5		1,056		45		—		—		—		—		—		—		—		1,106
Securities purchased under agreements to resell	—		886		500		—		—		—		—		—		—		—		—		1,386
Federal funds sold	—		1,855		5,165		750		—		—		—		—		—		—		—		7,770
Total other investments	—		2,746		6,721		795		—		—		—		—		—		—		—		10,262
Total investments	$	463	$	26,399	$	6,741	$	1,050	$	398	$	172	$	621	$	8	$	91	$	556	$	11	$	36,510

____________

⁽¹⁾ Investment amounts noted in the above table represent the carrying value and do not include related accrued interest receivable of $35 million as of December 31, 2016.

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	As of December 31, 2015
	Carrying Value (1)
	Investment Grade								Below Investment Grade
	AAA		AA		A		BBB		BB		B		CCC		CC		C		D		Unrated		Total
Investment securities:
State or local housing agency debt obligations	$	—	$	77	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	77
Government-sponsored enterprises debt obligations	—		6,957		—		—		—		—		—		—		—		—		—		6,957
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	—		279		—		—		—		—		—		—		—		—		—		279
Government-sponsored enterprises residential	—		11,958		—		—		—		—		—		—		—		—		—		11,958
Government-sponsored enterprises commercial	464		3,676		—		—		—		—		—		—		—		—		—		4,140
Private-label residential	—		7		25		325		421		368		616		151		101		729		12		2,755
Total mortgage-backed securities	464		15,920		25		325		421		368		616		151		101		729		12		19,132
Total investment securities	464		22,954		25		325		421		368		616		151		101		729		12		26,166
Other investments:
Interest-bearing deposits	—		3		1,050		35		—		—		—		—		—		—		—		1,088
Securities purchased under agreements to resell	—		2,500		—		—		—		—		—		—		—		—		—		2,500
Federal funds sold	—		1,401		3,200		820		—		—		—		—		—		—		—		5,421
Total other investments	—		3,904		4,250		855		—		—		—		—		—		—		—		9,009
Total investments	$	464	$	26,858	$	4,275	$	1,180	$	421	$	368	$	616	$	151	$	101	$	729	$	12	$	35,175

____________

⁽¹⁾  Investment amounts noted in the above table represent the carrying value and do not include related accrued interest receivable of $40 million as of December 31, 2015.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell are considered collateralized financing arrangements and effectively represent short-term loans transacted with counterparties that the Bank considers to be of investment quality. The terms of these loans are structured such that if the fair value of the underlying securities decreases below the fair value required as collateral, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash. If an agreement to resell is deemed to be impaired, the difference between the fair value of the collateral and the amortized cost of the agreement is recognized in earnings. Based upon the collateral held as security, the Bank determined that no allowance for credit losses was needed for the securities purchased under agreements to resell as of December 31, 2016 and 2015.

Non-Private-label MBS

The unrealized losses related to U.S. agency and GSE MBS are caused by interest rate changes. Because these securities are guaranteed by government agencies or GSEs, it is expected that these securities would not be settled at a price less than the amortized cost basis. The Bank does not consider these investments to be other-than-temporarily impaired as of December 31, 2016 because the decline in fair value is attributable to changes in interest rates and not credit quality, the Bank does not intend to sell the investments, and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity.

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Private-label MBS

For disclosure purposes, the Bank classifies private-label MBS as either prime or Alt-A based upon the overall credit quality of the underlying loans as determined by the originator at the time of origination, unless otherwise noted. Although there is no universally accepted definition of Alt-A, generally, loans with credit characteristics that range between prime and subprime are classified as Alt-A. Participants in the mortgage market have used the Alt-A classification principally to describe loans for which the underwriting process has been streamlined in order to reduce the documentation requirements of the borrower or allow for alternative documentation.

The following table presents information, based on investment ratings, on the Bank’s private-label MBS as of December 31, 2016 (dollars in millions).

	Prime			Alt-A			Total
Investment Ratings:
AA	$	3		$	—		$	3
A	20			—			20
BBB	245			10			255
BB	382			17			399
B	127			46			173
CCC	622			104			726
CC	9			—			9
C	99			—			99
D	548			102			650
Unrated	11			—			11
Total unpaid principal balance	$	2,066		$	279		$	2,345
Amortized cost	$	1,784		$	227		$	2,011
Gross unrealized losses	$	(6	)	$	(5	)	$	(11	)
Fair value	$	1,906		$	229		$	2,135
Other-than-temporary impairment (Year-to-date):
Total other-than-temporary impairment losses	$	(2	)	$	—		$	(2	)
Net amount of impairment losses reclassified from accumulated other comprehensive income	(1		)	—			(1		)
Net impairment losses recognized in earnings	$	(3	)	$	—		$	(3	)
Weighted average percentage of fair value to unpaid principal balance	92.27		%	82.10		%	91.06		%
Original weighted average credit support	9.10		%	23.28		%	10.79		%
Weighted average credit support	5.36		%	12.06		%	6.15		%
Weighted average collateral delinquency	10.89		%	17.78		%	11.71		%

The following table presents a summary of the significant inputs used to evaluate each of the Bank’s private-label MBS for other-than-temporary impairment as of December 31, 2016.

	Significant Inputs - Weighted Average (%)
Classification of Securities (1)	Prepayment Rate	Default Rates	Loss Severities	Current Credit Enhancement (%)
Prime	13.80	5.65	24.86	7.91
Alt-A	11.75	18.85	35.23	4.10
Total	12.85	11.74	29.65	6.15

____________

⁽¹⁾ The classification of securities is based on current characteristics and performance, which may be different from the securities’ classification as determined

by the originator at the time of origination.

For those securities for which an other-than-temporary impairment was determined to have occurred during 2016, a summary of the significant inputs used to measure the amount of the credit loss recognized in earnings is contained in Note 8—Other-than-temporary Impairment to the Bank’s 2016 audited financial statements.

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In addition to the cash flow analysis of the Bank’s private-label MBS under a base case (best estimate) housing price scenario as described in Note 8—Other-than-temporary Impairment to the Bank’s 2016 audited financial statements, a cash flow analysis was also performed based on a housing price scenario that is more adverse than the base case (adverse case housing price scenario). This more stressful scenario was primarily based on a short-term housing price forecast, which was five percentage points lower than the base case, followed by a path with annual rates of housing price growth that were 33.0 percent lower than the base case. The base case and adverse case housing price scenarios for credit losses on all other-than temporary impaired private-label MBS were $1 million, respectively, for the three months ended December 31, 2016.

The adverse case housing price scenario and associated results do not represent the Bank’s current expectations and therefore, should not be construed as a prediction of the Bank’s future results, market conditions, or the actual performance of these securities. Rather, the results from this hypothetical adverse case housing price scenario provide a measure of the credit losses that the Bank might incur if home price declines (and subsequent recoveries) are more adverse than those projected in the Bank’s base case assessment.

The Bank continues to actively monitor the credit quality of its private-label MBS investments. It is not possible to predict the magnitude of additional other-than-temporary impairment losses in future periods because that prediction depends on the actual performance of the underlying loan collateral, as well as the Bank’s future modeling assumptions. Many factors could influence the Bank’s future modeling assumptions, including economic, financial market, and housing market conditions. If performance of the underlying loan collateral deteriorates and/or the Bank’s modeling assumptions become more pessimistic, the Bank could experience further losses on its investment portfolio.

Derivatives

The Bank is subject to credit risk due to the risk of nonperformance by counterparties to its derivative transactions. The amount of credit risk on derivatives depends on the extent to which netting procedures, collateral requirements, and other credit enhancements are used and are effective in mitigating the risk. The Bank manages credit risk through credit analysis, collateral management, and other credit enhancements. The Bank is also required to follow the requirements set forth by applicable regulations.

The Bank's over-the-counter derivative transactions may either be (1) uncleared derivatives, which are executed bilaterally with a counterparty; or (2) cleared derivatives, which are cleared through a Futures Commission Merchant (clearing agent) with a Derivative Clearing Organization (Clearinghouse). 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 as the counterparty.

For uncleared derivatives, the Bank is subject to nonperformance by counterparties. The Bank generally requires collateral on uncleared derivative transactions. The amount of net unsecured credit exposure that is permissible with respect to each counterparty depends on the credit rating of that counterparty. A counterparty must deliver collateral to the Bank if the total market value of the Bank's exposure to that counterparty rises above a specific trigger point. As a result of these risk mitigation initiatives, the Bank does not anticipate any credit losses on its uncleared derivatives as of December 31, 2016.

For cleared derivatives, the Bank is subject to credit risk due to nonperformance by the Clearinghouse and clearing agent. The requirement that the Bank post initial and variation margin through the clearing agent, to the Clearinghouse, exposes the Bank to institutional credit risk in the event that the clearing agent or the Clearinghouse fails to meet its obligations. The use of cleared derivatives mitigates credit risk exposure because a central counterparty is substituted for individual counterparties, and collateral is posted daily for changes in the value of cleared derivatives through a clearing agent. This does introduce, however, a risk of concentration among the limited number of Clearinghouses and clearing agents. The Bank actively monitors Clearinghouses and clearing agents. An annual review of the Bank’s Clearinghouses is performed, and the Bank also monitors its exposure to Clearinghouses on a monthly basis. The Bank currently has the following two approved Clearinghouses: CME Group, Inc. and LCH.Clearnet Limited. The Bank also monitors the clearing agents through its unsecured credit system, and the Bank subjects these clearing agents to the same limits as other bilateral derivative counterparties. The parent companies of the clearing agents are monitored through annual reviews, as well as through the Bank’s daily monitoring tools, which include reviewing equity triggers, debt triggers, and credit default swap spread triggers. In addition, exposures to the clearing agents are monitored daily on a swap counterparty report. The Bank currently has the following three approved clearing agents: Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, and Goldman Sachs & Co. The Bank does not anticipate any credit losses on its cleared derivatives as of December 31, 2016.

The contractual or notional amount of derivative transactions reflects the involvement of the Bank in the various classes of financial instruments; however, the Bank's maximum credit risk with respect to derivative transactions is the estimated cost of

57

replacing the derivative transactions if there is default, less the value of any related collateral, including initial and variation margin. In determining the maximum credit risk, the Bank considers accrued interest receivables and payables, as well as the netting requirements to net assets and liabilities.

The following tables present information on the credit ratings of, and the Bank’s credit exposure to, its derivative counterparties (in millions). The credit ratings reflect the lowest long-term credit rating by an NRSRO.

	As of December 31, 2016
	Notional Amount		Derivatives Fair Value Before Collateral			Cash Collateral Pledged To (From) Counterparty			Net Credit Exposure to Counterparties
Non-member counterparties:
Asset positions with credit exposure:
Double-A	$	12	$	—		$	—		$	—
Cleared derivatives	944		22			(13		)	9
Liability positions with credit exposure:
Single-A	125		—			—			—
Cleared derivatives	49,771		(512		)	858			346
Total derivative positions with non-member counterparties to which the Bank had credit exposure	50,852		(490		)	845			355
Member institutions (1)	3		—			—			—
Total	$	50,855	$	(490	)	$	845		$	355

____________

⁽¹⁾ Collateral held with respect to derivatives with member institutions when the Bank is acting as an intermediary represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

	As of December 31, 2015
	Notional Amount		Derivatives Fair Value Before Collateral			Cash Collateral Pledged To (From) Counterparty			Other Collateral Pledged To (From) Counterparty			Net Credit Exposure to Counterparties
Non-member counterparties:
Asset positions with credit exposure:
Triple-B	$	9,862	$	12		$	(12	)	$	—		$	—
Cleared derivatives	684		12			(8		)	—			4
Liability positions with credit exposure:
Cleared derivatives	48,469		(327		)	497			—			170
Total derivative positions with non-member counterparties to which the Bank had credit exposure	59,015		(303		)	477			—			174
Member institutions (1)	185		2			—			(2		)	—
Total	$	59,200	$	(301	)	$	477		$	(2	)	$	174

____________

⁽¹⁾ Collateral held with respect to derivatives with member institutions when the Bank is acting as an intermediary represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

Certain of the Bank's uncleared derivative instruments contain provisions that require the Bank to post additional collateral with its counterparties if there is a deterioration in the Bank's credit rating. If the Bank’s credit rating had been lowered from its current rating to the next lower rating that would have triggered additional collateral to be delivered, the Bank would have been required to deliver up to an additional $71 million of collateral (at fair value) to its uncleared derivative counterparties as of December 31, 2016.

If the counterparty has an NRSRO rating, the net exposure after collateral is treated as unsecured credit, consistent with the Bank's RMP and Finance Agency regulations. If the counterparty does not have an NRSRO rating, the Bank requires collateral for the full amount of the exposure.

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Mortgage Loan Programs

The Bank seeks to manage the credit risk associated with the MPP and the MPF Program by maintaining underwriting and eligibility standards and structuring possible losses into several layers to be shared with the PFIs. In some cases, a portion of the credit support for MPP and MPF loans is provided under a primary and/or supplemental mortgage insurance policy. Currently, 10 mortgage insurance companies provide primary and/or supplemental mortgage insurance for mortgage loans in which the Bank has a retained interest. As of December 31, 2016, seven of the Bank’s 10 mortgage insurance providers have been rated below "AA" by one or more NRSROs for their claims paying ability or insurer financial strength, and three are no longer rated. Ratings downgrades imply an increased risk that these mortgage insurers may be unable to fulfill their obligations to pay claims that may be made under the insurance policies. The Bank holds additional risk-based capital to mitigate the incremental risk, if any, that results from the supplemental mortgage insurance providers.

MPF Program

Mortgage loans purchased under the MPF Program must comply with the underwriting and eligibility standards established and maintained by FHLBank Chicago. In some circumstances, the Bank, with the concurrence of FHLBank Chicago, may grant a PFI a waiver exempting it from complying with these standards. The Bank has granted a limited number of such waivers related to documentation requirements or accepted alternate underwriting criteria in circumstances in which such waivers would not materially affect the value of the asset.

The Bank manages MPF Program credit risk through underwriting and eligibility guidelines and sharing of potential losses with the PFIs. The Bank and PFIs share the risk of losses on MPF loans by structuring potential losses on conventional MPF loans into layers with respect to each master commitment. The general allocation of losses under the MPF Program is divided into the following loss layers:

Borrower's Equity. The first layer of protection against loss is the borrower's equity in the real property securing the MPF loan.

Primary Mortgage Insurance. The second layer of protection comes from primary mortgage insurance (PMI) that is required for any MPF loan with a loan-to-value ratio (LTV) ratio greater than 80 percent at the time of origination.

First Loss Account. Third, losses for each master commitment that are not paid by PMI, up to an agreed-upon amount, are incurred by the Bank up to a pre-specified amount that is tracked in what is called a “First Loss Account,” or “FLA”. The FLA represents the amount of expected losses that the Bank incurs before the PFI's credit enhancement becomes available to cover losses. For MPF products with performance based credit enhancement fees (e.g., MPF Plus), the Bank may withhold credit enhancement fees to recover losses at the FLA level, essentially transferring a portion of the first layer risk of credit loss to the PFI.

Member Credit Enhancement. Fourth, for loans purchased under each master commitment, losses in excess of the FLA, up to an agreed-upon amount, called the credit enhancement or “CE Amount,” are incurred by the PFI. For MPF Plus, this CE amount includes supplemental mortgage insurance (SMI). The member's CE Amount is sized using the MPF Program methodology to limit the amount of the Bank's losses in excess of, or including, the FLA (depending on the MPF product) to those that would be expected to be experienced by an investor in an MBS that is rated AA under the S&P LEVELS ratings methodology (although the assets are not rated by S&P or any other agency). Pursuant to the Finance Agency's amended regulation on acquired member assets (AMA), effective January 18, 2017, the MPF Program methodology was adjusted to set the PFI’s CE Amount consistent with the Bank’s determination of AMA investment grade. The CE Amount is determined at inception of each loan pool master commitment and is reassessed and increased, if necessary, after the “fill up period” for each master commitment that has been completed, but it is not increased thereafter. In one MPF product, the PFI is required to obtain and pay for SMI, for which the Bank is the insured party. The Bank pays the PFI a monthly credit enhancement fee for managing credit risk on the MPF Program loans. In most cases, the credit enhancement fees are performance based, which further motivates the PFI to minimize loan losses on MPF Program loans.

MPF Bank. Fifth, the Bank absorbs any remaining unallocated losses.

The unpaid principal balance of MPFProgram mortgage loans was $399 million and $516 million as of December 31, 2016 and 2015, respectively. The allowance for credit losses on MPF loans was $1 million and $2 million as of December 31, 2016 and 2015, respectively. The decrease in the allowance for credit losses was related to the improvement of the credit quality of the portfolio.

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MPP

Mortgage loans purchased under the MPP must comply with the underwriting and eligibility standards set forth in applicable MPP guidelines. In some circumstances, the Bank may grant a PFI a waiver exempting it from complying with specified provisions of the MPP guidelines.

The Bank manages MPP credit risk by sharing potential losses with the PFI. The general allocation of losses under the MPP is divided into the following loss layers:

Borrower's Equity and Primary Mortgage Insurance. The first layer of protection against loss is the borrower's equity in the real property securing the MPP loan and PMI where applicable.

Lender Risk Account. Second, the Bank establishes a Lender Risk Account (LRA) for each master commitment to cover losses that are not paid by PMI or borrower's equity. The Bank can establish the amount of the LRA balance either up front as a portion of the purchase proceeds (Fixed LRA) or as a portion of the monthly interest paid by the borrower (Spread LRA).

The PFI's recourse is limited to this predetermined LRA amount so that the PFI has no further obligation to make additional contributions to the LRA, regardless of any losses or deterioration of the mortgage pool exceeding such amount in the LRA. Once the LRA has reached the required amount, but not before five years for the Fixed LRA, the Bank will pay the PFI any unused amounts of the LRA that are no longer required to cover expected losses on an annual basis in accordance with a step-down schedule that is established at the time of a master commitment.

Supplemental Mortgage Insurance. Third, losses for each master commitment in excess of the LRA, up to a specified LTV ratio, are covered by SMI obtained by the PFI. In the MPP, SMI generally covers mortgages with an LTV ratio of 45 percent or greater. In addition, SMI policies for master commitments in excess of $35 million contain an aggregate loss limit whereby the total amount payable by the SMI insurer under the policy is less than the total unpaid principal balances of the insured loans. MPP master commitments entered into in 2016 do not have SMI policies.

The Bank has established formal policies and procedures to monitor its exposure to mortgage insurance companies, including a cap on the aggregate amount of permissible exposure to SMI at each provider.

The Bank. Fourth, the Bank absorbs any remaining unallocated losses.

Total credit enhancement is sized to provide the equivalent of at least a BBB rating under the S&P LEVELS rating methodology (although the assets are not rated by S&P or any other agency).

The unpaid principal balance of MPP mortgage loans was $126 million and $71 million as of December 31, 2016 and 2015, respectively. The allowance for credit losses on MPP loans was less than $1 million as of December 31, 2016 and 2015.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. Operational risk for the Bank also includes reputation and legal risks associated with business practices or market conduct that the Bank may undertake. Operational risk inherently is greatest where transaction processes include numerous processing steps, require greater subjectivity, or are non-routine. The Bank operates in a complex business environment and is subject to numerous regulatory requirements.

The Bank identifies risk through daily operational monitoring, independent reviews, and the strategic planning and risk assessment programs that both consider the operational risk ramifications of the Bank’s business strategies and environment. The Bank has established comprehensive financial and operating policies and procedures to mitigate the likelihood of loss resulting from the identified operational risks. In addition, the Bank’s operational risk committee is responsible for overseeing the monitoring process and review of risk assessments related to operational risk and overseeing the Bank’s risk management policies, procedures, strategies, and activities related to operational risks. This oversight also includes compliance risk and reputational risk. The Bank effects related changes in processes, information systems, lines of communication, and other internal controls as deemed appropriate in response to identified or anticipated increases in operational risk.

The efficiencies offered by information technology (IT) and networks are a necessary component of Bank operations. The information systems architecture of the Bank is client/server-based to support the multiple operating systems and servers,

60

which are a mixture of vendor-licensed and in-house developed applications. The Bank's IT division maintains and regularly reviews a number of controls to ensure that the IT assets of the Bank are well managed and secure from unauthorized access. Exposure from the internet (and accompanying network security issues, including software virus risk) is a factor that shapes the Bank's risk profile. This exposure results from the Bank's e-commerce activity and an increasing number of specialized vendor-provided solutions that are supported by web-based servers. Management monitors and maintains controls against attempted spyware and anti-virus attacks against Bank systems. The Bank utilizes firewalls to protect the network from internet based attacks while also employing firewalls on laptops that may operate outside of the Bank's network. Additionally, the Bank has systems to detect an intrusion in the event that it is not stopped by one of the firewalls. The Bank also has an information security department that is responsible for the policies, procedures, reviews, education, and management of entitlement requests. One key objective of the information security department is to protect the Bank's sensitive business information from unauthorized access. A security governance committee provides independent and integrated oversight of the information security program, physical security program, security policies and procedures, and security exceptions and violations. The security governance committee reviews all information security-related incidents and escalates them to the executive management committee or the board, as appropriate.

The board of directors has an Enterprise Risk and Operations Committee to advise and assist the board with respect to enterprise risk management, operations, information technology, and other related matters. In addition, the Bank's internal Enterprise Risk Committee is responsible for the management and oversight of the Bank's risk management programs and practices. Additionally, the Bank's Internal Audit department, which reports directly to the Audit Committee of the Bank's board of directors, regularly tests compliance with the policies and procedures related to managing operational risks.

Business Risk

Business risk is the risk of an adverse effect on the Bank's profitability resulting from external factors that may occur in both the short- and the long-term. Business risk includes political, strategic, reputation, and regulatory events that are beyond the Bank's control. In particular, during 2016 and continuing into 2017, the Bank faces the following business risks:

• competition for advances from traditional and nontraditional sources; and

• legislative and regulatory changes that could affect the Bank's cost of doing business or alter the Bank's business model.

For discussion of the Bank's competition for advances, see Item 1, Business—Competition above. For discussion of recent regulatory activity that may have a material impact on the Bank's operations, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Legislative and Regulatory Developments. The Bank attempts to mitigate these risks through long-term strategic planning and through continually monitoring economic indicators and the external environment.

Cyclicality and Seasonality

The Bank's business and the demand for advances from the Bank are generally not subject to the effects of cyclical or seasonal variations, although the Bank's advance demand may vary based upon fluctuations of its members' consumer credit liquidity needs.

Effects of Inflation

The majority of the Bank's assets and liabilities are, and will continue to be, monetary in nature. Although interest rates do not necessarily move in the same direction, or to the same extent, as the prices of goods and services, higher rates of inflation generally result in corresponding increases in interest rates. Inflation, coupled with increasing interest rates, generally has the following effects on the Bank:

• the cost of the Bank's funds and operating overhead increases;

• the yield on variable rate assets held by the Bank increases;

• the fair value of fixed-rate investments and mortgage loans held in portfolio decreases; and

• mortgage loan prepayment rates decrease and result in lower levels of mortgage loan refinance activity, which may result in the reduction of Bank advances to members as increased rates tend to slow home sales.

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Conversely, lower rates of inflation or deflation have the opposite effects of the above on the Bank and its holdings.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk.

A discussion of the Bank's market risk is contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Market Risk.

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Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

of the Federal Home Loan Bank of Atlanta:

In our opinion, the accompanying statements of condition and the related statements of income, comprehensive income, capital, and cash flows present fairly, in all material respects, the financial position of the Federal Home Loan Bank of Atlanta (the “Bank”) at December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016 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, 2016, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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 accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Bank’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. 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.

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.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia

March 9, 2017

63

FEDERAL HOME LOAN BANK OF ATLANTA

STATEMENTS OF CONDITION

(In millions, except par value)

	As of December 31,
	2016			2015
Assets
Cash and due from banks	$	1,815		$	1,751
Interest-bearing deposits (including deposits with another FHLBank of $5 and $3 as of December 31, 2016 and 2015, respectively)	1,106			1,088
Securities purchased under agreements to resell	1,386			2,500
Federal funds sold	7,770			5,421
Investment securities:
Trading securities (includes another FHLBank’s bond of $0 and $52 as of December 31, 2016 and 2015, respectively)	262			1,265
Available-for-sale securities	1,345			1,662
Held-to-maturity securities (fair value of $24,633 and $23,263 as of December 31, 2016 and 2015, respectively)	24,641			23,239
Total investment securities	26,248			26,166
Advances	99,077			104,168
Mortgage loans held for portfolio, net:
Mortgage loans held for portfolio	524			586
Allowance for credit losses on mortgage loans	(1		)	(2		)
Total mortgage loans held for portfolio, net	523			584
Accrued interest receivable	171			171
Derivative assets	355			176
Premises and equipment, net	24			25
Other assets	196			196
Total assets	$	138,671		$	142,246
Liabilities
Interest-bearing deposits	$	1,118		$	1,084
Consolidated obligations, net:
Discount notes	41,292			69,434
Bonds	88,647			63,953
Total consolidated obligations, net	129,939			133,387
Mandatorily redeemable capital stock	1			14
Accrued interest payable	128			127
Affordable Housing Program payable	69			63
Derivative liabilities	107			124
Other liabilities	358			431
Total liabilities	131,720			135,230
Commitments and contingencies (Note 20)
Capital
Capital stock Class B putable ($100 par value) issued and outstanding shares:
Subclass B1 issued and outstanding shares: 8 and 7 as of December 31, 2016 and 2015, respectively	787			745
Subclass B2 issued and outstanding shares: 42 and 44 as of December 31, 2016 and 2015, respectively	4,168			4,356
Total capital stock Class B putable	4,955			5,101
Retained earnings:
Restricted	310			255
Unrestricted	1,582			1,585
Total retained earnings	1,892			1,840
Accumulated other comprehensive income	104			75
Total capital	6,951			7,016
Total liabilities and capital	$	138,671		$	142,246

The accompanying notes are an integral part of these financial statements.

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FEDERAL HOME LOAN BANK OF ATLANTA

STATEMENTS OF INCOME

(In millions)

	For the Years Ended December 31,
	2016			2015			2014
Interest income
Advances	$	583		$	137		$	178
Prepayment fees, net	3			4			2
Interest-bearing deposits	17			5			4
Securities purchased under agreements to resell	4			3			1
Federal funds sold	36			11			8
Trading securities	38			68			75
Available-for-sale securities	105			109			122
Held-to-maturity securities	289			231			238
Mortgage loans	31			40			50
Total interest income	1,106			608			678
Interest expense
Consolidated obligations:
Discount notes	249			59			29
Bonds	519			305			325
Interest-bearing deposits	4			—			—
Mandatorily redeemable capital stock	—			1			1
Total interest expense	772			365			355
Net interest income	334			243			323
Reversal of provision for credit losses	(1		)	(1		)	(5		)
Net interest income after reversal of provision for credit losses	335			244			328
Noninterest income (loss)
Total other-than-temporary impairment losses	(2		)	—			—
Net amount of impairment losses reclassified from accumulated other comprehensive income	(1		)	(5		)	(3		)
Net impairment losses recognized in earnings	(3		)	(5		)	(3		)
Net losses on trading securities	(30		)	(61		)	(60		)
Net gains on derivatives and hedging activities	119			261			120
Gain on extinguishment of debt	—			—			15
Standby letters of credit fees	28			28			26
(Loss) gain on litigation settlements, net	(6		)	—			4
Other	3			2			3
Total noninterest income	111			225			105
Noninterest expense
Compensation and benefits	79			76			73
Other operating expenses	37			39			41
Finance Agency	9			9			9
Office of Finance	6			6			5
Other	6			5			4
Total noninterest expense	137			135			132
Income before assessments	309			334			301
Affordable Housing Program assessments	31			33			30
Net income	$	278		$	301		$	271

The accompanying notes are an integral part of these financial statements.

65

FEDERAL HOME LOAN BANK OF ATLANTA

STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	For the Years Ended December 31,
	2016			2015			2014
Net income	$	278		$	301		$	271
Other comprehensive income (loss):
Net noncredit portion of other-than-temporary impairment losses on available-for-sale securities:
Noncredit losses on available-for-sale securities	(1		)	—			—
Net change in fair value on other-than-temporarily impaired available-for-sale securities	27			(28		)	(10		)
Reclassification of noncredit portion of impairment losses included in net income	3			5			3
Total net noncredit portion of other-than-temporary impairment losses on available-for-sale securities	29			(23		)	(7		)
Other comprehensive income (loss) related to pension and postretirement benefit plans	—			3			(10		)
Total other comprehensive income (loss)	29			(20		)	(17		)
Total comprehensive income	$	307		$	281		$	254

The accompanying notes are an integral part of these financial statements.

66

FEDERAL HOME LOAN BANK OF ATLANTA

STATEMENTS OF CAPITAL

(In millions)

	Capital Stock Class B Putable					Retained Earnings								Accumulated Other Comprehensive Income			Total Capital
	Shares		Par Value			Restricted		Unrestricted			Total
Balance, December 31, 2013	49		$	4,883		$	141	$	1,516		$	1,657		$	112		$	6,652
Issuance of capital stock	50		5,034			—		—			—			—			5,034
Repurchase/redemption of capital stock	(47	)	(4,760		)	—		—			—			—			(4,760		)
Net shares reclassified to mandatorily redeemable capital stock	—		(7		)	—		—			—			—			(7		)
Comprehensive income (loss)	—		—			54		217			271			(17		)	254
Cash dividends on capital stock	—		—			—		(182		)	(182		)	—			(182		)
Balance, December 31, 2014	52		5,150			195		1,551			1,746			95			6,991
Issuance of capital stock	56		5,606			—		—			—			—			5,606
Repurchase/redemption of capital stock	(57	)	(5,634		)	—		—			—			—			(5,634		)
Net shares reclassified to mandatorily redeemable capital stock	—		(21		)	—		—			—			—			(21		)
Comprehensive income (loss)	—		—			60		241			301			(20		)	281
Cash dividends on capital stock	—		—			—		(207		)	(207		)	—			(207		)
Balance, December 31, 2015	51		5,101			255		1,585			1,840			75			7,016
Issuance of capital stock	54		5,405			—		—			—			—			5,405
Repurchase/redemption of capital stock	(55	)	(5,544		)	—		—			—			—			(5,544		)
Net shares reclassified to mandatorily redeemable capital stock	—		(7		)	—		—			—			—			(7		)
Comprehensive income	—		—			55		223			278			29			307
Cash dividends on capital stock	—		—			—		(226		)	(226		)	—			(226		)
Balance, December 31, 2016	50		$	4,955		$	310	$	1,582		$	1,892		$	104		$	6,951

The accompanying notes are an integral part of these financial statements.

67

FEDERAL HOME LOAN BANK OF ATLANTA

STATEMENTS OF CASH FLOWS

(In millions)

	For the Years Ended December 31,
	2016			2015			2014
Operating activities
Net income	$	278		$	301		$	271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	(45		)	(157		)	(110		)
Reversal of provision for credit losses	(1		)	(1		)	(5		)
Loss due to change in net fair value adjustment on derivative and hedging activities	43			119			62
Net change in fair value adjustment on trading securities	30			61			61
Net impairment losses recognized in earnings	3			5			3
Gain on extinguishment of debt	—			—			(15		)
Net change in:
Accrued interest receivable	(1		)	8			20
Other assets	(6		)	10			(17		)
Affordable Housing Program payable	4			(4		)	(12		)
Accrued interest payable	1			(18		)	(38		)
Other liabilities	(76		)	65			17
Total adjustments	(48		)	88			(34		)
Net cash provided by operating activities	230			389			237
Investing activities
Net change in:
Interest-bearing deposits	214			242			143
Securities purchased under agreements to resell	1,114			(540		)	(1,960		)
Federal funds sold	(2,349		)	964			(4,590		)
Trading securities:
Proceeds from principal collected	973			—			345
Purchases of long-term	—			(56		)	—
Available-for-sale securities:
Proceeds from principal collected	396			333			342
Held-to-maturity securities:
Proceeds from principal collected	5,641			6,694			3,183
Purchases of long-term	(7,044		)	(6,249		)	(6,862		)
Advances:
Proceeds from principal collected	265,686			234,088			176,124
Made	(261,105		)	(239,051		)	(186,125		)
Mortgage loans:
Proceeds from principal collected	127			150			158
Purchases from another FHLBank	(72		)	—			—
Proceeds from sale of foreclosed assets	13			15			24
Purchase of premise, equipment, and software	(4		)	(5		)	(5		)
Net cash provided by (used in) investing activities	3,590			(3,415		)	(19,223		)

68

FEDERAL HOME LOAN BANK OF ATLANTA STATEMENTS OF CASH FLOWS—(Continued) (In millions)
	For the Years Ended December 31,
	2016			2015			2014
Financing activities
Net change in interest-bearing deposits	29			(31		)	(688		)
Net payments on derivatives containing a financing element	(72		)	(97		)	(101		)
Proceeds from issuance of consolidated obligations:
Discount notes	517,242			657,757			470,192
Bonds	75,617			61,513			84,624
Payments for debt issuance costs	(9		)	(9		)	(9		)
Payments for maturing and retiring consolidated obligations:
Discount notes	(545,415		)	(625,495		)	(465,234		)
Bonds	(50,763		)	(89,515		)	(73,337		)
Proceeds from issuance of capital stock	5,405			5,606			5,034
Payments for repurchase/redemption of capital stock	(5,544		)	(5,634		)	(4,760		)
Payments for repurchase/redemption of mandatorily redeemable capital stock	(20		)	(26		)	(12		)
Cash dividends paid	(226		)	(207		)	(182		)
Net cash (used in) provided by financing activities	(3,756		)	3,862			15,527
Net increase (decrease) in cash and due from banks	64			836			(3,459		)
Cash and due from banks at beginning of the year	1,751			915			4,374
Cash and due from banks at end of the year	$	1,815		$	1,751		$	915
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	536		$	354		$	402
Affordable Housing Program assessments, net	$	25		$	35		$	39
Noncash investing and financing activities:
Net shares reclassified to mandatorily redeemable capital stock	$	7		$	21		$	7
Held-to-maturity securities acquired with accrued liabilities	$	135		$	133		$	348
Transfers of mortgage loans to real estate owned	$	5		$	12		$	18

The accompanying notes are an integral part of these financial statements.

69

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 1—Nature of Operations

The Federal Home Loan Bank of Atlanta (Bank) is a federally chartered corporation and is one of 11 district Federal Home Loan Banks (FHLBanks). Each FHLBank operates as a separate entity within a defined geographic district and has its own management, employees, and board of directors. The Bank's defined geographic district includes Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. The FHLBanks are government-sponsored enterprises that serve the public by enhancing the availability of credit for residential mortgages and targeted community developments. The primary function of the Bank is to provide readily available, competitively priced funding to its member institutions.

The Bank is a cooperative whose member institutions own substantially all of the capital stock of the Bank. Former members and certain non-members, which own the Bank's capital stock as a result of a merger or acquisition of a member of the Bank, own the remaining capital stock to support business transactions still carried on the Bank's Statements of Condition. All holders of the Bank's capital stock are entitled to receive dividends on their capital stock, to the extent declared by the Bank's board of directors.

Federally insured depository institutions, insurance companies, privately insured, state-chartered credit unions, and community development financial institutions that are located in the Bank's defined geographic district and engaged in residential housing finance are eligible to apply for membership. All members must purchase and hold capital stock of the Bank. A member's stock requirement is based on the amount of its total assets, as well as the amount of certain of its business activities with the Bank. State and local housing authorities that meet certain statutory criteria may also borrow from the Bank. While they are eligible to borrow, housing associates are not members of the Bank and are not allowed to hold capital stock.

The Federal Housing Finance Agency (Finance Agency) is the independent federal regulator of the FHLBanks and is responsible for ensuring that the FHLBanks (1) operate in a safe and sound manner, including that they maintain adequate capital and internal controls; (2) foster liquid, efficient, competitive, and resilient national housing finance markets through their operations and activities; (3) comply with applicable laws and regulations; and (4) carry out their housing finance mission through authorized activities that are consistent with the public interest. The Finance Agency also establishes policies and regulations covering the operations of the FHLBanks. The Bank does not have any special purpose entities or any other types of off-balance sheet conduits.

The Federal Home Loan Banks Office of Finance (Office of Finance), a joint office of the FHLBanks, facilitates the issuance and servicing of the FHLBanks' debt instruments, known as consolidated obligations, and prepares the combined quarterly and annual financial reports of the FHLBanks. As provided by the Federal Home Loan Bank Act of 1932, as amended (FHLBank Act), and applicable regulations, the Bank's consolidated obligations are backed only by the financial resources of the FHLBanks. Consolidated obligations are the primary source of funds for the Bank in addition to deposits, other borrowings, and capital stock issued to members. The Bank primarily uses these funds to provide advances to members. The Bank also provides members and non-members with correspondent banking services, such as safekeeping, wire transfer, and cash management services.

Note 2—Summary of Significant Accounting Policies

Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires the Bank's management to make subjective assumptions and estimates, which are based upon the information then available to the Bank and are inherently uncertain and subject to change. These assumptions and estimates may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. Actual results could differ significantly from these estimates.

Estimated Fair Values. The estimated fair value amounts, recorded on the Statements of Condition and in the note disclosures for the periods presented, have been determined by the Bank using available market and other pertinent information and reflect the Bank's best judgment of appropriate valuation methods. Although the Bank uses its best judgment in estimating the fair value of these 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.

70

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Financial Instruments Meeting Netting Requirements. The Bank has certain financial instruments, including derivative instruments and securities purchased under agreements to resell, that are subject to offset under master netting agreements or by operation of law. The Bank has elected to offset its derivative asset and liability positions, as well as cash collateral received or pledged, when it has the legal right of offset under these master agreements. The Bank does not have any offsetting liabilities related to its securities purchased under agreements to resell for the periods presented.

The net exposure for these financial instruments can change on a daily basis; 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. There may be a delay for excess collateral to be returned. For derivative instruments, any excess cash collateral received or pledged is recognized as a derivative liability or derivative asset based on the terms of the individual master agreement between the Bank and its derivative counterparty. Additional information regarding these agreements is provided in Note 18—Derivatives and Hedging Activities. Based on the fair value of the related securities held as collateral, the securities purchased under agreements to resell were fully collateralized for the periods presented.

Interest-bearing Deposits, Securities Purchased under Agreements to Resell, and Federal Funds Sold. These investments provide short-term liquidity and are carried at cost. The Bank treatssecurities purchased under agreements to resell as short-term collateralized loans, which are classified as assets on the Statements of Condition. Securities purchased under agreements to resell are held in safekeeping in the name of the Bank by third-party custodians approved by the Bank. Should the fair value of the underlying securities decrease below the fair value required as collateral, the counterparty has the option to (1) place an equivalent amount of additional securities in safekeeping in the name of the Bank, or (2) remit an equivalent amount of cash; otherwise, the dollar value of the resale agreement will be decreased accordingly. Federal funds sold consist of short-term, unsecured loans transacted with counterparties that are considered by the Bank to be of investment quality. Interest on interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold is accrued as earned and recorded in interest income on the Statements of Income.

Investment Securities. The Bank classifies certain investment securities acquired for purposes of liquidity and asset-liability management as trading investments and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in noninterest income (loss) as “Net losses on trading securities” on the Statements of Income, along with gains and losses on sales of investment securities using the specific identification method. The Bank does not participate in speculative trading practices in these investments and generally holds them until maturity, except to the extent management deems necessary to manage the Bank's liquidity position.

Investment securities that the Bank has both the ability and intent to hold to maturity are classified as held-to-maturity and are carried at amortized cost, adjusted for periodic principal repayments, amortization of premiums, and accretion of discounts. Amortization of premiums and accretion of discounts are computed using the contractual level-yield method (contractual interest method), adjusted for actual prepayments. The contractual interest method recognizes the income effects of premiums and discounts 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.

The Bank classifies certain securities that are not held-to-maturity or trading as available-for-sale and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in other comprehensive income. The Bank intends to hold its available-for-sale securities for an indefinite period of time but may sell them prior to maturity in response to changes in interest rates, prepayment risk, or other factors.

Other-than-temporary Impairment of Investment Securities. The Bank evaluates its individual available-for-sale and held-to-maturity securities in unrealized loss positions for other-than-temporary impairment on a quarterly basis. A security is considered impaired when its fair value is less than its amortized cost. The Bank considers an other-than-temporary impairment to have occurred under any of the following circumstances:

• the Bank has an intent to sell the impaired debt security;

• if, based on available evidence, the Bank believes it is more likely than not that it will be required to sell the impaired debt security before the recovery of its amortized cost basis; or

• the Bank does not expect to recover the entire amortized cost basis of the impaired debt security.

71

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

If either of the first two conditions above is met, the Bank recognizes an other-than-temporary impairment loss in earnings equal to the entire difference between the security's amortized cost basis and its fair value as of the Statements of Condition date.

For securities in an unrealized loss position that meet neither of the first two conditions, the Bank performs a cash flow analysis to determine if it will recover the entire amortized cost basis of each of these securities. The present value of the cash flows expected to be collected is compared to the amortized cost basis of the debt security to determine whether a credit loss exists. If there is a credit loss (the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security), the carrying value of the debt security is adjusted to its fair value. However, rather than recognizing the entire difference between the amortized cost basis and fair value in earnings, only the amount of the impairment representing the credit loss (i.e., the credit component) is recognized in earnings, while the amount related to all other factors (i.e., the non-credit component) is recognized in other comprehensive income. The credit loss on a debt security is limited to the amount of that security's unrealized losses. The total other-than-temporary impairment is presented on the Statements of Income with an offset for the amount of the non-credit component of other-than-temporary impairment that is recognized in other comprehensive income. The remaining amount on the Statements of Income represents the credit loss for the period.

For subsequent accounting of an other-than-temporarily impaired security, the Bank records an additional other-than-temporary impairment if the present value of cash flows expected to be collected is less than the amortized cost of the security. The total amount of this additional other-than-temporary impairment (both credit and non-credit component, if any) is determined as the difference between the security's amortized cost, less the amount of other-than-temporary impairment recognized in other comprehensive income prior to the determination of this additional other-than-temporary impairment, and its fair value. Any additional credit loss is limited to that security's unrealized losses or the difference between the security's amortized cost and its fair value as of the Statements of Condition date. This additional credit loss, up to the amount in other comprehensive income related to the security, is reclassified out of other comprehensive income and recognized in earnings. Any credit loss in excess of the related other comprehensive income is recorded as additional total other-than-temporary impairment loss and recognized in earnings.

For debt securities classified as available-for-sale, the Bank does not accrete the other-than-temporary impairment recognized in accumulated other comprehensive income to the carrying value. Rather, subsequent related increases and decreases (if not an other-than-temporary impairment) in the fair value of available-for-sale securities are netted against the non-credit component of other-than-temporary impairment recognized previously in accumulated other comprehensive income.

Upon subsequent evaluation of a debt security where there is no additional other-than-temporary impairment, the Bank adjusts the accretable yield on a prospective basis if there is a significant increase in the security's expected cash flows. As of the impairment measurement date, a new accretable yield is calculated for the impaired investment security. This adjusted yield is then used to calculate the interest income recognized over the remaining life of the security so as to match the amount and timing of future cash flows expected to be collected. Subsequent significant increases in estimated cash flows change the accretable yield on a prospective basis.

Advances. The Bank reports advances (secured loans to members, former members, or housing associates), net of discounts on advances related to the Affordable Housing Program (AHP) and the Economic Development and Growth Enhancement Program (EDGE), unearned commitment fees, and hedging basis adjustments. The Bank accretes the discounts on advances and amortizes the recognized unearned commitment fees and hedging adjustments to interest income using the contractual interest method. The Bank records interest on advances to interest income as earned.

Prepayment Fees. The Bank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity date. The Bank records prepayment fees, net of basis adjustments related to hedging activities included in the carrying value of the advance as “Prepayment fees on advances, net” in the interest income section of the Statements of Income. In cases in which there is a prepayment of an existing advance and a contemporaneous funding of a new 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. If the new advance qualifies as a modification of the existing advance, the hedging basis adjustments and the net prepayment fee on the prepaid advance are recorded in the carrying value of the modified advance and amortized over the life of the modified advance using the contractual interest method. This amortization is recorded in advance interest income. If the Bank determines that the transaction does not qualify as a modification of an existing advance, it is

72

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

treated as an advance termination with subsequent funding of a new advance, and the Bank records the net fees as “Prepayment fees, net” in the interest income section of the Statements of 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 unamortized premiums, unaccreted discounts, mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, and any allowance for credit losses.

The Bank defers and amortizes premiums and accretes discounts (1) paid to and received by the participating financial institutions (PFIs), and (2) of mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, as interest income using the contractual interest method.

A mortgage loan is considered past due when the principal or interest payment is not received in accordance with the contractual terms of the loan. The Bank places a conventional mortgage loan on nonaccrual status when the collection of the contractual principal or interest from the borrower is 90 days or more past due. When a mortgage loan is placed on nonaccrual status, accrued but uncollected interest is reversed against interest income. The Bank records cash payments received on nonaccrual loans as interest income and as a reduction of principal as specified in the contractual agreement. A loan on nonaccrual status may be restored to accrual status when the contractual principal and interest are less than 90 days past due. A government-guaranteed or -insured loan is not placed on nonaccrual status when the collection of the contractual principal or interest is 90 days or more past due because of the (1) U.S. government guarantee or insurance on the loan, and (2) the contractual obligation of the loan servicer to repurchase the loan when certain criteria are met.

A mortgage loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the mortgage loan agreement. Interest income is recognized in the same manner as nonaccrual loans.

Finance Agency regulations require that mortgage loans held in the Bank's portfolios be credit enhanced so that the Bank's risk of loss is limited to the losses of an investor in at least an investment-grade category, such as “BBB.” For conventional mortgage loans, PFIs retain a portion of the credit risk on the loans they sell to the Bank by providing credit enhancement either through a direct liability to pay credit losses up to a specified amount or through a contractual obligation to provide supplemental mortgage insurance. PFIs are paid a credit enhancement fee (CE Fee) for assuming credit risk, and in some instances, all or a portion of the CE Fee may be performance based. CE Fees are paid monthly based on the remaining unpaid principal balance of the loans in a master commitment. CE Fees are recorded as an offset to mortgage loan interest income. To the extent that the Bank experiences losses in a master commitment, it may be able to recapture CE Fees paid to the PFI to offset these losses.

Allowance for Credit Losses. The allowance for credit losses is a valuation allowance separately established for each identified portfolio segment of financing receivables, if necessary, to provide for probable incurred losses in the Bank's portfolio as of the Statements of Condition date. A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology for determining its allowance for credit losses. The Bank has developed and documented a systematic methodology for determining an allowance for credit losses for the following portfolio segments of financing receivables: advances and standby letters of credit, government-guaranteed or -insured residential mortgage loans held for portfolio, conventional residential mortgage loans held for portfolio, term federal funds sold, and term securities purchased under agreements to resell.

A portfolio segment may be further disaggregated into classes of financing receivables to the extent that it is needed to understand the exposure to credit risk arising from these financing receivables; however, the Bank determined that no further disaggregation of the portfolio segments identified above is needed.

The Bank manages its credit exposure to advances through an integrated approach that includes (1) establishing a credit limit for each borrower; (2) an ongoing review of each borrower's financial condition; and (3) collateral and lending policies to limit risk of loss, while balancing each borrower's needs for a reliable source of funding. In addition, the Bank lends to financial institutions within its district and housing associates in accordance with federal statutes and Finance Agency regulations. Specifically, the Bank complies with the FHLBank Act, which requires the Bank to obtain sufficient collateral to fully secure advances. The estimated value of the collateral required to secure each borrower's advances is calculated by applying discounts to the fair value or unpaid principal balance of the collateral, as applicable. The Bank accepts certain investment securities,

73

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

residential mortgage loans, deposits, and other real estate related assets as collateral. The Bank's capital stock owned by its member borrower is also pledged as additional collateral. Collateral arrangements may vary depending upon borrower credit quality, financial condition and performance, borrowing capacity, and the Bank's overall credit exposure to the borrower. The Bank can call for additional or substitute collateral to protect its security interest. The Bank believes that these policies effectively manage credit risk from advances.

Based upon the financial condition of the borrower, the Bank either allows a borrower to retain physical possession of the collateral pledged to it or requires the borrower to specifically assign the collateral to or place the collateral in physical possession of the Bank or its safekeeping agent. The Bank requires its borrowers to execute an advances and security agreement that establishes the Bank's security interest in all collateral pledged by the borrower to the Bank. The Bank perfects its security interest in all pledged collateral. The FHLBank Act affords any security interest granted to the Bank by a borrower priority over the claims or rights of any other party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), except for claims or rights of a third party that (1) would be entitled to priority under otherwise applicable law, and (2) is an actual bona fide purchaser for value or is an actual secured party whose security interest is perfected in accordance with state law.

Using a risk-based approach and taking into consideration each borrower's financial strength, the Bank considers the types and amounts of pledged collateral to be the primary indicator of credit quality on its advances. The Bank had rights to collateral on a borrower-by-borrower basis with an estimated value equal to or greater than its outstanding extensions of credit as of December 31, 2016 and 2015.

The Bank continues to evaluate and make changes to its collateral policies, as necessary, based on current market conditions. No advance was past due, on nonaccrual status, or considered impaired as of December 31, 2016 and 2015. In addition, there were no troubled debt restructurings related to advances as of December 31, 2016 and 2015.

Based upon the collateral held as security, the Bank's collateral policies, credit analysis, and the repayment history on advances, the Bank did not anticipate any credit losses on advances as of December 31, 2016 and 2015. Accordingly, the Bank has not recorded any allowance for credit losses on advances, nor has the Bank recorded any liability to reflect an allowance for credit losses for off-balance sheet credit exposure as of December 31, 2016 and 2015.

The Bank invested in government-guaranteed or -insured fixed-rate mortgage loans secured by one-to-four family residential properties. Government-guaranteed or -insured mortgage loans are mortgage loans guaranteed or insured by the Department of Veterans Affairs or the Federal Housing Administration. The servicer provides and maintains insurance or a guarantee from the applicable government agency. The servicer is responsible for compliance with all government agency requirements and for obtaining the benefit of the applicable insurance or guarantee with respect to defaulted government-guaranteed or -insured mortgage loans. Any losses incurred on these loans that are not recovered from the issuer or the guarantor are absorbed by the servicers. Therefore, the Bank only has credit risk for these loans if the servicer fails to pay for losses not covered by insurance or guarantees. Based on the Bank's assessment of its servicers, the Bank did not establish an allowance for credit losses for its government-guaranteed or -insured mortgage loan portfolio as of December 31, 2016 and 2015.

Modified loans that are considered a troubled debt restructuring are evaluated individually for impairment. All other conventional residential mortgage loans are evaluated collectively for impairment. The allowance for conventional residential mortgage loans is determined by an analysis (performed at least quarterly) that includes segregating the portfolio into various aging groups. For loans that are 60 days or less past due, the Bank calculates a loss severity, default rate, and the expected loss based on individual loan characteristics. For loans that are more than 60 days past due, the allowance is determined using an automated valuation model.

A modified loan that is considered a troubled debt restructuring is individually evaluated for impairment when determining its related allowance for credit losses. Credit loss is measured by factoring in expected cash shortfalls (i.e., loss severity rate) incurred as of the reporting date, as well as the economic loss attributable to delaying the original contractual principal and interest due dates.

A charge-off is recorded if the recorded investment in the loan will not be recovered. The Bank evaluates whether to record a charge-off on a conventional residential mortgage loan upon the occurrence of a confirming event. Once a loan is 180 days delinquent, the Bank classifies as a loss and charges off the portion of outstanding conventional residential mortgage loan

74

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

balances in excess of the fair value of the underlying property, less costs to sell and adjusted for any available credit enhancements.

Term federal funds sold are generally short-term, their recorded balance approximates fair value, and they are transacted with counterparties that the Bank considers to be of investment quality. The Bank's investment in federal funds sold are evaluated for purposes of an allowance for credit losses only if the investment is not paid when due. All investments in federal funds sold are unsecured and were repaid or expected to be repaid according to the contracted terms as of December 31, 2016 and 2015.

Securities purchased under agreements to resell are considered collateralized financing arrangements and effectively represent short-term loans transacted with counterparties that the Bank considers to be of investment quality. The terms of these loans are structured such that if the fair value of the underlying securities decreases below the fair value required as collateral, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash. If an agreement to resell is deemed to be impaired, the difference between the fair value of the collateral and the amortized cost of the agreement is recognized in earnings. Based upon the collateral held as security, the Bank determined that no allowance for credit losses was needed for the securities purchased under agreements to resell as of December 31, 2016 and 2015.

Real estate owned (REO) includes assets that have been received in satisfaction of debt through foreclosures. REO is initially recorded at fair value, less estimated selling costs and is subsequently carried at the lower of that amount or current fair value, less estimated selling costs. The Bank recognizes a charge-off to the allowance for credit losses if the fair value of the REO less estimated selling costs is less than the recorded investment in the loan at the date of transfer from loans to REO. Any subsequent realized gains, realized or unrealized losses, and carrying costs are included in noninterest income (loss) on the Statements of Income. REO is recorded in “Other assets” on the Statements of Condition. REO was $2 and $9 as of December 31, 2016 and 2015, respectively.

Derivatives. All derivatives are recognized on the Statements of Condition at their fair values and are reported as either derivative assets or derivative liabilities, net of cash collateral, including initial and variation margin, and accrued interest received from or pledged to clearing agents and/or counterparties. The fair values of derivatives are netted by the clearing agent and/or counterparty when the netting requirements have been met. If these netted amounts are positive, they are classified as an asset and, if negative, they are classified as a liability. Cash flows associated with derivatives 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. Derivatives not used for intermediary purposes are designated as either (1) a hedge of the fair value of (a) a recognized asset or liability or (b) an unrecognized firm commitment (a fair-value hedge); or (2) a non-qualifying hedge of an asset or liability for asset-liability management purposes. Changes in the fair value of a derivative that are effective as, and that are designated and qualify as, a fair-value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (including changes that reflect losses or gains on firm commitments), are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. Any hedge ineffectiveness (which represents the amount by which the change in the fair value of the derivative differs from the change in the fair value of the hedged item) is recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. A non-qualifying hedge is a derivative hedging specific or non-specific underlying assets, liabilities, or firm commitments that is an acceptable hedging strategy under the Bank's risk management program and Finance Agency regulatory requirements, but it does not qualify or was not designated for fair value or cash flow hedge accounting. A non-qualifying hedge introduces the potential for earnings variability because only the change in fair value of the derivative is recorded and is not offset by corresponding changes in the fair value of the non-qualifying hedged asset, liability, or firm commitment, unless such asset, liability, or firm commitment is required to be accounted for at fair value through earnings. Both the net interest on the derivative and the fair value adjustments of a non-qualifying hedge are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

The derivatives used in intermediary activities do not qualify for hedge accounting treatment and are separately marked-to-market through earnings. These amounts are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. The net result of the accounting for these derivatives does not significantly impact the Bank's results of operations.

The net settlement 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 settlement of interest receivables and payables related to intermediated derivatives for members and other non-qualifying hedges are recognized in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

75

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The Bank discontinues hedge accounting prospectively when (1) it determines that the derivative is no longer expected to be effective in offsetting changes in the fair value of a hedged risk, including hedged items such as firm commitments; (2) the derivative and/or the hedged item expires or is sold, terminated, or exercised; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) the bank determines that designating the derivative as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued due to the Bank's determination that a derivative no longer qualifies as an effective fair-value hedge of an existing hedged item, or when the bank decides to cease the specific hedging activity, the Bank will either (1) terminate the derivative; or (2) continue to carry the derivative on the Statements of Condition at its fair value, cease to adjust the hedged asset or liability for changes in fair value, and amortize the cumulative basis adjustment on the hedged item into earnings over the remaining life of the hedged item using the level-yield method. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Bank will carry the derivative at its fair value on the Statements of Condition, recognizing changes in the fair value of the derivative in current-period earnings.

The Bank may issue debt, make advances, or purchase financial instruments in which a derivative instrument may be “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 advance, debt, or purchased financial instruments (i.e., 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. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (2) 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 a stand-alone derivative instrument pursuant to a non-qualifying hedge. However, if the entire contract (the host contract and the embedded derivative) is to be measured at fair value, with changes in fair value reported in current-period earnings (e.g., an investment security classified as “trading”), or if the Bank could not identify and measure reliably the embedded derivative for purposes of separating that derivative from its host contract, the entire contract would be carried on the Statements of Condition at fair value, and no portion of the contract could be designated as a hedging instrument.

Premises, Equipment, and Software. The Bank records premises and equipment at cost less accumulated depreciation. The Bank's accumulated depreciation was $64 and $66 as of December 31, 2016 and 2015, respectively. The Bank computes depreciation using the straight-line method over the estimated useful lives of assets. The estimated useful lives in years are generally as follows: automobiles and computer hardware-three; office equipment-eight; office furniture and building improvements-10; and building-40. The Bank amortizes leasehold improvements using the straight-line method over the shorter of the estimated useful life of the improvement or the remaining term of the lease. The Bank capitalizes improvements and expenses ordinary maintenance and repairs when incurred. Depreciation expense was $4 for the years ended December 31, 2016, 2015, and 2014. The Bank includes gains and losses on disposal of premises and equipment in noninterest income (loss).

The Bank records the cost of purchased software and certain costs incurred in developing computer software for internal use at cost, less accumulated amortization. The Bank amortizes capitalized computer software cost using the straight-line method over an estimated useful life of five years. The gross carrying amount of computer software included in other assets was $55 and $58, and accumulated amortization was $48 and $49, as of December 31, 2016 and 2015, respectively. Amortization of computer software was $3 for the year ended December 31, 2016 and $5 for the years ended December 31, 2015 and 2014. The Bank includes gains and losses on disposal of capitalized software cost in noninterest income (loss).

Consolidated Obligations. The Bank records consolidated obligations at amortized cost. Additionally, the Bank pays concessions to dealers in connection with the issuance of certain consolidated obligations. The Federal Home Loan Bank Office of Finance (Office of Finance) prorates the concessions to the Bank based upon the percentage of the debt issued that is assumed by the Bank. The Bank records concessions paid on consolidated obligations as a direct deduction from their carrying amounts, consistent with the presentation of discounts on consolidated obligations. The Bank accretes discounts and amortizes premiums, as well as concessions and hedging basis adjustments on consolidated obligations, to interest expense using the contractual interest method over the contractual term of the corresponding consolidated obligation.

Mandatorily Redeemable Capital Stock. The Bank reclassifies stock that is subject to redemption from capital to a liability after a member submits a written redemption request, gives notice of intent to withdraw from membership, or attains non-member status through a merger or acquisition, charter termination, or involuntary termination from membership since the member shares will then meet the definition of a mandatorily redeemable financial instrument. Member shares meeting this definition

76

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

are reclassified to a liability at fair value. Dividends declared on shares classified as a liability are accrued at the expected dividend rate and recorded as interest expense on the Statements of Income. The repurchase or redemption of these mandatorily redeemable financial instruments is recorded as cash outflows 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 mandatorily redeemable capital stock from a liability to capital. After the reclassification, dividends on the capital stock no longer will be classified as interest expense.

Restricted Retained Earnings. The FHLBanks entered into a Joint Capital Enhancement Agreement, as amended (Capital Agreement), which is intended to enhance the capital position of each FHLBank. Under the Capital Agreement, each FHLBank allocates 20 percent of its net income each quarter to a separate retained earnings account until the account balance equals at least one percent of the FHLBank’s average balance of outstanding consolidated obligations for the previous quarter. Restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

Finance Agency and Office of Finance Expenses. The Finance Agency allocates the FHLBanks' portion of its expenses and working capital fund among the FHLBanks based on the ratio between each FHLBank's minimum required regulatory capital and the aggregate minimum required regulatory capital of every FHLBank. Each FHLBank's proportionate share of the Office of Finance's operating and capital expenditures is calculated using a formula that is (1) two-thirds based upon each FHLBank's share of total consolidated obligations outstanding, and (2) one-third based upon an equal pro rata allocation.

Affordable Housing Program. The FHLBank Act requires each FHLBank to establish and fund an AHP that provides subsidies to members to assist in the purchase, construction, or rehabilitation of housing for very low-to-moderate-income households. The Bank charges the required funding for AHP against earnings and establishes a corresponding liability. The Bank issues AHP advances at interest rates below the customary interest rate for non-subsidized advances. A discount on the AHP advance and charge against the AHP liability is recorded for the present value of the variation in the cash flow caused by the difference in the interest rate between the AHP advance rate and the Bank's related cost of funds for comparable maturity funding. As an alternative, the Bank has the authority to make the AHP subsidy available to members as a grant. The discount on AHP advances is accreted to interest income on advances using the contractual interest method over the life of the advance.

Note 3—Recently Issued and Adopted Accounting Guidance

Recently Issued Accounting Guidance

Classification of Certain Cash Receipts and Cash Payments. In August 2016, the Financial Accounting Standards Board (FASB) issued guidance intended to reduce diversity in how cash receipts and cash payments are presented and classified on the Statements of Cash Flows for certain transactions. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2017, and early application is permitted. The adoption of this guidance will not have an impact on the Bank's financial condition, results of operations, or cash flows.

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued guidance intended to improve the timeliness of recording credit losses on loans and other financial instruments held by financial institutions and other organizations. This guidance requires all expected credit losses for financial assets that are held at the reporting date to be measured based on historical experience, current conditions, and reasonable and supportable forecasts. Credit losses related to available-for-sale securities will be recorded through an allowance for credit losses. Additionally, this guidance amends the accounting for purchased financial assets with credit deterioration and requires enhanced disclosures that provide additional information to help financial statement users better understand significant estimates and judgments. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2019. Early application is permitted for the interim and annual periods beginning after December 15, 2018 although the Bank does not intend to adopt this guidance early. The Bank is in the process of evaluating this guidance, and its impact on the Bank’s financial condition and results of operations will depend upon the composition of the financial assets held by the Bank at the adoption date, as well as the economic conditions and forecasts at that time.

77

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Leases. In February 2016, the FASB issued guidance on accounting for leases and disclosure of key information about leasing arrangements. This guidance requires lessees to recognize the following for all operating and finance leases at the commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. This guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2018. Early application is permitted although the Bank does not intend to adopt this guidance early. This guidance will be applied on a modified retrospective basis for leases existing at, or entered into after, the earliest period presented in the financial statements. The adoption of this guidance is not expected to have a material impact on the Bank's financial condition or results of operations.

Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued guidance designed to improve the recognition, measurement, presentation, and disclosure of financial instruments through targeted changes to existing GAAP. These changes require the following: (1) entities to measure equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (2) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (3) entities to separately present financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (4) reporting entities to separately present in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, these changes eliminate the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Bank’s financial condition or results of operations.

Revenue from Contracts with Customers. In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Financial instruments and other contractual rights are excluded from the scope of this new revenue recognition guidance and will continue to be accounted for under existing guidance. In 2017 and 2016, the FASB issued amendments, which did not change the core principle of the original guidance, but clarified certain aspects of the guidance. This guidance becomes effective for the Bank for the interim and annual reporting periods beginning after December 15, 2017. This guidance will be applied retrospectively either to each prior reporting period or with a cumulative effect recognized at the date of initial application. Early application is permitted for the interim and annual reporting periods beginning after December 15, 2016 although the Bank does not intend to adopt this guidance early. Because the majority of contracts with the Bank's members are excluded from the scope of this guidance, this guidance is not expected to have a material impact on the Bank’s financial condition or results of operations.

Recently Adopted Accounting Guidance

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued amended guidance that eliminates the concept of extraordinary items from GAAP. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. However, this guidance did not have an impact on the Bank’s financial condition or results of operations.

Amendments to the Consolidation Analysis. In February 2015, the FASB issued amended guidance intended to enhance consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The new guidance places more emphasis on risk of loss when determining a controlling financial interest. Additionally, this guidance reduces the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. However, this guidance did not have an impact on the Bank's financial condition or results of operations.

78

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued guidance that requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. This amended guidance was applied on a retrospective basis to each individual period presented on the Statements of Condition. As a result, $7 of debt issuance costs that were included in other assets were reclassified as a reduction in the corresponding consolidated obligations balance. Specifically, the reclassification resulted in a $5 reduction in the consolidated bonds balance and a $2 reduction in the consolidated discount notes balance on the Bank's Statements of Condition as of December 31, 2015. Accordingly, the Bank's total assets and total liabilities each decreased by $7 as of December 31, 2015. However, the adoption of this guidance did not have an impact on the Bank's results of operations.

Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. In March 2016, the FASB issued amended guidance designed to clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Bank early adopted this guidance prospectively, and it became effective for the interim and annual periods beginning on January 1, 2016. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. In August 2014, the FASB issued guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide the related footnote disclosures. This guidance requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. This guidance became effective for the Bank for the annual period ending December 31, 2016, and the annual and interim periods thereafter. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

Contingent Put and Call Options in Debt Instruments. In March 2016, the FASB issued amended guidance to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance requires entities to apply only the four-step decision sequence when performing this assessment. Consequently, when a call (put) option is contingently exercisable, an entity should not assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2017. This guidance was applied on a modified retrospective basis to existing debt instruments as of the beginning of the period for which the amendments are effective. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

Note 4—Cash and Due from Banks

The Bank maintains a collected cash balance with a commercial bank, which is a member, in return for certain services, and the average collected cash balance was $7 and $8 for the years ended December 31, 2016 and 2015, respectively. There are no legal restrictions regarding the withdrawal of these funds.

79

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 5—Trading Securities

Major Security Types. The following table presents trading securities.

	As of December 31,
	2016		2015
Government-sponsored enterprises debt obligations	$	261	$	1,212
Another FHLBank’s bond (1)	—		52
State or local housing agency debt obligations	1		1
Total	$	262	$	1,265

 ____________

⁽¹⁾  The Federal Home Loan Bank of Chicago is the primary obligor of this consolidated obligation bond.

The following table presents net losses on trading securities.

	For the Years Ended December 31,
	2016			2015			2014
Net losses on trading securities held at year end	$	(8	)	$	(61	)	$	(53	)
Net losses on trading securities that matured during the year	(22		)	—			(7		)
Net losses on trading securities	$	(30	)	$	(61	)	$	(60	)

Note 6—Available-for-sale Securities

Major Security Type. The following table presents information on private-label residential mortgage-backed securities (MBS) that are classified as available-for-sale.

	Amortized   Cost		Other-than-temporary   Impairment Recognized in Accumulated Other Comprehensive Income		Gross   Unrealized   Gains		Gross   Unrealized   Losses		Estimated   Fair Value
As of December 31, 2016	$	1,221	$	6	$	130	$	—	$	1,345
As of December 31, 2015	$	1,567	$	19	$	114	$	—	$	1,662

The following table presents private-label residential MBS that are classified as available-for-sale with unrealized losses. The unrealized losses are aggregated by the length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses
As of December 31, 2016	1	$	14	$	—	10	$	189	$	6	11	$	203	$	6
As of December 31, 2015	3	$	107	$	2	10	$	247	$	17	13	$	354	$	19

80

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as available-for-sale.

	As of December 31,
	2016		2015
Variable-rate	$	1,202	$	1,540
Fixed-rate	19		27
Total amortized cost	$	1,221	$	1,567

The following table presents private-label residential MBS that are classified as available-for-sale and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Other-than-temporary Impairment Recognized in  Accumulated Other Comprehensive Income		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	792	$	5	$	102	$	—	$	889
As of December 31, 2015	$	1,037	$	16	$	77	$	—	$	1,098

Note 7—Held-to-maturity Securities

Major Security Types. The following table presents held-to-maturity securities.

	As of December 31,
	2016								2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
State or local housing agency debt obligations	$	76	$	—	$	—	$	76	$	76	$	—	$	—	$	76
Government-sponsored enterprises debt obligations	6,041		3		5		6,039		5,693		—		12		5,681
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	209		2		—		211		279		4		—		283
Government-sponsored enterprises residential	10,752		44		43		10,753		11,958		88		31		12,015
Government-sponsored enterprises commercial	6,773		2		11		6,764		4,140		—		16		4,124
Private-label residential	790		5		5		790		1,093		4		13		1,084
Total	$	24,641	$	56	$	64	$	24,633	$	23,239	$	96	$	72	$	23,263

81

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following tables present held-to-maturity securities with unrealized losses. The unrealized losses are aggregated by major security type and by the length of time that the individual securities have been in a continuous unrealized loss position.

	As of December 31, 2016
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	10	$	2,532	$	5	—	$	—	$	—	10	$	2,532	$	5
Mortgage-backed securities:
Government-sponsored enterprises residential	46	2,813		22		63	2,206		21		109	5,019		43
Government-sponsored enterprises commercial	52	4,147		6		22	1,540		5		74	5,687		11
Private-label residential	6	10		—		56	432		5		62	442		5
Total	114	$	9,502	$	33	141	$	4,178	$	31	255	$	13,680	$	64

	As of December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	20	$	4,535	$	7	3	$	745	$	5	23	$	5,280	$	12
Mortgage-backed securities:
Government-sponsored enterprises residential	41	3,233		21		8	443		10		49	3,676		31
Government-sponsored enterprises commercial	31	2,680		9		25	1,037		7		56	3,717		16
Private-label residential	29	407		2		47	428		11		76	835		13
Total	121	$	10,855	$	39	83	$	2,653	$	33	204	$	13,508	$	72

82

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Redemption Terms. The following table presents the amortized cost and estimated fair value of held-to-maturity securities by contractual maturity. Expected maturities of some securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment fees.

	As of December 31,
	2016				2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Non-mortgage-backed securities:
Due in one year or less	$	2,454	$	2,455	$	651	$	651
Due after one year through five years	3,487		3,484		5,118		5,106
Due after five years through ten years	176		176		—		—
Total non-mortgage-backed securities	6,117		6,115		5,769		5,757
Mortgage-backed securities	18,524		18,518		17,470		17,506
Total	$	24,641	$	24,633	$	23,239	$	23,263

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as held-to-maturity.

	As of December 31,
	2016		2015
Non-mortgage-backed securities:
Fixed-rate	$	2,413	$	1,915
Variable-rate	3,704		3,854
Total non-mortgage-backed securities	6,117		5,769
Mortgage-backed securities:
Fixed-rate	2,438		2,949
Variable-rate	16,086		14,521
Total mortgage-backed securities	18,524		17,470
Total amortized cost	$	24,641	$	23,239

The following table presents private-label residential MBS that are classified as held-to-maturity and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	177	$	—	$	2	$	175
As of December 31, 2015	$	286	$	—	$	5	$	281

Note 8—Other-than-temporary Impairment

Mortgage-backed Securities. The Bank’s investments in MBS consist of U.S. agency guaranteed securities and senior tranches of private-label MBS. The Bank has increased exposure to the risk of loss on its investments in MBS when the loans backing the MBS exhibit high rates of delinquency and foreclosures, as well as losses on the sale of foreclosed properties. To reduce its risk of loss on such securities, the Bank regularly requires high levels of credit enhancements from the structure of the collateralized mortgage obligation. Credit enhancements are defined as the percentage of subordinate tranches, overcollateralization, or excess spread, or the support of monoline insurance, if any, in a security structure that will absorb the losses before the security that the Bank purchased will take a loss. The Bank does not purchase credit enhancements for its MBS from monoline insurance companies.

83

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The Bank’s investments in private-label MBS were rated “AAA” (or its equivalent) by a nationally recognized statistical rating organization (NRSRO), such as Moody’s Investors Service (Moody’s) and Standard and Poor’s Ratings Services (S&P), at their purchase dates. The “AAA”-rated securities achieved their ratings through credit enhancement, overcollateralization, and senior-subordinated shifting interest features; the latter results in subordination of payments by junior classes to ensure cash flows to the senior classes. The ratings on all of the Bank’s private-label MBS have changed since their purchase dates.

Non-private-label MBS. The unrealized losses related to U.S. agency MBS are caused by interest rate changes, not credit quality. These securities are guaranteed by government agencies or government-sponsored enterprises and the Bank does not expect these securities to be settled at a price less than their amortized cost basis. In addition, the Bank does not intend to sell these investments and it is not more likely than not that the Bank will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The Bank does not consider these investments to be other-than-temporarily impaired as of December 31, 2016.

Private-label MBS. To assess whether the entire amortized cost basis of its private-label MBS will be recovered, the Bank performs a cash flow analysis for each of its private-label MBS using two third-party models.

The first third-party model considers borrower characteristics and the particular attributes of the loans underlying the Bank’s securities, in conjunction with assumptions about future changes in home prices and interest rates, to project prepayments, defaults, and loss severities. A significant input to the first model is the forecast of future housing price changes for the relevant states and core based statistical areas (CBSA), which are based upon an assessment of the individual housing markets. The term CBSA refers collectively to metropolitan and micropolitan statistical areas as defined by the United States Office of Management and Budget; as currently defined, a CBSA must contain at least one urban area with a population of 10,000 or more people. The Bank’s housing price forecast as of December 31, 2016 included a short-term housing price forecast with projected changes ranging from a decrease of three percent to an increase of 10 percent over the 12 month period beginning October 1, 2016. For the vast majority of markets, the projected short-term housing price changes range from an increase of two percent to an increase of six percent. Thereafter, a unique path is projected for each geographic area based on an internally developed framework derived from historical data.

The month-by-month projections of future loan performance derived from the first model, which reflect projected prepayments, defaults, and loss severities, were then input into a second model. The second model allocates the projected loan level cash flows and losses to the various security classes in the securitization structure in accordance with its prescribed cash flow and loss allocation rules.

At each quarter end, the Bank compares the present value of the cash flows (discounted at the securities' effective yield) expected to be collected with respect to its private-label MBS to the amortized cost basis of the security to determine whether a credit loss exists. For the Bank’s variable rate and hybrid private-label MBS, the Bank uses a forward interest rate curve to project the future estimated cash flows. The Bank then uses the effective interest rate for the security prior to impairment for determining the present value of the future estimated cash flows. For securities previously identified as other-than-temporarily impaired, the Bank updates its estimate of future estimated cash flows on a quarterly basis.

The following table presents a summary of the significant inputs used to measure the amount of the credit loss recognized in earnings for those securities for which an other-than-temporary impairment was determined to have occurred during the year ended December 31, 2016, as well as the related current credit enhancement.

	Significant Inputs - Weighted Average (%) (1)
Classification of Securities	Prepayment Rates	Default Rates	Loss Severities	Current Credit Enhancement (%)
Prime	15.02	4.62	19.73	0.24
Alt-A	12.13	17.56	40.22	0.00
Total	12.31	16.76	38.95	0.02

____________

⁽¹⁾ The classification of securities is based on current characteristics and performance, which may be different from the securities’ classification as determined by the originator at the time of origination.

84

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents a roll-forward of the amount of credit losses on the Bank’s investment securities recognized in earnings during the life of the securities for which a portion of the other-than-temporary loss was recognized in accumulated other comprehensive income.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	505		$	542		$	574
Amount related to credit loss for which an other-than-temporary impairment was previously recognized	3			5			3
Increase in cash flows expected to be collected, (accreted as interest income over the remaining lives of the applicable securities)	(53		)	(42		)	(35		)
Balance, end of year	$	455		$	505		$	542

Certain other private-label MBS that have not been designated as other-than-temporarily impaired have experienced unrealized losses and decreases in fair value due to interest rate volatility and illiquidity in the marketplace. These declines in fair value are considered temporary as the Bank expects to recover the amortized cost basis of the securities, the Bank does not intend to sell these securities, and it is not more likely than not that the Bank will be required to sell these securities before the anticipated recovery of the securities’ remaining amortized cost basis, which may be at maturity. This assessment is based on the fact that the Bank has sufficient capital and liquidity to operate its business and has no need to sell these securities, nor has the Bank entered into any contractual constraints that would require the Bank to sell these securities.

Note 9—Advances

Redemption Terms. The Bank had advances outstanding at interest rates ranging from zero percent to 7.55 percent as of December 31, 2016. Advances with interest rates of zero percent are AHP and EDGE subsidized advances and certain structured advances. The following table presents the Bank's advances outstanding.

	As of December 31,
	2016			2015
Overdrawn demand deposit accounts	$	—		$	16
Due in one year or less	47,325			46,673
Due after one year through two years	8,244			12,747
Due after two years through three years	5,904			6,360
Due after three years through four years	5,859			2,994
Due after four years through five years	11,846			4,616
Due after five years	19,110			29,458
Total par value	98,288			102,864
Discount on AHP advances	(5		)	(6		)
Discount on EDGE advances	(4		)	(4		)
Hedging adjustments	798			1,315
Deferred commitment fees	—			(1		)
Total	$	99,077		$	104,168

The Bank offers callable advances to members that may be prepaid on prescribed dates (call dates) without incurring prepayment or termination fees. The Bank also offers prepayable advances, which are variable-rate advances that may be contractually prepaid by the borrower on specified dates without incurring prepayment or termination fees. Other advances may be prepaid only by paying a fee to the Bank, so the Bank is financially indifferent to the prepayment of the advance. The Bank had callable and prepayable advances outstanding of $27,459 and $25,565 as of December 31, 2016 and 2015, respectively.

85

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents advances by year of contractual maturity or next call date for callable advances.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or callable in one year or less	72,404		71,243
Due or callable after one year through two years	7,680		11,593
Due or callable after two years through three years	3,740		5,545
Due or callable after three years through four years	2,289		2,214
Due or callable after four years through five years	4,570		2,371
Due or callable after five years	7,605		9,882
Total par value	$	98,288	$	102,864

Convertible advances offered by the Bank allow the Bank to convert the fixed-rate advance to a variable-rate advance at the current market rate on certain specified dates. The Bank had convertible advances outstanding of $1,497 and $2,394 as of December 31, 2016 and 2015, respectively.

The following table presents advances by year of contractual maturity or, for convertible advances, next conversion date.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or convertible in one year or less	47,935		48,743
Due or convertible after one year through two years	7,724		11,434
Due or convertible after two years through three years	5,943		5,768
Due or convertible after three years through four years	5,867		3,020
Due or convertible after four years through five years	11,866		4,609
Due or convertible after five years	18,953		29,274
Total par value	$	98,288	$	102,864

Interest-rate Payment Terms. The following table presents interest-rate payment terms for advances.

	As of December 31,
	2016		2015
Fixed-rate:
Due in one year or less	$	38,597	$	32,011
Due after one year	24,528		27,051
Total fixed-rate	63,125		59,062
Variable-rate:
Due in one year or less	8,728		14,678
Due after one year	26,435		29,124
Total variable-rate	35,163		43,802
Total par value	$	98,288	$	102,864

Credit Risk. The Bank’s potential credit risk from advances is concentrated in commercial banks, thrifts, and credit unions and further is concentrated in certain larger borrowing relationships. The concentration of the Bank's advances to its 10 largest borrowers was $67,493 and $75,842 as of December 31, 2016 and 2015, respectively. This concentration represented 68.7 percent and 73.7 percent of total advances outstanding as of December 31, 2016 and 2015, respectively.

86

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Based on the collateral pledged as security for advances, the Bank's credit analysis of members’ financial condition, and prior repayment history, no allowance for credit losses on advances was deemed necessary by the Bank as of December 31, 2016 and 2015. No advance was past due as of December 31, 2016 and 2015.

For additional information related to the Bank's credit risk on advances and allowance for credit losses, see Note 2—Summary of Significant Accounting Policies.

Note 10—Mortgage Loans Held for Portfolio

The Bank purchased fixed-rate residential mortgage loans directly from PFIs, who service and credit enhance the residential mortgage loans that they sold to the Bank. The Bank ceased purchasing these loans directly from PFIs in 2008. The Bank may also acquire fixed-rate residential mortgage loans through participations in eligible mortgage loans purchased from other FHLBanks.

The following table presents information on mortgage loans held for portfolio by contractual maturity at the time of purchase.

	As of December 31,
	2016			2015
Medium-term (15 years or less)	$	40		$	66
Long-term (greater than 15 years)	485			521
Total unpaid principal balance	525			587
Premiums	2			2
Discounts	(3		)	(3		)
Total	$	524		$	586

The following table presents the unpaid principal balance of mortgage loans held for portfolio by collateral or guarantee type.

	As of December 31,
	2016		2015
Conventional mortgage loans	$	492	$	546
Government-guaranteed or insured mortgage loans	33		41
Total unpaid principal balance	$	525	$	587

The Bank records credit enhancement fees related to residential mortgage loans as a reduction to mortgage loan interest income.

For information related to the Bank's credit risk on mortgage loans and allowance for credit losses, see Note 11—Allowance for Credit Losses.

Note 11—Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses related to conventional residential mortgage loans.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	2		$	3		$	11
Reversal of provision for credit losses	(1		)	(1		)	(5		)
Charge-offs	—			—			(3		)
Balance, end of year	$	1		$	2		$	3

87

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the recorded investment in conventional residential mortgage loans by impairment methodology.

	As of December 31,
	2016		2015
Allowance for credit losses:
Collectively evaluated for impairment	$	1	$	2
Recorded investment:
Individually evaluated for impairment	$	12	$	15
Collectively evaluated for impairment	481		532
Total recorded investment	$	493	$	547

Key credit quality indicators for mortgage loans include the migration of past due mortgage loans, nonaccrual mortgage loans, and mortgage loans in process of foreclosure. The following tables present the Bank's recorded investment in mortgage loans by these key credit quality indicators.

	As of December 31, 2016
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	3			1			4
Past due 90 days or more	12			1			13
Total past due mortgage loans	32			6			38
Total current mortgage loans	461			27			488
Total mortgage loans (1)	$	493		$	33		$	526
Other delinquency statistics:
In process of foreclosure (2)	$	6		$	1		$	7
Seriously delinquent rate (3)	2.44		%	3.75		%	2.53		%
Past due 90 days or more and still accruing interest (4)	$	—		$	1		$	1
Mortgage loans on nonaccrual status (5)	$	12		$	—		$	12

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $2 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

88

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

	As of December 31, 2015
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	5			1			6
Past due 90 days or more	18			3			21
Total past due mortgage loans	40			8			48
Total current mortgage loans	507			34			541
Total mortgage loans (1)	$	547		$	42		$	589
Other delinquency statistics:
In process of foreclosure (2)	$	9		$	1		$	10
Seriously delinquent rate (3)	3.32		%	6.65		%	3.55		%
Past due 90 days or more and still accruing interest (4)	$	—		$	3		$	3
Mortgage loans on nonaccrual status (5)	$	18		$	—		$	18

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $3 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

A troubled debt restructuring is considered to have occurred when a concession that would not have been considered otherwise is granted to a borrower for economic or legal reasons related to the borrower's financial difficulties. The Bank has granted a concession when it does not expect to collect all amounts due under the original contract as a result of the restructuring. In the event the Bank grants a concession, the borrower's monthly payment is restructured for a period of up to 36 months to try to achieve a target housing expense ratio of not more than 31.0 percent of their qualifying income. To restructure the loan, the outstanding principal balance is first re-amortized to reflect a principal and interest payment for a term not to exceed 40 years. This results in a balloon payment at the original maturity date of the loan as the maturity date and number of remaining monthly payments are not adjusted. If the 31.0 percent housing expense ratio is not achieved through re-amortization, the interest rate is reduced below the original note rate in 0.125 percent increments to a floor rate of 3.00 percent until the target 31.0 percent housing expense ratio is met. These reductions in principal and interest payments are for the temporary payment modification period of up to 36 months. Additionally, a conventional residential mortgage loan in which the borrower filed for Chapter 7 bankruptcy and the bankruptcy court discharged the borrower's obligation to the Bank, is considered a troubled debt restructuring. Troubled debt restructurings are evaluated individually for impairment.

The following table presents the Bank's recorded investment balance in mortgage loans classified as troubled debt restructurings.

	As of December 31,
	2016						2015
	Performing		Non-performing		Total		Performing		Non-performing		Total
Conventional residential mortgage loans	$	10	$	2	$	12	$	13	$	2	$	15

Due to the minimal change in terms of modified loans (i.e., no write-offs of principal), the Bank's pre-modification recorded investment was not materially different than the post-modification recorded investment in troubled debt restructurings during the years ended December 31, 2016, 2015, and 2014.

The financial amounts related to the Bank's troubled debt restructurings and impaired loans are not material to the Bank's financial condition or results of operations for the periods presented.

89

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 12—Deposits

The Bank offers demand and overnight deposits for members and qualifying non-members. A member that services mortgage loans may deposit funds in the Bank that were collected in connection with the mortgage loans, pending disbursement of such funds to the owners of the mortgage loans. The Bank records these items in "Interest-bearing deposits" on the Statements of Condition.

The Bank pays interest on demand and overnight deposits based on a daily interest rate.

Note 13—Consolidated Obligations

Consolidated obligations, consisting of consolidated obligation bonds and discount notes, are the joint and several obligations of the FHLBanks and are backed only by the financial resources of the FHLBanks.

The Bank is primarily liable for its portion of consolidated obligations (i.e., those issued on its behalf) and also is jointly and severally liable with the other 10 FHLBanks for the payment of principal and interest on all consolidated obligations of each of the FHLBanks. The Finance Agency, at its discretion, may require any FHLBank to make principal or interest payments due on any consolidated obligation, whether or not the consolidated obligation represents a primary liability of such FHLBank. Although it has never occurred, to the extent that an FHLBank makes any payment on a consolidated obligation on behalf of another FHLBank that is primarily liable for such consolidated obligation, Finance Agency regulations provide that the paying FHLBank is entitled to reimbursement from the noncomplying FHLBank for any payments made on its behalf and any other associated costs (including interest to be determined by the Finance Agency). However, if the Finance Agency determines that the noncomplying FHLBank is unable to satisfy its repayment obligations, the Finance Agency may allocate the outstanding liabilities of the noncomplying FHLBank among the remaining FHLBanks on a pro rata basis in proportion to each FHLBank's participation in all consolidated obligations outstanding. The Finance Agency reserves the right to allocate the outstanding liabilities for the consolidated obligations among the FHLBanks in any other manner it may determine to ensure that the FHLBanks operate in a safe and sound manner. The par value of the FHLBanks' outstanding consolidated obligations, including consolidated obligations issued by the Bank, was $989,311 and $905,202 as of December 31, 2016 and 2015, respectively.

Regulations require each FHLBank to maintain, in the aggregate, unpledged qualifying assets equal to that FHLBank's consolidated obligations outstanding. Qualifying assets are defined as cash; secured advances; obligations of or fully guaranteed by the United States; mortgages guaranteed or insured by the United States or its agencies; participations, mortgages, or other securities of or issued by certain government-sponsored enterprises; and such securities as fiduciary and trust funds may invest in under the laws of the state in which the FHLBank is located. The Bank held unpledged qualifying assets of $138,097 and $141,848 as of December 31, 2016 and 2015, respectively, compared to a book value of $129,939 and $133,387 in consolidated obligations as of December 31, 2016 and 2015, respectively.

General Terms. Consolidated obligations are issued with either fixed- or variable-rate coupon payment terms that use a variety of indices for interest-rate resets including the London Interbank Offered Rate (LIBOR), Constant Maturity Treasury, and others. To meet the expected specific needs of certain investors in consolidated obligations, both fixed- and variable-rate consolidated obligation bonds may contain certain features, which may result in complex coupon payment terms and call options. When such consolidated obligations are issued, the Bank generally enters into derivatives containing offsetting features that, in effect, convert the terms of the consolidated obligation bond to those of a simple variable-rate consolidated obligation bond.

These consolidated obligations, beyond having fixed-rate or simple variable-rate coupon payment terms, may also have the following broad term regarding either principal repayment or coupon payment terms:

Optional Principal Redemption Consolidated Obligation Bonds (callable bonds) that the Bank may redeem in whole or in part at its discretion on predetermined call dates according to the terms of the consolidated obligation bond offerings.

90

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

With respect to interest payments, consolidated obligation bonds may have the following terms:

Step-up/down Consolidated Obligation Bonds have coupons at fixed rates for specified intervals over the lives of the consolidated obligation bonds. At the end of each specified interval, the coupon rate increases (or decreases) or steps up (or steps down). These consolidated obligation bond issues generally contain call provisions enabling the bonds to be called at the Bank's discretion; and

Variable-rate Capped Floater Consolidated Obligation Bonds pay interest at variable rates subject to an interest-rate ceiling.

Interest-rate Payment Terms. The following table presents the Bank’s consolidated obligation bonds by interest-rate payment type.

	As of December 31,
	2016		2015
Fixed-rate	$	23,674	$	40,512
Step up/down	2,534		4,239
Simple variable-rate	62,408		19,022
Total par value	$	88,616	$	63,773

Redemption Terms. The following table presents the Bank’s participation in consolidated obligation bonds outstanding by year of contractual maturity.

	As of December 31,
	2016				2015
	Amount			Weighted- average Interest Rate (%)	Amount			Weighted- average Interest Rate (%)
Due in one year or less	$	65,378		0.91	$	32,559		0.74
Due after one year through two years	17,065			1.05	17,132			1.41
Due after two years through three years	1,849			1.67	5,959			1.63
Due after three years through four years	1,482			1.68	2,124			1.67
Due after four years through five years	1,117			1.58	1,975			1.72
Due after five years	1,725			2.37	4,024			2.18
Total par value	88,616			1.00	63,773			1.16
Premiums	24				36
Discounts	(12		)		(20		)
Hedging adjustments	19				164
Total	$	88,647			$	63,953

The following table presents the Bank’s consolidated obligation bonds outstanding by call feature.

	As of December 31,
	2016		2015
Noncallable	$	83,487	$	53,432
Callable	5,129		10,341
Total par value	$	88,616	$	63,773

91

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the Bank’s consolidated obligation bonds outstanding, by year of contractual maturity, or for callable consolidated obligation bonds, by next call date.

	As of December 31,
	2016		2015
Due or callable in one year or less	$	70,232	$	41,410
Due or callable after one year through two years	15,250		16,277
Due or callable after two years through three years	1,399		3,461
Due or callable after three years through four years	1,103		1,055
Due or callable after four years through five years	162		1,023
Due or callable after five years	470		547
Total par value	$	88,616	$	63,773

Consolidated Obligation Discount Notes. Consolidated obligation discount notes are issued to raise short-term funds and have original contractual maturities of up to one year. These consolidated obligation discount notes are issued at less than their face amounts and redeemed at par value when they mature.

The following table presents the Bank's participation in consolidated obligation discount notes.

	Book Value		Par Value		Weighted-average Interest Rate (%)
As of December 31, 2016	$	41,292	$	41,334	0.48
As of December 31, 2015	$	69,434	$	69,481	0.27

Note 14—Affordable Housing Program

Affordable Housing Program. Annually, each FHLBank must set aside 10 percent of its income subject to assessment for the AHP, or such additional prorated sums as may be required so that the aggregate annual contribution of the FHLBanks is not less than $100. For purposes of the AHP calculation, each FHLBank's income subject to assessment is defined as the individual FHLBank's net income before assessments, plus interest expense related to mandatorily redeemable capital stock. The Bank accrues this expense monthly based on its income subject to assessment. The Bank reduces the AHP liability as members use subsidies.

If the Bank experienced a net loss during a quarter but had income subject to assessment in subsequent quarters, it would be required to contribute additional amounts to meet its calculated annual obligation based on the Bank's year-to-date income subject to assessment. If the Bank experienced a net loss for a full year, the Bank would have no obligation to the AHP for the year since each FHLBank's required annual AHP contribution is limited to its annual income subject to assessment. If the aggregate of 10 percent of income subject to assessment for all FHLBanks was less than $100, each FHLBank would be required to contribute additional amounts so that the aggregate contribution of the FHLBanks equals the required $100. Each FHLBanks' prorated contribution would be determined based on its income in relation to the income of all FHLBanks for the previous year. There was no shortfall in the years ended December 31,2016, 2015, or 2014. If an FHLBank finds that its required contributions are contributing to the financial instability of that FHLBank, it may apply to the Finance Agency for a temporary suspension of its contributions. No FHLBank made such an application in the years ended December 31,2016, 2015, or 2014. The Bank had outstanding principal in AHP-related advances of $27 and $30 as of December 31, 2016 and 2015, respectively.

92

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents a rollforward of the Bank's AHP liability.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	63		$	65		$	74
AHP assessments	31			33			30
Subsidy usage, net	(25		)	(35		)	(39		)
Balance, end of year	$	69		$	63		$	65

Note 15—Capital and Mandatorily Redeemable Capital Stock

Capital. The Bank is subject to the following three regulatory capital requirements under its capital plan, the FHLBank Act, and Finance Agency regulations.

Risk-Based Capital. The Bank must maintain, at all times, permanent capital in an amount at least equal to the sum of its credit risk capital requirement, its market risk capital requirement, and its operations risk capital requirement, calculated in accordance with the rules and regulations of the Finance Agency. Permanent capital is defined by the FHLBank Act and regulations as the sum of retained earnings and the amounts paid-in for Class B stock.Only permanent capital satisfies the risk-based capital requirement.The Finance Agency may require the Bank to maintain a greater amount of permanent capital than is required by the risk-based capital requirement as defined.

Total Regulatory Capital. The FHLBank Act requires the Bank to maintain total regulatory capital in an amount equal to at least four percent of total assets at all times. Total regulatory capital is defined as the sum of permanent capital, the amount paid-in for Class A stock (if any), the amount of the Bank's general allowance for losses (if any), and the amount of any other instruments identified in the capital plan and approved by the Finance Agency. The Bank has not issued any Class A stock, has no general allowance for losses, and has no other instruments identified in the capital plan and approved by the Finance Agency; therefore, the Bank's total regulatory capital is equal to its permanent capital as of December 31, 2016.

Leverage Capital. The FHLBank Act requires the Bank to maintain leverage capital in an amount equal to at least five percent of total assets at all times. Leverage capital is defined as the sum of permanent capital weighted 1.5 times and all other capital weighted 1.0 times. Although mandatorily redeemable capital stock is not included in capital for financial reporting purposes, such outstanding stock is considered capital for determining compliance with these regulatory capital requirements.

The following table presents the Bank's compliance with the Finance Agency's regulatory capital rules and requirements.

	As of December 31,
	2016						2015
	Required			Actual			Required			Actual
Risk-based capital	$	1,701		$	6,848		$	1,621		$	6,956
Total regulatory capital ratio	4.00		%	4.94		%	4.00		%	4.89		%
Total regulatory capital (1)	$	5,547		$	6,848		$	5,690		$	6,956
Leverage capital ratio	5.00		%	7.41		%	5.00		%	7.33		%
Leverage capital	$	6,934		$	10,273		$	7,113		$	10,433

___________

⁽¹⁾  Total regulatory capital does not include accumulated other comprehensive income but does include mandatorily redeemable capital stock.

93

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The Bank offers two subclasses of Class B stock, each of which is issued, redeemed, and repurchased at a par value of $100 per share. Member shares cannot be purchased or sold except between the Bank and its members at $100 per share par value. Shares of subclass B1 capital stock are issued to meet the membership stock requirement under the capital plan and shares of subclass B2 capital stock are issued to meet the activity-based stock requirement under the capital plan. Activity-based stock held by a member is that amount of subclass B2 capital stock that the member is required to own for as long as certain transactions between the Bank and the member remain outstanding. The manner in which the activity-based stock requirement is determined under the capital plan is set forth below.

The minimum stock requirement for each member is the sum of the membership stock requirement and the activity-based stock requirement. The capital plan permits the Bank's board of directors to set the membership and activity-based stock requirements within a range as set forth in the capital plan. As of December 31, 2016, the membership stock requirement was an amount of subclass B1 capital stock equal to 0.09 percent (nine basis points) of the member's total assets as of December 31, 2015, subject to a cap of $15. The membership stock requirement is recalculated using the member's total assets as of the preceding calendar year-end at least annually by March 31. As of December 31, 2016, the activity-based stock requirement was an amount of subclass B2 capital stock equal to the sum of the following:

• 4.25 percent of the member's outstanding par value of advances and

• 8.00 percent of targeted debt/equity investments (such as multifamily residential mortgage loan assets) sold by the member to the Bank on or after December 17, 2004.

The activity-based stock requirement also may include a percentage of any outstanding balance of acquired member assets (such as residential mortgage loan assets) although this percentage was set at zero as of December 31, 2016 and 2015.

The FHLBank Act and Finance Agency regulations require that the minimum stock requirement for members must be sufficient to enable the Bank to meet its minimum regulatory capital requirement. Therefore, from time to time, the Bank's board of directors may adjust the membership stock requirement and the activity-based stock requirement within specified ranges set forth in the capital plan. Any adjustment outside the ranges would require an amendment to the capital plan and Finance Agency approval. Each member is required to comply promptly with any adjustment to the minimum stock requirement. The FHLBank Act provides that the Bank may repurchase, at its sole discretion, any member's capital stock investment that exceeds the required minimum amount (excess capital stock). Under certain circumstances, Finance Agency rules limit the ability of the Bank to create member excess stock. The Bank may not pay dividends in the form of capital stock or issue excess capital stock to any member if the Bank's excess capital stock exceeds one percent of its total assets or if the issuance of excess capital stock would cause the Bank's excess capital stock to exceed one percent of its total assets. As of December 31, 2016 and 2015, the Bank's excess capital stock did not exceed one percent of its total assets.

A member may redeem its excess Class B capital stock at par value payable in cash five years after providing written notice to the Bank. The Bank, at its option, may repurchase a member's excess capital stock before expiration of the five-year notice period. The Bank's authority to redeem or repurchase capital stock is subject to a number of limitations.

Under Finance Agency rules, the Bank's board of directors may, but is not required to, declare and pay non-cumulative dividends in cash or capital stock from unrestricted retained earnings and current earnings. All shares of capital stock share in any dividend without preference. Dividends are computed on the average daily balance of capital stock outstanding during the relevant time period. The Bank may not pay a dividend if the Bank is not in compliance with any of its regulatory capital requirements or if a payment would cause the Bank to fail to meet any of its regulatory capital requirements.

The concentration of the Bank's regulatory capital stock to its 10 largest shareholders was $3,018, or 60.9 percent, and $3,373, or 65.9 percent, as of December 31, 2016 and 2015, respectively.

94

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the activity in mandatorily redeemable capital stock.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	14		$	19		$	24
Net reclassification from capital during the year	7			21			7
Repurchase/redemption of mandatorily redeemable capital stock	(20		)	(26		)	(12		)
Balance, end of year	$	1		$	14		$	19

As of December 31, 2016, the Bank's outstanding mandatorily redeemable capital stock consisted of B1 membership stock and B2 activity-based stock. The Bank is not required to redeem activity-based stock until the later of the expiration of the redemption period, which is five years after notification is received, or until the activity no longer remains outstanding.

The following table presents the amount of mandatorily redeemable capital stock by year of redemption. The year of redemption in the table is the end of the five-year redemption period, or with respect to activity-based stock, the later of the expiration of the five-year redemption period or the activity’s maturity date.

	As of December 31,
	2016		2015
Due in one year or less	$	—	$	7
Due after one year through two years	—		1
Due after three years through four years	1		—
Due after four years through five years	—		6
Total	$	1	$	14

A member may cancel or revoke its written notice of redemption or its notice of withdrawal from membership at any time prior to the end of the five-year redemption period, subject to payment of a cancellation fee as set forth in the capital plan. If a member cancels its written notice of redemption or notice of withdrawal, the Bank will reclassify mandatorily redeemable capital stock from a liability to capital.

95

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 16—Accumulated Other Comprehensive Income

The following table presents the components comprising accumulated other comprehensive income.

	Pension and Postretirement Benefits			Noncredit Portion of Other-than- temporary Impairment  Losses on Available-for- sale Securities			Total  Accumulated Other Comprehensive Income
Balance, December 31, 2013	$	(13	)	$	125		$	112
Other comprehensive income before reclassifications:
Net change in fair value	—			(10		)	(10		)
Actuarial loss	(11		)	—			(11		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive loss	(10		)	(7		)	(17		)
Balance, December 31, 2014	(23		)	118			95
Other comprehensive income before reclassifications:
Net change in fair value	—			(28		)	(28		)
Actuarial gain	1			—			1
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			5			5
Amortization of pension and postretirement (1)	2			—			2
Net current period other comprehensive income (loss)	3			(23		)	(20		)
Balance, December 31, 2015	(20		)	95			75
Other comprehensive income before reclassifications:
Noncredit other-than-temporary impairment losses	—			(1		)	(1		)
Net change in fair value	—			27			27
Actuarial loss	(1		)	—			(1		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive income	—			29			29
Balance, December 31, 2016	$	(20	)	$	124		$	104

____________ 

⁽¹⁾ Included in Compensation and benefits on the Statements of Income.

Note 17—Pension and Postretirement Benefit Plans

The Bank participates in the Pentegra Defined Benefit Plan for Financial Institutions (Pentegra Plan), a tax-qualified defined-benefit pension plan. The Pentegra Plan is treated as a multiemployer plan for accounting purposes but operates as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As a result, certain multiemployer plan disclosures are not applicable to the Pentegra Plan. Under the Pentegra Plan, contributions made by a participating employer may be used to provide benefits to employees of other participating employers because assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer.  Also, in the event a participating employer is unable to meet its contribution requirements, the required contributions for the other participating employers could increase proportionately. The Pentegra Plan covers substantially all officers and employees of the Bank hired before March 1, 2011.

The Pentegra Plan operates on a fiscal year from July 1 through June 30. The Pentegra Plan files one Form 5500 on behalf of all employers who participate in the plan. The Employer Identification Number is 13-5645888, and the three-digit plan number is 333. There are no collective bargaining agreements in place at the Bank.

96

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The Pentegra Plan's annual valuation process includes separately calculating the plan's funded status and the funded status of each participating employer. The funded status is defined as the fair value of assets divided by the funding target (100 percent of the present value of all benefit liabilities accrued at that date). As permitted by ERISA, the Pentegra Plan accepts contributions for the prior plan year up to eight and a half months after the asset valuation date. As a result, the fair value of assets at the valuation date (July 1) will increase by any subsequent contributions designated for the immediately preceding plan year ended June 30.

The most recent Form 5500 available for the Pentegra Plan is for the year ended June 30, 2015. The contributions made by the Bank during 2016 and 2015 were more than five percent of the total contributions for each of the Pentegra Plan years ended June 30, 2015 and 2014.

The following table presents information on the net pension costs and funded status of the Pentegra Plan.

	2016			2015			2014
Net pension cost charged to compensation and benefit expense for the year ended December 31	$	12		$	11		$	10
Pentegra Plan funded status as of July 1(1)	104.12		%	107.01		%	111.44		%
Bank's funded status as of the plan year end	105.51		%	108.82		%	114.16		%

____________

⁽¹⁾The Pentegra Plan's funded status as of July 1 is preliminary and may increase because the plan's participants are permitted to make contributions through March 15 of the following year (i.e. through March 15, 2017 for the plan year ended June 30, 2016 and through March 15, 2016 for the plan year ended June 30, 2015). Contributions made before the March 15th deadline may be credited to the plan for the plan year ended June 30 of the previous year and included in the final valuation as of July 1 of the year the plan ended. The final funded status as of July 1 will not be available until the Form 5500 for the plan year July 1 through June 30 is filed. Form 5500 is due to be filed no later than April 2018 for the plan year July 1, 2016 through June 30, 2017 and April 2017 for the plan year July 1, 2015 through June 2016. Form 5500 was filed in April 2016 for the plan year July 1, 2014 through June 30, 2015.

The Bank also participates in a qualified defined contribution plan. The Bank's contribution to this plan is equal to a percentage of voluntary contributions, subject to certain limitations, plus contributions for all employees hired on or after March 1, 2011. The Bank contributed $2 to this plan during each of the years ended December 31, 2016, 2015, and 2014.

The Bank offers a supplemental nonqualified defined contribution retirement plan to eligible executives. The Bank's contribution to this plan is equal to a percentage of voluntary contributions. The Bank contributed less than $1 to this plan during each of the years ended December 31, 2016, 2015, and 2014.

In addition, the Bank maintains a nonqualified deferred compensation plan, available to Bank directors and officers at the senior vice president level and above, which is, in substance, an unfunded supplemental savings plan. The plan's liability consists of the accumulated compensation deferrals and accrued earnings on those deferrals. The Bank's minimum obligation from this plan was $3 and $2 as of December 31, 2016 and 2015, respectively. Operating expense includes deferred compensation and accrued earnings of $1 during each of the years ended December 31, 2016 and 2015, and less than $1 during the year ended December 31, 2014.

The Bank offers a supplemental nonqualified defined benefit pension plan to eligible executives and a postretirement health benefit plan to eligible retirees. There are no funded plan assets that have been designated to provide supplemental retirement plan or postretirement health benefits.

Amounts recognized in other liabilities (funded status) on the Statements of Condition for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan were $56 and $51 as of December 31, 2016 and 2015, respectively. The net periodic benefit costs recognized in “Compensation and benefits” on the Statements of Income for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan were $6 for each of the years ended December 31, 2016 and 2015, and $4 for the year ended December 31, 2014. The amount recognized in other comprehensive income (loss) related to pension and postretirement benefit plans on the Statements of Comprehensive Income for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan was income of less than $1 and$3for the years ended December 31, 2016 and 2015, respectively, and a loss of $10 for the year ended December 31, 2014.

The financial amounts related to the Bank's supplemental nonqualified defined benefit pension plan and postretirement health benefit plan are not material to the Bank's financial condition or results of operations.

97

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 18—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 on its funding sources that finance these assets. 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 that it is willing to accept. In addition, the Bank monitors the risk to its interest income, net interest margin, and average maturity of its interest-earning assets and funding sources. The goal of the Bank’s interest-rate risk management strategies is not to eliminate interest-rate risk, but to manage it within appropriate limits.

The Bank enters into derivatives to manage the interest-rate risk exposure that is inherent in its otherwise unhedged assets and funding sources, to achieve the Bank's risk management objectives, and to act as an intermediary between its members and counterparties. Finance Agency regulations and the Bank's risk management policy prohibit the trading or speculative use of these derivative instruments and limit credit risk arising from these instruments. The use of derivatives is an integral part of the Bank's financial management strategy.

The most common ways in which the Bank uses derivatives are to:

• preserve a favorable interest-rate spread between the yield of an asset (e.g., an advance) and the cost of the related liability (e.g., the consolidated obligation bond used to fund the advance) by converting both fixed-rate instruments to a variable rate using interest-rate swaps;

• reduce funding costs by combining a derivative with a consolidated obligation because the cost of a combined funding structure can be lower than the cost of a comparable consolidated obligation bond;

• reduce the interest-rate sensitivity and repricing gaps of assets and liabilities;

• mitigate the adverse earnings effects from the shortening or lengthening of certain assets (e.g., mortgage assets);

• protect the value of existing asset or liability positions;

• manage embedded options in assets and liabilities; and

• achieve overall asset/liability management objectives.

Application of Derivatives

General. The Bank designates derivative instruments in the following three ways: (1) as a fair value hedge of an underlying financial instrument or a firm commitment; (2) as an intermediary transaction; or (3) as a non-qualifying hedge for purposes of asset or liability management.

The Bank reevaluates its hedging strategies from time to time and may change the hedging techniques it uses or adopt new strategies.

The Bank transacts most of its derivatives with large banks and major broker-dealers. Some of these banks and broker-dealers or their affiliates buy, sell, and distribute consolidated obligations. The Bank's over-the-counter derivative transactions may either be (1) uncleared derivatives, which are executed bilaterally with a counterparty; or (2) cleared derivatives, which are cleared through a Futures Commission Merchant (clearing agent) with a Derivative Clearing Organization (Clearinghouse).

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 as the counterparty. The Bank is not a derivative dealer and does not trade derivatives for short-term profit.

The Bank uses derivatives when they are considered to be the most cost-effective alternative to achieve the Bank's long-term financial and risk management objectives. Accordingly, the Bank may enter into derivatives that do not qualify for hedge accounting (non-qualifying hedges).

98

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Types of Derivatives

The Bank may use the following derivatives to reduce funding costs and to manage its exposure to interest-rate risks inherent in the normal course of business.

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 paid 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 principal 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 principal amount at a variable rate for the same period of time. The variable rate received or paid by the Bank in most derivative transactions agreements is LIBOR.

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 when it is planning to lend or borrow funds in the future. The Bank may enter into both payer swaptions 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 Cap and Floor Agreements. In an interest-rate cap agreement, a cash flow is generated if the price or 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 rate of an underlying variable falls below a certain threshold (or floor) price. Caps may be used in conjunction with liabilities, and floors may be used in conjunction with assets. Caps and floors are designed to protect against the interest rate on a variable-rate asset or liability rising above or falling below a certain level.

Types of Hedged Items

At inception, the Bank documents all relationships between derivatives designated as hedging instruments and hedged items, its risk management objectives and strategies for undertaking various hedge transactions, and its method of assessing effectiveness. This process includes linking all derivatives that are designated as fair value hedges to (1) assets and liabilities on the Statements of Condition; or (2) firm commitments. The Bank also formally assesses (both at the hedge's inception and at least quarterly on an ongoing basis) whether the derivatives that it uses in hedging relationships have been effective in offsetting changes in the fair value of hedged items attributable to the hedged risk and whether those derivatives may be expected to remain effective in future periods. The Bank uses regression analyses to assess the effectiveness of its hedges.

Consolidated Obligations. While consolidated obligations are the joint and several obligations of the FHLBanks, each FHLBank has consolidated obligations for which it is the primary obligor. The Bank enters into derivatives to hedge the interest-rate risk associated with its specific debt issuances in conjunction with the associated interest-rate risk on advances. The Bank manages the risk arising from changing market prices and volatility of a consolidated obligation by matching the cash inflow on the derivative with the cash outflow on the consolidated obligation. For instance, in a typical transaction, fixed-rate consolidated obligations are issued for the Bank, and the Bank simultaneously enters into a matching derivative in which the counterparty pays fixed cash flows to the Bank designed to mirror cash outflows that the Bank pays on the consolidated obligation in timing and amount. The Bank pays a variable cash flow that closely matches the interest payments it receives on short-term or variable-rate advances (typically one- or three-month LIBOR). These transactions are typically treated as fair-value hedges. This intermediation between the capital and swap markets permits the Bank to raise funds at lower costs than otherwise would be available through the issuance of simple fixed-rate consolidated obligations in the capital markets.

Advances. The Bank offers a variety of advance structures to meet members' funding needs. These advances may have maturities of up to 30 years with variable or fixed rates and may include early termination features or options. The Bank may use derivatives to adjust the repricing and/or options characteristics of advances in order to more closely match the characteristics of the Bank's funding liabilities. In general, whenever a member executes a fixed- or a variable-rate advance with embedded options, the Bank simultaneously will execute a derivative with terms that offset the terms and embedded options in the advance. For example, the Bank may hedge a fixed-rate advance with an interest-rate swap in which 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.

Mortgage Assets. The Bank has invested in mortgage assets. The prepayment options embedded in mortgage assets may shorten or lengthen the expected repayment of these investments, depending on changes in estimated prepayment speeds. The Bank manages the interest-rate and prepayment risk associated with mortgages through a combination of debt issuance and

99

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

derivatives. The Bank issues 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 use derivatives to match the expected prepayment characteristics of the mortgages.

Options (interest-rate caps, interest-rate floors and/or options) also may be used to hedge prepayment risk on the mortgages. Many options are not identified to specific mortgages and therefore, do not receive fair-value or cash-flow hedge accounting treatment. The Bank also may purchase interest-rate caps and floors, swaptions, callable swaps, calls, and puts to minimize the prepayment risk embedded in the mortgage loans. Although these derivatives are valid non-qualifying hedges against the prepayment risk of the loans, they do not receive either fair-value or cash-flow hedge accounting. These derivatives are marked-to-market through earnings.

Firm Commitments. Certain mortgage purchase commitments are considered derivatives. Mortgage purchase commitments are recorded on the balance sheet at fair value, with changes in fair value recognized in current-period earnings. When the mortgage purchase commitment derivative settles, the current fair value of the commitment is included with the basis of the mortgage loan and amortized accordingly.

The Bank also may enter into a fair value hedge of a firm commitment for a forward starting advance through the use of an interest-rate swap. In this case, the swap functions as the hedging instrument for both the firm commitment and the subsequent advance. The basis movement associated with the firm commitment is recorded as a basis adjustment of the advance at the time the commitment is terminated and the advance is issued. The basis adjustment is then amortized into interest income over the life of the advance using the level-yield method.

Investments. The Bank invests in MBS, U.S. agency obligations, certificates of deposit, and the taxable portion of state or local housing finance agency obligations. The interest-rate and prepayment risks associated with these investment securities are managed through a combination of debt issuance and derivatives. The Bank may manage the prepayment and interest-rate risks by funding investment securities with consolidated obligations that have call features, by hedging the prepayment risk with caps or floors, or by adjusting the duration of the securities by using derivatives to modify the cash flows of the securities. Investment securities may be classified as trading, available-for-sale, or held-to-maturity.

The Bank also may manage the risk arising from changing market prices and volatility of investment securities classified as trading by entering into derivatives (non-qualifying hedges) that offset the changes in fair value of these securities.

Financial Statement Effect and Additional Financial Information

Derivative Notional Amounts. The notional amount of derivatives serves as a factor in determining periodic interest payments or 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 overall risk is much smaller. 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.

100

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the fair value of derivative instruments, including 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.

	As of December 31,
	2016							2015
	Notional Amount of Derivatives		Derivative Assets		Derivative Liabilities			Notional Amount of Derivatives		Derivative Assets			Derivative Liabilities
Derivatives in hedging relationships:
Interest-rate swaps	$	65,027	$	256	$	1,029		$	80,290	$	312		$	1,467
Derivatives not designated as hedging instruments:
Interest-rate swaps	1,158		9		31			3,008		10			74
Interest-rate caps or floors	15,000		17		13			16,500		15			10
Mortgage delivery commitments	12		—		—			—		—			—
Total derivatives not designated as hedging instruments	16,170		26		44			19,508		25			84
Total derivatives before netting and collateral adjustments	$	81,197	282		1,073			$	99,798	337			1,551
Netting adjustments and cash collateral (1)			73		(966		)			(161		)	(1,427		)
Derivative assets and derivative liabilities			$	355	$	107				$	176		$	124

___________

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

The following table presents the components of net gains on derivatives and hedging activities as presented on the Statements of Income.

	For the Years Ended December 31,
	2016			2015			2014
Derivatives and hedged items in fair value hedging relationships:
Interest-rate swaps	$	120		$	269		$	147
Derivatives not designated as hedging instruments:
Interest-rate swaps	30			53			57
Interest-rate caps or floors	(1		)	(2		)	(14		)
Net interest settlements	(30		)	(59		)	(70		)
Total net losses related to derivatives not designated as hedging instruments	(1		)	(8		)	(27		)
Net gains on derivatives and hedging activities	$	119		$	261		$	120

The following tables present, by type of hedged item, the gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Bank’s net interest income.

	For the Year Ended December 31, 2016
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	524		$	(393	)	$	131		$	(529	)
Consolidated obligations:
Bonds	(154		)	146			(8		)	230
Discount notes	2			(5		)	(3		)	(3		)
Total	$	372		$	(252	)	$	120		$	(302	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

101

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

	For the Year Ended December 31, 2015
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	448		$	(169	)	$	279		$	(713	)
Consolidated obligations:
Bonds	(93		)	81			(12		)	469
Discount notes	(6		)	8			2			9
Total	$	349		$	(80	)	$	269		$	(235	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

	For the Year Ended December 31, 2014
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income(1)
Advances	$	(152	)	$	297		$	145	$	(875	)
Consolidated obligation bonds	135			(133		)	2		497
Total	$	(17	)	$	164		$	147	$	(378	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

Managing Credit Risk on Derivatives

The Bank is subject to credit risk to its derivative transactions due to the risk of nonperformance by counterparties and manages this risk through credit analysis, collateral requirements, and adherence to the requirements set forth in its policies, U.S. Commodity Futures Trading Commission regulations, and Finance Agency regulations. For uncleared derivatives, the degree of credit risk depends on the extent to which master netting arrangements are included in such contracts to mitigate the risk. The Bank requires collateral agreements with collateral delivery thresholds on all uncleared derivatives. Additionally, collateral related to derivatives with member institutions includes collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

For cleared derivatives, the Clearinghouse is the Bank's counterparty. The Clearinghouse notifies the clearing agent of the required initial and variation margin, and the clearing agent notifies the Bank. Because the Bank is required to post initial and variation margin through the clearing agent to the Clearinghouse, it 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 is posted daily through a clearing agent for changes in the fair value of cleared derivatives. The Bank has analyzed the enforceability of offsetting rights incorporated in its cleared derivative transactions and 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 Bank’s 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.

The Bank presents derivative instruments and the related cash collateral (including initial and variation margin) that is received or pledged, plus the associated accrued interest, on a net basis by clearing agent and/or by counterparty when it has met the netting requirements.

102

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the fair value of derivative instruments meeting or not meeting netting requirements, including the related collateral received from or pledged to counterparties.

	As of December 31,
	2016						2015
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
Gross recognized amount:
Uncleared derivatives	$	70		$	370		$	260		$	1,159
Cleared derivatives	212			703			77			392
Total gross recognized amount	282			1,073			337			1,551
Gross amounts of netting adjustments and cash collateral:
Uncleared derivatives	(69		)	(263		)	(258		)	(1,035		)
Cleared derivatives	142			(703		)	97			(392		)
Total gross amounts of netting adjustments and cash collateral	73			(966		)	(161		)	(1,427		)
Derivative assets and derivative liabilities:
Uncleared derivatives	1			107			2			124
Cleared derivatives	354			—			174			—
Total derivative assets and total derivative liabilities	355			107			176			124
Non-cash collateral received or pledged not offset- cannot be sold or repledged: (1)
Uncleared derivatives	—			—			2			—
Net unsecured amounts: (2)
Uncleared derivatives	1			107			—			124
Cleared derivatives	354			—			174			—
Total net unsecured amount	$	355		$	107		$	174		$	124

____________ 

⁽¹⁾  Collateral held with respect to derivatives with member institutions, in which the Bank is acting as an intermediary, represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

⁽²⁾  The Bank had net credit exposure of $346 and $170 as of December 31, 2016 and 2015, respectively, due to instances where the Bank’s pledged collateral to a counterparty exceeds the Bank’s net derivative liability position.

Certain of the Bank’s uncleared derivative instruments contain provisions that require the Bank to post additional collateral with its counterparties if there is deterioration in the Bank’s credit rating. If the Bank’s credit rating is lowered by an NRSRO, the Bank may be required to deliver additional collateral on uncleared derivative instruments in net liability positions. The aggregate fair value of all uncleared derivative instruments with credit-risk-related contingent features that were in a net liability position (before cash collateral and related accrued interest) as of December 31, 2016 was $296, for which the Bank has posted collateral with a fair value of $193 in the normal course of business. If the Bank’s credit ratings had been lowered from its current rating to the next lower rating that would have triggered additional collateral to be delivered, the Bank would have been required to deliver an additional $71 of collateral at fair value to its uncleared derivative counterparties as of December 31, 2016.

Note 19—Estimated Fair Values

The Bank records trading securities, available-for-sale securities, derivative assets and liabilities, and grantor trust assets (publicly-traded mutual funds) at estimated fair value on a recurring basis. Fair value is a market-based measurement and is defined 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. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. In general, the transaction price will equal the exit price and therefore, represents the fair value of the asset or liability at initial recognition. In determining whether a transaction price represents the fair value of the asset or liability at initial recognition, each reporting entity is required to consider factors specific to the transaction, the asset or liability, the principal or most advantageous market for the asset or liability, and market participants with whom the entity would transact in the market.

103

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

A fair value hierarchy is used to prioritize the inputs of valuation techniques used to measure fair value. The inputs are evaluated, and an overall level for the fair value measurement is determined. This overall level is an indication of how market-observable the fair value measurement is and defines the level of disclosure. In order to determine the fair value or the exit price, entities must determine the unit of account, highest and best use, principal market, and market participants. These determinations allow the reporting entity to define the inputs for fair value and level of hierarchy.

Outlined below is the application of the “fair value hierarchy” to the Bank's financial assets and liabilities that are carried at fair value or disclosed in the notes to the financial statements.

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market for the 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. The Bank carried grantor trust assets at fair value hierarchy Level 1 as of December 31, 2016 and 2015.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Bank carried trading securities and derivatives at fair value hierarchy Level 2 as of December 31, 2016 and 2015.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are supported by limited market activity and reflect the entity's own assumptions. The Bank carried available-for-sale securities at fair value hierarchy Level 3 as of December 31, 2016 and 2015.

The Bank utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

For financial instruments carried at fair value, the Bank reviews the fair value hierarchy classification of financial assets and liabilities on a quarterly basis. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. Such reclassifications are reported as transfers in/out at fair value as of the beginning of the quarter in which the changes occur. There were no such transfers during the periods presented.

Estimated Fair Value Measurements on a Recurring Basis. The following tables present, for each fair value hierarchy level, the Bank’s financial assets and liabilities that are measured at fair value on a recurring basis on its Statements of Condition.

	As of December 31, 2016
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	261	$	—	$	—		$	261
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		262		—		—			262
Available-for-sale securities:
Private-label residential MBS	—		—		1,345		—			1,345
Derivative assets:
Interest-rate related	—		282		—		73			355
Grantor trust (included in Other assets)	37		—		—		—			37
Total assets at fair value	$	37	$	544	$	1,345	$	73		$	1,999
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,073	$	—	$	(966	)	$	107
Total liabilities at fair value	$	—	$	1,073	$	—	$	(966	)	$	107

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

104

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

	As of December 31, 2015
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	1,212	$	—	$	—		$	1,212
Another FHLBank’s bond	—		52		—		—			52
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		1,265		—		—			1,265
Available-for-sale securities:
Private-label residential MBS	—		—		1,662		—			1,662
Derivative assets:
Interest-rate related	—		337		—		(161		)	176
Grantor trust (included in Other assets)	31		—		—		—			31
Total assets at fair value	$	31	$	1,602	$	1,662	$	(161	)	$	3,134
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,551	$	—	$	(1,427	)	$	124
Total liabilities at fair value	$	—	$	1,551	$	—	$	(1,427	)	$	124

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

The following table presents a reconciliation of available-for-sale securities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	1,662		$	1,981		$	2,299
Total (losses) gains realized and unrealized: (1)
Included in net impairment losses recognized in earnings	(3		)	(5		)	(3		)
Included in other comprehensive income	29			(23		)	(7		)
Accretion of credit losses in net interest income	53			42			34
Settlements	(396		)	(333		)	(342		)
Balance, end of year	$	1,345		$	1,662		$	1,981

____________ 

⁽¹⁾  Related to available-for-sale securities held at year end.

Estimated Fair Value Measurements on a Nonrecurring Basis. The Bank periodically measures and recognizes certain assets at fair value on a nonrecurring basis in certain circumstances. Adjustments to fair value usually result from the application of lower of amortized cost or fair value accounting, or write-downs of individual assets due to impairment. The following table presents the fair value hierarchy and carrying value of all assets as of the last impairment date that were still held as of December 31, 2015, for which a nonrecurring fair value adjustment was recorded during the period presented. The carrying value for each of the assets presented in the following table was less than $1 as of December 31, 2016.

	As of December 31, 2015
	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
Mortgage loans held for portfolio	$	—	$	—	$	1	$	1
Real estate owned (included in Other assets)	—		—		3		3
Total nonrecurring assets at fair value	$	—	$	—	$	4	$	4

105

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Described below are the Bank's fair value measurement methodologies for financial assets and liabilities measured or disclosed at fair value.

Cash and Due from Banks. The estimated fair value approximates the recorded carrying value due to the short-term nature and negligible credit risk.

Interest-bearing Deposits. The estimated fair value is determined by calculating the present value of the expected future cash flows from the deposits and reducing this amount for accrued interest receivable. The discount rates used in these calculations are the rates for deposits with similar terms and represents market observable rates.

Securities purchased under agreements to resell. The estimated fair value is determined by calculating the present value of the expected future cash flows. The discount rates used in these calculations are the rates for securities with similar terms and represent market observable rates.

Federal Funds Sold. The estimated fair values of overnight federal funds sold approximate the carrying values. The estimated fair values of term federal funds sold are determined by calculating the present value of the expected future cash flows. The discount rates used in these calculations are the rates for federal funds with similar terms and represent market observable rates.

Investment Securities.TheBank obtains prices from four designated third-party pricing vendors, when available, to estimate the fair value of its investment securities. The pricing vendors use various proprietary models to price investment securities. The inputs to those models are derived from various sources including, but not limited to, the following: benchmark yields, reported trades, dealer estimates, issuer spreads, benchmark securities, 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 challenge process in place for all investment securities valuations, which facilitates resolution of potentially erroneous prices identified by the Bank.

The Bank periodically conducts reviews of the four pricing vendors to confirm and further augment its understanding of the vendors' pricing processes, methodologies, and control procedures for U.S. agency and private-label MBS.

The Bank's valuation technique for estimating the fair value 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 does not provide evidence that an outlier is more representative of the 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.

If all prices received for a security are outside the tolerance threshold level of the median price, then there is no default price, and the final price is determined by an evaluation of all outlier prices as described above.

Four vendor prices were received for a majority of the Bank's investment securities holdings and the final prices for those securities were computed by averaging the prices received as of December 31, 2016 and 2015. 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 (or the Bank's additional analysis in those instances in which there were outliers or significant yield variances), the Bank believes that 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. Based on the lack of significant market activity for private-label MBS, the fair value measurement for those securities were classified as Level 3 within the fair value hierarchy as of December 31, 2016 and 2015.

Advances. The Bank determines the estimated fair values of advances by calculating the present value of expected future cash flows from the advances, excluding the amount of the accrued interest receivable. The discount rates used in these calculations

106

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

are the equivalent to the replacement advance rates for advances with similar terms. The Bank calculates its replacement advance rates at a spread to its cost of funds. The Bank's cost of funds approximates the consolidated obligation curve (See "Consolidated Obligations" paragraph within this note for a discussion of the consolidated obligation curve). To estimate the fair values of advances with optionality, market-based expectations of future interest rate volatility implied from current market prices for similar options are also used. In accordance with the Finance Agency's advances regulations, advances with a maturity or repricing period greater than six months require a prepayment fee sufficient enough to make the Bank financially indifferent to the borrower's decision to prepay the advances, thereby removing prepayment risk from the fair value calculation. The Bank did not adjust the fair value measurement of advances for creditworthiness because advances were fully collateralized.

Mortgage Loans Held for Portfolio. The estimated fair values for mortgage loans are determined based on quoted market prices of similar mortgage loans available in the pass-through securities market. These prices, however, can change rapidly based upon market conditions and are highly dependent upon the underlying prepayment assumptions. The estimated fair values of impaired mortgage loans are based on the current property value, as provided by a third party vendor, adjusted for estimated selling costs.

Accrued Interest Receivable and Payable. The estimated fair value approximates the recorded carrying value due to the short-term nature and negligible credit risk.

Derivative Assets and Liabilities. The Bank calculates the fair value of derivatives using a discounted cash flow analysis. The Bank’s discounted cash flow analysis utilizes market-observable inputs. Inputs by class of derivatives are as follows:

• Interest-rate related - the Overnight Index Swap curve for collateralized derivatives; and

• Mortgage delivery commitments - to be announced (TBA) securities prices adjusted for differences in coupon, average loan rate, and seasoning.

Derivative instruments are transacted primarily in the institutional dealer market and priced with observable market assumptions at a mid-market valuation point. The Bank does not provide a credit valuation adjustment based on aggregate exposure by derivative counterparty when measuring the fair value of its derivatives. This is because the collateral provisions pertaining to the Bank's derivatives obviate the need to provide such a credit valuation adjustment. The fair values of the Bank's derivatives take into consideration the effects of legally enforceable master netting agreements, where applicable, that allow the Bank to settle positive and negative positions and offset cash collateral with the same counterparty on a net basis. The Bank and each uncleared derivative counterparty have collateral thresholds that take into account both the Bank's and the counterparty's credit ratings. As a result of these practices and agreements, the Bank has concluded that the impact of the credit differential between the Bank and its derivative counterparties was mitigated to an immaterial level, and no further adjustments were deemed necessary to the recorded fair values of derivative assets and liabilities on the Statements of Condition as of December 31, 2016 and 2015.

Grantor Trust Assets. Grantor trust assets, recorded in "Other assets" on the Statements of Condition, are carried at estimated fair value based on quoted market prices.

Interest-bearing Deposits. The Bank determines estimated fair values of Bank deposits by calculating the present value of expected future cash flows from the deposits and reducing this amount for accrued interest payable. The discount rate used in these calculations is based on LIBOR.

Consolidated Obligations. The Bank calculates the fair value of consolidated obligation bonds and discount notes by calculating the present value of future cash flows using cost of funds as the discount rate. The Office of Finance constructs an internal curve, referred to as the consolidated obligation curve, using the U.S. Treasury curve as a base curve that is then adjusted by adding indicative spreads obtained from market observable sources. These market indications are generally derived from pricing indications from dealers, historical pricing relationships, recent government-sponsored enterprise trades, and secondary market activity. To estimate the fair values of consolidated obligations with optionality, the Bank uses market based expectations of future interest rate volatility implied from current market prices for similar options.

Mandatorily Redeemable Capital Stock. The fair value of mandatorily redeemable capital stock is par value and also includes estimated dividends earned at the time of reclassification from capital to liabilities, until such amount is paid. Capital stock can be acquired by members only at par value and redeemed by the Bank at par value. Capital stock is not traded and no market mechanism exists for the exchange of capital stock outside the cooperative structure.

107

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following estimated fair value amounts have been determined by the Bank using available market information and the Bank’s best judgment of appropriate valuation methods. These estimates are based on pertinent information available to the Bank as of December 31, 2016 and 2015. Although the Bank uses its best judgment in estimating the fair values of these financial instruments, there are inherent limitations in any estimation technique or valuation methodology. For example, because an active secondary market does not exist for a portion of the Bank’s financial instruments, in certain cases, fair values are not subject to precise quantification or verification and may change as economic and market factors and evaluation of those factors change. Therefore, these estimated fair values are not necessarily indicative of the amounts that would be realized in current market transactions, although they do reflect the Bank’s judgment of how a market participant would estimate the fair value. The fair value tables presented below do not represent an estimate of the overall fair value of the Bank as a going concern, which would take into account future business opportunities and the net profitability of assets versus liabilities.

The following tables present the carrying values and estimated fair values of the Bank’s financial instruments.

	As of December 31, 2016
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,815	$	1,815	$	1,815	$	—	$	—	$	—
Interest bearing-deposits	1,106		1,106		—		1,106		—		—
Securities purchased under agreements to resell	1,386		1,386		—		1,386		—		—
Federal funds sold	7,770		7,770		—		7,770		—		—
Trading securities	262		262		—		262		—		—
Available-for-sale securities	1,345		1,345		—		—		1,345		—
Held-to-maturity securities	24,641		24,633		—		23,843		790		—
Advances	99,077		99,062		—		99,062		—		—
Mortgage loans held for portfolio, net	523		569		—		569		—		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	355		355		—		282		—		73
Grantor trust assets (included in Other assets)	37		37		37		—		—		—
Liabilities:
Interest-bearing deposits	1,118		1,118		—		1,118		—		—
Consolidated obligations, net:
Discount notes	41,292		41,293		—		41,293		—		—
Bonds	88,647		88,768		—		88,768		—		—
Mandatorily redeemable capital stock	1		1		1		—		—		—
Accrued interest payable	128		128		—		128		—		—
Derivative liabilities	107		107		—		1,073		—		(966		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

108

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

	As of December 31, 2015
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,751	$	1,751	$	1,751	$	—	$	—	$	—
Interest bearing-deposits	1,088		1,088		—		1,088		—		—
Securities purchased under agreements to resell	2,500		2,500		—		2,500		—		—
Federal funds sold	5,421		5,421		—		5,421		—		—
Trading securities	1,265		1,265		—		1,265		—		—
Available-for-sale securities	1,662		1,662		—		—		1,662		—
Held-to-maturity securities	23,239		23,263		—		22,179		1,084		—
Advances	104,168		104,021		—		104,021		—		—
Mortgage loans held for portfolio, net	584		647		—		646		1		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	176		176		—		337		—		(161		)
Grantor trust assets (included in Other assets)	31		31		31		—		—		—
Liabilities:
Interest-bearing deposits	1,084		1,084		—		1,084		—		—
Consolidated obligations, net:
Discount notes	69,434		69,432		—		69,432		—		—
Bonds	63,953		63,940		—		63,940		—		—
Mandatorily redeemable capital stock	14		14		14		—		—		—
Accrued interest payable	127		127		—		127		—		—
Derivative liabilities	124		124		—		1,551		—		(1,427		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

Note 20—Commitments and Contingencies

Consolidated obligations are backed only by the financial resources of the FHLBanks. At any time, the Finance Agency may require any FHLBank to make principal or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that obligation. No FHLBank has ever had to assume or pay the consolidated obligation of another FHLBank.

The par value of the other FHLBanks’ outstanding consolidated obligations for which the Bank is jointly and severally liable was $859,361 and $771,948 as of December 31, 2016 and 2015, respectively, exclusive of the Bank’s own outstanding consolidated obligations. None of the other FHLBanks defaulted on their consolidated obligations, the Finance Agency was not required to allocate any obligation among the FHLBanks, and no amount of the joint and several obligation was fixed as of December 31, 2016 and 2015. Accordingly, the Bank has not recognized a liability for its joint and several obligation related to the other FHLBanks' consolidated obligations as of December 31, 2016 and 2015.

109

FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the Bank’s outstanding commitments, which represent off-balance sheet obligations.

	As of December 31,
	2016						2015
	Expire Within One Year		Expire After One Year		Total		Expire Within One Year		Expire After One Year		Total
Standby letters of credit (1)	$	10,934	$	21,734	$	32,668	$	8,693	$	23,823	$	32,516
Commitments to fund additional advances	100		200		300		207		100		307
Unsettled consolidated obligation discount notes, at par (2)	—		—		—		100		—		100
Unsettled consolidated obligation bonds, at par (2)	15		—		15		25		—		25
Commitments to purchase mortgage loans	12		—		12		—		—		—

____________

⁽¹⁾  "Expire Within One Year" includes 12 standby letters of credit for a total of $34 and 11 standby letters of credit for a total of $29 as of December 31, 2016 and 2015, respectively, that have no stated maturity date and are subject to renewal on an annual basis.

⁽²⁾  Expiration is based on settlement period rather than underlying contractual maturity of consolidated obligations.

The Bank issues standby letters of credit on behalf of its members for a fee. A standby letter of credit is a financing arrangement between the Bank and its member. If the Bank is required to make payment for a beneficiary's draw, the Bank in its discretion may convert such paid amount to an advance to the member and will require a corresponding activity-based capital stock purchase.

The Bank monitors the creditworthiness of its standby letters of credit based on an evaluation of the member. In addition, standby letters of credit are fully collateralized from the time of issuance. The Bank has established parameters for the measurement, review, classification, and monitoring of credit risk related to these standby letters of credit that results in an internal credit rating, which focuses primarily on an institution’s overall financial health and takes into account the quality of assets, earnings, and capital position. In general, borrowers categorized into the highest risk rating category have more restrictions on the types of collateral that they may use to secure standby letters of credit, may be required to maintain higher collateral maintenance levels and deliver loan collateral, and may face more stringent collateral reporting requirements.

The carrying value of the guarantees related to standby letters of credit is recorded in "Other liabilities" on the Statements of Condition and amounted to $135 and $136 as of December 31, 2016 and 2015, respectively. Based on the Bank's credit analyses and collateral requirements, the Bank does not deem it necessary to record any additional liability on these commitments.

The Bank may enter into commitments that unconditionally obligate it to purchase mortgage loans. Commitments are generally for periods not exceeding 91 days. Delivery commitments are recorded at fair value as derivative assets or derivative liabilities on the Statements of Condition.

The Bank charged to operating expenses net rental costs of $2 for each of the years ended December 31, 2016, 2015, and 2014.

Lease agreements for Bank premises generally provide for increases in the basic rentals resulting from increases in property taxes and maintenance expenses. Such increases are not expected to have a material effect on the Bank's results of operations.

The Bank is subject to legal proceedings arising in the normal course of business. After consultation with legal counsel, management does not anticipate, as of the date of the financial statements, that the ultimate liability, if any, arising out of these matters will have a material effect on the Bank’s financial condition or results of operations.

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FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

Note 21—Transactions with Shareholders

The Bank is a cooperative whose member institutions own substantially all of the capital stock of the Bank. Former members and certain non-members, which own the Bank's capital stock as a result of a merger or acquisition of a member of the Bank, own the remaining capital stock to support business transactions still carried on the Bank’s Statements of Condition. All holders of the Bank’s capital stock receive dividends on their investments, to the extent declared by the Bank’s board of directors. All advances are issued to members and eligible “housing associates” under the FHLBank Act, and mortgage loans held for portfolio are purchased from members. The Bank also maintains demand deposit accounts primarily to facilitate settlement activities that are related directly to advances and mortgage loan purchases. Transactions with any member that has an officer or director who is also a director of the Bank are subject to the same Bank policies as transactions with other members.

Related Parties. In accordance with GAAP, financial statements are required to disclose material related-party transactions other than compensation arrangements, expense allowances, or other similar items that occur in the ordinary course of business. Under GAAP, related parties include owners of more than 10 percent of the voting interests of the Bank. Due to limits on member voting rights under the FHLBank Act and Finance Agency regulations, no member owned more than 10 percent of the total voting interests. Therefore, the Bank had no such related party transactions required to be disclosed for the periods presented.

Shareholder Concentrations. The Bank considers shareholder concentration as members or non-members with regulatory capital stock outstanding in excess of 10 percent of the Bank's total regulatory capital stock. The following tables present transactions with shareholders whose holdings of regulatory capital stock exceed 10 percent of total regulatory capital stock outstanding.

	As of December 31, 2016
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	745	15.03	$	17,176	17.48	$	16	1.41
Navy Federal Credit Union	589		11.88	13,495		13.73	156		13.93
Bank of America, National Association	504		10.17	11,511		11.71	—		0.01

	As of December 31, 2015
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	869	16.99	$	20,095	19.54	$	17	1.55
Navy Federal Credit Union	643		12.57	14,773		14.36	—		0.01
Bank of America, National Association	579		11.31	13,262		12.89	—		0.01

Note 22—Transactions with Other FHLBanks

The Bank's activities with other FHLBanks are summarized below.

Loans to and Borrowings from Other FHLBanks. Occasionally, the Bank loans short-term funds to or borrows short-term funds from the other FHLBanks; however, there were no outstanding loans to or borrowings from the other FHLBanks as of December 31, 2016 and 2015. Interest income on loans to other FHLBanks was less than $1 for each of the years ended December 31, 2016, 2015, and 2014. Interest expense on borrowings from other FHLBanks was $0 for the year ended December 31, 2016, and less than $1 for each of the years ended December 31, 2015 and 2014.

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FEDERAL HOME LOAN BANK OF ATLANTA

NOTES TO FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts)

The following table presents the cash flow activities for loans to and borrowings from other FHLBanks.

	For the Years Ended December 31,
	2016			2015			2014
Investing activities:
Loans made to other FHLBanks	$	(1,010	)	$	(11,759	)	$	(990	)
Principal collected on loans made to other FHLBanks	1,010			11,759			990
Net change in loans made to other FHLBanks	$	—		$	—		$	—
Financing activities:
Proceeds from short-term borrowings from other FHLBanks	$	—		$	927		$	1,038
Payments of short-term borrowings from other FHLBanks	—			(927		)	(1,038		)
Net change in borrowings from other FHLBanks	$	—		$	—		$	—

Investment in Another FHLBank's Consolidated Obligation Bond. Occasionally, the Bank purchases consolidated obligations issued by other FHLBanks through third-party dealers as investment securities. The balance of these investments is presented in Note 5—Trading Securities. Interest income earned on these consolidated obligation bonds totaled $2 for the year ended December 31, 2016 and $9 for each of the years ended December 31, 2015 and 2014.

Mortgage Loan Purchases of Participation Interests from Other FHLBanks. During 2016, the Bank and FHLBank Indianapolis began participating in the funding of a master commitment with a member of FHLBank Indianapolis. The Bank's outstanding balance related to these mortgage loan assets was $72 as of December 31, 2016.

Note 23— Subsequent Events

On March 9, 2017, the Bank’s board of directors approved a cash dividend for the fourth quarter of 2016. The Bank will pay the fourth quarter 2016 dividend on March 14, 2017, in the amount of $58.

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Supplementary Financial Information (Unaudited)

Selected Quarterly Financial Data

The following tables present supplementary financial information for each quarter in the years ended December 31, 2016 and 2015 (in millions).

	For the Year Ended December 31, 2016
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Total
Interest income	$	290		$	292		$	266		$	258		$	1,106
Interest expense	222			199			186			165			772
Net interest income	68			93			80			93			334
Reversal of provision for credit losses	—			(1		)	—			—			(1		)
Noninterest income (loss)	69			28			17			(3		)	111
Noninterest expense	38			34			31			34			137
Affordable Housing Program assessments	10			9			6			6			31
Net income	$	89		$	79		$	60		$	50		$	278
	For the Year Ended December 31, 2015
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Total
Interest income	$	202		$	186		$	36		$	184		$	608
Interest expense	110			91			84			80			365
Net interest income (expense)	92			95			(48		)	104			243
(Reversal) provision for credit losses	(1		)	1			—			(1		)	(1		)
Noninterest income	22			7			176			20			225
Noninterest expense	37			33			31			34			135
Affordable Housing Program assessments	7			7			10			9			33
Net income	$	71		$	61		$	87		$	82		$	301

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Investment Portfolio

The following table presents supplementary financial information on the Bank's investments (dollars in millions).

	As of December 31,
	2016														2015		2014
	Due in one year or less			Due after one year through five years			Due after five through 10 years			Due after 10 years			Total
Interest-bearing deposits	$	1,106		$	—		$	—		$	—		$	1,106	$	1,088	$	1,010
Securities purchased under agreements to resell	1,386			—			—			—			1,386		2,500		1,960
Federal funds sold	7,770			—			—			—			7,770		5,421		6,385
Total Investment Securities by Major Security Type
Trading securities:
Government-sponsored enterprises debt obligations	206			—			55			—			261		1,212		1,208
Another FHLBank's bond	—			—			—			—			—		52		60
State and local housing agency debt obligations	—			1			—			—			1		1		1
Total trading securities	206			1			55			—			262		1,265		1,269
Available-for-sale securities:
Private-label residential MBS	—			1			2			1,342			1,345		1,662		1,981
Held-to-maturity securities:
State and local housing agency debt obligations	75			—			1			—			76		76		81
Government-sponsored enterprises debt obligations	2,379			3,487			175			—			6,041		5,693		6,667
Mortgage-backed securities:
U.S. agency obligations- guaranteed residential	—			—			6			203			209		279		366
Government-sponsored enterprises residential	3			268			348			10,133			10,752		11,958		13,665
Government-sponsored enterprises commercial	—			808			5,749			216			6,773		4,140		1,663
Private-label residential	—			30			—			760			790		1,093		1,455
Total held-to-maturity securities	2,457			4,593			6,279			11,312			24,641		23,239		23,897
Total investment securities	2,663			4,595			6,336			12,654			26,248		26,166		27,147
Total investments	$	12,925		$	4,595		$	6,336		$	12,654		$	36,510	$	35,175	$	36,502
Yield on trading securities	5.50		%	6.72		%	2.66		%	0.00		%
Yield on available-for-sale securities	0.00		%	4.75		%	5.95		%	5.30		%
Yield on held-to-maturity securities	0.80		%	1.15		%	1.06		%	1.69		%
Yield on total investment securities	1.17		%	1.15		%	1.08		%	2.04		%

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The following table presents securities the Bank held with the following issuer with a carrying value greater than 10 percent of the Bank's total capital. These amounts include securities issued by the issuer's holding company, along with its subsidiaries and affiliate trusts (in millions):

	As of December 31, 2016
	Total Carrying Value		Total Fair Value
Bank of America Corporation, Charlotte, NC	$	1,066	$	1,064

Loan Portfolio

The following table presents the Bank's outstanding domestic loans, nonaccrual loans, loans 90 days or more past due and accruing interest, and restructured loans (in millions).

	As of December 31,
	2016		2015		2014		2013		2012
Advances	$	99,077	$	104,168	$	99,644	$	89,588	$	87,503
Real estate mortgages (1)	$	524	$	586	$	749	$	929	$	1,255
Nonaccrual real estate mortgages, unpaid principal balance	$	11	$	18	$	33	$	51	$	77
Real estate mortgages past due 90 days or more and still accruing interest, unpaid principal balance (2)	$	1	$	3	$	5	$	9	$	10
Troubled debt restructurings, unpaid principal balance (not included above) (3)	$	10	$	13	$	11	$	11	$	9
Interest contractually due during the year	$	1
Interest actually received during the year	$	—

___________

⁽¹⁾ Amounts include single-family residential loans and Affordable Multifamily Participation Program loans classified as substandard. In August 2013, the Bank sold its Affordable Multifamily Participation Program mortgage loan portfolio.

⁽²⁾ Only government loans (e.g., FHA, VA) continue to accrue interest after 90 days or more delinquent.

⁽³⁾ Represents troubled debt restructured loans that are still performing as of year end.

The Bank places a conventional mortgage loan on nonaccrual status when the collection of the contractual principal or interest from the borrower is 90 days or more past due.

Summary of Loan Loss Experience

The following table presents the allowance for credit losses on domestic real estate mortgage loans (dollars in millions).

	For the Years Ended December 31,
	2016			2015			2014			2013			2012
Balance, beginning of year	$	2		$	3		$	11		$	11		$	6
(Reversal) provision for credit losses	(1		)	(1		)	(5		)	5			6
Charge-offs	—			—			(3		)	(4		)	(1		)
Mortgage loans transferred to held for sale	—			—			—			(1		)	—
Balance, end of year	$	1		$	2		$	3		$	11		$	11
Ratio of net charge-offs during the year to average loans outstanding during the year (in basis points)	2			4			39			35			4

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The following table presents the allocation of the allowance for credit losses on mortgage loans (dollars in millions).

	As of December 31,
	2016			2015			2014			2013			2012
	Amount (1)		% of Total Loans (2)	Amount (1)		% of Total Loans (2)	Amount (1)		% of Total Loans (2)	Amount (1)		% of Total Loans (2)	Amount (1)		% of Total Loans (2)
Single-family residential mortgages	$	1	100	$	2	100	$	3	100	$	11	100	$	10	98
Multifamily residential mortgages	—		—	—		—	—		—	—		—	1		2
Total	$	1	100	$	2	100	$	3	100	$	11	100	$	11	100

____________

⁽¹⁾ Amount allocated for credit losses on mortgage loans.

⁽²⁾ Mortgage loans outstanding as a percentage of total mortgage loans.

Short-term Borrowings

Borrowings with original maturities of one year or less are classified as short-term. The following table presents information regarding the Bank's short-term borrowings (dollars in millions).

	As of and for the Years Ended December 31,
	2016			2015			2014
Consolidated obligation discount notes:
Amount outstanding at the end of the year	$	41,292		$	69,434		$	37,162
Weighted average interest rate at the end of the year	0.48		%	0.27		%	0.10		%
Daily average outstanding for the year	$	58,744		$	42,328		$	29,899
Weighted average interest rate for the year	0.42		%	0.14		%	0.10		%
Maximum amount outstanding at any month-end during the year	$	69,375		$	69,434		$	37,162
Consolidated obligation bonds:
Amount outstanding at the end of the year	$	41,705		$	13,279		$	31,138
Weighted average interest rate at the end of the year	0.68		%	0.26		%	0.11		%
Daily average outstanding for the year	$	27,227		$	20,262		$	31,461
Weighted average interest rate for the year	0.65		%	0.18		%	0.14		%
Maximum amount outstanding at any month-end during the year	$	41,705		$	26,773		$	36,529

Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

The Bank's President and Chief Executive Officer and the Bank's Executive Vice President and Chief Financial Officer (Certifying Officers) are responsible for establishing and maintaining a system of disclosure controls and procedures designed to ensure that information required to be disclosed by the Bank in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Bank in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2016, the Bank's management, with the participation of the Certifying Officers, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Based on that evaluation, the Certifying Officers have concluded that the Bank's disclosure controls and procedures (as defined in Rules 13a-15(a) and 15d-15(e) under

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the Exchange Act) were effective to provide reasonable assurance that information required to be disclosed by the Bank in the reports that it files or submits under the Exchange Act (1) is accumulated and communicated to the Bank's management, including the Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure; and (2) is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

In designing and evaluating the Bank's disclosure controls and procedures, the Bank's Certifying Officers recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Management's Report on Internal Control Over Financial Reporting

The Bank's management is responsible for establishing and maintaining adequate internal control over financial reporting for the Bank, as defined in Rule 13a-15(f) under the Exchange Act. The Bank's management assessed the effectiveness of the Bank's internal control over financial reporting as of December 31, 2016. In making this assessment, the Bank's management utilized the criteria set forth by COSO in Internal Control-Integrated Framework (2013). Based upon that evaluation, management has concluded that the Bank's internal control over financial reporting was effective as of December 31, 2016.

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. The effectiveness of the Bank's internal control over financial reporting as of December 31, 2016, has been audited by PricewaterhouseCoopers LLP (PwC), an independent registered public accounting firm, as stated in their report which appears within.

Changes in Internal Control Over Financial Reporting

During the fourth quarter of 2016, there were no changes in the Bank's internal control over financial reporting that have affected materially, or are reasonably likely to affect materially, the Bank's internal control over financial reporting.

Item 9B. Other Information.

PricewaterhouseCoopers LLP (PwC) serves as the independent registered public accounting firm for the Bank. Rule 201(c)(1)(ii)(A) of Regulation S-X (the Loan Rule) prohibits an accounting firm, such as PwC, from having certain financial relationships with its audit clients and affiliated entities. Specifically, the Loan Rule provides, in relevant part, that an accounting firm generally would not be independent if it or a covered person in the firm receives a loan from a lender that is a “record or beneficial owner of more than ten percent of the audit client’s equity securities.” A covered person in the firm includes personnel on the audit engagement team, personnel in the chain of command, partners and managers who provide ten or more hours of non-audit services to the audit client, and partners in the office where the lead engagement partner practices in connection with the client.

PwC has advised the Bank that for the year ended December 31, 2016 that PwC and certain covered persons had borrowing relationships with two Bank members (referred below as the “Lenders”) who own more than ten percent of the Bank’s capital stock, which could call into question PwC’s independence with respect to the Bank. The Bank is providing this disclosure to explain the facts and circumstances, as well as PwC’s and the Audit Committee’s conclusions, concerning PwC’s objectivity and impartiality with respect to the audit of the Bank.

PwC advised the Audit Committee of the Bank that it believes that, in light of the facts of these borrowing relationships, its ability to exercise objective and impartial judgment on all matters encompassed within PwC’s audit engagement has not been impaired and that a reasonable investor with knowledge of all relevant facts and circumstances would reach the same conclusion. PwC has advised the Audit Committee that this conclusion is based in part on the following considerations:

• the firm's borrowings are in good standing and neither Lender has the right to take action against PwC, as borrower, in connection with the financings;

• the debt balances outstanding are immaterial to PwC and to each Lender;

• PwC has borrowing relationships with a diverse group of lenders, therefore PwC is not dependent on any single lender or group of lenders;

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• the PwC audit engagement team has no involvement in PwC’s treasury function and PwC’s treasury function has no oversight or ability to influence the PwC audit engagement team; and

• neither Lender has made any attempt to influence the conduct of the Bank’s audit or the objectivity and impartiality of any member of PwC’s audit engagement team.

Additionally, the Audit Committee of the Bank assessed PwC’s ability to perform an objective and impartial audit, including consideration of the ownership structure of the Bank, the limited voting rights of the Bank’s members and the composition of the board of directors. In addition to the above listed considerations, the Audit Committee considered the following:

• although the Lenders owned more than ten percent of the Bank’s capital stock, the Lenders' voting rights are each less than ten percent;

• as of December 31, 2016 and as of the date of the filing of this Form 10-K, no officer or director of either Lender served on the board of directors of the Bank;

• the Lenders will each be eligible to vote only in the at-large independent directorship election for 2017; and

• the Lenders are subject to the same terms and conditions for conducting business with the Bank as any other member.

Based on the Audit Committee’s evaluation, the Audit Committee has concluded that PwC’s ability to exercise objective and impartial judgment on all issues encompassed within PwC’s audit engagement has not been impaired.

PART III.

Item 10.Directors, Executive Officers and Corporate Governance.

Directors

The FHLBank Act provides that an FHLBank's board of directors is to comprise 13 directors, or such other number as the Director determines appropriate. For 2017, the Director has designated 14 directorships for the Bank, eight of which are member directorships and six of which are independent directorships.

All individuals serving as Bank directors must be United States citizens. At least a majority of the directors must be member directors and not less than two-fifths must be independent directors. Under the FHLBank Act, as amended by the Housing Act, and Finance Agency regulations, the term of office of each director is four years, subject to certain adjustments to achieve a staggered board. Any director that has been elected to three consecutive full terms is not eligible for election to directorship for any term that begins within two years of the expiration of the third term.

The board of directors does not solicit proxies, nor are member institutions permitted to solicit or use proxies in order to cast their votes in an election.

Member Directors

Candidates for member directorships in a particular state are nominated by members in that state. FHLBank Boards are not permitted to nominate or elect member directors, except for vacant member directorships. Finance Agency regulations require that:

• a member directorship be held only by an officer or director of a member institution located within the Bank's district;

• the member institution meet all minimum capital requirements established by its regulator(s); and

• the member institution be a member as of the record date established for the election of the member director.

The Bank is not permitted to establish additional eligibility criteria or qualifications for member directorships. With respect to member directors, under Finance Agency regulations, no director, officer, employee, attorney, or agent of the Bank (except in his/her personal capacity) may, directly or indirectly, support the nomination or election of a particular individual for a member directorship.

For each member director position to be filled, an eligible member in that state may cast one vote for each share of capital stock it was required to hold as of the record date, except that an eligible member's votes for each member

118

director position to be filled may not exceed the average number of shares of capital stock required to be held by all of the members in that state as of the record date.

The regulations permit, but do not require, the board of directors to conduct an annual assessment of the skills and experience possessed by the members of its board of directors as a whole and to determine whether the capabilities of the board would be enhanced through the addition of individuals with particular skills and experience. The Bank may identify those qualifications and so inform the members as part of its election notification process, but the Bank may not exclude a member director candidate from the election ballot on the basis of such qualifications. In 2016, the board of directors conducted an assessment of its directors, but did not identify any particular qualifications as part of its 2016 election notification process.

Independent Directors

Candidates for independent directorships are nominated by the Bank's board of directors. Finance Agency regulations require that an independent directorship be held only by an individual:

• who is a bona fide resident of the Bank's district;

• who is not a director, officer, or employee of a member institution or of any recipient of advances from the Bank; and

• who is not an officer of any FHLBank.

At least two of the independent directors must be public interest directors. Finance Agency regulations define a public interest independent director as someone having more than four years of experience representing consumer or community interests in banking services, credit needs, housing or consumer financial protection. The other independent directors must have experience in, or knowledge of, one or more of the following areas: auditing and accounting, derivatives, financial management, organizational management, project development, risk management practices, and the law.

Any individual may submit an application form and request to be considered by the Bank to be an independent director candidate. Before nominating any individual for an independent directorship, other than for a public interest directorship, the Board must determine that the candidate's knowledge or experience is commensurate with that needed to oversee a financial institution with a size and complexity that is comparable to the Bank's. Finance Agency regulations require the board to consult with the Bank's Affordable Housing Advisory Council with respect to the independent directorship candidates. Further, the Bank must submit information about independent directorship candidates to the Finance Agency for its review prior to their nomination. After the independent director candidates are nominated by the board, the candidates are then presented to the Bank's membership for a district-wide vote. Finance Agency regulations permit the Bank's directors, officers, attorneys, employees, agents, and Advisory Council members to support the candidacy of the board's candidates for independent directorships.

For independent directorships, candidates are elected on a district-wide basis, with the candidate receiving the most votes being declared the winner. Candidates running unopposed must receive at least 20 percent of the number of votes eligible to be cast. If an unopposed candidate receives less than 20 percent of eligible votes, a new election must be conducted.

Board Vacancies

When the board has a vacancy, Finance Agency regulations require the board to elect a director to fill the vacancy by a majority vote of the remaining directors.

The Bank has determined that all directors meet the regulatory eligibility requirements for directors. Because of the laws and regulations governing member directorship elections that are described above, the Bank is not in a position to know what specific factors the Bank's member institutions may consider in selecting member director candidates or electing member directors. For the Bank's independent directors and the directors who hold their current directorship due to vacancy and appointment by the board, the board considered the experience, qualifications, attributes or skills described in the biographical paragraphs provided below in determining to nominate or appoint that person as a director for the Bank. In addition the board has at times considered the importance of maintaining a continuity of relevant knowledge, leadership and experience on the board and diversity the candidate would bring to the board when nominating or appointing a candidate.

119

The following table presents information regarding each of the Bank's directors, and all persons nominated or chosen to become directors, as of the date of this Report. Except as otherwise indicated, each director has been engaged in the principal occupation described below for at least five years. No director has any family relationship with any other director or executive officer of the Bank.

Name	Age	Director Since	Expiration of Current Term as Director
Brian E. Argrett(1)	53	2016	12/31/2017
Travis Cosby, III (1)	58	2014	12/31/2017
Suzanne S. DeFerie (1)	60	2015	12/31/2020
R. Thornwell Dunlap, III (1)	59	2016	12/31/2019
F. Gary Garczynski (2)(3)	70	2007	12/31/2020
William C. Handorf (2)	72	2007	12/31/2019
Scott C. Harvard(1)(4)	62	2017	12/31/2020
Jonathan Kislak (2)	68	2008	12/31/2018
LaSalle D. Leffall, III (2)	54	2007	12/31/2020
Kim C. Liddell (1)	56	2015	12/31/2018
Miriam Lopez (1)	66	2008	12/31/2018
John B. Rucker (2)	65	2017	12/31/2019
Robert L. Strickland, Jr. (2)(3)(4)	65	2007	12/31/2017
Richard A. Whaley (1)	57	2013	12/31/2018

____________

⁽¹⁾  Member Director

⁽²⁾  Independent Director

⁽³⁾  Public Interest Director

⁽⁴⁾  Mr. Harvard previously served as a director from 2003-2012. Mr. Strickland previously served as a director from 2002-2004.

Chairman of the board, F. Gary Garczynski, has served as the president of National Capital Land and Development, Inc., a construction and real estate development company in Woodbridge, Virginia, since 1997. Mr. Garczynski served as chairman of the National Housing Endowment from 2004 to 2010 and continues to serve on its executive committee. He previously served as the 2002 President of the National Association of Home Builders (NAHB). Mr. Garczynski serves as a Senior Life Director of NAHB, a Life Director of the Home Builders Association of Virginia, and a Senior Life Director of the Northern Virginia Building Industry Association. He also is a member of the Prince William County, Virginia, Affordable Housing Task Force and a three-term appointee to the Virginia Housing Commission. Mr. Garczynski serves a gubernatorial appointment through 2018 as vice chairman of the Commonwealth Transportation Board and has previously served as a director on the Northern Virginia Transportation Authority. Mr. Garczynski's public interest experience in housing, affordable housing and housing policy supported his nomination as a public interest director.

Vice chairman of the board, Richard A. Whaley, has served as president, chief executive officer, and director of Citizens Bank of Americus in Americus, Georgia, since 2001. From 1989 to 2001, he served as market manager and commercial lender for Wachovia Bank. Mr. Whaley served as chairman of the Georgia Bankers Association from October 2010 to June 2012. Mr. Whaley also served as chairman of the South Georgia Technical College Foundation from 2008 to 2010. He has served as a director of the Georgia Bankers Association Insurance Trust, Inc. since June 2013 and is a veteran of the U.S. Army.

Brian E. Argretthas served as president, chief executive officer, and director of City First Bank of DC since 2011. Previously, Mr. Argrett was founder and managing partner of both Fulcrum Capital Group and Fulcrum Capital Partners, L.P. from 1992 to 2011. He served as president, chief executive officer, and director of Fulcrum Venture Capital Corporation, a federally licensed and regulated Small Business Investment Company, from 1992 to 2011. He currently serves as chairman of the boards of directors of City First Enterprises, a nonprofit bank holding company, and City First Foundation. Mr. Argrett also serves as presidential appointee to the Community Development Advisory Board, chairman of the Community Development Bankers Association, and director of the Washington DC Economic Partnership. From 2006-2009, Mr. Argrett served on the audit

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committee of First Federal Financial Corp. (NYSE- FED). Mr. Argrett's experience in affordable housing and underserved markets and his SEC and board-level experience supported his appointment to fill the member directorship vacancy.

Travis Cosby, III has served as chairman of the board of First Community Bank of Central Alabama in Wetumpka, Alabama, since January 1, 2013, having previously served as president from 2001 to 2011 as well as chief executive officer from 2004 to 2012. He has over 30 years of banking experience and served in operations, lending, investment portfolio management, and funds management positions. He worked at Union Planters Bank from 1998 to 2001, achieving the title of city president, after rising to executive vice president during his tenure at First National Bank of Wetumpka from 1982 to 1998. From 1980 to 1982, Mr. Cosby worked at Jackson Thornton and Co., CPAs. He earned a B.S. in accounting from Auburn University, and became a certified public accountant in June 1982. Mr. Cosby is a past chairman and current board member of the Alabama Bankers Association, Inc.

Suzanne S. DeFerie has served as president and chief executive officer of Asheville Savings Bank, S.S.B. in Asheville, North Carolina, since 2008 and its holding company, ASB Bancorp. Inc. (NASDAQ - ASBB) since its incorporation in 2011. Ms. DeFerie also serves a member of the boards of directors for both Asheville Savings Bank and ASB Bancorp. Inc. Prior to becoming chief executive officer, Ms. DeFerie was executive vice president and chief financial officer of Asheville Savings Bank for 16 years.

R. Thornwell Dunlap, III has served as president and chief executive officer of Countybank since 1995 and chairman of its holding company, TCB Corporation, since 2001. He has served on the South Carolina Bankers Association Board of Directors since 2016 and is a past chairman of the Independent Banks of South Carolina Board of Directors. Mr. Dunlap also serves on the Greenwood Partnership Alliance Board of Directors and Executive Committee and is a past chairman. Mr. Dunlap served on the Piedmont Technical College Foundation Board of Directors from 1995 to 2004, and returned to serve in 2010 to present. He has served on the Ten at the Top Board of Directors since 2009 and is a founding director. Mr. Dunlap is a member and past chairman of the Greenwood Rotary Club.

William C. Handorf, Ph.D. has served as a professor of finance and real estate at The George Washington University's School of Business in Washington, D.C. since 1975. From 2001 to 2006, Mr. Handorf served as a director of the Federal Reserve Bank of Richmond's Baltimore branch, including two years as chair. From 1992 to 1995, Mr. Handorf served as a private citizen director of the FHLBanks Office of Finance. Mr. Handorf's experience in financial markets, banking, real estate investment, accounting, and derivatives supported his nomination as an independent director.

Scott C. Harvard has served as president, chief executive officer and director of First National Corporation (OTC - FXNC) since 2011. He served as president, chief executive officer and director of First Bank from 2011 to 2015 and has served as chief executive officer and director of First Bank since 2015. He previously served as a director of the Bank from 2003 to 2012, serving as chairman from 2007-2012. Mr. Harvard served as president, chief executive officer and as a director of Shore Bank from 1985 to 2008 and as president, chief executive officer and director of its parent, Shore Financial Corporation, from 1997 to 2008. He served as executive vice president and director of Hampton Roads Bankshares from 2008 to 2009 and served as a member of the executive committee of the Virginia Bankers Association and on the board of the Virginia Association of Community Banks from 2012-2014. He is also a director of the Community Bankers Bank in Richmond, Virginia. Mr. Harvard was the founder of the United Way of Virginia's Eastern Shore and currently serves as a director of the United Way of the Northern Shenandoah Valley. He has also served on the Council of Federal Home Loan Banks.

Jonathan Kislak has served as principal and chairman of the board of Antares Capital Corporation, a venture capital firm investing equity capital in expansion stage companies and management buyout opportunities, since 1999. From 1993 to 2005, Mr. Kislak served as president and chairman of the board of Kislak Financial Corporation, a community bank holding company in Miami, Florida. From 2013-2016, Mr. Kislak served on the board of directors and chair of the audit committee of Cherry Hill Mortgage Investment Corp. (NYSE - CHMI). Mr. Kislak's experience in economics and finance supported his nomination as an independent director.

LaSalle D. Leffall, III is president of LDL Financial, a corporate advisory and investment firm he founded in 2006. From 2002 to 2006, he was a senior executive of The NHP Foundation, one of the nation's largest nonprofit owners of affordable multifamily housing, and served as president and chief operating officer. In October and November 2008, he served as acting chief executive officer. From 1996 to 2002, Mr. Leffall was an investment banker in the mergers and acquisitions divisions of UBS and Credit Suisse in New York, New York. In 1992, Mr. Leffall began his career as an attorney in the corporate department of Cravath, Swaine & Moore in New York, New York. Mr. Leffall has served on the board of directors for Mutual of America Investment Corporation and Mutual of America Institutional Funds, registered investment companies, from 2011 through the present. He is a member of the New York State Bar, District of Columbia Bar, Council on Foreign Relations, The Federal City Council, and The Economic Club

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of Washington, D.C. Mr. Leffall earned a B.A., magna cum laude, in History from Harvard College followed by the simultaneous completion of a J.D., cum laude, from Harvard Law School and M.B.A. from Harvard Business School. Mr. Leffall's experience in finance, law, and affordable multifamily housing, and derivatives knowledge supported his nomination as an independent director.

Kim C. Liddell has served as president and chief executive officer of 1880 Bank, formerly known as the National Bank of Cambridge, in Cambridge, Maryland, since 2010. He was elected chairman of the board of directors in April 2011. From 2004 to 2009, Mr. Liddell served as chief operating officer and executive vice president of Cardinal Financial Corporation (CFNL) and Cardinal Bank. Mr. Liddell has served as a board member of the Virginia Bankers Association's Member Services, Inc., Junior Achievement of the National Capital Area, Business in Education Partnership with the Falls Church City Public Schools, Arlington County Chamber of Commerce, Celebrate Fairfax, and Leadership Fairfax. Mr. Liddell currently serves on the boards of the Maryland Bankers Association and Dorchester General Hospital Foundation. He previously served on the board of the Dorchester County Chamber of Commerce.

Miriam Lopez has served as president, chief lending officer, and director of Marquis Bank in Coral Gables, Florida since July 2010. She previously served as chief executive officer of TransAtlantic Bank in Miami, Florida for 24 years and as TransAtlantic's chairman of the board from 2003 to 2007. She is a former president (non-executive position) of the Florida Bankers Association and former member of the American Bankers Association's Government Relations Council and Executive Committee.

John B. Rucker has served as managing director of Stifel, Nicolaus & Company, Incorporated (“Stifel”), an investment banking firm, since 2015, and manages Stifel’s affordable housing business. Mr. Rucker was a founding partner and managing director of Merchant Capital, L.L.C., a public finance investment banking firm, from 1987 to 2015, which was aquired by Stifel in 2015. He was a member of Fannie Mae’s Southeast Regional Housing Advisory Council and Fannie Mae’s National Housing Impact Advisory Council in 2004 and 2005. He has also served on the board of directors of the National Housing & Rehabilitation Association since 2003. Mr. Rucker served on the Bank’s Affordable Housing Advisory Council from 2012 to 2016, serving as its vice chairman from 2014 to 2015 and as its chairman in 2016. Mr. Rucker's experience as a lawyer and in affordable housing finance supported his appointment to fill the independent directorship vacancy.

Robert L. Strickland, Jr. is executive director of the Alabama Housing Finance Authority, an independent public corporation dedicated to serving the housing needs of low- and moderate-income Alabamians, a position he has held since 1987. Mr. Strickland served as president of the National Council of State Housing Agencies for two terms. He has also served on the National Association of Home Builders Mortgage Finance Roundtable and as a member of Fannie Mae's National Advisory Council. He currently serves as a director of the Alabama MultiFamily Loan Consortium. Mr. Strickland's experience in affordable housing finance supported his nomination as a public interest director.

Code of Conduct

The board has adopted a Code of Conduct that applies to the Bank's principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions, in each case, who are employees of the Bank. The Code of Conduct is posted on the Who We Are - Investor Relations -Governance section of the Bank's Internet website at http://corp.fhlbatl.com/who-we-are/investor-relations/. Any amendments to, or waivers under, the Bank's Code of Conduct that are required to be disclosed pursuant to the SEC's rules will be disclosed on the Bank's website.

Director Independence, Compensation Committee, Audit Committee, and Audit Committee Financial Expert

General

The board of directors of the Bank is required to evaluate the independence of the directors of the Bank under two distinct director independence standards. First, Finance Agency regulations establish independence criteria for directors who serve as members of the Bank's Audit Committee. Second, SEC rules require that the Bank's board of directors apply the independence criteria of a national securities exchange or automated quotation system in assessing the independence of its directors.

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As of the date of this Report, the Bank has 14 directors, eight of whom are member directors and six of whom are independent directors. None of the Bank's directors is an “inside” director. That is, none of the Bank's directors is a Bank employee or officer. Further, as the Bank's capital stock may only be owned by members, former members, and certain non-members, the Bank's directors cannot personally own stock or stock options in the Bank. However, each of the member directors is an officer or director of an institution that is a member of the Bank and that is encouraged to, and does, engage in transactions with the Bank on a regular basis.

Finance Agency Regulations Regarding Independence

The Finance Agency's director independence standards prohibit an individual from serving as a member of the Bank's Audit Committee if he or she has one or more disqualifying relationships with the Bank or its management that would interfere with the exercise of that individual's independent judgment. Disqualifying relationships considered by the board are: employment with the Bank at any time during the last five years; acceptance of compensation from the Bank other than for service as a director; being a consultant, advisor, promoter, underwriter, or legal counsel for the Bank at any time within the last five years; and being an immediate family member of an individual who is or who has been within the past five years, a Bank executive officer. The board assesses the independence of each director under the Finance Agency's independence standards, regardless of whether he or she serves on the Audit Committee. As of March 9, 2017, each of the Bank's directors was independent under these criteria.

SEC Rules Regarding Independence

SEC rules require the Bank's board of directors to adopt a standard of independence to evaluate its directors. The board has adopted the independence standards of the New York Stock Exchange (NYSE) to determine which of its directors are independent, including members of its Governance and Compensation Committee and Audit Committee, and whether the Bank's Audit Committee's financial experts are independent.

After applying the NYSE independence standards, the board determined that, as of March 9, 2017, directors Garczynski, Handorf, Kislak, Leffall, and Rucker, each an independent director, were independent. Based upon the fact that each member director is a senior official of an institution that is a member of the Bank (and thus is an equity holder in the Bank), that each such institution routinely engages in transactions with the Bank, and that such transactions occur frequently and are encouraged, the board determined that none of the member directors presently meets the independence criteria under the NYSE independence standards. For the same reasons, because Mr. Strickland is a senior official of a housing associate that has transacted business with the Bank, the board has determined that he does not meet the independence criteria under the NYSE independence standards.

It is possible that under the NYSE objective criteria for independence (particularly the criterion regarding the amount of business conducted with the Bank by the director's institution), a member director could meet the independence standard on a particular day. However, because the amount of business conducted by a member director's institution may change frequently, and because the Bank generally desires to increase the amount of business it conducts with each member, the directors deemed it inappropriate to draw distinctions among the member directors based upon the amount of business conducted with the Bank by any director's institution at a specific time. The same reasoning generally applies to Mr. Strickland.

Compensation Committee

The board has a Governance and Compensation Committee, composed of directors Dunlap, Harvard, Liddell, Lopez, Garczynski, Rucker, Strickland and Whaley. As the Bank's Governance and Compensation Committee may only recommend actions to the full board regarding governance practices and compensation and benefits programs, which the full board may approve or disapprove, the board assesses the independence of the full board under the NYSE's standards for compensation committees. The board determined that, as of March 9, 2017, each of directors Garczynski, Handorf, Kislak, Leffall, and Rucker, was independent under the NYSE independence standards for compensation committee members, but for the reasons noted above, none of the member directors or Mr. Strickland was independent under such standards.

Audit Committee

The board has a standing Audit Committee, composed of directors Argrett, Cosby, DeFerie, Garczynski, Handorf, Kislak, Leffall, and Whaley. The board determined that, as of March 9, 2017, each of directors Garczynski, Handorf,

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Kislak, and Leffall was independent under the NYSE independence standards for audit committee members, but, for the reasons noted above, none of the member directors serving on the Audit Committee was independent under such standards. The board also determined that each of directors Argrett, DeFerie, Handorf, Kislak, Leffall, and Whaley is an “audit committee financial expert” within the meaning of the SEC rules.

The board also assesses the independence of the Audit Committee members under Section 10A(m)(3) of the Exchange Act. As of March 9, 2017, each of the Bank's directors was independent under these criteria. As stated above, the board determined that each member of the Audit Committee was independent under the Finance Agency's standards applicable to the Bank's Audit Committee.

Board Leadership Structure and Risk Oversight

The directors are nominated and elected in accordance with applicable law and Finance Agency regulations. As required by applicable law, the chairman and vice chairman of the board are elected by a majority of all the directors of the Bank from among the directors of the Bank for two year terms, and since Bank officers may not serve as directors of the Bank, neither the board chairman or vice chairman position can be filled by the president and chief executive officer of the Bank.

The board of directors establishes the Bank's risk management culture, including risk tolerances and risk management philosophies, by establishing its risk management system, overseeing its risk management activities, and adopting its risk appetite and RMP. The board reviews the risk appetite report on a quarterly basis and approves any changes as appropriate. The board receives regular updates on the Bank's key risks including an independent risk assessment. The board reviews the RMP at least annually and approves any amendments to it as appropriate. For further discussion of the risk appetite and the RMP, please see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations-Risk Management. The board works with management to align the Bank's strategic activities and objectives within the parameters of the risk appetite framework and the RMP. The board utilizes committees as an integral part of overseeing risk management, including an audit committee, a credit and member services committee, an enterprise risk and operations committee, an executive committee, a finance committee, a governance and compensation committee, and a housing and community investment committee, with the following oversight responsibilities:

• Audit Committee oversees the Bank's financial reporting process, system of internal control, audit process, policies and procedures for assessing and monitoring implementation of the strategic plan, and the Bank's process for monitoring compliance with laws and regulations.

• Credit and Member Services Committee oversees the Bank's credit and collateral policies and related programs, services, products and documentation, and the Bank's credit and collateral risk management program, strategies, and activities.

• Enterprise Risk and Operations Committee oversees the Bank's enterprise risk management functions, operations, information technology, and other related matters.

• Executive Committee exercises most of the powers of the board in the management and direction of the affairs of the Bank during the intervals between board meetings.

• Finance Committee oversees matters affecting the Bank's financial performance, capital management and other related matters, including the Bank's market and liquidity risk management program, strategies, and activities.

• Governance and Compensation Committee oversees the Bank's governance practices, compensation and benefits programs, and other related matters.

• Housing and Community Investment Committee oversees the Bank's housing and community investment policies, programs, and other relevant matters, including any other Bank products, services, and programs that may provide grants, subsidies, or other forms of assistance to support affordable housing and community economic development for low- and moderate-income individuals and communities.

The Bank's internal management is overseen by the president and chief executive officer and delegated to other senior managers and internal management committees. The Bank has determined that this leadership structure is the most

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effective means of actively engaging the board of directors in risk management oversight while utilizing Bank management to implement and maintain sound risk management practices.

Compensation Committee Interlocks and Insider Participation

The board has a Governance and Compensation Committee that recommends actions to the full board regarding governance practices and compensation and benefits programs, which the full board of directors may approve or disapprove. None of the directors serving on the board in 2016 has at any time been an officer or employee with the Bank. None of the Bank's executive officers served during 2016 or is serving on the board of directors or the compensation committee of any entity whose executive officers served on the Bank's board of directors.

Executive Officers

The following table presents the names, ages, and titles of the executive officers of the Bank and all persons chosen to become executive officers as of the date of this Report. No executive officer has any family relationship with any other executive officer or director of the Bank.

Executive Officer	Age	Title
W. Wesley McMullan	53	President and Chief Executive Officer
Kirk R. Malmberg	56	Executive Vice President and Chief Financial Officer
Cathy C. Adams	57	Executive Vice President and Chief Operations Officer
Robert F. Dozier, Jr.	48	Executive Vice President and Chief Business Officer
Robert C. Bennett	62	Senior Vice President and Chief Information Officer
Julia S. Brown	52	Senior Vice President, Corporate Secretary
Bryan Delong	53	Senior Vice President, Director of Human Resources and Staff Services
Arthur L. Fleming	58	Senior Vice President, Director of Community Investment Services
Annette Hunter	52	Senior Vice President, Director of Accounting Operations
Haig H. Kazazian, III	51	Senior Vice President, Treasurer
Robert S. Kovach	53	Senior Vice President, Chief Credit Officer
Eric M. Mondres	62	Senior Vice President, Director of Government and Industry Relations
Reginald T. O'Shields	46	Senior Vice President, General Counsel
Richard A. Patrick	61	Senior Vice President, Chief Audit Officer
William T. Shaw	45	First Vice President, Controller
Ken Yoo	46	Senior Vice President, Chief Risk Officer

W. Wesley McMullan was appointed president and chief executive officer in December 2010. Previously, he served as executive vice president and director of financial management since 2004, with responsibility for sales, MPP sales, asset-liability management, liquidity management, other mission-related investments, customer systems and operations, and member education. Mr. McMullan joined the Bank as a credit analyst in 1988 and later earned promotions to assistant vice president in 1993, vice president in 1995, group vice president in 1998, and senior vice president in 2001. He is a chartered financial analyst and earned a B.S. in finance from Clemson University.

Kirk R. Malmberg was appointed executive vice president and chief financial officer effective April 1, 2011. He oversees accounting, financial reporting, investment and derivatives operations, and treasury as well as the Bank's credit and collateral services. From 2007 through March 2011, he served as executive vice president and chief credit officer, overseeing collateral services, credit services, community investment services and mortgage program operations. Prior to that, Mr. Malmberg served as senior vice president responsible for the Bank's mortgage programs. He joined the Bank in 2001 as senior vice president, asset-liability management, after having served for five years as senior vice president, treasury, at FHLBank Chicago. Mr. Malmberg earned an M.B.A. from Rice University and a B.A. from Trinity University.

Cathy C. Adams was appointed executive vice president and chief operations officer effective March 1, 2011. She is responsible for overseeing all Bank programs related to information technology, human resources, administrative

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services, and financial operations management. Ms. Adams was named executive vice president and chief administrative officer in 2008. Previously, she served as senior vice president of staff services from 2004 through 2008. Ms. Adams joined the Bank in 1986. She earned an M.B.A. in management from Georgia State University and a B.A. in business administration from Tift College.

Robert F. Dozier, Jr. was appointed executive vice president and chief business officer effective June 6, 2011. Mr. Dozier oversees the Bank's member sales and outreach, community investment services, corporate communications, and government and industry relations. Prior to joining the Bank, Mr. Dozier was president and chief operating officer for Homeowners Mortgage Enterprises, a subsidiary of CoastalStates Bank, where he began as a loan officer in 1992. Mr. Dozier also served on the board of directors for CoastalSouth Bancshares, the holding company of CoastalStates Bank. From 2002 to 2004, Mr. Dozier served as a director of the Bank. He earned a B.A. in political science from the University of South Carolina.

Robert C. Bennett has served as senior vice president, chief information officer, overseeing the Bank's information technology division, since joining the Bank in 2009. Prior to that, Mr. Bennett was executive vice president and chief information officer for Homebanc Corporation from 1998 through 2007. During a 17-year career from 1981 through 1998 with BellSouth Telecommunications, Mr. Bennett served as chief information officer for various divisions, including corporate marketing and small business services. Mr. Bennett earned a B.A. in English literature from Ohio University.

Julia S. Brown serves as senior vice president and corporate secretary. The board of directors appointed Ms. Brown to serve as corporate secretary in April 2011. Prior to her appointment as corporate secretary, she served as associate general counsel, assistant corporate secretary beginning in 2005, deputy general counsel, assistant corporate secretary beginning in 2007, and first vice president, deputy general counsel for governance beginning in 2009. Before joining the Bank in 2001 as a senior attorney, Ms. Brown practiced commercial real estate law with Sutherland Asbill & Brennan, LLP, in Atlanta, Georgia. She earned a B.S. in Spanish and anthropology from Wellesley College, summa cum laude, and her J.D., cum laude, from Harvard Law School.

Bryan Delong has served as senior vice president, chief human resources officer, since January 1, 2016, having previously served as director of human resources and staff services since 2011. Mr. Delong is responsible for executing the Bank's human resources strategies to include: talent acquisition, total rewards, employee development, diversity and inclusion, and human resources compliance. Mr. Delong also leads the Bank's staff services and property management functions, which include facilities operations, tenant leasing, security, print and mail services, and procurement. A 24-year veteran of the Bank, Mr. Delong previously served as the assistant director of human resources with responsibility for managing the Bank's compensation, benefits, human resources information systems, and employee development programs. Prior to joining the Bank in 1993, Mr. Delong worked at LOMA as a compensation consultant and AT&T as a training specialist. Mr. Delong holds an M.S. in industrial and organizational psychology from Radford University, an M.A. in human resources development from Georgia State University, and a B.A. in English from Earlham College. He holds a certification as a Professional in Human Resources.

Arthur L. Fleming has served as senior vice president, director of community investment services, directing the Bank's community investment, economic development, and affordable housing products and services, since 2007. Mr. Fleming has experience in a variety of financial services, legal, housing development, and academic roles. Before joining the Bank, Mr. Fleming was chief lending and investment officer for the Opportunity Finance Network, Inc., a national community development financial institution. He also served as the senior director for the southeast region and director of housing finance for the Fannie Mae Foundation; the senior vice president, managing director of housing initiatives at GMAC; founder and executive director of the Community Financing Consortium, Inc; and an attorney/senior associate for the FAU/FIU Joint Center for Environmental and Urban Problems. Mr. Fleming earned his undergraduate degree from Florida State University, and a master's degree in Urban and Regional Planning and a J.D. from the University of Florida.

Annette Hunter has served as director of accounting operations since 2006. On January 1, 2015, she was promoted from first vice president to senior vice president. In that role, Ms. Hunter is responsible for the daily accounting operations of the derivatives, investments, consolidated obligations, advances and purchased mortgage portfolios. Ms. Hunter joined the Bank in 2002 as manager of derivative and investment operations. Prior to joining the Bank, she served in various managerial accounting roles at Mirant Corporation, Louis Dreyfus Energy Corporation and Continental Hydraulic Hose. Ms. Hunter earned a B.S. in Business Administration from The Ohio State University and an M.B.A. from Kennesaw State University. She is a certified public accountant.

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Haig H. Kazazian, III has served as treasurer since June 3, 2013, and was promoted to senior vice president, treasurer effective January 1, 2014. Mr. Kazazian joined the Bank as a credit analyst in 1992 and earned promotions to manager of national accounts and product development in 2001, first vice president in 2005, manager of national accounts and capital markets trading in 2009, and manager of treasury analysis and national accounts sales and trading in 2011. He is a chartered financial analyst and earned an M.B.A. and a B.A. in economics, each from Emory University. Mr. Kazazian was an M.B.A. Fellowship Recipient.

Robert S. Kovach has served as senior vice president, chief credit officer since January 2012, directing the Bank's credit and collateral services and collateral risk management operations. Prior to joining the Bank in 2010 as director of collateral services, Mr. Kovach served a variety of roles with FHLBank Pittsburgh from 1996 to 2010, including director of collateral services, chief investment officer, and director of internal audit. He also served as a field manager and a senior examiner for the Office of Thrift Supervision. Mr. Kovach holds a chartered financial analyst designation and earned a B.S. in chemistry from Dickinson College.

Eric M. Mondres has served as senior vice president, director of government and industry relations since 2009. Mr. Mondres oversees the Bank's efforts related to public policy development and strategy, as well as its relationships with industry members and groups as it relates to the Bank's business and mission. He joined the Bank in 2003 as vice president and director of government relations. Before joining the Bank, he worked for America's Community Bankers, the Thrift Depositor Protection Oversight Board, the Environmental Protection Agency as a consultant, the U.S. Department of Agriculture, and the U.S. House of Representatives' House Administration Committee as assistant minority counsel. Mr. Mondres earned a B.A. degree in history and political science from Bridgewater College and a J.D. from Cumberland School of Law.

Reginald T. O'Shields has served as senior vice president and general counsel since April 2, 2011. Mr. O'Shields manages the delivery of legal services by the Bank's legal department covering a wide variety of corporate, securities, finance, and regulatory matters. He joined the Bank in 2003 as a senior attorney and earned promotions to assistant general counsel in 2005, associate general counsel in 2006 and deputy general counsel in 2007. He was named senior vice president, deputy general counsel and director of legal services January 1, 2011. Before joining the Bank, Mr. O'Shields was in private legal practice with Sutherland Asbill & Brennan, LLP in Atlanta, Georgia, Haynsworth Sinkler Boyd in Greenville, South Carolina, and Simpson, Thacher & Bartlett in New York, New York. Mr. O'Shields earned a J.D. from Vanderbilt University and a B.A. in economics from Furman University.

Richard A. Patrick has served as senior vice president and chief audit officer since 2002. He is responsible for providing an independent audit of the Bank by evaluating the internal control system and testing for compliance with internal policies and procedures as well as with applicable laws and directives from the Finance Agency. Mr. Patrick reports directly to the audit committee of the board of directors. Mr. Patrick joined the Bank in 1991 as the vice president and director of internal audit and was promoted to his senior position in 2002. Prior to joining the Bank, Mr. Patrick was a vice president and audit manager for C&S/Sovran Corporation, which is now known as Bank of America. Previously, he was a branch and operations audit officer for National Bank of Georgia. A certified public accountant, certified fraud examiner, certified financial services auditor, and certified bank auditor, Mr. Patrick earned a B.A. in business administration from Appalachian State University. He is also an honors graduate of the Bank Administration Institute's School for Bank Administration.

William T. Shaw has served as first vice president and controller of the Bank since June 28, 2014. Mr. Shaw oversees financial reporting, accounting policy, and derivatives hedge accounting. From 2009 to 2013 he served as vice president, director of accounting policy. Mr. Shaw was promoted to director of accounting policy and financial reporting in 2013 and to first vice president in January, 2014. Before joining the Bank as assistant vice president, manager of accounting policy in 2008, Mr. Shaw served as vice president of accounting and assistant controller for First Charter Corporation, director of SEC reporting for Novelis Inc., manager of inspections with the Public Company Accounting Oversight Board, and various manager roles with PricewaterhouseCoopers LLP. He received his B.S. in accounting and master’s degree in accountancy from Brigham Young University. He is also a certified public accountant.

Ken Yoo has served as chief risk officer since April 1, 2011. On January 1, 2013, he was promoted from first vice president to senior vice president. Mr. Yoo directs the Bank's enterprise risk management function and is responsible for overseeing enterprise-wide risk assessment and reporting functions, financial risk modeling, as well as model validation efforts for the Bank. Mr. Yoo joined the Bank in 2006 as manager of risk reporting and analysis and was

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promoted to director of enterprise risk management and then deputy chief risk officer prior to his current position. Prior to joining the Bank, Mr. Yoo was employed by the Office of Federal Housing Enterprise Oversight (which was subsequently merged into the Finance Agency pursuant to the Housing Act), where he was a senior member of its supervisory group since 2005. Previously, Mr. Yoo was employed in various senior risk management consulting positions at BearingPoint, Inc. and at Merrill Lynch & Co. Mr. Yoo earned a Masters in International Affairs from George Washington University, an M.B.A. from Yonsei University in Seoul, Korea, and a B.A. in Economics from Virginia Tech.

Item 11.Executive Compensation.

Compensation Discussion and Analysis

Introduction

This section describes and analyzes the Bank's 2016 compensation program for its chief executive officer, chief financial officer, and the three other most highly-compensated executive officers. These executive officers are collectively referred to as the Bank's “named executive officers.”

The Bank's named executive officers during 2016 are identified in the following table.

Name	Title
W. Wesley McMullan	President and Chief Executive Officer
Kirk R. Malmberg	Executive Vice President and Chief Financial Officer
Cathy C. Adams	Executive Vice President and Chief Operations Officer
Robert F. Dozier, Jr.	Executive Vice President and Chief Business Officer
Robert S. Kovach	Senior Vice President, Chief Credit Officer

Philosophy and Objectives

The Bank's compensation philosophy and objectives are to attract, motivate, and retain high caliber financial services executives capable of achieving strategic business initiatives, enhancing business performance and increasing shareholder value. The Bank's compensation program is designed to reward this performance and enhanced value and to offer competitive compensation elements that align its executives' incentives with the interests of its members. To mitigate unnecessary or excessive risk-taking by executive management, the Bank's incentive compensation plan contains overall Bank performance goals that are dependent on an aggregation of transactions throughout the Bank and that cannot be individually altered by executive management. The incentive compensation plan contains quantitative components that are evaluated by the board of directors. Additionally, the board of directors maintains discretionary authority over all incentive compensation awards, giving the board of directors the flexibility to review Bank performance throughout the year and to adjust incentive compensation accordingly.

Elements of Compensation

The Bank compensates its executive officers with a combination of base salary, incentive compensation, and benefits. The Bank is unable to offer equity-related compensation because it is a cooperative, and only member financial institutions may own its capital stock. Accordingly, the Bank offers other compensation elements, such as qualified and non-qualified defined benefit and defined contribution pension plans, to motivate long-term performance and encourage retention. Because the Bank is exempt from federal taxes, the deductibility of compensation is not relevant to compensation plan design. The elements of the Bank's compensation program for executive officers, and the objective of each compensation element, are described below.

Base salary. Base salary is established on the basis of the ongoing duties associated with managing a particular set of functions at the Bank and provides an amount of fixed compensation. Each executive's base salary also is used as a basis in calculating the executive's annual incentive award opportunity, as described below.

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Incentive compensation. The Bank provides an annual cash award opportunity under its Incentive Compensation Plan (ICP) to executive officers based on the achievement of quantitative goals set and evaluated by the board of directors. To promote consistently high corporate performance on a long-term basis and enhance the retention of key senior executive officers, payment of a portion of any ICP granted is deferred and distributed over a three-year period, together with positive or negative returns (Deferred Incentive). If, as of the time any payment of the Deferred Incentive otherwise would be due, the board of directors has made a good faith determination that the Bank has not achieved certain financial performance requirements, the board of directors may in its sole discretion elect to reduce or eliminate such payment of Deferred Incentive.

Benefits. The Bank provides retirement benefits to promote executive retention, and the executive officers are eligible to participate in the same benefit plans that are made available to other employees of the Bank, such as medical, group term life and long-term disability coverage. The Bank also provides limited perquisites to executive officers.

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Executive Compensation Process

Board and committee consideration of executive compensation. The Bank's board of directors establishes the Bank's executive compensation philosophy and objectives and has final approval of any compensation decisions related to the Bank's chief executive officer and all officers reporting directly to the chief executive officer who are senior vice presidents or higher. The governance and compensation committee of the board of directors advises and assists the board and makes recommendations to the board relating to compensation of such officers.

The chief executive officer reviews and recommends to the board the base salary of the officers who report directly to him and who are senior vice president and higher level officers. The chief executive officer also determines the base salary of all other senior vice president officers (other than the chief audit officer) within an overall budget approved by the board of directors.

Use of compensation consultant. The governance and compensation committee of the board of directors selected and engaged Willis Towers Watson to provide assistance in evaluating the Bank's executive compensation programs for 2016. Willis Towers Watson reports directly to the committee with respect to executive compensation.

Consideration of competitive compensation levels. The Bank's executive compensation program is designed to be appropriately competitive with prevailing practices in the broader financial services industry, consistent with the Bank's business and risk profile. As part of each compensation review process, the board considers (1) the total cash compensation (including base salary and target incentive compensation), retirement benefits, perquisites and other benefits, severance agreements, and change in control agreements, at FHLBanks of similar size and complexity based on total assets, advance activity, membership, and scope of operations, and (2) the median and 75^th percentiles for base pay, bonus pay, and total cash compensation offered at certain comparable commercial banks and financial services organizations. The companies that were included in the peer groups for 2016 are listed below in "Compensation Decisions in 2016 - Overview." The board used this data to assess competitive levels of compensation for the Bank's executives and did not target any named executive officer's compensation to a specific percentile of such executive officer's comparable position in the peer groups.

The board does not evaluate specifically the multiples by which a named executive officer's cash compensation is greater than that of non-executive employees when setting executive compensation. The Bank is exempt from SEC proxy rules and does not provide shareholder advisory “say on pay” votes regarding executive compensation.

Finance Agency oversight of executive compensation. Pursuant to the Housing Act, the Director prohibits the FHLBanks from providing compensation to any executive officer that is not reasonable and comparable with compensation for employment in other similar businesses involving similar duties and responsibilities. Pursuant to this authority and a Finance Agency final rule on executive compensation, effective February 27, 2014, the FHLBanks are required to report to the Director all compensation actions relating to the president, the chief financial officer, and the three other most highly compensated officers at least 30 days in advance of any planned board decision with respect to those actions, and at least 60 days prior to entering into any written arrangement that provides incentive awards to any executive officer. At any time before an executive compensation action is taken, the Director may require an FHLBank to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, or prohibit the action. The Housing Act also authorizes the Director to prohibit the Bank from making any golden parachute payments to its officers, employees, and directors.

In addition, Finance Agency Advisory Bulletin 2009-AB-02 establishes five principles for executive compensation by the FHLBanks and the Office of Finance:

• executive compensation must be reasonable and comparable to that offered to executives in similar positions at other comparable financial institutions;

• executive incentive compensation should be consistent with sound risk management and preservation of the par value of the FHLBank's capital stock;

• a significant percentage of an executive's incentive-based compensation should be tied to longer-term performance and outcome indicators;

• a significant percentage of an executive's incentive-based compensation should be deferred and made contingent upon the FHLBank's financial performance over several years; and

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• the FHLBank's board of directors should promote accountability and transparency in the process of setting compensation.

Under the capital classifications rules issued by the Finance Agency, a significantly undercapitalized FHLBank is prohibited from paying any bonus to an executive officer, or giving any salary increase to an executive officer without the prior written approval of the Director. The Bank was not undercapitalized during 2016.

Compensation Decisions in 2016

Overview

The board of directors bases its compensation decisions on both objective criteria related to the Bank's performance and subjective criteria related to general executive performance. Among the various criteria the board considered in evaluating the named executive officers' performance in 2016 were:

• achievement of performance objectives for 2016 as determined by the board;

• fulfillment of the Bank's public policy mission;

• demonstration of leadership and vision for the Bank;

• implementation and maintenance of effective business strategies and operations, legal and regulatory compliance programs, risk management activities, and internal controls commensurate with the Bank's size, scope, and complexity;

• establishment and maintenance of strong relationships between the Bank and its customers, shareholders, employees, regulators, and other stakeholders; and

• the Bank's 2016 financial results.

Base Salary

Mr. McMullan was appointed president and chief executive officer effective December 16, 2010. His base salary during 2016 was $800,000, which represents a 6.52 percent increase from 2015. In determining the base salary for Mr. McMullan, the board considered data developed by Willis Towers Watson regarding the cash compensation provided by two different groups:

(1) the following FHLBanks deemed to be of similar size and complexity based on total assets, advance activity, membership, and scope of operations (FHLB Peers):

• FHLBank Boston

• FHLBank Chicago

• FHLBank Cincinnati

• FHLBank Des Moines

• FHLBank New York

• FHLBank Pittsburgh

• FHLBank San Francisco

and (2) the following commercial banks with assets between $20 billion and $65 billion (Commercial Bank Peers):

Ÿ Associated Banc-Corp        Ÿ First Horizon National

Ÿ Bank of the West        Ÿ Huntington Bancshares

Ÿ City National Bank        Ÿ People’s Bank

Ÿ Commerce Bancshares        Ÿ Synovus Financial Corporation

Ÿ East West Bank        Ÿ Webster Bank

Ÿ Everbank            Ÿ BOK Financial

The median asset size for the Commercial Bank Peers was $27.9 billion. According to the historical data provided to the board by Willis Towers Watson, Mr. McMullan's salary was at the median base salary for the presidents of the FHLB Peers and below the median base salary for Commercial Bank Peers.

In order to review sufficient market data in determining the base salaries for Mr. Malmberg, and for Ms. Adams and Mr. Dozier, whose positions are not as precisely mirrored at other institutions, the board also considered compensation data supplied by Willis Towers Watson from the following financial services organizations with assets between $20 billion and $65 billion (Financial Service Peers):

Ÿ Anthem            Ÿ Great American Insurance

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Ÿ Associated Banc-Corp        Ÿ Humana

Ÿ Assurant            Ÿ Huntington Bancshares

Ÿ Bank of the West        Ÿ Markel

Ÿ BOK Financial        Ÿ People's Bank

Ÿ Chubb            Ÿ Phoenix Companies

Ÿ Cigna            Ÿ Progressive

Ÿ City National Bank        Ÿ Reinsurance Group of America

Ÿ CNO Financial        Ÿ Synovus Financial Corporation

Ÿ Commerce Bancshares        Ÿ TD Ameritrade

Ÿ Cullen Frost Bankers        Ÿ Unum

Ÿ East West Bank        Ÿ Visa

Ÿ First Horizon National        Ÿ Webster Bank

The median asset size for the Financial Service Peers was $29.1 billion.

According to the historical data provided to the board by Willis Towers Watson, the base salaries of Mr. Malmberg, Ms. Adams, and Mr. Dozier were at or below the median base salaries for comparable positions at the considered FHLB Peers, and below the median base salaries for comparable positions at the considered Commercial Bank Peers and Financial Service Peers. Following this review, the board opted to increase the existing base salaries for 2016 as follows:

• Mr. Malmberg to $495,000 (a 4.65 percent increase)

• Ms. Adams to $480,000 (a 4.80 percent increase)

• Mr. Dozier to $475,000 (a 4.86 percent increase)

Mr. Kovach's base salary for 2016 was $390,000. In setting Mr. Kovach's base salary, the president considered a broad-based compensation survey of all FHLBanks. Mr. Kovach's base salary is above the 75^th percentile of base salaries of comparable positions at the other FHLBanks. The president considered this pay level to be appropriate based on the scope of Mr. Kovach's responsibility and his tenure in the FHLBank System.

Incentive Compensation

The following table presents the 2016 award opportunities, as established by the board under the ICP, expressed as a percentage of base pay earnings during the year.

2016 Award Opportunities

	Percent of Base Salary (%)
Title	Threshold	Target	Maximum
President and Chief Executive Officer	40.00	75.00	98.00
Executive Vice President	30.00	55.00	80.00
Senior Vice President	24.00	48.00	70.00

These percentages are the same as the award percentages established for 2015.

For 2016, the board established three incentive goals under the ICP, which correlate to the shareholder focus and risk management performance priorities reflected in the Bank's strategic plan. Each of these goals is described in more detail below. Awards for senior vice presidents also included individual and team goals. The board of directors established threshold, target, and maximum performance levels for each quantitative incentive goal. Each goal's “target” performance level is consistent with the assumptions set forth in the annual operating budget, forecasts, and strategic plan. The “threshold” and “maximum” performance levels are designed to reward partial attainment of the goal and performance beyond the forecasted levels, respectively. Factors considered in setting threshold and maximum performance levels include management's projections concerning economic conditions, interest rates, demand for advances products, and balance sheet structure.

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The following tables provide the weights and awards for each performance target as a percentage of base salary that the board established for 2016. A description of each of the performance metrics, and the performance against such metrics in 2016, is provided following the tables.

2016 Weights and Awards

President and Chief Executive Officer
		Percent of Base Salary
Goal	Weight (%)	Threshold (%)	Target (%)	Maximum (%)
Shareholder Focus - Shareholder Activity	40.00	16.00	30.00	39.20
Risk Management - Risk Appetite	30.00	12.00	22.50	29.40
Risk Management - ROE Spread to 3-Month LIBOR	30.00	12.00	22.50	29.40
Total	100.00	40.00	75.00	98.00
Executive Vice President
		Percent of Base Salary
Goal	Weight (%)	Threshold (%)	Target (%)	Maximum (%)
Shareholder Focus - Shareholder Activity	40.00	12.00	22.00	32.00
Risk Management - Risk Appetite	30.00	9.00	16.50	24.00
Risk Management - ROE Spread to 3-Month LIBOR	30.00	9.00	16.50	24.00
Total	100.00	30.00	55.00	80.00
Senior Vice President
		Percent of Base Salary
Goal	Weight (%)	Threshold (%)	Target (%)	Maximum (%)
Shareholder Focus - Shareholder Activity	30.00	7.20	14.40	21.00
Risk Management - Risk Appetite	25.00	6.00	12.00	17.50
Risk Management - ROE Spread to 3-Month LIBOR	25.00	6.00	12.00	17.50
Individual and Team Goals	20.00	4.80	9.60	14.00
Total	100.00	24.00	48.00	70.00

The Shareholder Focus - Shareholder Activity goal measures the increase in the number of products and services utilized by members during 2016. Performance under this measure was determined by calculating the percentage increase in product utilization as of December 31, 2016, over a product utilization baseline established as of December 31, 2015. The performance goals were 1.00 percent product utilization increase (threshold), 3.50 percent (target), and 7.00 percent (maximum). This goal was substantially the same for each named executive officer, and performance was determined on an overall basis. As of December 31, 2016, the Bank achieved a shareholder activity performance score of 6.85 percent. Based on 2016 performance, the board awarded between the target and maximum level for this goal.

The Risk Management - Risk Appetite goal involves managing the Bank’s key risks at appropriate tolerance levels. Under this measure, the board and management defined the Bank’s key risks and the tolerance levels with respect to those risks. The Bank then scored each key risk based upon whether the Bank was satisfying the defined tolerance level. If the Bank was performing at or better than the defined tolerance level for all key risks, a risk appetite performance score of 100 was achieved. A deduction was applied to the risk appetite performance score for each key risk performing below the defined tolerance level. The amount that was deducted depended upon the extent of the underperformance. The performance goals were 85.0 percent risk appetite performance score (threshold), 95.0 percent risk appetite performance score (target), and 100 percent risk appetite performance score (maximum). This goal was substantially the same for each named executive officer, and performance under these measures was determined on an overall basis. As of December 31, 2016, the Bank achieved a risk appetite performance score of 99.1 percent. Based upon that score, the board awarded between the target and maximum level for this goal.

The Risk Management - ROE Spread to 3-Month LIBOR performance goal relates to the Bank's return on equity (ROE) amount in excess of average three-month LIBOR. This performance measure reflects the Bank's ability to pay quarterly

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dividends to its members and was established with a sliding scale so that the spread performance metrics become smaller as LIBOR increases. The board of directors could reduce the award for this measure or increase the required ROE spread to LIBOR under certain economic scenarios. For 2016, the performance goals were 250 basis points (threshold), 275 basis points (target), and 300 basis points (maximum). In 2016, the Bank's ROE spread to average three-month LIBOR, after adjusting for the amount the Bank voluntarily contributed to AHP in excess of regulatory requirements, was 337 basis points. Based upon that calculation, the board awarded the maximum level for this goal.

In 2016, the board of directors did not establish individual performance award opportunities for the Bank's president and executive vice presidents. Mr. Kovach's individual goals were focused on shareholder service, risk management and team development. Based upon performance in 2016, Mr. Kovach was awarded the maximum level for this goal.

The following table presents the final award level associated with each performance goal and total award amounts for each named executive officer.

2016 Incentive Compensation Plan Awards

Name	Shareholder Activity (%)	Risk Appetite (%)	ROE Spread to 3-Month LIBOR (%)	Individual/Team Goals (%)	Total Award (%) of Base Salary	Overall Award Level	Total Calculated Award		Deferred Incentive
W. Wesley McMullan	38.81	28.20	29.40	—	96.41	Target-Max	$	771,280	$	385,640
Kirk R. Malmberg	31.57	22.70	24.00	—	78.27	Target-Max	387,436		193,718
Cathy C. Adams	31.57	22.70	24.00	—	78.27	Target-Max	375,696		187,848
Robert F. Dozier, Jr.	31.57	22.70	24.00	—	78.27	Target-Max	371,782		185,891
Robert S. Kovach	20.72	16.54	17.50	14.00	68.76	Target-Max	268,164		134,082

The amount of incentive compensation earned by each of the named executive officers under the ICP, as shown in the “Total Calculated Award” column in the preceding table is reflected under the “Non-Equity Incentive Compensation Plan” column in the Summary Compensation Table below. The Deferred Incentive portion will be paid, together with positive or negative returns (equal to the Bank's return on equity for the applicable year) over three years (2018-2020) on the following schedule, subject to certain restrictions discussed above:

Deferred Incentive Fee Payout Schedule

Payment Year	Payment
2018	1/3 of balance (± 1-year return)
2019	1/2 of balance (± 2-year return)
2020	Remaining balance (± 3-year return)

If a named executive officer's employment with the Bank terminates for any reason prior to payment of any earned incentive compensation, all remaining payments (including Deferred Incentive) shall be forfeited, subject to certain limited exceptions if the named executive officer dies, becomes disabled, or retires with a combination of age and years of service to the Bank totaling at least 70.

Retirement Benefits

The named executive officers are eligible to participate in certain tax-qualified and non-qualified defined benefit pension plans and defined contribution and deferred compensation plans. These plans are described in more detail below in the sections entitled "Executive Compensation -- Pension Benefits" and "--Deferred Compensation."

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The Bank's retirement benefit plans are a vital component of the Bank's retention strategy for executive officers, particularly because many other competing organizations provide executive officers with economic benefits based on equity interests in the employer, oftentimes in addition to similar retirement benefits.

Perquisites and Other Benefits

All named executive officers are eligible to participate in the benefit plans that are made available to all other employees of the Bank including medical, dental, and vision insurance coverage, group term life and long-term disability insurance coverage, paid vacation, and sick leave. The named executive officers generally participate in these plans on the same basis and terms as all other employees.

The Bank offers its named executive officers a limited number of perquisites, including an annual physical examination, guest travel to certain business functions, business club memberships, and financial planning services. For Mr. McMullan, the Bank also provides an automobile allowance of up to $1,500 per month. Because perquisites generally are limited, the board does not specifically consider perquisites when reviewing total compensation for any of the named executive officers.

Employment Arrangements and Severance Benefits

Other than the specific contractual arrangements discussed below, all Bank employees are employed under an “at will” arrangement. Accordingly, an employee may resign employment at any time, and the Bank may terminate the employee's employment at any time for any reason, with or without cause.

The board of directors may, in its discretion, provide severance benefits to an executive officer in the event of termination of his/her employment. In determining whether severance compensation is appropriate, the board of directors considers both the factors underlying the termination of employment and the employment history of the executive officer. The Bank does not provide a “gross up” benefit on taxes incurred with respect to any severance.

Employment Agreement. The Bank entered into an Employment Agreement with Mr. McMullan, effective January 1, 2014 (Employment Agreement). Under the Employment Agreement, Mr. McMullan's employment with the Bank may be terminated by the Bank with or without “cause,” or by Mr. McMullan with or without “good reason,” as defined in the Employment Agreement. Unless earlier terminated by either party as provided therein, the Employment Agreement has a three-year term and will extend automatically for subsequent one-year periods unless either party elects not to renew. Pursuant to the Employment Agreement, the Bank provides Mr. McMullan with a $1,500 per month automobile allowance. Mr. McMullan is entitled to participate in all incentive, savings, and retirement plans and programs available to senior executives of the Bank. The Employment Agreement also provides for certain severance benefits for Mr. McMullan, which are discussed below under "Potential Payments upon Termination or Change in Control." This severance arrangement was an integral and necessary component of the Bank's strategy to recruit Mr. McMullan to the president and chief executive officer position.

Severance Plan. Effective January 1, 2017, the Bank adopted an Executive Change in Control Severance Plan (Severance Plan). The purpose of the Severance Plan is to facilitate the hiring and retention of senior executives capable of executing the Bank’s strategic priorities, to ensure their continued dedication to the Bank notwithstanding the possibility of a change in control, and to provide them with certain protection and benefits in the event of certain termination events following a defined change in control of the Bank. The board has designated certain of the named executive officers as eligible to participate in the Severance Plan. The Severance Plan is discussed below under "Potential Payments upon Termination or Change in Control."

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Report of the Board of Directors

The board of directors of the Bank has reviewed and discussed the Compensation Discussion and Analysis above with management, and based on such review and discussion, the board of directors has determined that the Compensation Discussion and Analysis above should be included in the Bank's Annual Report on Form 10-K.

The board of directors of the Bank has primary responsibility for establishing and determining the Bank's compensation program. Therefore, this report is submitted by the full board of directors.

BOARD OF DIRECTORS

F. Gary Garczynski, Chairman	Richard A. Whaley, Vice Chairman
Brian E. Argrett	Jonathan Kislak
Travis Cosby, III	LaSalle D. Leffall, III
Suzanne S. DeFerie	Kim C. Liddell
R. Thornwell Dunlap, III	Miriam Lopez
William C. Handorf	John B. Rucker
Scott C. Harvard	Robert L. Strickland, Jr.

Executive Compensation

Summary Compensation Tables

The following table presents a summary of cash and other compensation earned by the named executive officers for the years ended December 31, 2016, 2015, and 2014. It is important to read this table, and the other tables that follow, closely and in conjunction with the Compensation Discussion and Analysis. The narratives following the tables and the footnotes accompanying each table are important parts of each table.

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2016 Summary Compensation Table

Name and Principal Position (a)	Year (b)	Salary (c)		Bonus (d)(1)		Non-Equity Incentive Plan Compensation (e)(2)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (f) (3)		All Other Compensation (g) (4)		Total (h)
W. Wesley McMullan President and Chief Executive Officer	2016	$	800,000	$	100	$	799,865	$	1,871,447	$	69,688	$	3,541,100
	2015	751,000		100		757,270		498,478		64,679		2,071,527
	2014	722,000		100		651,166		2,545,955		62,401		3,981,622
Kirk R. Malmberg Executive Vice President and Chief Financial Officer	2016	495,000		600		401,882		775,473		32,682		1,705,637
	2015	473,000		100		387,308		245,184		29,244		1,134,836
	2014	455,000		100		327,033		964,617		28,301		1,775,051
Cathy C. Adams Executive Vice President and Chief Operations Officer	2016	480,000		1,100		389,676		1,123,030		29,873		2,023,679
	2015	458,000		100		374,990		335,020		28,319		1,196,429
	2014	440,000		100		316,213		1,556,293		26,840		2,339,446
Robert F. Dozier, Jr. Executive Vice President and Chief Business Officer	2016	475,000		200		385,605		67,000		28,614		956,419
	2015	453,000		100		370,880		38,000		29,352		891,332
	2014	435,000		100		311,992		66,000		26,050		839,142
Robert S. Kovach Senior Vice President and Chief Credit Officer	2016	390,000		100		278,317		190,000		23,491		881,908

____________

⁽¹⁾ The amounts in column (d) reflect an annual $100 employee appreciation bonus provided to all employees of the Bank. The Bank provides the named executive officers a tax gross-up on this bonus, which amount is included in column (g). The 2016 bonus amounts for Ms. Adams and Messrs. Malmberg and Dozier also includes an award payment of $1,000, $500 and $100, respectively, under the Bank's Service Award Program to recognize employees with five or more years of service. The Service Award Program is administered by the Bank's human resources department and is available to all employees of the Bank under the same general terms and conditions. To the extent the Bank provided a tax gross-up on such awards, those amounts are included in column (g).

⁽²⁾ The amounts in column (e) reflect the dollar value of all earnings for services performed during the fiscal years ended December 31, 2016, 2015, and 2014 pursuant to awards under the ICP, even though a portion of those awards were subject to certain mandatory deferral requirements. Fifty percent of the ICP awards for each year were subject to mandatory deferral over three years. As discussed in the Compensation Discussion and Analysis, the 2016 non-equity incentive compensation awards were subject to a 30 day review period and receipt of non-objection by the Finance Agency. The Bank received written non-objection from the Finance Agency on February 6, 2017. The amounts in column (e) also include the dollar value of all interest during each year earned on Deferred Incentive related to ICP awards for prior fiscal years, in the following amounts for 2016: $28,585 for Mr. McMullan, $14,446 for Mr. Malmberg, $13,980 for Ms. Adams, $13,823 for Mr. Dozier, and $10,153 for Mr. Kovach.

⁽³⁾ The amounts in column (f) reflect the sum of (i) the actuarial increase during each fiscal year in present value of the named executive officer's aggregate pension benefits under the Bank's Pension and Excess Plans, computed as described in footnote (1) to the 2016 Pension Benefits table, and (ii) all "above market" earnings earned under the Bank's non-qualified deferred compensation plans. Under SEC rules, "above-market" earnings result when deferrals are credited with interest in excess of 120 percent of the Applicable Federal Rate. The 2016 above-market amounts for Mr. McMullan, Mr. Malmberg, and Ms. Adams were $27,447, $1,473, and $2,030, respectively. These plans are described in greater detail below under “Pension Benefits” and “Deferred Compensation.”

⁽⁴⁾ The amounts in column (g) for 2016 consist of the following amounts:

Name	Bank Contributions under the 401(k) Plan (1)		Matching contributions under the Bank's non-qualified Defined Contribution Benefit Equalization Plan		Perquisite (2)		Tax Gross-ups (3)		Total
W. Wesley McMullan	$	14,769	$	33,231	$	21,638	$	50	$	69,688
Kirk R. Malmberg	15,900		13,800		2,891		91		32,682
Cathy C. Adams	15,900		12,900		736		337		29,873
Robert F. Dozier, Jr.	26,500		—		2,062		52		28,614
Robert S. Kovach	5,400		18,000		41		50		23,491

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____________

⁽¹⁾ The Bank provided Mr. Dozier with $15,900 in matching 401(k) contributions and $10,600 in automatic 401(k) contributions.

⁽²⁾ Perquisites are valued at the actual amounts paid by the Bank, and the value of each perquisite for each executive was less than $25,000. The Bank paid premiums for each NEO for the Bank's Business Travel Accidental Death and Dismemberment Policy. The Bank provided Mr. McMullan reimbursement for guest travel to certain business functions, executive health benefits and a $1,500 per month car allowance. The Bank provided Mr. Malmberg and Mr. Dozier reimbursement for executive health benefits. The Bank provided Ms. Adams reimbursement for an airline program membership.

⁽³⁾ The tax gross-up amount represents Federal Insurance Contributions Act (FICA) tax on the $100 employee appreciation bonus provided to all employees of the Bank and the service awards provided to Ms. Adams, Mr. Malmberg and Mr. Dozier.

Awards of Incentive Compensation in 2016

The following table provides information concerning each grant of an award to a named executive officer in 2016 under the ICP.

2016 Grants of Plan-Based Awards

	Estimated Future Payouts Under Non-Equity Incentive Plan Awards
Name (a)	Threshold (b) (1)		Target (c) (1)		Maximum (d) (1)
W. Wesley McMullan	$	320,000	$	600,000	$	784,000
Kirk R. Malmberg	148,500		272,250		396,000
Cathy C. Adams	144,000		264,000		384,000
Robert F. Dozier, Jr.	142,500		261,250		380,000
Robert S. Kovach	93,600		187,200		273,000

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⁽¹⁾ Columns (b-d) reflect threshold, target, and maximum payment opportunities under the Bank's ICP for the fiscal year ended December 31, 2016. The actual amounts earned pursuant to the ICP during 2016 are reported under column (e) of the summary compensation table. Fifty percent of the actual amount earned is subject to mandatory deferral. For information on these awards, see “Compensation Discussion and Analysis.”

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Retirement Benefits

Pension Benefits

The 2016 Pension Benefits table below provides information with respect to the Pentegra Plan, the Bank's tax-qualified pension plan (Pension Plan), and the Bank's non-qualified excess benefit pension plan (Excess Plan). The table shows the actuarial present value of accumulated benefits as of December 31, 2016, for each of the named executive officers and the number of years of service credited to each named executive under each plan.

Pension Plan

The pension benefits payable under the Pension Plan are based on a pre-established defined benefit formula that provides for an annual retirement allowance and a retirement death benefit. A participant's benefit in the plan vests upon completion of five years of service with the Bank, and the participant then may retire under the plan at the times described below.

Employees hired before July 1, 2005

For participants hired on or before July 1, 2005, the Pension Plan generally provides an annual retirement allowance equal to 2.50 percent of the participant's highest consecutive three-year average compensation for each year of credited service under the plan (not to exceed 30 years). Average compensation is defined as base salary and annual short-term incentive compensation.

For these participants, the standard retirement age is 65, with reduced early retirement benefits available at age 45. If the participant continues to work for the Bank until the sum of the participant's age and years of service with the Bank equals at least 70, the annual benefit payable following retirement is reduced by 1.50 percent for each year that retirement precedes normal retirement age. If the participant terminates employment before the participant's age and years of service with the Bank total 70, the annual benefit payable following retirement is reduced by six percent for each year between age 64 and 60, by four percent for each year between age 59 and 55, and by three percent for each year between age 54 and 45, in each case, that retirement precedes normal retirement age. For these participants, lump sum payments are available beginning at age 50.

Mr. McMullan, Mr. Malmberg, and Ms. Adams participate in the Pension Plan on these terms because they were hired on or before July 1, 2005. Each of them has attained eligibility for immediate early retirement.

Employees hired between July 1, 2005, and February 28, 2011

For participants hired between July 1, 2005, and February 28, 2011, the Pension Plan generally provides an annual retirement allowance equal to 1.50 percent of the participant's highest consecutive five-year average compensation for each year of credited service under the plan (not to exceed 30 years). Average compensation is defined as base salary only. For these participants, the standard retirement age is 65, with reduced early retirement benefits available at age 55. If the participant terminates employment before reaching age 65, the annual benefit payable following retirement is reduced by six percent for each year between age 65 and 60, by four percent for each year between age 60 and 55, in each case, that retirement precedes normal retirement age. For these participants, lump sum payments are not available. Mr. Kovach, hired in 2010, participates in the Pension Plan under these terms and has satisfied the plan vesting requirements, but is not eligible for immediate early retirement.

Employees hired on or after March 1, 2011

The Pension Plan was closed to new participants effective March 1, 2011. Accordingly, Mr. Dozier does not participate in the Pension Plan.

Excess Plan

Payments under the Pension Plan may be limited due to federal tax code limitations. The Excess Plan exists to restore those benefits that executives otherwise would forfeit due to these limitations. The Excess Plan operates using the same benefit formula and retirement eligibility provisions as described above under the Pension Plan. Because the Excess Plan is a non-qualified plan, the benefits received from this plan do not receive the same tax treatment and funding protection associated with the Pension Plan.

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Mr. Dozier participates solely in the Excess Plan because he was hired after March 1, 2011. As approved by the board of directors, Mr. Dozier participates in the Excess Plan to the same extent as if he were participating in the Pension Plan (as if he was an employee hired between July 1, 2005, and February 28, 2011). Mr. Dozier has satisfied the plan vesting requirements, but is not eligible for immediate early retirement.

Death Benefits

Death benefits, which do not vary based on date of hire, also are available under the Pension Plan and the Excess Plan. If an employee dies while in active service, his/her beneficiary is entitled to a lump sum amount equal to the commuted value of 120 monthly retirement payments. If a former employee dies while in retirement, having elected the normal form of retirement benefits, his/her beneficiary also is entitled to a lump sum amount equal to the commuted value of 120 monthly retirement payments less payments received before the former employee died.

2016 Pension Benefits

Name (a)	Plan Name (b)	Number of Years of Credited Service (c)	Present Value of Accumulated Benefit(d) (1)		Payments during last fiscal year (e)
W. Wesley McMullan	Pension Plan	28.8	$	1,692,000	$	—
	Excess Plan	28.8	7,230,000		—
Kirk R. Malmberg (2)	Pension Plan	19.8	1,261,000		—
	Excess Plan	19.8	2,520,000		—
Cathy C. Adams	Pension Plan	30.0	2,022,000		—
	Excess Plan	30.0	4,199,000		—
Robert F. Dozier, Jr. (3)	Pension Plan	—	—		—
	Excess Plan	4.5	214,000		—
Robert S. Kovach (2)	Pension Plan	30.0	1,229,000		—
	Excess Plan	30.0	399,000		—

____________

⁽¹⁾ The “Present Value of Accumulated Benefit” is the present value of the annual pension benefit that was earned as of December 31, 2016, assuming retirement at age 65. Benefits under the Pension Plan were calculated using a 4.14 percent discount rate; 4.17 percent was used to calculate benefits under the Excess Plan.

⁽²⁾ In accordance with plan provisions, the years of credited service for Mr. Malmberg include 4.0 years credited for prior service earned while employed by FHLBank Chicago and for Mr. Kovach include 23.8 years credited for prior service earned while employed by FHLBank Pittsburgh. The incremental value of this prior service, as valued in the Bank's Excess Plan, using the methodology described in note 1, is $511,000 for Mr. Malmberg and $316,000 for Mr. Kovach.

⁽³⁾ As noted above, Mr. Dozier is not eligible to participate in the Pension Plan.

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Deferred Compensation

Each named executive officer of the Bank is eligible to participate in the Bank's non-qualified, elective deferred compensation plan. Each named executive officer is also eligible to participate in the non-qualified defined contribution benefit equalization plan (DCBEP). Directors are eligible to participate in the deferred compensation plan but are not eligible to participate in the DCBEP.

The deferred compensation plan permits a participant to defer all or a portion of his/her compensation, including base salary and awards under the ICP, and to select the method of determining the earnings on such deferred compensation, based on a range of mutual fund options designed to mirror the Bank's 401(k) Plan. Deferred compensation plan participants also may select an interest crediting rate based on the Bank's return on equity. Distributions from the deferred compensation plan may be made either in a specific year, whether or not a participant's employment has ended, or at a time that begins at or after the participant's retirement or separation. Participants may elect to receive either a lump sum distribution or annual installment payments over periods ranging from two to five years. The Bank does not match contributions to the deferred compensation plan. Mr. McMullan, Mr. Malmberg and Ms. Adams participated in the deferred compensation plan for the year ended December 31, 2016.

Named executive officers are permitted to defer up to 40.0 percent of salary under the Bank's 401(k) Plan and the DCBEP. The Bank matches the amount contributed by a participant up to six percent of base salary. For employees hired on or after March 1, 2011, including Mr. Dozier, the Bank automatically contributes four percent of base salary into the 401(k) Plan on behalf of the employee, in addition to the six percent match described above.

All Bank contributions to the DCBEP are subject to a two-year vesting period.

The DCBEP, like the 401(k) Plan, is self-directed and provides participants with a range of mutual fund options through the Vanguard Group. Participants earn a market rate of return based on the mutual funds selected. Distributions from the DCBEP begin when a participant's employment has ended. Participants may elect to receive either a lump sum distribution or annual installment payments over periods ranging from two to five years. These plans are designed to encourage additional voluntary savings and to offer a valuable financial planning tool.

The board amended the DCBEP, effective January 1, 2017, to:

• increase the amount that the Bank contributes to Mr. Dozier under the Bank’s 401(k) Plan and DCBEP by two percent;

• permit Mr. Dozier to participate in the DCBEP outside of the 401(k) benefit limits imposed by the Internal Revenue Service; and

• provide an additional contribution by the Bank of 12% of Mr. Dozier’s incentive compensation plan awards to the DCBEP.

In addition, the amendments provided that Mr. Dozier shall be deemed to have satisfied the plan vesting requirements.

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The following table presents compensation earned and deferred in 2016, and earnings on, or distributions of, such amounts. In accordance with SEC rules, the amounts shown in the table do not include any amounts in respect of the 401(k) Plan.

2016 Nonqualified Deferred Compensation

Name (a)	Executive Contributions in Last Fiscal Year (b) (1)		Bank Contributions in Last Fiscal Year (c) (2)		Aggregate Earnings In Last Fiscal Year (d) (3)		Aggregate Withdrawals / Distributions (e)			Aggregate Balance at Last Fiscal Year End (f) (4)
W. Wesley McMullan	$	419,484	$	33,231	$	129,705	$	—		$	2,314,122
Kirk R. Malmberg	75,000		13,800		92,742		—			1,026,975
Cathy C. Adams	196,800		12,900		73,015		(16,695		)	1,205,734
Robert F. Dozier, Jr.	—		—		—		—			—
Robert S. Kovach	93,000		18,000		90,485		—			837,247

____________

⁽¹⁾ Amounts under column (b) are included in salary reported for 2016 in column (c) of the 2016 Summary Compensation Table for all named executive officers, except for Mr. McMullan, for whom $56,000 is included in salary reported for column (c) of the 2016 Summary Compensation Table and $363,484 is included in non-equity incentive plan compensation reported in column (e) of the 2016 Summary Compensation Table.

⁽²⁾ Amounts under column (c) are included in all other compensation amounts reported for 2016 in column (g) of the 2016 Summary Compensation Table.

⁽³⁾ Amounts under column (d) reflect actual market returns for mutual funds selected by participants and interest credit received under the Bank's core economic income return on equity interest crediting rate.

⁽⁴⁾ To the extent that a participant was a named executive officer in prior years, executive and Bank contributions included in the “Aggregate Balance at Last Fiscal Year End” column have been reported as compensation in the Summary Compensation Table for the applicable year.

Potential Payments upon Termination or Change in Control

McMullan Employment Agreement

Mr. McMullan's Employment Agreement provides that upon the Bank's termination of his employment for any reason other than “cause,” or upon Mr. McMullan's termination of his employment for “good reason,” the Bank shall pay a total of one year's base salary in effect at the date of termination in a lump sum within 30 days after Mr. McMullan executes and delivers a general release of claims to the Bank, plus an amount equal to the amount that would have been payable pursuant to Mr. McMullan's incentive compensation award for the year in which the date of termination occurs, prorated based upon the number of days Mr. McMullan was employed that year. The incentive compensation award is based on the Bank's actual performance for the year in which termination occurs and is payable at the time such incentive compensation awards are paid to other senior executives. In addition, Mr. McMullan is entitled to receive certain healthcare replacement costs and other amounts required to be paid or provided under any other Bank plan, program, policy or practice or contract or agreement.

Under Mr. McMullan's Employment Agreement, “cause” is defined to include Mr. McMullan's failure to perform substantially his duties; his engagement in illegal conduct or gross misconduct injurious to the Bank; a written request from the Finance Agency or any other regulatory agency or body requesting that the Bank terminate his employment; crimes involving a felony, fraud or other dishonest acts; certain other notices from or actions by the Finance Agency; his breach of fiduciary duty or breach of certain covenants in the Employment Agreement; his refusal to comply with a lawful directive from the Chairman of the board of directors or from the board of directors; or his material breach of the Employment Agreement. The Employment Agreement defines “good reason” to include a material diminution in Mr. McMullan's base salary or in his authority; the Bank requiring Mr. McMullan to be based at any office or location other than in Atlanta, Georgia; or a material breach of the Employment Agreement by the Bank.

The following table presents information about potential payments to Mr. McMullan under his Employment Agreement in the event his employment had terminated on December 31, 2016. He is not entitled to any tax gross-up payments in the event of termination, whether under the 280G "golden parachute" tax rules or otherwise. None of the other executive officers had a severance arrangement with the Bank in 2016.

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Potential Payments upon Termination
Cause	Severance						Medical, Dental, and Vision Insurance Benefits		Pension Benefit Enhancements		Other Perquisites		Total
	2016 ICP Award		Deferred Incentive for Prior Periods(1)		Annual Base Salary
Resignation without Good Reason	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Involuntary Termination For Cause	—		—		—		—		—		—		—
Involuntary Termination Without Cause	771,280		729,215		800,000		47,143		—		—		2,347,638
Resignation For Good Reason	771,280		729,215		800,000		47,143		—		—		2,347,638

____________

⁽¹⁾ Mr. McMullan has reached a combination of age and years of service to the Bank totaling at least 70.

The other named executive officers are entitled to receive amounts earned during their terms of employment, regardless of the manner in which their employment terminated, on the same terms generally applicable to all employees of the Bank. These amounts include:

• Severance, if and as determined at the sole discretion of the board.

• Amounts accrued and vested through the Bank's Pension Plan and the Excess Plan (the Bank's qualified and non-qualified defined benefit plans). Up to three months of incremental service under the Bank's Pension Plan may be granted, in the sole discretion of the board, if an employee is provided with severance pay.

• Amounts accrued and vested through the 401(k) Plan and the DCBEP (the Bank's qualified and non-qualified defined contribution plans) and amounts contributed and associated earnings under the Bank's deferred compensation plan.

• Accrued vacation and applicable retiree medical benefits and applicable retiree life insurance.

In the event of the death or disability of an employee, including a named executive officer, in conjunction with the benefits above, the employee or his/her beneficiary may receive benefits under the Bank's disability plan or payments under the Bank's life insurance plan, as appropriate. Named executive officers also are entitled to receive death benefit payments under the Pension Plan and the Excess Plan, as described under "Retirement Benefits--Death Benefits."

Severance Plan

Effective January 1, 2017, the Bank adopted an Executive Change in Control Severance Plan (Severance Plan).

Overview of the Severance Plan

The Severance Plan provides certain protection and benefits in the event of a Qualifying Termination(as defined below) following a Change in Control (as defined below). The Severance Plan applies to employees or officers who are designated by the Bank’s board of directors as participants. The Bank’s board designated Messrs. McMullan, Malmberg and Dozier, and Ms. Adams, as participants in the Severance Plan.

Qualifying Termination

“Qualifying Termination” means any separation, termination or other discontinuation of the employment relationship between the Bank and a participant, (A) by the Bank, other than for“cause” (as defined in the Severance Plan); or (B) by the participant, for “good reason” (as defined in the Severance Plan), but does not include a termination resulting from the participant’s death or disability.

The Severance Plan defines “cause” to include:

• the participant’s failure to perform substantially his/her duties;

• the participant’s engagement in illegal conduct or willful misconduct injurious to the Bank;

• the participant’s material violation of law or regulation or of the Bank’s written policies or guidelines;

• a written request from the Finance Agency requesting that the Bank terminate the participant’s employment;

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• crimes involving a felony, fraud or other dishonest acts;

• certain other notices from or actions by the Finance Agency;

• the participant’s breach of fiduciary duty or breach of certain covenants in the Severance Plan; and

• the participant’s refusal to comply with a lawful directive from the chief executive officer or the board of directors.

The Severance Plan defines “good reason” to include:

• a material diminution in the participant’s base salary or in his/her duties or authority;

• the Bank requiring the participant to be based at any office or location other than in Atlanta, Georgia; or

• or a material breach of the Severance Plan by the Bank.

Under the terms of the Severance Plan, if there is a Qualifying Termination during the period beginning on the earliest of the date a definitive agreement or order for a Change in Control has been entered, or the effective date of a Change of Control as prescribed by the Finance Agency, and ending, in all cases, twenty-four (24) months following the effective date of the Change in Control, the participant becomes entitled to certain severance payments and benefits.

These payments and benefits include the following:

• The chief executive officer would receive a cash payment equal to 2.5 times his/her annual base salary amount.

• An executive vice president would receive a cash payment equal to 1.75 times his/her annual base salary amount.

• Participants would receive a lump sum cash payment equal to the amount that would have been payable pursuant to the participant’s incentive compensation award for the year in which the date of a Qualifying Termination occurs, prorated based on the number of days the participant was employed that year.

• Participants would receive a lump sum cash payment for outplacement assistance in the amount of $7,500.

In addition, the chief executive officer would receive a cash payment equivalent to 24 months of health continuation coverage, and executive vice presidents would receive a cash payment equivalent to 18 months of health continuation coverage.

The Severance Plan defines a “Change in Control” as:

• the merger, reorganization, or consolidation of the Bank with or into, or acquisition of the Bank by, another Federal Home Loan Bank or other entity;

• the sale or transfer of all or substantially all of the business or assets of the Bank to another Federal Home Loan Bank or other entity; or

• a change in the composition of the Bank’s board that causes the combined number of member directors from the jurisdictions of Alabama, the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia to cease to constitute a majority of the Bank’s directors; or

• the Bank’s liquidation or dissolution.

The payments described above are payable in a lump sum within sixty (60) days following the participant’s employment termination date, except the prorated incentive compensation award, which is payable at the time such incentive compensation awards are paid to other senior executives. All payments and benefits are conditioned on the executive having delivered an irrevocable general release of claims against the Bank before payment occurs. In addition, all payments and benefits remain subject to the Bank’s compliance with any applicable statutory and regulatory requirements relating to the payment of amounts under the Severance Plan.The Severance Plan requires that an individual execute a participation agreement to become a participant in the Severance Plan. Messrs. McMullan, Malmberg and Dozier, and Ms. Adams, each executed a participation agreement to become participants in the Severance Plan, effective January 1, 2017.

Director Compensation

The FHLBank Act provides that each FHLBank may pay its directors reasonable compensation for the time required of them, and their necessary expenses, in the performance of their duties, subject to approval by the Director. In accordance with the FHLBank Act, the Bank has adopted a policy governing the compensation and travel expense reimbursement provided to its directors. Under this policy, directors receive fees paid for attendance at each meeting of the board of directors and meeting of a committee of the board of directors, as further described below. These fees are subject to the annual caps established under the policy. Directors do not receive separate retainers.

Directors are reimbursed for reasonable Bank-related travel expenses in accordance with Bank policy. In specified instances, the Bank may reimburse a director for the transportation and other ordinary travel expenses of the director's guest; in 2016, these expenses totaled $30,044.

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During 2016, directors received fees for attendance at each board and committee meeting as described below. The following table presents the annual compensation limits applied.

2016 Annual Director Compensation Limits

Title	Amount
Chairman of the Board	$	100,000
Vice Chairman of the Board	95,000
Chairman of the Audit Committee	95,000
Other Committee Chairmen (excluding Audit and Executive)	90,000
All Other Directors	80,000

Under the 2016 Directors' Compensation Policy, each director had an opportunity to receive a payment of approximately one-seventh of that director's annual cap for attendance at no less than 75.0 percent of the board meeting and meetings of each committee of the board on which the director serves during each interim period. The first interim period began on December 14, 2015 and ended January 28, 2016 (the day of the first scheduled in-person board meeting for 2016). Each successive interim period began on the calendar day immediately following a scheduled board meeting through and including the day of the next scheduled board meeting, with the seventh interim period ending on December 11, 2016 after the seventh scheduled in-person board meeting. Under the policy, after the end of the seventh interim period and before the seventh payment was made, the governance and compensation committee of the board reviewed the cumulative attendance and performance of each director during 2016 and, in consultation with the chair of the board, recommended to the board a reduction, elimination or increase in the final payment opportunity. No increase could exceed the applicable annual compensation cap.

The following table presents the cash and other compensation earned or paid by the Bank to the members of the board of directors for all services in all capacities during 2016.

2016 Director Compensation
Name (a)	Fees Earned or Paid in Cash (b)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (c) (1)		All Other Compensation (d) (2)		Total (e)
Brian E. Argrett(3)	$	34,286	$	—	$	41	$	34,327
Travis Cosby, III	80,000		—		1,041		81,041
Suzanne S. DeFerie	80,000		—		41		80,041
R. Thornwell Dunlap, III	80,000				3,041		83,041
Michael P. Fitzgerald(3)	34,286		—		41		34,327
F. Gary Garczynski	100,000		—		3,041		103,041
William C. Handorf	90,000		—		1,541		91,541
Jonathan Kislak(4)	95,000		—		3,041		98,041
LaSalle D. Leffall, III	90,000		—		1,041		91,041
Kim C. Liddell	80,000		—		41		80,041
Miriam Lopez	90,000				3,041		93,041
John C. Neal	90,000		—		3,041		93,041
H. Gary Pannell(3)	45,714		106		41		45,861
Robert L. Strickland, Jr.	90,000		—		41		90,041
Richard A. Whaley	95,000		522		2,041		97,563

____________

⁽¹⁾ Directors are eligible to participate in the Bank's deferred compensation plan. Directors Dunlap, Lopez, Neal, Pannell and Whaley elected to defer compensation during 2016. Amounts reported for Directors Pannell and Whaley represent above-market earnings on amounts deferred during prior years.

⁽²⁾ Represents premiums paid by the Bank for each director for the Bank's Business Travel Accidental Death and Dismemberment Policy and matching contributions under the Bank's Once For All Trust charitable matching contribution program.

⁽³⁾ Director served a portion of 2016.

⁽⁴⁾ At the request of the director, the amount in column (b) was paid to a charity of his choosing.

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In September 2016, the board of directors approved the 2017 Directors' Compensation Policy, which is substantially similar to the 2016 policy, keeping annual compensation limits at the 2016 level, as presented in the following table.

2017 Annual Compensation Limits

Title	Amount
Chairman of the Board	$	100,000
Vice Chairman of the Board	95,000
Chairman of the Audit Committee	95,000
Other Committee Chairmen (excluding Audit and Executive)	90,000
All Other Directors	80,000

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The Bank is a cooperative whose members own substantially all of the outstanding capital stock of the Bank and elect the directors of the Bank. The voting right of members is generally limited to the election of the Bank's board of directors. A 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 all members are eligible to vote for the number of open independent director seats. Membership is voluntary, and a member must give notice of its intent to withdraw from membership. A member that withdraws from membership may not acquire shares of any FHLBank before the end of the five-year period beginning on the date of the completion of its divestiture of Bank stock.

The Bank does not offer any compensation plan under which equity securities of the Bank are authorized for issuance. The following table presents the ownership of the Bank's capital stock, which is concentrated within the financial services industry and is stratified across various institution types (in millions).

	Commercial Banks		Thrifts		Credit Unions		Insurance Companies		CDFIs		Mandatorily Redeemable Capital Stock		Total
December 31, 2016	$	3,393	$	366	$	1,100	$	94	$	2	$	1	$	4,956
December 31, 2015	3,557		368		1,094		81		1		14		5,115
December 31, 2014	3,821		381		872		75		1		19		5,169
December 31, 2013	3,766		290		739		86		2		24		4,907
December 31, 2012	3,641		342		810		104		1		40		4,938

The following table presents information about those members that are beneficial owners of more than five percent of the Bank's capital stock as of February 28, 2017.

Name and Address	Number of Shares Owned	Percent of Total Capital Stock
Bank of America, National Association	13,117,079	25.43
100 North Tryon Street
Charlotte, NC 28255
Navy Federal Credit Union	5,122,687	9.93
820 Follin Lane
Vienna, VA 22180
Capital One, National Association	3,029,700	5.87
1680 Capital One Drive
McLean, VA 22102

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Additionally, member directors, which comprise a majority of the board of directors of the Bank, are officers or directors of member institutions that own the Bank's capital stock. The following table presents these institutions as of February 28, 2017.

Member Name	City, State	Number of Shares Owned	Percent of Total Capital Stock
Asheville Savings Bank, S.S.B.	Asheville, NC	28,286	0.05
Marquis Bank	Coral Gables, FL	14,592	0.03
Countybank	Greenwood, SC	7,892	0.02
Community Bankers' Bank	Midlothian, VA	6,560	0.01
First Bank	Strasburg, VA	6,229	0.01
Citizens Bank of Americus	Americus,GA	5,288	0.01
First Community Bank of Central Alabama	Wetumpka, AL	3,021	0.01
1880 Bank	Cambridge, MD	2,847	0.01
City First Bank of D.C., N.A.	Washington, DC	2,314	*

____________

^* Represents less than 0.01 percent.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

Because the Bank is a cooperative, capital stock ownership is a prerequisite for a member to transact any business with the Bank. The Bank's member directors are officers or directors of member institutions. All directors and any member that holds five percent or more of the Bank's voting securities are classified as related parties under SEC regulations. In the ordinary course of its business, the Bank may transact business with each of the members that has an officer or director serving as a director of the Bank and members that hold five percent or more of the Bank's voting securities. All such transactions:

• have been made in the ordinary course of the Bank's business;

• have been made subject to the same Bank policies as transactions with the Bank's members generally; and

• in the opinion of management, do not involve more than the normal risk of collection or present other unfavorable features.

The Bank has adopted a written related person transaction policy, which requires the Governance and Compensation Committee of the board of directors to review and, if appropriate, to approve any transaction between the Bank and any related person (as defined by applicable SEC regulations). Pursuant to the policy, the committee will review any transaction the Bank would be required to disclose in filings with the SEC in which the Bank is or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has, or will have a direct or indirect material interest. The Bank has exemptive relief, pursuant to an SEC no-action letter, from disclosing certain related person transactions that arise in the ordinary course of the Bank's business. The committee may approve those transactions that are in, or are not inconsistent with, the best interests of the Bank and its shareholders.

In addition, the Bank has a written Code of Conduct applicable to all employees and a Code of Conduct and Ethics for Directors as well as other written policies and procedures that also may apply to or prohibit certain related person transactions.

Director Independence

For a discussion of director independence, refer to Item 10, Directors, Executive Officers and Corporate Governance-Director Independence, Compensation Committee, Audit Committee and Audit Committee Financial Expert.

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Item 14.Principal Accountant Fees and Services.

The following table presents the aggregate fees billed to the Bank by PwC (in thousands).

	For the Years Ended December 31,
	2016		2015
Audit fees(1)	$	841	$	838
Audit-related fees(2)	48		47
All other fees(3)	8		2
Total fees	$	897	$	887

____________

⁽¹⁾ Audit fees and expenses for the years ended December 31, 2016 and 2015 were for professional services rendered by PwC in connection with the Bank's annual audits and quarterly reviews of the Bank's financial statements.

⁽²⁾ Audit-related fees and expenses for the years ended December 31, 2016 and 2015 were for certain FHLBank system assurance and related services, as well as fees related to PwC’s participation at conferences.

⁽³⁾ All other fees for the year ended December 31, 2016 were for non-audit services for a FHLBanks' project related to employee benefits and the annual license for PwC's accounting research software.

The Bank paid additional fees to PwC in the form of assessments paid to the Office of Finance. The Bank is assessed its proportionate share of the costs of operating the Office of Finance, which includes the expenses associated with the annual audits of the combined financial statements of the FHLBanks. These assessments, which totaled $60,870 and $60,569 in 2016 and 2015, respectively, are not included in the table above.

The Bank is exempt from federal, state, and local taxation. Therefore, no tax-related fees were paid during the years ended December 31, 2016 and 2015.

The Audit Committee of the board of directors has adopted the Audit Committee Pre-Approval Policy (Pre-Approval Policy). In accordance with the Pre-Approval Policy and applicable law, the Audit Committee pre-approves audit services, audit-related services, tax services, and non-audit services to be provided by the Bank's independent registered public accounting firm. The term of any pre-approval is 12 months from the date of pre-approval unless the Audit Committee specifically provides otherwise. On an annual basis, the Audit Committee reviews the list of specific services and projected fees for services to be provided for the next 12 months and pre-approves services as the Audit Committee deems necessary. Under the Pre-Approval Policy, the Audit Committee has granted pre-approval authority to the Chairman and the Vice-Chairman of the Audit Committee, subject to limitation as set forth in the Pre-Approval Policy. The Chairman or the Vice-Chairman must report any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting. New services that have not been pre-approved by the Audit Committee that are in excess of the pre-approval fee level established by the Audit Committee must be presented to the entire Audit Committee for pre-approval. In the years ended December 31, 2016 and 2015, 100 percent of the audit fees, audit-related fees, and all other fees were pre-approved by the Audit Committee.

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PART IV.

Item 15.Exhibits and Financial Statement Schedules.

(a) Financial Statements. The following financial statements of the Federal Home Loan Bank of Atlanta, set forth in Item 8 above, are filed as part of this Report.

Report of Independent Registered Public Accounting Firm

Statements of Condition as of December 31, 2016 and 2015

Statements of Income for the Years Ended December 31, 2016, 2015, and 2014

Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015, and 2014

Statements of Capital Accounts for the Years Ended December 31, 2016, 2015, and 2014

Statements of Cash Flows for the Years Ended December 31, 2016, 2015, and 2014

Notes to Financial Statements

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(b) Exhibits. The following exhibits are filed as a part of this Report:

Exhibit No.		Description
3.1		Amended and Restated Organization Certificate of the Federal Home Loan Bank of Atlanta1
3.2		Bylaws of the Federal Home Loan Bank of Atlanta (Revised and Restated through January 28, 2016)2
4.1		Capital Plan of the Federal Home Loan Bank of Atlanta3
10.1		Federal Home Loan Bank of Atlanta Benefit Equalization Plan (2017 restatement)*
10.2		Federal Home Loan Bank of Atlanta Deferred Compensation Plan (2009 revision)4*
10.3		Form of Officer and Director Indemnification Agreement5*
10.4		Federal Home Loan Bank of Atlanta 2017 Directors' Compensation Policy*
10.5		Federal Home Loan Bank of Atlanta Omnibus Annual Incentive Compensation Plan (as amended January 26, 2012)6*
10.6		Employment Agreement, effective as of January 1, 2014, between the Bank and W. Wesley McMullan7*
10.7		Federal Home Loan Bank of Atlanta Executive Change in Control Severance Plan, effective January 1, 2017
10.8		Amended and Restated Federal Home Loan Banks P&I Funding and Contingency Plan Agreement, effective as of January 1, 2017, by and among the Office of Finance and each of the Federal Home Loan Banks
10.9		Amended Joint Capital Enhancement Agreement by and among each of the Federal Home Loan Banks8
12.1		Statement regarding computation of ratios of earnings to fixed charges
31.1		Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 135, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Audit Committee Report
101		Audited financial statements from the Annual Report on Form 10-K of Federal Home Loan Bank of Atlanta for the year ended December 31, 2016, filed on March 9, 2017, formatted in XBRL: (i) the Statements of Condition, (ii) Statements of Income, (iii) the Statements of Capital, (iv) the Statements of Cash Flows and (v) the Notes to Financial Statements.
	* Denotes management contract or compensatory plan.
1	Filed on October 26, 2012 with the SEC in the Bank's Form 8-K and incorporated herein by reference.
2	Filed on February 1, 2016 with the SEC in the Bank's Form 8-K and incorporated herein by reference.
3	Filed on August 5, 2011 with the SEC in the Bank's Form 8-K and incorporated herein by reference.
4	Filed on March 30, 2009 with the SEC in the Bank's Form 10-K and incorporated herein by reference.
5	Filed on March 17, 2006 with the SEC in the Bank's Form 10 Registration Statement and incorporated herein by reference.
6	Filed on March 23, 2012 with the SEC in the Bank's Form 10-K and incorporated herein by reference.
7	Filed on March 14, 2014 with the SEC in the Bank's Form 10-K and incorporated herein by reference.
8	Filed on August 5, 2011 with the SEC in the Bank's Form 8-K and incorporated herein by reference.

151

Item 16.     Form 10-K Summary.

None.

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 Atlanta
Date:	March 9, 2017	By /s/ W. Wesley McMullan
		Name: W. Wesley McMullan     Title: President and Chief Executive Officer

152

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 dates indicated.

Date:	March 9, 2017	By /s/ W. Wesley McMullan
		Name: W. Wesley McMullan
		Title: President and Chief Executive Officer
Date:	March 9, 2017	By /s/ Kirk R. Malmberg
		Name: Kirk R. Malmberg
		Title: Executive Vice President                 and Chief Financial Officer
Date:	March 9, 2017	By /s/ William T. Shaw
		Name: William T. Shaw
		Title: First Vice President and Controller
Date:	March 9, 2017	By /s/ F. Gary Garczynski
		Name: F. Gary Garczynski
		Title: Chairman of the Board of Directors
Date:	March 9, 2017	By /s/ Richard A. Whaley
		Name: Richard A. Whaley
		Title: Vice Chairman of the Board of Directors
Date:	March 9, 2017	By /s/ Brian E. Argrett
		Name: Brian E. Argrett
		Title: Director
Date:	March 9, 2017	By /s/ Travis Cosby, III
		Name: Travis Cosby, III
		Title: Director
Date:	March 10, 2016	By /s/ Suzanne S. DeFerie
		Name: Suzanne S. DeFerie
		Title: Director
Date:	March 9, 2017	By/s/ R. Thornwell Dunlap, III
		Name: R. Thornwell Dunlap, III
		Title: Director
Date:	March 9, 2017	By /s/ William C. Handorf
		Name: William C. Handorf
		Title: Director

153

Date:	March 9, 2017	By /s/ Scott C. Harvard
		Name: Scott C. Harvard
		Title: Director
Date:	March 9, 2017	By /s/ Jonathan Kislak
		Name: Jonathan Kislak
		Title: Director
Date:	March 9, 2017	By /s/ LaSalle D. Leffall, III
		Name: LaSalle D. Leffall, III
		Title: Director
Date:	March 9, 2017	By /s/ Kim C. Liddell
		Name: Kim C. Liddell
		Title: Director
Date:	March 9, 2017	By /s/ Miriam Lopez
		Name: Miriam Lopez
		Title: Director
Date:	March 9, 2017	By/s/ John B. Rucker
		Name: John B. Rucker
		Title: Director
Date:	March 9, 2017	By /s/ Robert L. Strickland, Jr.
		Name: Robert L. Strickland, Jr.
		Title: Director

154

EX-10.1

Exhibit 10.1

THE FEDERAL HOME LOAN BANK

OF ATLANTA

BENEFIT EQUALIZATION PLAN

(As Amended and Restated Effective January 1, 2017)

TABLE OF CONTENTS

Introduction    …………………………………………………………………………………….1

Article 1.Definitions…………………………………………………………………………1

Article II.    Membership……………………………………………………………………….3

Article III. Amount and Payment of Pension Benefits………………………………………..4

Article IV. Amount and Payment of Savings Plan Benefits…………………………………..7

Article V. Executive Retirement Plan Benefits……………………………………………11

Article VI. Source of Payment………………………………………………………………12

Article VII. Designation of Beneficiaries…………………………………………………….12

Article VIII. Administration of the Plan………………………………………………………13

Article IX. Amendment and Termination……………………………………………………14

Article X. General Provisions……………………………………………………………….14

FEDERAL HOME LOAN BANK OF ATLANTA

BENEFIT EQUALIZATION PLAN

(2017 RESTATEMENT)

Effective January 1, 2017, THE FEDERAL HOME LOAN BANK OF ATLANTA (the “Bank") hereby amends and completely restates its Benefit Equalization Plan (the “Plan") as follows.

Previously, the Plan was amended and restated in order to add provisions necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended. As permitted under guidance issued under Code Section 409A, the Plan does not contain provisions retroactive to the effective date of Section 409A (January 1, 2005), but the Plan has complied with Section 409A and guidance thereunder since the effective date of such legislation. The Plan was also previously amended and restated effective January 1, 2011.

INTRODUCTION

The purpose of this Plan is to provide benefits to certain employees of the Bank which would have been payable under the Pentegra Defined Benefit Plan for Financial Institutions (the “Retirement Fund") and benefits equivalent to the matching contributions and 401(k) contributions which would have been available under the Federal Home Loan Bank of Atlanta 401(k) Savings Plan (“Savings Plan”), but for the limitations placed on benefits and matching contributions for such employees by Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code of 1986, as amended from time to time, or any successor body of law thereto. In addition, the Plan is designed to provide certain additional executive retirement benefits to certain executive employees of the Bank. Finally, under the Plan the Board may grant additional benefits to Participants from time to time in order to attract and retain key employees of the Bank.

This Plan is intended to constitute a nonqualified unfunded deferred compensation arrangement for a select group of management or highly compensated employees. All benefits payable under this Plan shall be paid solely out of the general assets of the Bank. No benefits under this Plan shall be payable by the Retirement Fund or from its assets or by the Savings Plan or from its assets.

Article 1. Definitions

When used in the Plan, the following terms shall have the following meanings:

1.01     “Account” means the account established and maintained under Article IV to record the contributions deemed to be made by the Member and the Bank, as well as the change in value attributable to the deemed gains and losses thereon, all as described hereafter. For a Member who participated in the Plan prior to January 1, 2005, the Account includes both a Grandfathered Account and a Section 409A Account.

1.02     “Actuary” means the independent consulting actuary retained by the Bank to assist the Committee in its administration of the Plan.

1.03     “Adoption Date” means January 1, 2017.

1.04     “Bank” means the Federal Home Loan Bank of Atlanta.

1.05     “Beneficiary” means the beneficiary or beneficiaries designated in accordance with Article VI of the Plan to receive the benefit, if any, payable upon the death of a Member of the Plan.

1.06     “Board” or “Board of Directors” means the Board of Directors of the Bank.

1.07     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

1.08     “Code Limitations” mean the cap on compensation taken into account by a plan under Code Section 401(a)(17), the limitations on 401(k) contributions necessary to meet the dollar limitations on elective deferrals under Code Section 402(g) and the overall limitations on contributions and benefits imposed on qualified plans by Code Section 415, as such provisions may be amended from time to time, and any similar successor provisions of federal tax law.

1.09     “Committee” means the Governance and Compensation Committee or any successor committee appointed by the Board of Directors to administer the Plan.

1.10    “Compensation” means compensation as defined in the Savings Plan.

1.11     “Deferral Agreement” means the Agreement under which a Member elected to defer compensation under the Plan in accordance with the provisions of Article IV, which may include online elections pursuant to specific administrative procedures established by the Committee.

1.12     “Eligible Executive” means an officer of the Bank who holds the title of Senior Vice President or higher, who has been selected to be an Eligible Executive by the Committee, and who is or potentially is affected by the cap on compensation set out in Code Section 401(a)(17) during the current or next following calendar year.

1.13    “Executive Retirement Plan Benefit” or “ERP Benefit” means the extra benefits provided to certain Eligible Executives in accordance with Article V of the Plan.

1.14    “Grandfathered Account” means the value of the Member’s Account on December 31, 2004, together with earnings accruing to the Member’s Grandfathered Account thereafter, and is exempt from Code Section 409A.

1.15    “Grandfathered Benefit” shall mean the portion of the Member’s pension benefit under Article III, determined as if the Member terminated employment as of December 31, 2004, but only if the Member was vested in such benefit as of December 31, 2004. Such Grandfathered Benefit shall remain exempt from Code Section 409A.

1.16     “Member” means any person included in the membership of the Plan as provided in Article II.

1.17    “Retirement Fund” means the Pentegra Defined Benefit Plan for Financial Institutions, in which the Bank participates as a participating employer.

1.18    “Savings Plan” means the Federal Home Loan Bank of Atlanta 401(k) Savings Plan.

1.19    “Section 409A Account” shall mean the value of the Member’s Account, minus the value of the Member’s Grandfathered Account. The Section 409A Account shall be subject to Code Section 409A and applicable guidance thereunder.

1.20    “Section 409A Benefit” means, as applicable (i) the portion of the Member’s pension benefit under Article III of the Plan, minus the Grandfathered Benefit; or (ii) the Member’s entire pension benefit under Article III if the Member was not vested in his or her benefit as of December 31, 2004. The Section 409A Benefit shall be subject to Code Section 409A and applicable guidance thereunder.

1.21    “Termination of Employment” whether or not capitalized herein, means “separation from service” under Code Section 409A and applicable guidance thereunder.

Article II.Membership

2.01     Each Eligible Executive of the Bank shall become a Member of the Plan on the earliest of the day such Eligible Executive first accrues a benefit under Article III, Article IV, or Article V.     2.02    Notwithstanding the provisions of Section 2.01, the Board or its designee may act, in its sole discretion, as described in (i) and (ii) below. In the absence of a determination under (i) or (ii) below, the provisions of Sections 2.01 shall apply.

(i)    The Board or its designee may, in its sole discretion, make a determination that an Eligible Executive who would become a Member of the Plan through the operation of Sections 2.01 shall not become a Member of the Plan. In such a case, the Eligible Executive shall not become a Member of the Plan unless and until the Board or its designee makes a determination, in its sole discretion, that such Eligible Executive shall become a Member of the Plan. The Committee shall notify any Eligible Executive affected by such a determination.

(ii)    The Board or its designee may, in its sole discretion, make a determination that an individual who would not become a Member of the Plan through the operation of Section 2.01 shall become a Member of the Plan. In such a case, the individual shall become a Member of the Plan on the date the Board or its designee makes the determination described herein. The Committee shall notify any Eligible Executive affected by such a determination.

2.03     If on the date that payment of a Member's benefit from the Retirement Fund commences, the Member is not entitled under Section 3.01 below to receive a benefit under the Plan, his membership in the Plan for purposes of benefits under Article III shall terminate on such date.

2.04     A benefit shall be payable under the Plan to or on account of a Member only upon the Member's retirement, death or other Termination of Employment with the Bank, except as provided in Article IV or Article V.

Article III. Amount and Payment of Pension Benefits

3.01     the amount, if any, of the annual pension benefit payable to or on account of a Member pursuant to the Plan shall equal, unless otherwise provided in an Appendix (pursuant to Section 3.09), the excess of (i) over (ii), as determined by the Committee, where:

(i)     Is the annual pension benefit determined as of a Member’s Termination of Employment on the basis of the Regular Form of payment that would otherwise be payable to or on account of the Member by the Retirement Fund if its provisions were administered without regard to the Code Limitations, and with the inclusion in the definition of “Base Salary” (for the year deferred) of any amount deferred by a Member under (A) the Deferred Compensation Plan and (B) under Sections 4.01 and 4.02 of this Plan; and

(ii)Is the annual pension benefit determined as of a Member’s Termination of Employment on the basis of the Regular Form of payment that is payable to or on account of the Member by the Retirement Fund.

For purposes of this Section 3.01, “annual pension benefit” includes any “Active Service Death Benefit,” “Retirement Adjustment Payment,” “Annual Increment” and “Single Purchase Fixed Percentage Adjustment” which the Bank elected to provide its employees under the Retirement Fund. For Members initially hired by the Bank prior to July 1, 2005, “Base Salary” is the basic annual salary rate as of each January 1st including bonuses paid in the current calendar year. For Members initially hired by the Bank on or after July 1, 2005, “Base Salary” is the basic annual salary rate as of each January 1st, but excluding bonuses paid in the current calendar year.

3.02     Unless the Member elects an optional form of payment under the Plan pursuant to Section 3.03 below, the annual pension benefit, if any, payable to or on account of a Member under Section 3.01 above, shall be converted by the Actuary and shall be payable to or on account of the Member in the “Regular Form” of payment, utilizing for that purpose the same actuarial factors and assumptions then used by the Retirement Fund to determine the actuarial equivalence. For purposes of the Plan, the “Regular Form” of payment means an actual pension benefit payable for the Member's lifetime and the death benefit described in Section 3.04 below.

3.03     (a) A Member may elect in writing pursuant to paragraph (c) below to have the annual pension benefit, if any, payable to or on account of a Member under Section 3.02 above converted by the Actuary to any optional form of payment then permitted for such Member under the Retirement Fund; and for this purpose it is noted that, depending on their date of hire, Members may have different optional forms of payment available to them under the Retirement Fund. The Actuary shall utilize for the purpose of that conversion the same actuarial factors and assumptions then used by the Retirement Fund to determine actuarial equivalence.

(b)     If a Member who had elected an optional form of payment under this Section 3.03 dies after the date his benefit payments under the Plan had commenced, the only death benefit, if any, payable under the Plan in respect of said Member shall be the amount, if any, payable under the optional form of payment which the Member had elected under the Plan. If a Member who had elected an optional form of payment under this Section 3.03 dies before the date his benefit payments under the Plan commence, his election of an optional form of benefit shall be inoperative.

(c)     An election of any optional form of payment under this Section 3.03 may be made only in writing and filed by the Member with the Committee, and shall be subject to the following additional rules:

(i)     A Member shall be permitted to make an initial election with respect to the form of payment under this Article III no later than January 30 following the end of the calendar year in which the Member first accrues a benefit under Article III.

(ii)    Any subsequent election (i.e., any election following the Member’s initial election under paragraph (c)(i) above) must be made no later than twelve (12) months preceding the Member’s Termination of Employment; and

(iii)    Any subsequent election (i.e., any election following the Member’s initial election under paragraph (c)(i) above) with respect to the Member’s Section 409A Benefit must defer the commencement of distribution of the Section 409A Benefit for a period of at least five (5) years from the date such payment would have otherwise commenced, provided, however, that if the subsequent election is a change in the form of payment between two life annuities (as determined under Section 409A and applicable guidance thereunder) that are actuarially equivalent applying reasonable actuarial methods and assumptions, such election shall not be subject to the five year delay rule under this clause (iii).

3.04     Benefits payments upon the death of a Member shall be calculated as follows:

(a)For benefits accrued to a Member prior to February 1, 2003, upon the death of a Member before the date his benefit payments under the Plan commence or after the date his benefit payments commence, if he had not elected an optional form of payment under Section 3.03 above, a death benefit shall be paid to the Member's Beneficiary in a lump sum equal to the excess, if any, of (i) over (ii), where:

(i)     is an amount equal to 12 times the annual pension benefit, if any, payable under Section 3.01 above, and

(ii)     is the sum of the benefit payments, if any, which the Member had received under the Plan.

(b)For any benefits accrued to any Member from February 1, 2003 onward, upon the death of a Member before the date his benefit payments under the Plan commence or after the date his benefit payments commence, if he had not elected an optional form of payment under Section 3.03 above, a death benefit shall be paid to the Member's Beneficiary in a lump sum equal to the excess, if any, of (i) over (ii), where:

(i)     is an amount equal to 10 times the annual pension benefit, if any, payable under Section 3.01 above and adjusted for present value, and

(ii)     is the sum of the benefit payments, if any, which the Member had received under the Plan.

3.05     If a Member to whom an annual pension benefit is payable under this Plan dies before the commencement of the payment of his benefit, the death benefit payable under Section 3.04 shall be payable to the Member's beneficiary as if the payment of the Member's benefit had commenced on the first day of the month in which his death occurred.

3.06     If a Member is restored to employment with the Bank, payment of any pension benefits under this Plan shall continue as though the Member had not been re-employed, and the Member may not cease the payment of pension benefits or change the form of payment of such benefits. However, the Member, if eligible to participate in the Plan upon his re-employment, shall accrue pension benefits under the terms of this Article III as though the Member had not previously retired, and upon the Member’s subsequent Termination of Employment, his pension benefits under Article III of the Plan shall be reduced by the equivalent actuarial value of the amount of any pension benefit under Article III previously paid by the Plan to the Member. For purposes of this Section 3.06, the equivalent actuarial value of the pension benefits previously paid to the Member shall be determined by the Actuary utilizing for that purpose the same actuarial factors and assumptions then used by the Retirement Fund to determine actuarial equivalence under the Retirement Fund. In addition, with respect to pension benefits under Article III of this Plan which accrue after the Member’s re-employment, the Member may make initial and subsequent elections regarding the form of payment, as provided under the terms of this Article III.

3.07     If (i) a Member or beneficiary is eligible to commence his or her pension benefit under this Article III or has already commenced receiving such benefit, (ii) such Member or beneficiary does not participate in any other non-qualified deferred compensation plan that would be aggregated with this Plan under Treasury Regulation Section 1.409A-1(c)(2) (i.e., another defined benefit-type deferred compensation plan), and (iii) during a given calendar year the equivalent actuarial value of the remaining pension benefit payable to such Member or beneficiary under Article III of this Plan does not exceed the applicable dollar amount under Code Section 402(g)(1)(B) for such calendar year, then the equivalent actuarial value of such remaining benefit shall be paid in a single lump sum to such Member or beneficiary, as applicable, on a date determined by the Committee in its discretion, but no later than December 31 of the calendar year for which such determination is made.

3.08     Except in cases where the Member properly elects to receive his benefit in the form of a lump sum payment, all annual pension benefits under the Plan shall be paid in monthly, or annual installments, as elected by the Member. Benefits shall commence on a date determined by the Committee in its sole discretion, but no later than ninety (90) days after the Member’s Termination of Employment with the Bank. If a Member has properly elected to receive his benefit in the form of a lump sum payment, such benefit shall be paid to the Member within ninety (90) days following the later of (i) the date the Member reaches age 50 or (ii) the date of the Member’s Termination of Employment with the Bank.

3.09    Only a Member’s years of service with the Bank beginning on the Member’s initial hire date with the Bank shall be taken into account for purposes of the Plan. The Board or its designee may make exceptions to this rule and may grant additional years of service to a Member. Similarly, the Board or its designee may also from time to time grant to one or more Members or prospective Members under this Plan additional benefits which the Board or its designee deems appropriate to attract or retain such Member. In crediting such additional benefits or service, the Board or its designee may attach vesting or other conditions as it deems appropriate. Any such additional benefits or service, and the terms and conditions associated with such additional benefits or service, shall be set forth on an Appendix to this Plan. Such Appendix shall be incorporated in and made a part of this Plan, but shall not be required to be disclosed to any Member other than the Member who receives such additional benefits, except as required by applicable law. Any additional benefits credited pursuant to this Section 3.09 shall be treated as part of the Member’s Section 409A Benefit and shall be fully subject to Section 409A.

3.10    The timing of a distribution of a Member’s Section 409A Benefit may not be accelerated, except in the event the Committee, in its sole discretion, elects to allow an acceleration which is a permissible acceleration under Treas. Reg. Section 1.409A-3(j)(4).

Article IV. Amount and Payment of Savings Plan Benefits

4.01      Duringeach calendar year, if the Eligible Executive's 401(k) account contributions under the Savings Plan for such year have been limited by a Code Limitation, and if the Eligible Executive has elected to reduce his compensation for the current calendar year in accordance with the provisions of Section 4.02, then such Eligible Executive shall be credited with an elective contribution addition under this Plan equal to the reduction in his Compensation made in accordance with such election; provided, however, that the sum of all such elective contribution additions for an Eligible Executive with respect to any single calendar year shall generally be limited to the amount of 401(k) account contributions not permitted to be made to the Savings Plan as a result of the application of the Code Limitations and shall not be greater than the excess of (i) over (ii), where

(i) is an amount equal to the regular account and maximum 401(k) account contributions permitted under the Savings Plan for the calendar year as determined under the Savings Plan if its provisions were administered without regard to the Code Limitations and if compensation as defined in the Savings Plan included any deferrals made under this Section 4.01; and

(ii) (ii) is an amount equal to his regular account and 401(k) account contributions actually made under the Savings Plan for the calendar year.

4.02     A Member's election under Section 4.01 shall be made in accordance with the following provisions:

(a)The Committee shall provide each Member with a Deferral Agreement at least 30 days prior to the commencement of the calendar year in which compensation is to be earned and paid. Each Member shall execute and deliver the Deferral Agreement to the Committee no later than the last business day preceding the calendar year in which compensation is to be earned and paid.

Notwithstanding the above, provided the Eligible Executive does not already participate in a deferred compensation plan of the Bank that is considered to be the same type of plan as this Plan under the plan aggregation rules contained in Treasury Regulation 1.409A-1(c)(2), an Eligible Executive who first becomes eligible to participate in the plan during a calendar year may execute a Deferral Agreement with respect to his elections under Section 4.01 within 30 days of the date he becomes eligible to participate. An individual who is an Eligible Executive immediately prior to the Adoption Date may file a Deferral Agreement with the Committee within such period prior to the Adoption Date and in such manner as the Committee may prescribe. With respect to Section 4.01, the Deferral Agreement shall only apply to compensation earned by the Member in the payroll periods beginning on or after the later of the date such Agreement is submitted to the Committee or the Adoption Date.

(b)     The Deferral Agreement shall provide for separate elections with respect to elective contribution additions under Section 4.01, and shall provide for separate distribution elections with respect to the Grandfathered Account and the Section 409A Account.

(c)     An Eligible Executive's elections on his Deferral Agreement of the rates at which he authorizes deferrals under Section 4.01 for purposes of this Plan shall be irrevocable for the calendar year for which the deferral is elected. Notwithstanding the foregoing, a Member may, in the event of an unforeseeable emergency which results in severe financial hardship, request a suspension of his salary deferrals under the Plan. The request shall be made in a time and manner determined by the Committee. The suspension shall be effective with respect to the portion of the calendar year remaining after the Committee's determination that the Member has incurred a severe financial hardship. The Committee shall apply standards, to the extent applicable, identical to those described in Section 4.08 in making its determination.

4.03     Unless otherwise provided in Appendix A, Members may also receive an employer contribution (consisting potentially of employer matching contributions and employer non-elective contributions as described below) under the Plan if such Member’s employer contributions under the Savings Plan are limited by any applicable Code Limitation in accordance with the following:

(a) For each elective contribution addition credited to a Member under Section 4.01, such Member shall also be credited with an additional employer matching contribution, subject to a maximum employer matching contribution of 6% of such Member’s Compensation, under this Plan equal to the employer matching contributions, if any, that would be credited under the Savings Plan with respect to such amount if contributed to the Savings Plan, determined as if the provisions of the Savings Plan were administered without regard to the Code Limitations and determined after taking into account the Member's actual contributions to and actual matching contributions under the Savings Plan.

(b) Each Member whose non-elective employer contributions under the Savings Plan are limited by a Code Limitation, shall receive an employer non-elective contribution under this Plan equal to the employer non-elective contribution, if any, that would be credited under the Savings Plan with respect to such Member, provided such employer non-elective contribution shall be subject to a maximum of 4% of such Member’s Compensation, determined without regard to the Code Limitations.

4.04     The Committee shall maintain an Account on the books and records of the Bank for each Eligible Executive who is a Member by reason of amounts credited under Sections 4.01 and 4.03. The elective contribution additions, makeup contribution additions and employer contribution additions of a Member under Section 4.01 and 4.03 shall be credited to the Member's Account as soon as practical after the date that the compensation reduced under Section 4.01 would otherwise have been paid to such Member.

4.05    In addition to the amounts described in Section 4.04, the Account of a Member shall be credited from time to time with deemed investment gains and losses based upon such hypothetical investment options as the Committee shall announce to Members from time to time. A Member may request how his Account shall be allocated among such investment options in increments of not less than one percent (1%), but the Committee or its delegate may in its sole discretion override any such request, and, if so, the Committee or its delegate may allocate such funds in a different manner. A Member may make investment requests on a daily basis, using such electronic or other media as the Committee may permit. Investment requests shall be subject to such additional rules and conditions as the Committee may prescribe from time to time (including a delay in implementing such request, in order to give the Committee or its delegate an opportunity to override such request). The Bank shall not be required under any circumstance to obtain an actual investment vehicle which reflects the investment request made by the Member, nor shall the Committee's acceptance of a Member's investment request give the Member a right or interest in any specific assets of the Bank.

4.06     A Member shall at all times be 100% vested in his deferrals under Section 4.01. A Member shall become vested in employer contributions under Section 4.03 at the same time the Member becomes vested in his or her employer contributions under the Savings Plan. The balance credited to a Member's Account under this Article IV, as adjusted by deemed gains and losses under Section 4.05, shall be paid to him either in a lump sum payment or annual installments over a period of two (2) to five (5) years, as elected by the Member, with such payments to commence on a date determined by the Committee in its sole discretion, but no later than ninety (90) days after the Member’s Termination of Employment with the Bank. A Member’s election of lump sum or installments (and, if applicable, the number of installments), shall be made in writing on a form acceptable to the Committee, which may be on online election pursuant to specific administrative procedures established by the Committee, and shall be subject to the following additional rules:

(i)    Any subsequent election (i.e., any election following the Member’s initial election under Section 4.02) with respect to the Member’s Grandfathered Account must be made no later than six (6) months preceding the Member’s Termination of Employment; and

(ii)    Any subsequent election (i.e., any election following the Member’s initial election under Section 4.02) with respect to the Member’s Section 409A Account (A) must be made no later than twelve (12) months preceding the Member’s Termination of Employment; and (B) other than in the event of the death of the Member, must defer the commencement of distribution of the Section 409A Account for a period of at least five (5) years from the date such payment would have otherwise commenced.

If installments are elected, a Member may continue to request that the balance of his or her Account be invested under the procedures set out in Section 4.05. Subsequent installments shall be paid on the anniversary of the date the first installment is paid, and the amount paid on each installment shall be determined by the multiplying the Member’s balance as most recently determined by the Committee for this purpose, by a fraction, the numerator of which is one, and the denominator of which is the number of remaining installments (including the installment being paid); therefore, for example, if a Member elects installments over five years, the fraction in the first year would be 1/5, in the second year would be ¼, in the third year would be 1/3, and so forth, until the fraction in the final year is 1/1.

Notwithstanding the foregoing, if (i) a Member or beneficiary is eligible to commence distribution of his or her Account under this Article IV or has already commenced distribution, (ii) such Member or beneficiary does not participate in any other non-qualified deferred compensation plan that would be aggregated with this Plan under Treasury Regulation Section 1.409A-1(c)(2)(i.e., another voluntary deferral-type deferred compensation plan), and (iii) during a given calendar year the value of the Account payable to such Member or beneficiary under Article IV does not exceed the applicable dollar amount under Code Section 402(g)(1)(B) for such calendar year, then the remaining value of such Account shall be paid in a single lump sum to such Member or beneficiary, as applicable, on a date determined by the Committee in its discretion, but no later than December 31 of the calendar year for which such determination is made.

4.07     If a Member dies prior to receiving the balance credited to his Account under Section 4.06 above, the balance in his Account shall be paid to his Beneficiary in a lump sum payment on a date determined by the Committee in its sole discretion, but no later than ninety (90) days after his death, regardless of whether the Member had elected installment payments under Section 4.06.

4.08     While employed by the Bank, a Member may, in the event of an unforeseeable emergency, request a withdrawal from this Account. The request shall be made in a time and manner determined by the Committee, shall be for an amount not greater than the lesser of (i) the amount required to meet the financial hardship, or (ii) the amount of his Account, and shall be subject to approval by the Committee. For purposes of this Section 4.08, an unforeseeable emergency means a severe financial hardship resulting from an illness or accident of the Member or a dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Member’s property due to casualty (including the need to rebuild a home not otherwise covered by insurance), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Member. Except as otherwise provided herein, the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Member or dependent is faced with an unforeseeable emergency is to be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Member’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the arrangement.

4.09    Only a Member’s years of service with the Bank beginning on the Member’s initial hire date with the Bank shall be taken into account for purposes of the Plan. The Board or its designee may make exceptions to this rule and may grant additional years of service to a Member. Similarly, the Board or its designee may also from time to time credit to one or more Members or prospective Members under this Plan additional amounts which the Board or its designee deems appropriate to attract or retain such Member. In crediting such additional amounts or service, the Board or its designee may attach vesting or other conditions as it deems appropriate. Any such additional credits or service, and the terms and conditions associated with such additional credits or service, shall be set forth on an Appendix to this Plan. Such Appendix shall be incorporated in and made a part of this Plan, but shall not be required to be disclosed to any Member other than the Member who receives such additional credits. Any additional amounts credited pursuant to this Section 4.09 shall be added to the Member’s Section 409A Account and shall be fully subject to Section 409A.

4.10    The timing of a distribution of a Member’s Section 409A Account may not be accelerated, except in the event except in the event the Committee, in its sole discretion, elects to allow an acceleration which is a permissible acceleration of distribution under Treas. Reg. Section 1.409A-3(j)(4).

Article V. Amount and Payment of Executive Retirement Plan Benefits

5.01    Eligible Executives who (i) were first hired or promoted to executive vice president or above on or after January 1, 2017, and (ii) are not eligible to accrue benefits under the Retirement Flan, (“Executive Retirement Plan Participant”) shall receive additional executive retirement benefits under this Article V.

5.02    Provided that an Executive Retirement Plan Participant has met the requirements to receive elective deferral and employer contributions and other benefits as set forth in Article IV, above, an eligible Executive Retirement Plan Participant shall receive an Executive Retirement Plan Benefit equal to (a) plus (b) below:

(a) 15% of any bonuses paid in the current Plan Year to an eligible Executive Retirement Plan Participant;

(b) 9% of such Executive Retirement Plan Participant’s Compensation earned during the current Plan Year, offset by the amount of any employer non-elective contribution contributed on behalf of such Executive Retirement Plan Participant under Section 4.03 of this Plan, and offset by the amount of any employer non-elective contribution contributed on behalf of such Executive Retirement Plan Participant under the Savings Plan;

5.03    An Executive Retirement Plan Participant shall be vested in the benefits described in this Article V in the same manner as described in Section 4.06 above. Benefits described in this Article V shall be distributed in accordance with the same distribution elections made by an Executive Retirement Plan Participant in accordance with Article IV above.

Article VI. Source of Payment

6.01     All payments of benefits under the Plan shall be paid from, and shall only be a general claim upon, the general assets of the Bank, notwithstanding that the Bank, in its discretion, may establish a bookkeeping reserve or a grantor trust (as such term is used in Sections 671 through 677 of the Code) to reflect or to aid it in meeting its obligations under the Plan with respect to any Member or prospective Member or Beneficiary. No benefit whatever provided by the Plan shall be payable from the assets of the Retirement Fund or the Savings Plan.

6.02     No Member shall have any right, title or interest whatsoever in or to any investments which the Bank may make or any specific assets which the Bank may reserve to aid it in meeting its obligations under the Plan. To the extent that any person acquires a right to receive payments from the Bank under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Bank.

Article VII. Designation of Beneficiaries

7.01     For purposes of benefits payable under Article III of this Plan, the Member's designated beneficiary shall be the same individual or entity designated by the Member to receive benefits under the Retirement Fund in case of the Member's death. For purposes of benefits payable under Article IV and Article V hereof, each Member of the Plan may file with the Committee a single, combined written designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if any, payable under the Plan upon his death (this beneficiary designation may be made online pursuant to administrative procedures established by the Committee). The Member may, from time to time, revoke or change his beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Member's death, and in no event shall it be effective as of a date prior to such receipt.

7.02     If no such beneficiary designation is in effect at the time of a Member's death, or if no designated Beneficiary survives the Member, or if, in the opinion of the Committee, such designation conflicts with applicable law, the Member's estate shall be deemed to have been designated his Beneficiary and shall be paid the amount, if any, payable under the Plan upon the Member's death. If the Committee is in doubt as to the right of any person to receive such amount, the Committee may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or the Committee may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Plan and the Bank therefor.

Article VIII. Administration of the Plan

8.01     The Board of Directors has delegated to the Governance and Compensation Committee, subject to those powers which the Board has reserved as described in Article IX below, general authority over and responsibility for the administration and interpretation of the Plan. The Committee shall have full power and discretionary authority to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and any trust referred to in Article VI above, and the calculation of the amount of benefits payable thereunder, and to review claims for benefits under the Plan. Unless arbitrary or capricious, the Committee's interpretations and constructions of the Plan and its decisions or actions thereunder shall be binding and conclusive on all persons for all purposes.

8.02     The Committee shall arrange for the engagement of the Actuary, and if the Committee deems it advisable, it shall arrange for the engagement of legal counsel and certified public accountants (who may be actuary, counsel or accountants for the Bank), and other consultants, and make use of agents and clerical or other personnel for purposes of the Plan. The Committee may rely upon the written opinions of such Actuary, counsel, accountants and consultants, and upon any information supplied by the Retirement Fund or the Savings Plan for purposes of Sections 3.01, 4.01and 4.02 of the Plan, and delegate to any agent or to any sub‑committee or Committee member its authority to perform any act hereunder, including without limitations those matters involving the exercise of discretion; provided, however, that such delegation shall be subject to revocation at any time at the discretion of the Committee. The Committee shall report to the Board of Directors, or to a committee designated by the Board of Directors, at such intervals as shall be specified by the Board of Directors or such designated committee, with regard to the matters for which it is responsible under the Plan.

8.03     No Committee member shall be entitled to act on or decide any matters relating solely to such member or any of his rights or benefits under the Plan.

8.04     No Committee member shall receive any special compensation for serving in such capacity but shall be reimbursed for any reasonable expenses incurred in connection therewith. No bond or other security need be required of the Committee or any member thereof in any jurisdiction.

8.05     Any action of the Committee may be taken upon the affirmative vote of a majority of the members at a meeting or, at the direction of its Chairman, without a meeting by mail, e-mail or telephone, provided that all of the Committee members are informed in writing of the vote.

8.06     All claims for benefits under the Plan shall be submitted in writing to the Chairman of the Committee, pursuant to administrative procedures established by the Committee. Written notice of the decision on each such claim shall be furnished with reasonable promptness to the Member or his Beneficiary (the “claimant"). The claimant may request a review by the Committee of any decision denying the claim in whole or in part. Such request shall be made in writing and filed with the Committee within 30 days of such denial. A request for review shall contain all additional information which the claimant wishes the Committee to consider. The Committee may hold any hearing or conduct any independent investigation which it deems desirable to render its decision, and the decision on review shall be made as soon as feasible after the Committee's receipt of the request for review. Written notice of the decision on review shall be furnished to the claimant. For all purposes under the Plan, such decisions on claims (where no review is requested) and decisions on review (where review is requested) shall be final, binding and conclusive on all interested persons as to all matters relating to the Plan.

8.07     All expenses incurred by the Committee in its administration of the Plan shall be paid by the Bank.

Article IX. Amendment and Termination

9.01     The Board of Directors of the Bank may amend, suspend or terminate, in whole or in part, the Plan in accordance with applicable law without the consent of the Committee, any Member, Beneficiary or other person, provided, however, that (i) no amendment, suspension or termination shall retroactively impair or otherwise adversely affect the rights of any Member, Beneficiary or other person to benefits under the Plan which have accrued prior to the date of such action; and (ii) termination with respect to the portion of the Plan that includes the Section 409A Accounts and/or the Section 409A Accrued Benefits must comply with the requirements of Treas. Reg. Section 1.409A-3(j)(4)(ix). The Board may without the consent of any Member, Beneficiary or other person eliminate the lump sum payment provision under Section 3.04. The Board may also take any other action which may be necessary or appropriate to facilitate the administration, management and interpretation of the Plan or to conform the Plan thereto, provided that any such amendment or action does not have a material detrimental effect on the then currently estimated cost to the Bank of maintaining the Plan.

Article X. General Provisions

10.01     The Plan shall be binding upon and inure to the benefit of the Bank and its successors and assigns and the Members, and the successors, assigns, designees and estates of the Members. The Plan shall also be binding upon and inure to the benefit of any successor bank or organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan shall preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another bank or organization which assumes the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make appropriate provision for the preservation of the rights of Members under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of Plan obligations of the Bank, the term “Bank” shall refer to such other bank or successor entity and the Plan shall continue in full force and effect.

10.02     Neither the Plan nor any action taken thereunder shall be construed as giving to a Member the right to be retained in the employ of the Bank or as affecting the right of the Bank to dismiss any Member from its employ.

10.03     The Bank shall withhold or cause to be withheld from all benefits payable under the Plan all federal, state, local or other taxes required by applicable law to be withheld with respect to such payments.

10.04     No right or interest of a Member under the Plan may be assigned, sold, encumbered, transferred or otherwise disposed of and any attempted disposition of such right or interest shall be null and void. Further, no right or interest of a Member may be reached by any creditor of the Member.

10.05     If the Committee shall find that any person to whom any amount is or was payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment, or any part thereof, due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Committee is so inclined, be paid to such person's spouse, child or other relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be in complete discharge of the liability of the Plan and the Bank therefore.

10.06    All elections, designations, requests, notices, instructions, and other communications from a Member, Beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee and shall be mailed by first‑class mail or delivered to such location as shall be specified by the Committee and shall be deemed to have been given and delivered only upon actual receipt thereof at such location.

10.07     The benefits payable under the Plan shall be in addition to all other benefits provided for employees of the Bank and shall not be deemed salary or other compensation by the Bank for the purpose of computing benefits to which he may be entitled under any other plan or arrangement of the Bank.

10.08     No Committee member shall be personally liable by reason of any instrument executed by him or on his behalf, or action taken by him, in his capacity as a Committee member nor for any mistake of judgment made in good faith. Consistent with applicable law, regulation or governing bylaw of the Bank, the Bank shall indemnify and hold harmless the Retirement Fund or the Savings Plan and each Committee member and each employee, officer or director of the Bank or the Retirement Fund or Savings Plan, to whom any duty, power, function or action in respect of the Plan may be delegated or assigned, or from whom any information is requested for Plan purposes, against any cost or expense (including fees of legal counsel) and liability (including any sum paid in settlement of a claim or legal action with the approval of the Bank) arising out of anything done or omitted to be done in connection with the Plan, unless arising out of such person's fraud or bad faith.

10.09     As used in the Plan, the masculine gender shall be deemed to refer to the feminine, and the singular person shall be deemed to refer to the plural, wherever appropriate.

10.10     The captions preceding the Sections of the Plan have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provisions of the Plan.

10.11     The Plan shall be construed according to the laws of the State of Georgia in effect from time to time.

10.12    With respect to a specified employee (within the meaning of Code Section 409A), payment of benefits under the Plan, if conditioned upon the employee’s Termination of Employment, may not occur before the date that is six months after the Participant’s Termination of Employment (or, if earlier, the date of death of the Member).

IN WITNESS WHEREOF, THE FEDERAL HOME LOAN BANK of Atlanta has caused this amended and restated Benefit Equalization Plan to be executed effective as of the 1st day of January, 2017.

The Federal Home Loan Bank of Atlanta

By:/s/ W. Wesley McMullan    

Title: President and

Chief Executive Officer

Attest:

Julia S. Brown    

Secretary

APPENDIX A

This Appendix A is referenced in Section 3.01 and 4.03 of the Plan. It is intended to provide benefits under Article III and IV that are calculated pursuant to a different formula than that provided in Section 3.01 and 4.03 of the Plan.

1.

To more closely align the Chief Business Officer’s benefits with the retention objectives of the Board, Mr. Robert F. Dozier, Jr. shall receive the following pursuant to this plan:

(i) Mr. Dozier shall be deemed to have met the requirements to participate in the Retirement Fund, and shall receive benefits under this Plan in accordance with the provisions of Article III above.

(ii) Notwithstanding the provisions of Articles IV and V above, and provided that Mr. Dozier has met the requirements to receive elective deferral and employer contributions and other benefits as set forth in Article IV, above, Mr. Dozier shall receive an employer contribution equal to (a) plus (b) below. For clarity, the purpose of this Section is to provide a total employer contribution equal to 12% of Mr. Dozier’s combined Compensation plus bonuses under this Plan, but offset by amounts already contributed to the Plan under Article IV and by amounts already contributed to the Savings Plan.

a. 12% of any bonuses paid in the current Plan Year to Mr. Dozier;

b. 6% of Mr. Dozier’s Compensation earned during the current Plan Year, offset by the amount of any employer non-elective contribution contributed on behalf of Mr. Dozier under Section 4.03 of this Plan, and offset by the amount of any employer non-elective contribution contributed on behalf of Mr. Dozier under the Savings Plan;

EX-10.4

Exhibit 10.4

[FHLBank Logo]

Department: Corporate Secretary	Name of Policy:  2017 Directors’ Compensation Policy	Department Policy Number: 1
Effective Date: January 1, 2017	Supersedes Revisions: January 1, 2016	Authority to Approve and Amend: Board of Directors
Next Review Date: December 10, 2017	Department Policy Owner: Corporate Secretary

This policy is designed to set forth expectations for attendance by members of the board of directors of the Federal Home Loan Bank of Atlanta (Bank) at meetings of the board (including eight scheduled board meetings in 2017) and board committees and to ensure that each director is reasonably compensated for the time required of him or her in the performance of official Bank business.

A.Director Compensation

1. Effective January 1, 2017, the following annual compensation limits shall apply:

a) Chairman of the Board $100,000

b) Vice Chairman of the Board $95,000

c) Chairman of the Audit Committee $95,000

d) Other Chairmen of Committees (excluding Audit and Executive) $90,000

e) All Other Directors $80,000

2. Each director shall have the opportunity to be paid an amount equal to approximately one-seventh of such director’s annual limit for actual attendance at each scheduled in-person board meeting and board committee meetings, as further described in Section B. The seventh payment opportunity shall be subject to adjustment as further described in Section C.

3. In determining the above director compensation levels, the board considered a comparative compensation study prepared by a third party with expertise in compensation matters, the compensation paid to directors of other Federal Home Loan Banks in 2016, and the provision for payment of certain expenses described in Section D.3. The board established the above director compensation levels after evaluating the foregoing data and considering the time that directors are expected to devote to Bank business and the need to ensure the Bank’s future ability to attract qualified directors. The compensation levels reflect the board’s assessment of appropriate and comparable pay that will allow the Bank to recruit and retain highly qualified directors and compensate them for the time required in performing their duties.

B.Attendance

1. Each director is strongly encouraged to attend all meetings of the board and board committees on which the director serves, and is expected to attend no less than 75 percent of all such meetings

each year.

2. The Bank will pay a fee only for a director’s actual attendance at no less than 75 percent of the board meetings (including scheduled board meetings, new director orientation, joint meetings of the Affordable Housing Advisory Council and board or committee, board strategy sessions, and board teleconferences) and meetings of each committee of the board (including any ad hoc committee established by the board for a specific purpose) on which the director serves during each interim period, as identified below. In the event two or more committees on which a director serves are scheduled to meet concurrently, only one committee meeting will be required for the purpose of calculating the director’s attendance. Interested directors are not required to attend board or committee meetings that are devoted exclusively to director election matters. As ex officio members of all committees, the Chairman and Vice Chairman of the board are encouraged, but not required, to attend committee teleconferences and unscheduled committee meetings (meetings added after the 2017 board and committee meeting schedule is approved by the board).

3. The first interim period shall begin on December 12, 2016 and end on the last day of the first scheduled in-person board meeting for 2017. Each successive interim period shall begin on the calendar day immediately following a scheduled board meeting through and including the day of the next scheduled board meeting, with the seventh interim period ending on December 10, 2017 after the seventh scheduled in-person board meeting, as follows:

Interim Period	Start Date	End Date
First	December 12, 2016	January 26, 2017
Second	January 27, 2017	March 30, 2017
Third	March 31, 2017	May 25, 2017
Fourth	May 26, 2017	July 27, 2017
Fifth	July 28, 2017	September 25, 2017
Sixth	September 26, 2017	October 25, 2017
Seventh	October 26, 2017	December 10, 2017

The foregoing start and end dates will be adjusted to correspond to any changes in the board meeting schedule.

4. Participation by telephone for in-person meetings is discouraged unless necessary to attain a quorum. The Bank will not pay a separate fee for a director’s attendance at meetings other than those described above.

5. The Bank will not advance the payment of fees to any director.

C.Performance

1. Compensation paid to directors must reflect the time required of them in the performance of official Bank business. The time required will be measured principally by attendance and participation at board and board committee meetings, as described above, and secondarily by performance of other duties. These other duties include time spent: (a) preparing for board meetings; (b) chairing meetings as appropriate; (c) reviewing materials sent to directors on a

periodic basis; (d) attending other related events such as management conferences, FHLBank System meetings, and director training; and (e) fulfilling the responsibilities of directors.

2. Before the seventh payment is made, the Governance and Compensation Committee (GCC) shall review the cumulative attendance and performance of each director during 2017 and, in consultation with the Chairman, recommend to the board a reduction, elimination or increase in the final payment opportunity. No increase shall exceed the applicable compensation limit. In the event a director serves on the board for only a portion of a calendar year, the final payment for such director shall be subject to the same cumulative attendance and performance review through the director’s final date of service.

D. Expenses

1. In accordance with the Bank’s normal reimbursement policy, the Bank will reimburse a director’s travel expenses and any registration fees incurred in connection with attendance at any board or board committee meeting, the Council of FHLBanks’ directors conference, PricewaterhouseCoopers’ audit committee conference, any seminar or event specifically identified in the director education plan, and provided the director is the Bank’s designated representative, meetings of the FHLBank Chairs/Vice Chairs and Council of FHLBanks’ board of representatives. Please consult the Bank’s Travel and Entertainment Policy for a more detailed explanation regarding expense reimbursement.

2. The Bank will reimburse a director’s registration fees and travel expenses incurred in connection with any other meeting, hearing, ceremony, continuing education seminar, or other event only if the Chairman determines that the meeting is relevant to the Bank’s business activities or the director’s duties as a board member and the director attends the meeting at the request of, or with the approval of, the Chairman. The Vice Chairman shall approve all such fees and expenses for the Chairman. These amounts will be reimbursable to the extent provided for such purpose in the Bank’s annual budget and in accordance with the Bank’s Travel and Entertainment Policy. The Bank will not pay a fee for a director’s participation in these types of activities, and in accordance with 12 CFR Part 1261, the Bank will not reimburse directors for entertainment expenses at these events.

3. The Bank will pay the transportation and other reasonable and ordinary travel expenses, including meals and incidental activities, of one guest of a director to attend board or shareholder meetings only as specified in advance by the Bank..

4. A board member may invite a guest to Bank-sponsored board dinners or receptions held in connection with board meetings at the expense of the Bank, so long as such guest otherwise pays his or her own transportation and travel expenses.

5. Amounts paid by the Bank for any of the foregoing director or guest expenses will be reported as compensation to the director to the extent of and in compliance with applicable Internal Revenue Service laws and regulations and such expenses are in addition to the compensation limits identified in Section A above. Therefore, a director’s total annual compensation limit shall consist of (1) annual compensation set forth in Section A above and (2) payment for such reasonable and ordinary guest expenses set forth in Section D.3 above.

EX-10.7

Exhibit 10.7

FEDERAL HOME LOAN BANK OF ATLANTA

EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

Section 1 – Plan Objectives

1.1The purpose of this Federal Home Loan Bank of Atlanta Executive Change in Control Severance Plan (“Plan”) is to facilitate the hiring and retention of senior executives capable of executing the strategic priorities of Federal Home Loan Bank of Atlanta (“FHLBA”), to ensure their continued dedication to FHLBA notwithstanding the possibility of a Change in Control, and to provide them with appropriate protection and benefits in the event of a qualifying termination of employment following a Change in Control. This Plan became effective on January 1, 2017.

Section 2 – Definitions

2.1    When used in this Plan, the following words and phrases shall have the meanings set forth below:

Accrued Obligations means the following accrued obligations, which are to be paid to a Participant in a lump sum in cash within sixty (60) days following his or her Termination Date, or otherwise as required under Section 409A of the Code:

(a) The Participant’s base salary through the Termination Date;

(b) Any bonus or other incentive compensation previously earned and vested, but not yet paid to Participant, under the Incentive Compensation Plan or any other FHLBA compensation plan; and

(c) Any accrued but unused vacation pay through the Termination Date that is payable to the Participant under the standard FHLBA policies; and

(d) Reimbursement of any expenses accrued by, but not yet reimbursed to, the Participant through the Termination Date pursuant to FHLBA’s expense reimbursement policies and procedures.

Boardmeans FHLBA’s Board of Directors.

Causemeans the occurrence of any of the following events:

(a) The Participant’s continued failure to perform substantially his or her duties with FHLBA (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his or her duties; or

(b) The Participant’s engaging in illegal conduct or willful misconduct which is, or is likely to be, materially injurious to FHLBA, its financial condition, or its reputation; or

(c) The Participant’s material violation of law or regulation applicable to FHLBA, or material violation of FHLBA’s written policies or guidelines, including, without limitation, any code of conduct or ethics adopted by FHLBA;

(d) The Participant’s engaging in any activity or conduct that results in a written request from the FHFA requesting that FHLBA terminate the Participant’s employment; or

(e) The Participant’s commission of, indictment for or conviction of, plea of guilty or nolo contendere with respect to, or agreement to enter into a pre-trial diversion or similar program in connection with the prosecution for, a felony of any type or any crime involving fraud, theft, misappropriation, embezzlement, dishonesty, breach of trust or money laundering or any form of moral turpitude; or

(f) (A) FHLBA’s receipt of a written notice under 12 U.S.C. Section 1422b(a)(2) seeking removal or suspension of the Participant, (B) the issuance of a notice of charges by the FHFA against the Participant or FHLBA based upon the actions or activities of the Participant under 12 U.S.C. 1422b(a)(5), (C) the seeking of or entry of a cease and desist order by the FHFA against the Participant or FHLBA relating to actions of or conduct by the Participant, or (D) the imposition of civil money penalties by the FHFA relating to action or conduct by the Participant; or

(g) The Participant’s breach of fiduciary duty or breach of the Protective Covenants; or

(h) The Participant’s failure or refusal to comply with a lawful directive from the CEO or the Board.

Notwithstanding the foregoing, in the case of any conduct described in clauses (a), (c), (g) or (h) of the immediately preceding sentence, if such conduct is reasonably susceptible of being cured, then the Participant’s termination shall be for “Cause” only if the Participant fails to cure such conduct within thirty (30) days after receiving written notice from FHLBA describing such conduct in reasonable detail.

CEO means the President and Chief Executive Officer of FHLBA.

Change in Control means the occurrence of any of the following events:

(a) The merger, reorganization, or consolidation of FHLBA with or into, or acquisition of FHLBA by, another Federal Home Loan Bank or other entity;

(b) The sale or transfer of all or substantially all of the business or assets of FHLBA to another Federal Home Loan Bank or other entity; or

(c) A change in the composition of the Board of Directors, as a result of one or a series of related transactions, that causes the combined number of member directors from the jurisdictions of Alabama, the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia to cease to constitute a majority of the directors of FHLBA; or

(d)    The liquidation or dissolution of FHLBA.

Change in Control Periodshall mean the period commencing on the earliest to occur of the following dates and ending on the completion of twenty-four (24) consecutive months following the date of the Change in Control (or upon the earlier termination of the agreement or order relating to the Change in Control, such that the Change in Control will not occur):

(i) the date a definitive agreement or order for a Change in Control has been entered into; or

(ii)    the effective date of a Change in Control as prescribed by the FHFA.

Change in Control Termination means a Qualifying Termination that occurs within the Change in Control Period.

Code means the Internal Revenue Code of 1986, as amended.

Compensation Multipliermeans the compensation multiplier that is designated in a Participant’s Participation Agreement, as determined by the Board, and used to determine Participant’s Severance Benefits under Section 3.1. Unless otherwise provided in the Participant’s Participation Agreement, the Participant’s Compensation Multiplier shall be one of the following:

(a) Tier 1 Compensation Multiplier = two and one-half (2.5).

(b)    Tier 2 Compensation Multiplier = one and three-quarters (1.75).

Disabilitymeans the inability of a Participant, as determined by the Board, to substantially perform the essential functions of his or her regular duties and responsibilities due to a medically determinable physical or mental condition which has lasted (or can reasonably be expected to last) for 180 aggregate days (whether consecutive or not consecutive) in any twelve-month period.

Good Reason Termination means a Participant’s termination of employment with FHLBA, within the Change in Control Period, for one of more of the following reasons:

(a) a material diminution in the Participant’s base salary, excluding for this purpose an isolated, insubstantial or inadvertent action that is remedied by FHLBA after receipt of notice thereof given by the Participant;

(b) a material diminution in the Participant’s duties without the Participant’s consent, excluding for this purpose (i) an isolated, insubstantial or inadvertent action that is remedied by FHLBA after receipt of notice thereof given by the Participant and (ii) a change in the Participant’s reporting relationship;

(c) FHLBA’s requiring the Participant to be based at any office or location that constitutes a material change in the geographic location at which the Participant provides services; provided that for purposes of this Plan, any location outside the metropolitan area surrounding Atlanta, Georgia shall be deemed to be a material change; or

(d) any other action or failure to act that constitutes a material breach of this Plan by FHLBA that is not remedied by FHLBA after receipt of notice thereof given by the Participant.

Good Reason shall not include the Participant’s death or Disability. A termination by the Participant shall not constitute termination for Good Reason unless the Participant shall first have delivered to FHLBA, within 30 days of the occurrence of the first event giving rise to Good Reason, written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason, and there shall have passed a reasonable time (not less than 30 days and not more than 60 days) within which FHLBA may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Participant. The Participant’s separation for Good Reason must occur within 120 days following the initial occurrence of an event giving rise to Good Reason in order to be deemed a termination for Good Reason. In the event of a separation following such 120-day period, no “Good Reason” shall be deemed to exist. The parties intend, believe and take the position that a resignation by the Participant for Good Reason as defined above effectively constitutes an involuntary separation from service within the meaning of Section 409A of the Code and Treas. Reg. §1.409A-1(n)(2).

FHFAmeans the Federal Housing Finance Agency or any successor or other agency that regulates FHLBA or its operations.

FHLBAmeans the Federal Home Loan Bank of Atlanta.

Other Benefits means any amounts or benefits required to be paid or provided to the Participant, or which the Participant is entitled to receive, under any plan, program, policy or practice or contract or agreement of FHLBA, following his or her Termination Date (other than this Plan or the Accrued Obligations), which FHLBA shall timely pay or provide to the Participant in accordance with the terms of such applicable plan, program, policy or practice.

Participantmeans a person who is designated as a participant in the Plan by the Board, provided that such person has executed a Participation Agreement. For the avoidance of doubt, if a person has not executed a Participation Agreement, then he or she shall not be a Participant.

Participation Agreementmeans the agreement between FHLBA and a Participant the terms of which govern the Participant’s participation in this Plan. An example of a Participation Agreement is set forth in Appendix A.

Planmeans this FHLBA Executive Change in Control Severance Plan.

Payment Date shall mean the date that is 60 days after a Participant’s Termination Date; provided that, if (i) the Payment Date would have occurred but for the fact that FHLBA was not in compliance with any applicable regulatory capital or regulatory leverage requirement, or (ii) the payment would have caused FHLBA to fall out of compliance with applicable regulatory capital or regulatory leverage requirements, or (iii) the FHFA has delayed approval or objected to the Payment Date, then the Payment Date shall be as soon as administratively practicable following FHLBA or any successor achieving compliance with applicable regulatory capital or regulatory leverage requirement, or receiving FHFA’s approval or non-objection to the Payment Date.

Protective Covenants mean the covenants set forth in the Participation Agreement.

Qualifying Termination means a termination of a Participant’s employment with FHLBA under the following circumstances: (i) a Good Reason Termination occurs, or (ii) FHLBA terminates the Participant’s employment other than for Cause, death, or Disability. For the avoidance of doubt, a Participant shall not be deemed to have experienced a Qualifying Termination as a result of the Participant’s death or Disability, a termination by FHLBA for Cause, or the Participant’s resignation without Good Reason.

Release means the general release of claims and covenant not to sue referenced in Section 3.1 of the Plan.

Severance Benefitshall mean the benefit paid to a Participant pursuant to the Plan on account of a Change in Control Termination in accordance with Section 3.1 below.

Termination Date shall mean the date on which a Participant’s employment with FHLBA terminates.

Section 3 – Severance Benefits

3.1    Severance Benefits upon Change in Control Termination. Upon a Change in Control Termination, FHLBA shall provide the Participant, in addition to payment of the Accrued Obligations and Other Benefits, the following Severance Benefits, but only if the Participant has signed and not revoked a general release of claims and covenant not to sue (“Release”) in the form attached hereto in Appendix B, within 60 days after the Termination Date, and any right of revocation of such Release shall have lapsed by the Payment Date:

(a)    FHLBA shall pay to the Participant on the Payment Date, in a cash lump sum, an amount that equals the product of (i) the Compensation Multiplier indicated in the Participant’s Participation Agreement, times (ii) the higher of the Participant’s then annualized base salary or the Participant’s annualized base salary immediately prior to the start of the Change in Control Period.

(b)    FHLBA shall pay to the Participant on the Payment Date, in a cash lump sum, the excess of (i) the amount the Participant would have to pay to continue participation in any group medical, dental, vision and/or prescription drug benefit plan in which Participant and/or Participant’s eligible dependents are enrolled at the time of the Termination Date and would be entitled to continue enrollment under FHLBA’s Healthcare Continuation Plan for a period of eighteen (18) months, for Participants receiving benefits in the Tier 2 Compensation Multiplier, and twenty-four (24) months, for Participants receiving benefits in the Tier 1 Compensation Multiplier, after the Termination Date, over (ii) the amount that the Participant would have had to pay for such coverage if he or she had remained employed during such 18-month or 24-month period, as the case may be, and paid the active employee rate for such coverage.

(c)    FHLBA shall pay to the Participant, in a cash lump sum, an amount equal to the product of (i) the amount which would have been payable pursuant to the Participant’s annual incentive award for the year in which the Termination Date occurs, determined with respect to the actual performance against the performance criteria relating to such award, times (ii) a fraction, the numerator of which is the number of days in the then-current fiscal year through the Termination Date, and the denominator of which is 365, which amount shall be paid on the same the date on which amounts relating to annual incentive awards for such year are paid to other executive officers of FHLBA, but not later than March 15 of the year following the year in which the Termination Date occurs.

(d)    FHLBA shall pay to the Participant on the Payment Date, in a cash lump sum, outplacement assistance in an amount equal to $7,500.

3.2    Non-Change in Control Terminations. If FHLBA terminates a Participant’s employment for Cause or Participant terminates employment under circumstances that do not constitute a Good Reason Termination, or the Participant’s Qualified Termination occurs outside the Change in Control Period, the Participant shall receive the Accrued Obligations and Other Benefits, but the Participant’s rights pursuant to this Plan shall terminate without further liability on the part of FHLBA.

3.3    Termination Upon Death or Disability. If a Participant’s employment terminates because of his or her death or Disability, the Participant (or the Participant’s beneficiaries, as the case may be) shall receive the Accrued Obligations and Other Benefits, but the Participant’s (and his or her beneficiaries’) rights pursuant to this Plan shall terminate without further liability on the part of FHLBA.

3.4    No Duplication. In the event that a Participant becomes entitled to receive Severance Benefits under this Plan and may also be eligible for benefits under any other FHLBA plan, program, arrangement or agreement as a result of the Participant’s termination of employment, the Participant shall be entitled to receive the greater of the Severance Benefits available under this Plan, on the one hand, and the benefits available under such other FHLBA plan, program, arrangement or agreement, on the other, but not both. In addition, if any termination payments made to a Participant by FHLBA are related to an actual or potential liability under the Worker Adjustment and Retraining Notification Act (WARN) or similar law, such amounts shall reduce (offset) the Participant’s Severance Benefit under this Plan.

3.5    Recoupment. Severance Benefits under this Plan shall be subject to any compensation recoupment policy that FHLBA may adopt from time to time that is applicable by its terms to the Plan or the Participant.

Section 4 – Golden Parachute Limitation

4.1    Benefits under this Plan shall not be in an amount that would be prohibited under 12 CFR §1231.3(a) unless FHLBA has received the approval of the Director of the FHFA. In the event it shall be determined that any benefit, payment or distribution by FHLBA to or for the benefit of a Participant (whether payable or distributable pursuant to the terms of this Plan or otherwise) (such benefits, payments or distributions are hereinafter referred to as “Payments”) would, if paid, be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of Code, then prior to the making of any Payments to the Participant, a calculation shall be made comparing (i) the net after-tax benefit to the Participant of the Payments after payment by the Participant of the Excise Tax, to (ii) the net after-tax benefit to the Participant if the Payments had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payments shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). The reduction of the Payments, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in Section 4.2 below). For purposes of this Section 4.1, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this Section 4.1, the “Parachute Value” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

4.2    All determinations required to be made under Section 4.1, including whether an Excise Tax would otherwise be imposed, whether the Payments shall be reduced, the amount of the Reduced Amount, and the assumptions to be used in arriving at such determinations, shall be made by an accounting firm selected by FHLBA (the “Determination Firm”) which shall provide detailed supporting calculations both to FHLBA and the Participant. All fees and expenses of the Determination Firm shall be borne solely by FHLBA. Any determination by the Determination Firm shall be binding upon FHLBA and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments hereunder will have been unnecessarily limited by this Section 4 (“Underpayment”), consistent with the calculations required to be made hereunder. The Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by FHLBA to or for the benefit of the Participant, but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.

Section 5 – Eligibility

5.1    The Board has sole authority to approve the Participants in the Plan.

5.2    Eligibility shall be limited to a select group of key management or other highly-compensated employees (i.e., key employees), but normally will be further limited to the CEO and senior officers who are recommended as Participants by the CEO. Other key employees may be recommended by the CEO to participate on a limited basis to address extraordinary performance and/or other criteria and considerations as approved by the Board.

5.3    Initially, there will be two levels or “tiers” of participation by eligible employees based on the eligible employee’s position and responsibility. The Board shall determine each Participant’s level of participation.

5.4    The list of eligible Participants shall be approved by the Board.

5.5    An eligible employee shall become a Participant in the Plan through the signing of a Participation Agreement, and shall be subject to the Protective Covenants included therein. A Participant shall cease to be a Participant in the Plan upon termination of employment that is not a Qualifying Termination or that it outside the Change in Control Period.

5.6    Remedies. By virtue of signing the Participation Agreement, a Participant acknowledges and agrees to the terms and conditions of that Participation Agreement and the Plan and further acknowledges that FHLBA will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any actual, threatened, or attempted breach by the Participant of any provision of the Plan or the Protective Covenants. Accordingly, in the event of a threatened, attempted or actual breach by a Participant of any provision of the Plan or the Participation Agreement, including but not limited to the Protective Covenants, in addition to all other remedies to which FHLBA is entitled at law, in equity or otherwise, FHLBA may be entitled to a temporary restraining order and a permanent injunction or a decree of specific performance of any provision of Plan or the Participation Agreement. The foregoing remedies will not be deemed to be the exclusive rights or remedies of FHLBA for any breach of or noncompliance with the terms of this Plan, or the Participation Agreement signed by the Participant, but will be in addition to all other rights and remedies available to FHLBA at law, in equity, or otherwise.

Section 6 – Distribution of Severance Benefits

6.1    Time and Form of Benefit. If a Severance Benefit is payable to a Participant, FHLBA shall distribute to the Participant his or her Severance Benefit as provided in Section 3.1, less any appropriate payroll tax withholdings.

6.2    Consideration under other benefit plans. No Severance Benefit received by a Participant shall be considered as compensation for purposes of determining benefits under any employee benefit plan of FHLBA, except as otherwise determined by FHLBA.

6.3    Payments after death of Participant. If a Participant dies prior to the full distribution of his or her Severance Benefit, but after his or her Termination Date, Participant’s Severance Benefit shall be payable to Participant’s beneficiary or beneficiaries as designated in the Participant’s beneficiary designation, which shall be in a form acceptable to the Board.

Section 7 – Administrative Control

7.1    Subject to Section 8.14, the Plan shall be interpreted, administered and operated by the Board, which shall have complete authority, subject to the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The Board may delegate any of its duties hereunder to a committee of the Board, or to such person or persons from time to time as it may designate. All decisions, interpretations and other actions of the Board shall be final, conclusive and binding on all parties who have an interest in the Plan.

Section 8 – Miscellaneous Conditions

8.1    A Participant must be subject to a Change in Control Termination, and otherwise not in violation of the Protective Covenants, to receive any Severance Benefits.

8.2    The designation of an employee as a Participant in the Plan does not guarantee employment. Nothing in this Plan will confer on any employee the right to be retained in the service of FHLBA nor limit the right of FHLBA to terminate or change the terms of employment or participation in the Plan.

8.3    No benefit or interest available under the Plan will be subject in any manner to anticipation or alienation, and no Participant has any direct or indirect right to sell, transfer, assign, pledge, attach, garnish or otherwise encumber any anticipated Severance Benefit. Any effort(s) to do so shall be void and unenforceable, and FHLBA shall not be liable in any manner for or subject to the debts, contracts, liabilities, engagements or torts of any person who might anticipate a Severance Benefit under the Plan.

8.4    The Plan shall at all times be entirely unfunded, and no provision shall at any time be made with respect to segregating assets of FHLBA for payment of any Severance Benefit under this program.

8.5    Except to the extent superseded by laws of the United States, the laws of the State of Georgia will be controlling in all matters relating to the Plan without regard to the choice of law principles therein.

8.6    The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions. In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa.

8.7    This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.

8.8    The individual members of the Board will, in accordance with FHLBA’s Bylaws and other Board governance, be indemnified and held harmless by FHLBA with respect to any alleged breach of responsibilities performed or to be performed hereunder. In addition, notwithstanding any other provision of the Plan, neither FHLBA nor any individual acting as an employee or agent of FHLBA will be liable to a Participant for any claim, loss, liability or expense incurred in connection with the Plan.

8.9    If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the Board may provide for the distribution to be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person. Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of FHLBA and the Plan.

8.10    Evidence required of anyone under the Plan may be by certificate, affidavit, document, or other information which the person relying on the evidence considers pertinent and reliable, and which is signed, made, or presented by the proper party or parties.

8.11    Any action required of or permitted by FHLBA under the Plan will be made by the Board, or its designated authorities or individual designee(s).

8.12    In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.

8.13    A Participant, or any other person entitled to benefits under the Plan, must furnish the Board with any and all documents, evidence, data, or other information the Board considers necessary or desirable for the purpose of administering the Plan.

8.14    The Board has the right to revise, modify or terminate the Plan in whole or in part at any time or for any reason without the consent of any Participant outside of the Change in Control Period. However, during the Change in Control Period (or such longer period until all payments and benefits, if any, which become due under this Plan during the Change in Control Period have been paid or satisfied), any such revision, modification or termination that would impact the benefits to be provided to a Participant shall not become effective without the consent of such Participant.

8.15    The Plan will be binding upon and inure to the benefit of FHLBA and its successors and assigns, including any successor organization succeeding to substantially all of the assets and business of FHLBA, but nothing in the Plan will preclude FHLBA from merging or consolidating into or with or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of FHLBA hereunder. FHLBA agrees that it will make appropriate provision for the preservation of a Participant’s rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of Plan obligations of FHLBA, the term “FHLBA” will refer to such other organization and the Plan will continue in full force and effect.

8.16    It is intended that the payments and benefits provided under the Plan shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. The Plan shall be construed in a manner that effects such intent. Nevertheless, the tax treatment of the Severance Benefit and any other payment or award provided under this Plan is not warranted or guaranteed. Neither FHLBA, the Board, nor any of their respective directors, officers, employees or advisors (other than in his or her capacity as a Participant in the Plan) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Participant or any other taxpayer as a result of the Plan, the Severance Benefit, or any payment thereunder. By accepting participation in this Plan, each Participant agrees to be solely and exclusively liable for any associated tax consequences (including without limitation any additional tax based on noncompliance with Code Section 409A). Additionally, nothing in this Plan shall be interpreted as creating in FHLBA or any other entity a duty to optimize any tax treatment.

8.17    Notwithstanding anything in the Plan to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable under the Plan by reason of the occurrence of the Participant’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Participant by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.” Each payment of Severance Benefits pursuant to this Plan shall be considered a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

8.18    Whenever in this Plan a payment or benefit is conditioned on the Participant’s execution of a Release, the Company shall provide such Release to the Participant promptly following the Termination Date, and such Release must be executed and all revocation periods shall have expired in accordance with terms set forth in the release, but in no case later than sixty (60) days after the Termination Date; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the Termination Date provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period, subject to the terms and conditions of the Plan.

8.19    All Severance Benefits are subject to non-objection or approval by the FHFA. In the event that the FHFA objects to any amount payable hereunder, but agrees to approve or not to object to a specified lower amount, then the amount set forth in this Agreement shall be deemed to be revised to the lower amount acceptable to the FHFA. If the FHFA objects to the amount of any payment provided for in this Plan and does not specify an alternative amount that would be acceptable, then FHLBA will negotiate in good faith with the FHFA to reach agreement on another amount that would be acceptable to the FHFA. If the FHFA objects to a category of payment being made at all, then the payment objected to by the FHFA shall be deemed to be excised from this Plan and the obligation to make the payment shall be null and void. The FHFA’s objection to any payment or amount provided in this Plan shall not affect the validity or enforceability of any other portion of this Plan.

Appendix A

Participation Agreement

Participant:__________________________________________       

Date of Birth:________________________________________                    

Address:____________________________________________

___________________________________________________                    

THIS EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN PARTICIPATION AGREEMENT (this “Agreement”) is entered into by and between the Federal Home Loan Bank of Atlanta (“FHLBA”), and [NAME], [TITLE] (the “Participant”), and shall be effective as of [DATE].

1.    Agreement to Participate. The Participant (identified above and sometimes hereinafter referred to as “I”) hereby agrees to become a Participant in the Federal Home Loan Bank of Atlanta Executive Change in Control Severance Plan (the “Plan”). Capitalized terms not defined herein shall have the meanings set forth in the Plan.

2.    Benefit Tier. The Participant’s benefit under the Plan shall be determined in accordance with the Compensation Multiplier for Tier _____, as set forth in Section 2 of the Plan.

3.     Protective Covenants.

(a)    No Solicitation. While the Participant is employed by FHLBA, and for a period of twelve (12) months after the Termination Date unless the Participant has ceased to be a Participant in the Plan pursuant to Section 5.5 of the Plan due to a termination of employment that is not a Qualifying Termination or that is outside the Change in Control Period, the Participant shall not, directly or indirectly:

(i)    Solicit any customers of FHLBA or FHLBA’s affiliates for purposes of selling any products or services competitive with those of FHLBA or its affiliates and with whom the Participant had Material Contact in the twelve (12) months preceding the Termination Date. For purposes of this Agreement, the Participant had “Material Contact” with a customer if (a) the Participant had business dealings with the customer on FHLBA’s behalf, or (b) the Participant was responsible for supervising or coordinating the dealings between the customer and FHLBA; or

(ii)    Solicit for employment, offer, or cause to be offered, employment, either on a full time, part-time or consulting basis, to any person who was employed by FHLBA or its affiliates on the Termination Date and with whom Participant had contact during the course of his or her employment by FHLBA, unless the Participant shall have received the prior written consent of FHLBA to offer employment specifically to that person.

(b)    Confidentiality.

(i)    Trade Secrets. “Trade Secrets” refers to information, without regard to form, that fits within the definition of “trade secrets” in the Georgia Trade Secrets Act. Trade Secrets include, but are not limited to, concepts, ideas, customer lists, business lists, business and strategic plans, financial data, accounting procedures, secondary marketing and hedging models, trade secrets, and computer programs and plans. This definition shall not limit any definition of “trade secrets” or any equivalent term under the applicable state, local, or federal law.

(ii)    Confidential Information. “Confidential Information” refers to business information or data of FHLBA that, although not a Trade Secret, is not generally known to the public and that FHLBA desires and makes reasonable efforts to keep confidential. Confidential Information includes, but is not limited to, concepts, ideas, customer lists, business lists, business and strategic plans, financial data, accounting procedures, models, trade secrets, computer programs and plans, information related to officers, directors, employees and agents, operations materials and memoranda, personnel records and information, pricing and financial information related to FHLBA, its members, and suppliers, and any information marked “Confidential” by FHLBA, and other proprietary information that does not rise to the level of a Trade Secret. Confidential Information does not include data or information that (i) FHLBA has voluntarily disclosed to the public, (ii) third parties have independently developed and disclosed to the public, or (iii) otherwise enters the public domain through lawful means. This definition shall not limit any definition of “confidential information” or any equivalent term under any applicable state, local or federal law.

(iii)    Non-Disclosure. The Participant hereby acknowledges and agrees that FHLBA and its affiliates have developed and own valuable information described above as Trade Secrets and Confidential Information. The Participant acknowledges and agrees that all such Trade Secrets and Confidential Information are valuable assets of FHLBA, and if developed by the Participant, are developed by the Participant in the course of his or her employment with FHLBA, and are the sole property of FHLBA. The Participant agrees that he or she will not use for his or her own benefit or the benefit of anyone other than FHLBA and will not divulge or otherwise disclose to any third party, directly or indirectly, any Confidential Information or Trade Secrets, except to the extent such use or disclosure is (i) required by applicable law or in response to a lawful inquiry from a governmental or regulatory authority, (ii) lawfully obtainable from other sources, or (iii) authorized by FHLBA. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either FHLBA’s rights or the Participant’s obligations under any state or federal statutory or common law regarding trade secrets or unfair trade practices.

(c)    Enforcement of Protective Covenants.

(i)    Rights and Remedies Upon Breach. In the event the Participant breaches, or threatens to commit a breach of, any of the provisions of the covenants contained in this Section 3 (the “Protective Covenants”), FHLBA shall have the following rights and remedies, which shall be independent of any others and severally enforceable, and shall be in addition to, and not in lieu of, any other rights and remedies available to FHLBA at law or in equity:

(A)    the right and remedy to enjoin, preliminarily and permanently, the Participant from violating or threatening to violate the Protective Covenants and to have the Protective Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Protective Covenants would cause irreparable injury to FHLBA and that money damages would not provide an adequate remedy to FHLBA; and

(B)    the right and remedy to require the Participant to account for and pay over to FHLBA all compensation, profits, monies, accruals, increments or other benefits derived or received by the Participant as the result of any transactions constituting a breach of the Protective Covenants.

(ii)    Severability of Covenants. The Participant acknowledges and agrees that the Protective Covenants are reasonable and valid in time and scope and in all other respects. The covenants set forth in this Agreement shall be considered and construed as separate and independent covenants. Should any part or provision of any covenant be held invalid, void or unenforceable in any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement. If any portion of the foregoing provisions is found to be invalid or unenforceable by a court of competent jurisdiction because its duration, the territory, the definition of activities or the definition of information covered is considered to be invalid or unreasonable in scope, the invalid or unreasonable term shall be redefined, or a new enforceable term provided, such that the intent of FHLBA and the Participant in agreeing to the provisions of this Agreement will not be impaired and the provision in question shall be enforceable to the fullest extent of the applicable laws.

4.    Acknowledgements: As evidence by the Participant’s signature below, the Participant hereby acknowledges the following: (1) the Participant has received and reviewed a copy of the Plan; (2) that any right to benefits hereunder are subject to the specific terms and conditions of the Plan; (3) that no benefits will be paid under the Plan if the Participant does not have a Change in Control Termination as defined in the Plan or if FHFA does not approve or indicate its non-objection to the payment thereof; (4) that no benefits will be paid under the Plan and other remedies may be available to FHLBA if the Participant violates or fails to fulfill the Protective Covenants; (5) that the benefits of the Plan may be subject to all appropriate taxes before such amounts are actually paid to the Participant; and (6) all amounts received under the Plan shall be taxable to Participant as appropriate.

5.     Assignment; Assumption by Successor. The rights of FHLBA under this Agreement may, without the consent of the Participant, be assigned by FHLBA, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger, consolidation or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of FHLBA. FHLBA shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of FHLBA expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that FHLBA would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve FHLBA of its obligations hereunder.  

6.    Governing Law and Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the United States and, to the extent state law may be applicable, the laws of the State of Georgia applicable to contracts made and to be performed wholly within Georgia without regard to the conflicts of laws principles thereof. The parties agree that to the full extent permitted by applicable law any controversy or claim of any party hereto arising out of or in any way relating to the Plan or this Agreement, the breach thereof, the Participant’s employment with FHLBA or the termination thereof (including, without limitation, any claims of employment discrimination or retaliation) shall be settled by final and binding arbitration in Atlanta, Georgia, in accordance with the Federal Arbitration Act and the applicable Employment rules of the American Arbitration Association, and that judgment upon any award rendered may be entered by the prevailing party in any court having jurisdiction thereof; provided, however, that nothing herein shall preclude FHLBA from seeking injunctive or other equitable relief in a court of competent jurisdiction in connection with Participant’s breach or threatened breach of any of the Protective Covenants, or to prohibit any court from making preliminary findings of fact in connection with granting or denying such preliminary injunctive relief pending arbitration, and the losing party shall reimburse the prevailing party for attorneys’ or other experts’ fees and disbursements and court costs incurred by the prevailing party in successfully seeking any preliminary equitable relief or judicially enforcing any final arbitration award. Any discovery permitted by the arbitrator shall be limited to forty-five (45) consecutive days, and each party shall be limited to a maximum of three (3) depositions of eight (8) hours duration each, fifteen (15) interrogatories, and fifteen (15) requests for production of documents. The arbitrator shall be a licensed lawyer with at least fifteen (15) years’ experience in employment law, commercial, and/or contract law matters. The arbitrator shall issue a reasoned opinion in support of his award, and shall award reasonable attorneys’ fees and costs to the prevailing party in the action as the arbitrator shall deem appropriate.

(Signature Page Follows)

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

FEDERAL HOME LOAN BANK OF ATLANTA

By:_____________________________________    

Date:____________________________________

Print Name:______________________________    

Print Title:_______________________________    

PARTICIPANT

By:_____________________________________    

(Signature of Participant)    

Date:____________________________________

EX-10.8

Exhibit 10.8

Amended and Restated

Federal Home Loan Banks P&I Funding and Contingency Plan Agreement

This Amended and Restated Federal Home Loan Banks P&I Funding and Contingency Plan Agreement (“Agreement”) is entered into as of this 1st day of January, 2017 (the “Effective Date”) by and among the Office of Finance (the “OF”) and each of the Federal Home Loan Banks (“Banks”) and supersedes the Federal Home Loan Banks P&I Funding and Contingency Plan Agreement, effective as of July 20, 2006, by and among the OF and Banks. The OF and the Banks are sometimes referred to herein individually as a “party” and collectively as the “parties.” All references in this Agreement to any of the parties to this Agreement include such party or any successor entity.

WHEREAS, the Banks are jointly and severally liable for the payment of consolidated obligations issued pursuant to Section 11 of the Federal Home Loan Bank Act, as amended (12 U.S.C. §1431) (“COs”); and

WHEREAS, the OF has the authority under 12 CFR § 1273.6(a), or any successor provision adopted by the Federal Housing Finance Agency (the “Finance Agency”), to issue and service (including making timely payments on principal and interest due) consolidated obligations issued on behalf of the Banks pursuant to, and in accordance with, the policies and procedures established by the OF Board of Directors; and

WHEREAS, the OF and the Banks have developed P&I Funding and Contingency Plan Procedures (as the same may be amended, modified, or supplemented, the “Procedures”) to deal with the possibility that a Bank may not make a payment of debt service on COs to the OF on a timely basis; and

WHEREAS, the OF Board of Directors has approved the Procedures and determined that the OF should obtain the written agreement of the Banks on several matters relating to the Procedures, which matters are included in this Agreement; and

WHEREAS, the Federal Housing Finance Board (“Finance Board,” predecessor to the Finance Agency), supported the initial adoption of the OF’s and the Bank’s Procedures to deal with the possibility that a Bank may not make a payment of debt service on COs to the OF on a timely basis by issuing the waiver attached hereto as Exhibit A of its prohibition of the direct placement of COs with Banks (contained in former 12 CFR § 966.8(c), and superseded by 12 CFR § 1270.9, which prohibits COs from being purchased by any Bank as part of an initial issuance whether purchased directly from the OF or indirectly through an underwriter) to accommodate the implementation of the such Procedures, based in part on its view that timely payment of all principal and interest to investors in COs is essential to maintain the confidence of investors and potential investors in COs; and

WHEREAS, the Waiver provides that the interest rate paid by the Bank that has not remitted all the funds to the OF by the agreed upon deadline on the CO issued pursuant to the Waiver shall be at least 500 basis points above the federal funds rate.

NOW THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties hereby agree as follows:

1. Authorization of Issuance of COs

Each Bank agrees that if it is a “Delinquent Bank” (as defined below), the OF may cause one or more overnight “Plan COs” (as defined below) to be issued on behalf of the Delinquent Bank for the benefit of one or more “Contingency Banks” (as defined below), each such Plan CO to be issued to a Contingency Bank in the principal amount equal to the amount of funds provided by that Contingency Bank on behalf of that Delinquent Bank, to mature on the following Business Day (as defined below), and to bear interest on such principal amount from the date of issuance to but not including that maturity date, due and payable on that maturity date, at the rate per annum (the “Base Cost”) equal to (a) the overnight fed funds quote obtained by the OF from a recognized funds broker to be paid for any available funds delivered to the OF by a Contingency Bank or withheld from its “positive net position” as described in Section 2 of this Agreement or (b) the actual cost if funds are purchased by that Contingency Bank in the open market and delivered to the OF. All such interest shall be calculated on an actual/360 basis based on the number of days the Plan CO is outstanding, including non-Business Days. The Delinquent Bank shall also be obligated to pay “Additional Interest” as set forth in Section 3 of this Agreement, all or a portion of which will satisfy the obligation of the Delinquent Bank under the Waiver to pay an interest rate on the Plan CO that is at least 500 basis points above the federal funds rate.

The OF shall issue a Plan CO in physical form under those circumstances and apply the proceeds therefrom on behalf of that Delinquent Bank as provided for in the Procedures. Each Bank hereby authorizes the OF, and the OF hereby agrees, to hold any Plan COs issued as agent for each such Bank when it acts as a Contingency Bank.

For purposes of this Agreement,

a “Delinquent Bank” means a Bank that misses any funding time specified in the Procedures, including a funding time for the repayment of Plan COs; and

a “Plan CO” means a CO issued on behalf of a Delinquent Bank to one or more Contingency Banks. For the avoidance of doubt, although a Delinquent Bank is primarily responsible for repayment of a Plan CO issued on its behalf, each Plan CO is the joint and several obligation of all of the Banks; and

a “Contingency Bank” means any Bank that provides funds for a Delinquent Bank under the Procedures; and

“Business Day” means any day other than (i) a Saturday, (ii) a Sunday or (iii) any day on which banking institutions in New York City are authorized or required by law or executive order to close.

2. Use of Proceeds to Purchase COs

Each Bank shall be obligated to provide and authorizes the OF to apply any “positive net position” (i.e., the amount by which end-of-day proceeds received by a Bank from sale of COs on one day exceed payments by that Bank on COs on the same day) of that Bank to the purchase of a Plan CO issued on behalf of a Delinquent Bank, thereby causing such Bank to become a Contingency Bank, based on the priority established in the matrix attached hereto as Exhibit B (“Contingency Funding Matrix”) and otherwise in accordance with the Procedures.

3. Additional Interest

Each Bank agrees that if it is a Delinquent Bank, then it will pay an amount (“Additional Interest”) in accordance with the following schedule in addition to interest equal to the Base Cost:

1^st offense             PLUS 500 basis points per annum of the delinquent amount

2^nd offense             PLUS 750 basis points per annum of the delinquent amount

3^rd and

    subsequent offenses     PLUS 1,000 basis points per annum of the delinquent amount

The Additional Interest will be calculated on an actual/360 basis based on the actual number of days the related Plan CO is outstanding, including non-Business Days, from the date of issuance to but excluding the stated maturity date. For purposes of this calculation, Additional Interest attributable to a delinquent amount that is not related to the principal amount of a Plan CO (i.e., because the Delinquent Bank pays all or a portion of its delinquent amount after a deadline but before a Contingency Bank is entitled to have a Plan CO issued for its benefit on behalf of the Delinquent Bank with respect to such amount) will be assessed on that delinquent amount assuming that a Plan CO was issued with a principal amount equal to that delinquent amount and that the Plan CO would mature on the next Business Day.

For purposes of calculating Additional Interest, each different time deadline established under the Procedures will accrue its own separate count of the number of offenses, so that a Delinquent Bank will pay a separate amount for each such time deadline missed, and the step-up in Additional Interest for the occurrence of a particular offense will only be measured with regard to offenses that have occurred within the 36-month period ending on the date of that particular offense (the “Delinquency Measurement Period”). For example, if a Delinquent Bank twice misses a morning deadline and once misses an afternoon deadline, all as established under the Procedures, within a Delinquency Measurement Period, then the Delinquent Bank shall have been subject to Additional Interest of 500 basis points with respect to the first morning deadline missed, Additional Interest of 750 basis points with respect to the second morning deadline missed, and Additional Interest of 500 basis points with respect to the afternoon deadline missed.

Each Bank agrees that (i) for each Plan CO issued, the first 100 basis points of the Additional Interest shall be assessed against the Delinquent Bank for the benefit of the Contingency Bank that purchased the Plan CO as provided in Section 1 of this Agreement, and the balance of the Additional Interest assessed against the Delinquent Bank (i.e., 400 basis points, 650 basis points, or 900 basis points) will be divided equally among the Banks (including the Contingency Banks) that are not Delinquent Banks with respect to the same funding time specified in the Procedures and (ii) for Additional Interest attributable to a delinquent amount that is not related to a Plan CO, the Additional Interest will be divided equally among the Banks that are not Delinquent Banks with respect to the same funding time specified in the Procedures. Each of the Banks and the OF agree that any Additional Interest will be allocated and paid through the monthly assessment from the OF, and that the Additional Interest is not the joint and several obligation of the Banks.

Notwithstanding anything in this Section 3 or Section 7(a) or (b) of this Agreement to the contrary, and subject to Sections 5(a) and (d) below, each Bank agrees that assessment of the Additional Interest shall be subject to the appellate process contained in the Procedures and that the OF shall have the authority to waive all or any portion of the Additional Interest or excuse the occurrence of any offense as provided for in the Procedures. To the extent permitted under the Waiver, the assessment of Additional Interest shall be suspended pending completion of the appellate process.

4. Reallocation of COs

Each Bank agrees that if a Bank is a Delinquent Bank, with respect to each Plan CO issued to a Contingency Bank on behalf of a Delinquent Bank, each Bank that is a “Reallocation Bank” (as defined below) shall immediately have the obligation to purchase that Reallocation Bank’s “Pro Rata Share” (as defined below) of such Plan CO from that Contingency Bank, with such obligation to purchase being effective immediately upon the issuance of the Plan CO , subject to the proviso in the following paragraph.

Each Bank agrees that if it is a Reallocation Bank, it will wire to the Contingency Bank that holds a Plan CO an amount equal to (i) its Pro Rata Share of the principal amount of that Plan CO, plus (ii) accrued interest thereon from the date of issue of the Plan CO until its stated maturity date equal to the Base Cost, not later than 1:00 p.m., Eastern Time, on the second Business Day following the date of issuance of that Plan CO; provided, however, that such Reallocation Bank shall not be required to wire funds to the extent that it determines in good faith such purchase will violate any rule, regulation or binding policy of the Finance Agency, and under those circumstances such Reallocation Bank shall be excused from its obligation to make such payment to the Contingency Bank, but not from its joint and several obligation, with respect to such Plan CO. The wire shall be sent to the account identified by the Contingency Bank for that purpose, and time is of the essence with respect to the wire. In the event there are multiple Plan COs issued on a particular date, Reallocation Banks shall not favor any Contingency Bank over any other Contingency Bank, and shall purchase its Pro Rata Shares of such Plan COs on a proportional basis. To the extent that a Plan CO is repaid prior to the settlement of a Reallocation Bank’s obligations to purchase its Pro Rata Share, that Pro Rata Share shall be reduced proportionally by the amount so repaid.

Each Contingency Bank shall promptly notify the OF of its receipt of payment of the Pro Rata Share amounts from the Reallocation Banks. Promptly following receipt of that notice and confirmation of the payment from the Reallocation Banks, the OF shall cancel such original outstanding physical Plan CO and shall reissue replacement physical Plan COs with the principal amounts representing the respective Pro Rata Shares of the Reallocation Banks that have paid for their purchase of the Plan CO, along with a Plan CO representing the balance of the principal amount of the original Plan CO that is retained by the Contingency Bank. Each such reissued Plan CO remains a “Plan CO” for purposes of this Agreement and the Procedures, but a Reallocation Bank will not be treated as the Contingency Bank with respect thereto. Each Bank hereby authorizes the OF, and the OF hereby agrees, to hold any such reissued Plan COs payable to such Bank as agent for such Bank’s benefit, and to pay debt service on such CO to the record owner of such Plan CO as reflected on the OF’s books following reissuance.

For purposes of this Section,

a “Reallocation Bank” with respect to a Plan CO means each Bank other than (i) any Delinquent Bank on behalf of which that Plan CO or any other Plan CO was originally issued on the same date, and (ii) the Contingency Bank that owns that Plan CO;

“Pro Rata Share” of a Reallocation Bank means a fraction, the numerator of which is the total amount of outstanding COs for which the Reallocation Bank is primary obligor as of the Most Recent Measurement Date, and the denominator of which is the total amount of outstanding COs for which all Reallocation Banks and the Contingency Bank are primary obligor as of the Most Recent Measurement Date; and

“Most Recent Measurement Date” means the most recent month-end data calculated by the OF and available on the OF’s Debt Servicing System, which amount is not adjusted for inter-bank ownership of COs.

The Banks agree that the provisions of this Section 4 shall not affect the allocation of Additional Interest pursuant to the fourth paragraph of Section 3 of this Agreement, including without limitation the allocation of the first 100 basis points of Additional Interest pursuant to such paragraph to a Contingency Bank that acquired the Plan CO at original issuance.

One or more Contingency Banks and Reallocation Banks may agree among themselves to net their payments to each other that are due as a result of multiple Plan COs having been issued and subject to reallocation on the same date.

Each Bank agrees that the formula for determining the Pro Rata Shares has been agreed to by the Banks solely for the purpose of this Agreement and is not intended to represent an agreed upon allocation of risk or responsibility for any other purpose.

The provisions of this Section 4 shall survive any termination of this Agreement with respect to any Plan CO issued prior to such termination.

5. Acknowledgements

Each Bank acknowledges and agrees that:

(a) the Base Cost plus the Additional Interest assessed against a Delinquent Bank may not be lower than the amount required to be paid by the Delinquent Bank under the Waiver;

(b) the OF shall be required to provide any notice of issuance of a Plan CO hereunder to the Finance Agency, which notice is presently required by the Waiver to be provided no later than 5:00 P.M. eastern time on the date of the issuance of the Plan CO;

(c) its agreement in Section 1 of this Agreement with respect to any Plan CO issued on its behalf as a Delinquent Bank satisfies the regulatory requirement contained in 12 CFR § 1270.9(b) that provides that COs may be offered for sale only to the extent the Banks are committed to take the proceeds;

(d) the appellate process referred to in the last paragraph of Section 3 of this Agreement will be subject to the terms of the Waiver;

(e) no Bank will be entitled to a Plan CO in the amount of any positive net position except to the extent its end-of-day positive net position is used to purchase a Plan CO; and

(f) the Additional Interest will be calculated based on the principal amount of a Plan CO, as well as any other delinquent amount paid late to the OF by the Delinquent Bank.

6. Representations and Warranties of the Parties

As of the date of its execution and delivery of this Agreement, each party represents and warrants to the other parties that:

(a)    This Agreement is within such party’s powers and has been duly authorized by all necessary corporate action.

(b)    This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party enforceable in accordance with its terms.

7. Termination and Amendments

(a)    This Agreement will be deemed to be effective as of the Effective Date and will continue in full force until such time as (i) at least two-thirds (2/3) of the Banks agree to its termination, (ii) the Finance Agency rescinds the Finance Board’s Waiver or (iii) the Finance Agency takes any action, including without limitation modification of the Waiver, that makes compliance by the OF or the Banks with this Agreement not commercially reasonable.

(b)    This Agreement may be amended only in a signed writing executed and delivered by all of the Banks and the OF. Any such amendment shall be effective as of the effective date set forth in the amendment.

(c)This Agreement shall also be subject to termination at 11:59 p.m. on December 31, 2019, and at 11:59 p.m. on each third December 31 thereafter (“Expiration Time”) if at least one-third (⅓) of the Banks provide notice of their respective election to terminate to each other Bank and the OF at least one year prior to the Expiration Time. Such notice shall identify with reasonable specificity the reason or reasons such Bank wishes to terminate the Agreement at the next Expiration Time. The Banks and the OF agree to negotiate in good faith toward the resolution of the issues raised in the notices of termination with a view of reaching agreement on a new agreement at or prior to the Expiration Time.

8. Successors and Assigns

This Agreement shall be binding upon and inure to the benefit of the successors and permitted and authorized assigns of each Bank and the OF.

9. Governing Law; Severability

This Agreement shall be governed by the statutory and common law of the United States and, to the extent federal law incorporates or defers to state law, the laws (exclusive of the choice of law provisions) of the State of New York. Any term or provision of this Agreement that is determined to be invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement.

10. Notice

Except for any notices of payment delivered pursuant to Section 4 of this Agreement, which shall be delivered promptly either telephonically or electronically, any notice required or permitted to be given or made under this Agreement, including a notice to effect a change in a party’s address for notice, must be in writing and addressed to the other parties at the addresses of such parties set forth beneath their signatures below, and will be deemed to be properly given or made on the earliest of (i) actual delivery, (ii) two (2) Business Days after being sent, with delivery charges paid by the sending party, by a nationally recognized commercial courier service for delivery on the next Business Day, and (iii) three (3) Business Days after being sent through the United States Postal Service, certified mail, return receipt requested, postage prepaid.

11. Counterparts

This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement.

12. Entire Agreement; Conflicts

This Agreement constitutes the entire agreement of the parties and supersedes all prior understandings or agreements, oral or written, among the parties on the subjects addressed in this Agreement. Nothing in this Agreement, including without limitation the right of Banks to terminate it or the right of Banks to withhold approval of an amendment, shall be construed to (i) conflict with or limit the authority of the OF to carry out its duties pursuant to law, including without limitation Finance Agency regulations; or (ii) alter the Banks’ joint and several liability on COs, including the Plan COs issued hereunder. This Agreement does not constitute “an agreement to obtain financial assistance to meet a Bank’s current obligations… due during the quarter”, a “consolidated obligation payment plan,” an “inter-Bank assistance agreement” or “a payment on any [CO] on behalf of another Bank” as these terms are used in 12 CFR § 1270.10. If any applicable provision contained in the Procedures irreconcilably conflicts with any express provision of this Agreement, then such express provision of this Agreement shall control.

13. No Third Party Rights Created

Nothing in this Agreement shall create or be deemed to create any rights in any third party.

14. Suspension of Obligations

If the Finance Agency issues any order or enters into or amends any written agreement, that prohibits or prevents a party to this Agreement from either being a party to this Agreement, or from performing its obligations under this Agreement, after the Effective Date, then that party’s duty to perform its obligations under this Agreement shall be suspended while such order by or agreement with the Finance Agency is in effect.

[Signature Pages to Follow]

IN WITNESS WHEREOF, this Agreement has been executed, on the date(s) set forth below, as of the day and year first above written.

Federal Home Loan Bank of Atlanta            Federal Home Loan Bank of Boston    

President: /s/ W. Wesley McMullan            President: /s/ Edward A. Hjerpe III    

Date: 1/12/17                        Date:    12/22/16            

Address for notice:                    Address for notice:            

Wes McMullan                800 Boylston St.                

1475 Peachtree Street NE        9^th Floor                

Atlanta, GA 30309            Boston, MA 02199            

Federal Home Loan Bank of Chicago            Federal Home Loan Bank of Cincinnati    

President: /s/ Matthew R. Feldman             President: /s/ Andrew S. Howell    

Date:12/23/16                        Date: 12/15/16                

Address for notice:                    Address for notice:            

200 E. Randolph Drive            221 East Fourth St.            

18^th Floor                Suite 600                

Chicago, Illinois 60601            Cincinnati, OH 45202            

Federal Home Loan Bank of Dallas            Federal Home Loan Bank of Des Moines    

President: /s/ Sanjay K. Bhasin                President: /s/ Michael L. Wilson    

Date: December 30, 2016                Date: January 20, 2017            

Address for notice:                    Address for notice:            

8500 Freeport Pkwy South, Suite 100    801 Walnut Street            

Irving, Texas 75063            Suite 200                

Attn: General Counsel            Des Moines, IA 50309            

Federal Home Loan Bank of Indianapolis        Federal Home Loan Bank of New York    

President: /s/ Cindy L. Konich                President: /s/ José R. González        

Date: 1/4/17                        Date: 12/27/2016            

Address for notice:                    Address for notice:            

8250 Woodfield Crossing        101 Park Ave.                

Indianapolis, IN 46240            New York, NY 10178            

Federal Home Loan Bank of Pittsburgh Federal Home Loan Bank of San Francisco

President: /s/ Winthrop Watson            President: /s/ Greg Seibly        

Date: January 3, 2017                    Date: December 22, 2016        

Address for notice:                    Address for notice:            

601 Grant Street                600 California Street            

Pittsburgh, PA 15219            Suite 300                

San Francisco, CA 94108        

Federal Home Loan Bank of Topeka            Office of Finance    

President: /s/ Mark E. Yardley                Chief Executive Officer: /s/ John Fisk    

Date: 01-09-2017                    Date: 1/3/17                

Address for notice:                    Address for notice:            

Federal Home Loan Bank of Topeka    1818 Library St., Ste. 200            

One Security Benefit Place, Suite 100    Reston, VA 20190            

Topeka, KS 66606-2444            

Attn: General Counsel

EXHIBIT A

WAIVER

- 1 -

[FHFA Logo]

Number: Date:

FEDERAL HOUSING FINANCE BOARD

2005-22

December 14, 2005

Waiver Concerning the Direct Placement of Consolidated Obligations

WHEREAS, section 2A of the Federal Home Loan Bank Act (12 U.S.C. § 1422a(a)(3)) requires the Federal Housing Finance Board (Finance Board) to ensure that the Federal Home Loan Banks (Banks) remain adequately capitalized and able to raise funds in the capital markets to the extent consistent with ensuring the safe and sound operation of the Banks;

WHEREAS, timely payment of all principal and interest to investors in consolidated obligations (COs) is essential to maintain the confidence of investors and potential investors in COs;

WHEREAS, the Federal Reserve Bank of New York will implement procedures that will prevent a Bank or any other government sponsored enterprise from incurring an overdraft in the accounts at the Federal Reserve Bank of New York used to pay the principal and interest due on securities;

WHEREAS, the Banks Office of Finance (OF) serves as agent for each Bank in remitting to the Federal Reserve Bank of New York all funds due for principal and interest payments on COs;

WHEREAS, under 12 C.F.R. §§ 907.2 and 907.6, any party may request a waiver of a provision, restriction,or requirement of the Finance Board regulations not otherwise required by law if such waiver is not inconsistent with the law, does not adversely affect any substantial existing rights and the Finance Board finds that application of the restriction would adversely effect achievement of the purposes of the Bank Act, or upon a showing of good cause;

WHEREAS, on October 18, 2005, the OF submitted to the Finance Board a request to waive the prohibition on direct placement of COs in 12 C.F.R. § 966.8(c) when a Bank has not provided to the OF by the agreed upon deadline all funds for principal and interest payments due that day on COs, or portions of COs, for which that Bank is the primary obligor; and

WHEREAS, Finance Board staff has reviewed the waiver request and determined that it is consistent with the Bank Act, for good cause, and raises no legal or safety and soundness concerns if the waiver is granted pursuant to the terms of this resolution.

NOW, THEREFORE, IT IS RESOLVED that effective July 1, 2006, the Board of Directors hereby waives 12 C.F.R. § 966.8(c) when direct placement of COs is necessary to assure that the Federal Reserve Bank of New York has sufficient funds to timely pay all principal and interest due that day on COs or portions of COs;

Resolution Number 2005-22

Page 2 of 2

IT IS FURTHER RESOLVED that the OF must notify the Office of Supervision no later than 5:00 pm, eastern time, on any day it directly places a CO pursuant to this waiver; and

IT IS FURTHER RESOLVED that the interest rate paid by the Bank that has not remitted all the funds to the OF by the agreed upon deadline on the CO issued pursuant to this waiver shall be at least 500 basis points above the federal funds rate.

By the Board of Directors

of the Federal Housing Finance Board

/s/ Ronald A. Rosenfeld

Ronald A. Rosenfeld Chairman

EXHIBIT B

Contingency Funding Matrix

Year

January

February

March

April

May

June

July

August

September

October

November

December

2017

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

2018

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

2019

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

2020

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

2021

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

2022

INDP

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

2023

CHIC

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

2024

DSMN

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

2025

DALL

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

2026

TPKA

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

2027

SNFR

BOST

NWYK

PITT

ATLA

CINC

INDP

CHIC

DSMN

DALL

TPKA

SNFR

- 2 -

EX-12.1

										Exhibit 12.1
		Years Ended December 31,
		2016		2015		2014		2013		2012
Earnings:
	Income before assessments	$	309	$	334	$	301	$	375	$	300
	Fixed charges	772		365		355		450		597
Earnings available for fixed charges		$	1,081	$	699	$	656	$	825	$	897
Fixed charges:
	Interest on consolidated obligations	$	768	$	364	$	354	$	448	$	593
	Interest on deposits	4		—		—		1		1
	Mandatorily redeemable capital stock	—		1		1		1		3
Fixed charges		$	772	$	365	$	355	$	450	$	597
Ratio of earnings to fixed charges		1.40		1.92		1.85		1.83		1.50

EX-31.1

EXHIBIT 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, W. Wesley McMullan, certify that:

1. I have reviewed this annual report on Form 10-K of the Federal Home Loan Bank of Atlanta;

2. Based 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;

3. Based 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;

4. The registrant’s other certifying officer 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 15d-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

5. The registrant’s other certifying officer 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 9, 2017	/s/ W. Wesley McMullan
		W. Wesley McMullan
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kirk R. Malmberg, certify that:

1. I have reviewed this annual report on Form 10-K of the Federal Home Loan Bank of Atlanta;

2. Based 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;

3. Based 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;

4. The registrant’s other certifying officer 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 15d-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

5. The registrant’s other certifying officer 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 9, 2017	/s/ Kirk R. Malmberg
		Kirk R. Malmberg
		Executive Vice President and
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual Report on Form 10-K of the Federal Home Loan Bank of Atlanta (the “Registrant”) for the period ended December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), W. Wesley McMullan, President and Chief Executive Officer of the Bank, and Kirk R. Malmberg, Executive Vice President and Chief Financial Officer of the Bank, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Registrant’s Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	March 9, 2017	/s/ W. Wesley McMullan
		W. Wesley McMullan
		President and Chief Executive Officer
		/s/ Kirk R. Malmberg
		Kirk R. Malmberg
		Executive Vice President and
		Chief Financial Officer

The foregoing certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

EX-99.1

Exhibit 99.1

Audit Committee Report

March 9, 2017

The Audit Committee has adopted and is governed by a written charter. The Audit Committee Charter is available on the governance section of the Bank’s website at http://www.fhlbatl.com.

The Audit Committee has reviewed and discussed the audited financial statements with management. The Audit Committee has discussed with its independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has also received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with PwC its independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the board of directors that the Bank’s audited financial statements be included in the Bank’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the Securities and Exchange Commission.

2017 AUDIT COMMITTEE MEMBERS

Jonathan Kislak, Chairman

Travis Cosby, III, Vice Chairman

Brian E. Argrett

Suzanne S. DeFerie

F. Gary Garczynski

William C. Handorf

LaSalle D. Leffall, III

Richard A. Whaley

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Feb. 28, 2017	Jun. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Federal Home Loan Bank of Atlanta
Entity Central Index Key	0001331465
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		51,578,606
Entity Current Reporting Status	Yes
Entity Voluntary Filing Status	No
Entity Well Known Seasoned Issued	No
Entity Public Float			$ 0
Common Stock, Value, Outstanding			$ 5,249,367,100

XML

Statements of Condition - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 1,815	$ 1,751
Interest-bearing deposits (including deposits with another FHLBank of $5 and $3 as of December 31, 2016 and 2015, respectively)	1,106	1,088
Securities purchased under agreements to resell	1,386	2,500
Federal funds sold	7,770	5,421
Investment securities:
Trading securities (includes another FHLBank’s bond of $0 and $52 as of December 31, 2016 and 2015, respectively)	262	1,265
Available-for-sale securities	1,345	1,662
Held-to-maturity securities (fair value of $24,633 and $23,263 as of December 31, 2016 and 2015, respectively)	24,641	23,239
Total investment securities	26,248	26,166
Advances	99,077	104,168
Mortgage loans held for portfolio, net
Mortgage loans held for portfolio	524	586
Allowance for credit losses on mortgage loans	(1)	(2)
Total mortgage loans held for portfolio, net	523	584
Accrued interest receivable	171	171
Derivative assets	355	176
Premises and equipment, net	24	25
Other assets	196	196
Total assets	138,671	142,246
Liabilities
Interest-bearing deposits	1,118	1,084
Consolidated obligations, net:
Discount notes	41,292	69,434
Bonds	88,647	63,953
Total consolidated obligations, net	129,939	133,387
Mandatorily redeemable capital stock	1	14
Accrued interest payable	128	127
Affordable Housing Program payable	69	63
Derivative liabilities	107	124
Other liabilities	358	431
Total liabilities	131,720	135,230
Commitments and contingencies (Note 20)
Capital
Total capital stock Class B putable	4,955	5,101
Retained earnings:
Restricted	310	255
Unrestricted	1,582	1,585
Total retained earnings	1,892	1,840
Accumulated other comprehensive income	104	75
Total capital	6,951	7,016
Total liabilities and capital	138,671	142,246
Subclass B1 [Member]
Capital
Total capital stock Class B putable	787	745
Subclass B2 [Member]
Capital
Total capital stock Class B putable	$ 4,168	$ 4,356

XML

Statements of Condition (Parenthetical) - USD ($) shares in Millions, $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Deposits with other FHLBanks	$ 5	$ 3
Other FHLBank's bonds	0	52
Held-to-maturity securities, fair value	$ 24,633	$ 23,263
Capital stock Class B putable par value (per share)	$ 100	$ 100
Subclass B1 [Member]
Capital stock, shares issued	8	7
Capital stock, shares outstanding	8	7
Subclass B2 [Member]
Capital stock, shares issued	42	44
Capital stock, shares outstanding	42	44

XML

Statements of Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Interest income
Advances	$ 583	$ 137	$ 178
Prepayment fees, net	3	4	2
Interest-bearing deposits	17	5	4
Securities purchased under agreements to resell	4	3	1
Federal funds sold	36	11	8
Trading securities	38	68	75
Available-for-sale securities	105	109	122
Held-to-maturity securities	289	231	238
Mortgage loans	31	40	50
Total interest income	1,106	608	678
Interest expense
Consolidated obligation discount notes	249	59	29
Consolidated obligation bonds	519	305	325
Interest-bearing deposits	4	0	0
Mandatorily redeemable capital stock	0	1	1
Total interest expense	772	365	355
Net interest income	334	243	323
Reversal of provision for credit losses	(1)	(1)	(5)
Net interest income after reversal of provision for credit losses	335	244	328
Noninterest income (loss)
Total other-than-temporary impairment losses	(2)	0	0
Net amount of impairment losses reclassified from accumulated other comprehensive income	(1)	(5)	(3)
Net impairment losses recognized in earnings	(3)	(5)	(3)
Net losses on trading securities	(30)	(61)	(60)
Net gains on derivatives and hedging activities	119	261	120
Gain on extinguishment of debt	0	0	15
Standby letters of credit fees	28	28	26
(Loss) gain on litigation settlements, net	(6)	0	4
Other	3	2	3
Total noninterest income	111	225	105
Noninterest expense
Compensation and benefits	79	76	73
Other operating expenses	37	39	41
Finance Agency	9	9	9
Office of Finance	6	6	5
Other	6	5	4
Total noninterest expense	137	135	132
Income before assessments	309	334	301
Affordable Housing Program assessments	31	33	30
Net income	$ 278	$ 301	$ 271

XML

Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 278	$ 301	$ 271
Net noncredit portion of other-than-temporary impairment losses on available-for-sale securities:
Noncredit losses on available-for-sale securities	(1)	0	0
Net change in fair value on other-than-temporarily impaired available-for-sale securities	27	(28)	(10)
Reclassification of noncredit portion of impairment losses included in net income	3	5	3
Total net noncredit portion of other-than-temporary impairment losses on available-for-sale securities	29	(23)	(7)
Other comprehensive income (loss) related to pension and postretirement benefit plans	0	3	(10)
Total other comprehensive income (loss)	29	(20)	(17)
Total comprehensive income	$ 307	$ 281	$ 254

XML

Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Capital Stock Class B Putable [Member]	Retained Earnings [Member]	Retained Earnings, Restricted [Member]	Retained Earnings, Unrestricted [Member]	Accumulated Other Comprehensive Loss [Member]
Beginning balance (shares) at Dec. 31, 2013		49
Beginning balance at Dec. 31, 2013	$ 6,652	$ 4,883	$ 1,657	$ 141	$ 1,516	$ 112
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock (shares)		50
Issuance of capital stock	5,034	$ 5,034
Repurchase/redemption of capital stock (shares)		(47)
Repurchase/redemption of capital stock	(4,760)	$ (4,760)
Net shares reclassified to mandatorily redeemable capital stock (shares)		0
Net shares reclassified to mandatorily redeemable capital stock	(7)	$ (7)
Comprehensive income (loss)	254		271	54	217	(17)
Cash dividends on capital stock	(182)		(182)		(182)
Ending balance (shares) at Dec. 31, 2014		52
Ending balance at Dec. 31, 2014	6,991	$ 5,150	1,746	195	1,551	95
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock (shares)		56
Issuance of capital stock	5,606	$ 5,606
Repurchase/redemption of capital stock (shares)		(57)
Repurchase/redemption of capital stock	(5,634)	$ (5,634)
Net shares reclassified to mandatorily redeemable capital stock (shares)		0
Net shares reclassified to mandatorily redeemable capital stock	(21)	$ (21)
Comprehensive income (loss)	281		301	60	241	(20)
Cash dividends on capital stock	(207)		(207)		(207)
Ending balance (shares) at Dec. 31, 2015		51
Ending balance at Dec. 31, 2015	7,016	$ 5,101	1,840	255	1,585	75
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock (shares)		54
Issuance of capital stock	5,405	$ 5,405
Repurchase/redemption of capital stock (shares)		(55)
Repurchase/redemption of capital stock	(5,544)	$ (5,544)
Net shares reclassified to mandatorily redeemable capital stock (shares)		0
Net shares reclassified to mandatorily redeemable capital stock	(7)	$ (7)
Comprehensive income (loss)	307		278	55	223	29
Cash dividends on capital stock	(226)		(226)		(226)
Ending balance (shares) at Dec. 31, 2016		50
Ending balance at Dec. 31, 2016	$ 6,951	$ 4,955	$ 1,892	$ 310	$ 1,582	$ 104

XML

Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating activities
Net income	$ 278	$ 301	$ 271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	(45)	(157)	(110)
Reversal of provision for credit losses	(1)	(1)	(5)
Loss due to change in net fair value adjustment on derivative and hedging activities	43	119	62
Net change in fair value adjustment on trading securities	30	61	61
Net impairment losses recognized in earnings	3	5	3
Gain on extinguishment of debt	0	0	(15)
Net change in:
Accrued interest receivable	(1)	8	20
Other assets	(6)	10	(17)
Affordable Housing Program payable	4	(4)	(12)
Accrued interest payable	1	(18)	(38)
Other liabilities	(76)	65	17
Total adjustments	(48)	88	(34)
Net cash provided by operating activities	230	389	237
Investing activities
Interest-bearing deposits	214	242	143
Securities purchased under agreements to resell	1,114	(540)	(1,960)
Federal funds sold	(2,349)	964	(4,590)
Trading securities:
Proceeds from principal collected	973	0	345
Purchases of long-term	0	(56)	0
Available-for-sale securities:
Proceeds from principal collected	396	333	342
Held-to-maturity securities:
Proceeds from principal collected	5,641	6,694	3,183
Purchases of long-term	(7,044)	(6,249)	(6,862)
Advances:
Proceeds from principal collected	265,686	234,088	176,124
Made	(261,105)	(239,051)	(186,125)
Mortgage loans:
Proceeds from principal collected	127	150	158
Purchases from another FHLBank	(72)	0	0
Proceeds from sale of foreclosed assets	13	15	24
Purchase of premise, equipment, and software	(4)	(5)	(5)
Net cash provided by (used in) investing activities	3,590	(3,415)	(19,223)
Financing activities
Net change in interest-bearing deposits	29	(31)	(688)
Net payments on derivatives containing a financing element	(72)	(97)	(101)
Proceeds from issuance of consolidated obligations:
Discount notes	517,242	657,757	470,192
Bonds	75,617	61,513	84,624
Payments for debt issuance costs	(9)	(9)	(9)
Payments for maturing and retiring consolidated obligations:
Discount notes	(545,415)	(625,495)	(465,234)
Bonds	(50,763)	(89,515)	(73,337)
Proceeds from issuance of capital stock	5,405	5,606	5,034
Payments for repurchase/redemption of capital stock	(5,544)	(5,634)	(4,760)
Payments for repurchase/redemption of mandatorily redeemable capital stock	(20)	(26)	(12)
Cash dividends paid	(226)	(207)	(182)
Net cash (used in) provided by financing activities	(3,756)	3,862	15,527
Net increase (decrease) in cash and due from banks	64	836	(3,459)
Cash and due from banks at beginning of the year	1,751	915	4,374
Cash and due from banks at end of the year	1,815	1,751	915
Cash paid for:
Interest	536	354	402
Affordable Housing Program assessments, net	25	35	39
Noncash investing and financing activities:
Net shares reclassified to mandatorily redeemable capital stock	7	21	7
Held-to-maturity securities acquired with accrued liabilities	135	133	348
Transfers of mortgage loans to real estate owned	$ 5	$ 12	$ 18

XML

Nature of Operations

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

The Federal Home Loan Bank of Atlanta (Bank) is a federally chartered corporation and is one of 11 district Federal Home Loan Banks (FHLBanks). Each FHLBank operates as a separate entity within a defined geographic district and has its own management, employees, and board of directors. The Bank's defined geographic district includes Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. The FHLBanks are government-sponsored enterprises that serve the public by enhancing the availability of credit for residential mortgages and targeted community developments. The primary function of the Bank is to provide readily available, competitively priced funding to its member institutions.

The Bank is a cooperative whose member institutions own substantially all of the capital stock of the Bank. Former members and certain non-members, which own the Bank's capital stock as a result of a merger or acquisition of a member of the Bank, own the remaining capital stock to support business transactions still carried on the Bank's Statements of Condition. All holders of the Bank's capital stock are entitled to receive dividends on their capital stock, to the extent declared by the Bank's board of directors.

Federally insured depository institutions, insurance companies, privately insured, state-chartered credit unions, and community development financial institutions that are located in the Bank's defined geographic district and engaged in residential housing finance are eligible to apply for membership. All members must purchase and hold capital stock of the Bank. A member's stock requirement is based on the amount of its total assets, as well as the amount of certain of its business activities with the Bank. State and local housing authorities that meet certain statutory criteria may also borrow from the Bank. While they are eligible to borrow, housing associates are not members of the Bank and are not allowed to hold capital stock.

The Federal Housing Finance Agency (Finance Agency) is the independent federal regulator of the FHLBanks and is responsible for ensuring that the FHLBanks (1) operate in a safe and sound manner, including that they maintain adequate capital and internal controls; (2) foster liquid, efficient, competitive, and resilient national housing finance markets through their operations and activities; (3) comply with applicable laws and regulations; and (4) carry out their housing finance mission through authorized activities that are consistent with the public interest. The Finance Agency also establishes policies and regulations covering the operations of the FHLBanks. The Bank does not have any special purpose entities or any other types of off-balance sheet conduits.

The Federal Home Loan Banks Office of Finance (Office of Finance), a joint office of the FHLBanks, facilitates the issuance and servicing of the FHLBanks' debt instruments, known as consolidated obligations, and prepares the combined quarterly and annual financial reports of the FHLBanks. As provided by the Federal Home Loan Bank Act of 1932, as amended (FHLBank Act), and applicable regulations, the Bank's consolidated obligations are backed only by the financial resources of the FHLBanks. Consolidated obligations are the primary source of funds for the Bank in addition to deposits, other borrowings, and capital stock issued to members. The Bank primarily uses these funds to provide advances to members. The Bank also provides members and non-members with correspondent banking services, such as safekeeping, wire transfer, and cash management services.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires the Bank's management to make subjective assumptions and estimates, which are based upon the information then available to the Bank and are inherently uncertain and subject to change. These assumptions and estimates may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. Actual results could differ significantly from these estimates.

Estimated Fair Values. The estimated fair value amounts, recorded on the Statements of Condition and in the note disclosures for the periods presented, have been determined by the Bank using available market and other pertinent information and reflect the Bank's best judgment of appropriate valuation methods. Although the Bank uses its best judgment in estimating the fair value of these 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.

Financial Instruments Meeting Netting Requirements. The Bank has certain financial instruments, including derivative instruments and securities purchased under agreements to resell, that are subject to offset under master netting agreements or by operation of law. The Bank has elected to offset its derivative asset and liability positions, as well as cash collateral received or pledged, when it has the legal right of offset under these master agreements. The Bank does not have any offsetting liabilities related to its securities purchased under agreements to resell for the periods presented.

The net exposure for these financial instruments can change on a daily basis; 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. There may be a delay for excess collateral to be returned. For derivative instruments, any excess cash collateral received or pledged is recognized as a derivative liability or derivative asset based on the terms of the individual master agreement between the Bank and its derivative counterparty. Additional information regarding these agreements is provided in Note 18—Derivatives and Hedging Activities. Based on the fair value of the related securities held as collateral, the securities purchased under agreements to resell were fully collateralized for the periods presented.

Interest-bearing Deposits, Securities Purchased under Agreements to Resell, and Federal Funds Sold. These investments provide short-term liquidity and are carried at cost. The Bank treatssecurities purchased under agreements to resell as short-term collateralized loans, which are classified as assets on the Statements of Condition. Securities purchased under agreements to resell are held in safekeeping in the name of the Bank by third-party custodians approved by the Bank. Should the fair value of the underlying securities decrease below the fair value required as collateral, the counterparty has the option to (1) place an equivalent amount of additional securities in safekeeping in the name of the Bank, or (2) remit an equivalent amount of cash; otherwise, the dollar value of the resale agreement will be decreased accordingly. Federal funds sold consist of short-term, unsecured loans transacted with counterparties that are considered by the Bank to be of investment quality. Interest on interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold is accrued as earned and recorded in interest income on the Statements of Income.

Investment Securities. The Bank classifies certain investment securities acquired for purposes of liquidity and asset-liability management as trading investments and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in noninterest income (loss) as “Net losses on trading securities” on the Statements of Income, along with gains and losses on sales of investment securities using the specific identification method. The Bank does not participate in speculative trading practices in these investments and generally holds them until maturity, except to the extent management deems necessary to manage the Bank's liquidity position.

Investment securities that the Bank has both the ability and intent to hold to maturity are classified as held-to-maturity and are carried at amortized cost, adjusted for periodic principal repayments, amortization of premiums, and accretion of discounts. Amortization of premiums and accretion of discounts are computed using the contractual level-yield method (contractual interest method), adjusted for actual prepayments. The contractual interest method recognizes the income effects of premiums and discounts 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.

The Bank classifies certain securities that are not held-to-maturity or trading as available-for-sale and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in other comprehensive income. The Bank intends to hold its available-for-sale securities for an indefinite period of time but may sell them prior to maturity in response to changes in interest rates, prepayment risk, or other factors.

Other-than-temporary Impairment of Investment Securities. The Bank evaluates its individual available-for-sale and held-to-maturity securities in unrealized loss positions for other-than-temporary impairment on a quarterly basis. A security is considered impaired when its fair value is less than its amortized cost. The Bank considers an other-than-temporary impairment to have occurred under any of the following circumstances:

• the Bank has an intent to sell the impaired debt security;

• if, based on available evidence, the Bank believes it is more likely than not that it will be required to sell the impaired debt security before the recovery of its amortized cost basis; or

• the Bank does not expect to recover the entire amortized cost basis of the impaired debt security.

If either of the first two conditions above is met, the Bank recognizes an other-than-temporary impairment loss in earnings equal to the entire difference between the security's amortized cost basis and its fair value as of the Statements of Condition date.

For securities in an unrealized loss position that meet neither of the first two conditions, the Bank performs a cash flow analysis to determine if it will recover the entire amortized cost basis of each of these securities. The present value of the cash flows expected to be collected is compared to the amortized cost basis of the debt security to determine whether a credit loss exists. If there is a credit loss (the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security), the carrying value of the debt security is adjusted to its fair value. However, rather than recognizing the entire difference between the amortized cost basis and fair value in earnings, only the amount of the impairment representing the credit loss (i.e., the credit component) is recognized in earnings, while the amount related to all other factors (i.e., the non-credit component) is recognized in other comprehensive income. The credit loss on a debt security is limited to the amount of that security's unrealized losses. The total other-than-temporary impairment is presented on the Statements of Income with an offset for the amount of the non-credit component of other-than-temporary impairment that is recognized in other comprehensive income. The remaining amount on the Statements of Income represents the credit loss for the period.

For subsequent accounting of an other-than-temporarily impaired security, the Bank records an additional other-than-temporary impairment if the present value of cash flows expected to be collected is less than the amortized cost of the security. The total amount of this additional other-than-temporary impairment (both credit and non-credit component, if any) is determined as the difference between the security's amortized cost, less the amount of other-than-temporary impairment recognized in other comprehensive income prior to the determination of this additional other-than-temporary impairment, and its fair value. Any additional credit loss is limited to that security's unrealized losses or the difference between the security's amortized cost and its fair value as of the Statements of Condition date. This additional credit loss, up to the amount in other comprehensive income related to the security, is reclassified out of other comprehensive income and recognized in earnings. Any credit loss in excess of the related other comprehensive income is recorded as additional total other-than-temporary impairment loss and recognized in earnings.

For debt securities classified as available-for-sale, the Bank does not accrete the other-than-temporary impairment recognized in accumulated other comprehensive income to the carrying value. Rather, subsequent related increases and decreases (if not an other-than-temporary impairment) in the fair value of available-for-sale securities are netted against the non-credit component of other-than-temporary impairment recognized previously in accumulated other comprehensive income.

Upon subsequent evaluation of a debt security where there is no additional other-than-temporary impairment, the Bank adjusts the accretable yield on a prospective basis if there is a significant increase in the security's expected cash flows. As of the impairment measurement date, a new accretable yield is calculated for the impaired investment security. This adjusted yield is then used to calculate the interest income recognized over the remaining life of the security so as to match the amount and timing of future cash flows expected to be collected. Subsequent significant increases in estimated cash flows change the accretable yield on a prospective basis.

Advances. The Bank reports advances (secured loans to members, former members, or housing associates), net of discounts on advances related to the Affordable Housing Program (AHP) and the Economic Development and Growth Enhancement Program (EDGE), unearned commitment fees, and hedging basis adjustments. The Bank accretes the discounts on advances and amortizes the recognized unearned commitment fees and hedging adjustments to interest income using the contractual interest method. The Bank records interest on advances to interest income as earned.

Prepayment Fees. The Bank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity date. The Bank records prepayment fees, net of basis adjustments related to hedging activities included in the carrying value of the advance as “Prepayment fees on advances, net” in the interest income section of the Statements of Income. In cases in which there is a prepayment of an existing advance and a contemporaneous funding of a new 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. If the new advance qualifies as a modification of the existing advance, the hedging basis adjustments and the net prepayment fee on the prepaid advance are recorded in the carrying value of the modified advance and amortized over the life of the modified advance using the contractual interest method. This amortization is recorded in advance interest income. If the Bank determines that the transaction does not qualify as a modification of an existing advance, it is treated as an advance termination with subsequent funding of a new advance, and the Bank records the net fees as “Prepayment fees, net” in the interest income section of the Statements of 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 unamortized premiums, unaccreted discounts, mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, and any allowance for credit losses.

The Bank defers and amortizes premiums and accretes discounts (1) paid to and received by the participating financial institutions (PFIs), and (2) of mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, as interest income using the contractual interest method.

A mortgage loan is considered past due when the principal or interest payment is not received in accordance with the contractual terms of the loan. The Bank places a conventional mortgage loan on nonaccrual status when the collection of the contractual principal or interest from the borrower is 90 days or more past due. When a mortgage loan is placed on nonaccrual status, accrued but uncollected interest is reversed against interest income. The Bank records cash payments received on nonaccrual loans as interest income and as a reduction of principal as specified in the contractual agreement. A loan on nonaccrual status may be restored to accrual status when the contractual principal and interest are less than 90 days past due. A government-guaranteed or -insured loan is not placed on nonaccrual status when the collection of the contractual principal or interest is 90 days or more past due because of the (1) U.S. government guarantee or insurance on the loan, and (2) the contractual obligation of the loan servicer to repurchase the loan when certain criteria are met.

A mortgage loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the mortgage loan agreement. Interest income is recognized in the same manner as nonaccrual loans.

Finance Agency regulations require that mortgage loans held in the Bank's portfolios be credit enhanced so that the Bank's risk of loss is limited to the losses of an investor in at least an investment-grade category, such as “BBB.” For conventional mortgage loans, PFIs retain a portion of the credit risk on the loans they sell to the Bank by providing credit enhancement either through a direct liability to pay credit losses up to a specified amount or through a contractual obligation to provide supplemental mortgage insurance. PFIs are paid a credit enhancement fee (CE Fee) for assuming credit risk, and in some instances, all or a portion of the CE Fee may be performance based. CE Fees are paid monthly based on the remaining unpaid principal balance of the loans in a master commitment. CE Fees are recorded as an offset to mortgage loan interest income. To the extent that the Bank experiences losses in a master commitment, it may be able to recapture CE Fees paid to the PFI to offset these losses.

Allowance for Credit Losses. The allowance for credit losses is a valuation allowance separately established for each identified portfolio segment of financing receivables, if necessary, to provide for probable incurred losses in the Bank's portfolio as of the Statements of Condition date. A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology for determining its allowance for credit losses. The Bank has developed and documented a systematic methodology for determining an allowance for credit losses for the following portfolio segments of financing receivables: advances and standby letters of credit, government-guaranteed or -insured residential mortgage loans held for portfolio, conventional residential mortgage loans held for portfolio, term federal funds sold, and term securities purchased under agreements to resell.

A portfolio segment may be further disaggregated into classes of financing receivables to the extent that it is needed to understand the exposure to credit risk arising from these financing receivables; however, the Bank determined that no further disaggregation of the portfolio segments identified above is needed.

The Bank manages its credit exposure to advances through an integrated approach that includes (1) establishing a credit limit for each borrower; (2) an ongoing review of each borrower's financial condition; and (3) collateral and lending policies to limit risk of loss, while balancing each borrower's needs for a reliable source of funding. In addition, the Bank lends to financial institutions within its district and housing associates in accordance with federal statutes and Finance Agency regulations. Specifically, the Bank complies with the FHLBank Act, which requires the Bank to obtain sufficient collateral to fully secure advances. The estimated value of the collateral required to secure each borrower's advances is calculated by applying discounts to the fair value or unpaid principal balance of the collateral, as applicable. The Bank accepts certain investment securities, residential mortgage loans, deposits, and other real estate related assets as collateral. The Bank's capital stock owned by its member borrower is also pledged as additional collateral. Collateral arrangements may vary depending upon borrower credit quality, financial condition and performance, borrowing capacity, and the Bank's overall credit exposure to the borrower. The Bank can call for additional or substitute collateral to protect its security interest. The Bank believes that these policies effectively manage credit risk from advances.

Based upon the financial condition of the borrower, the Bank either allows a borrower to retain physical possession of the collateral pledged to it or requires the borrower to specifically assign the collateral to or place the collateral in physical possession of the Bank or its safekeeping agent. The Bank requires its borrowers to execute an advances and security agreement that establishes the Bank's security interest in all collateral pledged by the borrower to the Bank. The Bank perfects its security interest in all pledged collateral. The FHLBank Act affords any security interest granted to the Bank by a borrower priority over the claims or rights of any other party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), except for claims or rights of a third party that (1) would be entitled to priority under otherwise applicable law, and (2) is an actual bona fide purchaser for value or is an actual secured party whose security interest is perfected in accordance with state law.

Using a risk-based approach and taking into consideration each borrower's financial strength, the Bank considers the types and amounts of pledged collateral to be the primary indicator of credit quality on its advances. The Bank had rights to collateral on a borrower-by-borrower basis with an estimated value equal to or greater than its outstanding extensions of credit as of December 31, 2016 and 2015.

The Bank continues to evaluate and make changes to its collateral policies, as necessary, based on current market conditions. No advance was past due, on nonaccrual status, or considered impaired as of December 31, 2016 and 2015. In addition, there were no troubled debt restructurings related to advances as of December 31, 2016 and 2015.

Based upon the collateral held as security, the Bank's collateral policies, credit analysis, and the repayment history on advances, the Bank did not anticipate any credit losses on advances as of December 31, 2016 and 2015. Accordingly, the Bank has not recorded any allowance for credit losses on advances, nor has the Bank recorded any liability to reflect an allowance for credit losses for off-balance sheet credit exposure as of December 31, 2016 and 2015.

The Bank invested in government-guaranteed or -insured fixed-rate mortgage loans secured by one-to-four family residential properties. Government-guaranteed or -insured mortgage loans are mortgage loans guaranteed or insured by the Department of Veterans Affairs or the Federal Housing Administration. The servicer provides and maintains insurance or a guarantee from the applicable government agency. The servicer is responsible for compliance with all government agency requirements and for obtaining the benefit of the applicable insurance or guarantee with respect to defaulted government-guaranteed or -insured mortgage loans. Any losses incurred on these loans that are not recovered from the issuer or the guarantor are absorbed by the servicers. Therefore, the Bank only has credit risk for these loans if the servicer fails to pay for losses not covered by insurance or guarantees. Based on the Bank's assessment of its servicers, the Bank did not establish an allowance for credit losses for its government-guaranteed or -insured mortgage loan portfolio as of December 31, 2016 and 2015.

Modified loans that are considered a troubled debt restructuring are evaluated individually for impairment. All other conventional residential mortgage loans are evaluated collectively for impairment. The allowance for conventional residential mortgage loans is determined by an analysis (performed at least quarterly) that includes segregating the portfolio into various aging groups. For loans that are 60 days or less past due, the Bank calculates a loss severity, default rate, and the expected loss based on individual loan characteristics. For loans that are more than 60 days past due, the allowance is determined using an automated valuation model.

A modified loan that is considered a troubled debt restructuring is individually evaluated for impairment when determining its related allowance for credit losses. Credit loss is measured by factoring in expected cash shortfalls (i.e., loss severity rate) incurred as of the reporting date, as well as the economic loss attributable to delaying the original contractual principal and interest due dates.

A charge-off is recorded if the recorded investment in the loan will not be recovered. The Bank evaluates whether to record a charge-off on a conventional residential mortgage loan upon the occurrence of a confirming event. Once a loan is 180 days delinquent, the Bank classifies as a loss and charges off the portion of outstanding conventional residential mortgage loan balances in excess of the fair value of the underlying property, less costs to sell and adjusted for any available credit enhancements.

Term federal funds sold are generally short-term, their recorded balance approximates fair value, and they are transacted with counterparties that the Bank considers to be of investment quality. The Bank's investment in federal funds sold are evaluated for purposes of an allowance for credit losses only if the investment is not paid when due. All investments in federal funds sold are unsecured and were repaid or expected to be repaid according to the contracted terms as of December 31, 2016 and 2015.

Securities purchased under agreements to resell are considered collateralized financing arrangements and effectively represent short-term loans transacted with counterparties that the Bank considers to be of investment quality. The terms of these loans are structured such that if the fair value of the underlying securities decreases below the fair value required as collateral, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash. If an agreement to resell is deemed to be impaired, the difference between the fair value of the collateral and the amortized cost of the agreement is recognized in earnings. Based upon the collateral held as security, the Bank determined that no allowance for credit losses was needed for the securities purchased under agreements to resell as of December 31, 2016 and 2015.

Real estate owned (REO) includes assets that have been received in satisfaction of debt through foreclosures. REO is initially recorded at fair value, less estimated selling costs and is subsequently carried at the lower of that amount or current fair value, less estimated selling costs. The Bank recognizes a charge-off to the allowance for credit losses if the fair value of the REO less estimated selling costs is less than the recorded investment in the loan at the date of transfer from loans to REO. Any subsequent realized gains, realized or unrealized losses, and carrying costs are included in noninterest income (loss) on the Statements of Income. REO is recorded in “Other assets” on the Statements of Condition. REO was $2 and $9 as of December 31, 2016 and 2015, respectively.

Derivatives. All derivatives are recognized on the Statements of Condition at their fair values and are reported as either derivative assets or derivative liabilities, net of cash collateral, including initial and variation margin, and accrued interest received from or pledged to clearing agents and/or counterparties. The fair values of derivatives are netted by the clearing agent and/or counterparty when the netting requirements have been met. If these netted amounts are positive, they are classified as an asset and, if negative, they are classified as a liability. Cash flows associated with derivatives 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. Derivatives not used for intermediary purposes are designated as either (1) a hedge of the fair value of (a) a recognized asset or liability or (b) an unrecognized firm commitment (a fair-value hedge); or (2) a non-qualifying hedge of an asset or liability for asset-liability management purposes. Changes in the fair value of a derivative that are effective as, and that are designated and qualify as, a fair-value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (including changes that reflect losses or gains on firm commitments), are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. Any hedge ineffectiveness (which represents the amount by which the change in the fair value of the derivative differs from the change in the fair value of the hedged item) is recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. A non-qualifying hedge is a derivative hedging specific or non-specific underlying assets, liabilities, or firm commitments that is an acceptable hedging strategy under the Bank's risk management program and Finance Agency regulatory requirements, but it does not qualify or was not designated for fair value or cash flow hedge accounting. A non-qualifying hedge introduces the potential for earnings variability because only the change in fair value of the derivative is recorded and is not offset by corresponding changes in the fair value of the non-qualifying hedged asset, liability, or firm commitment, unless such asset, liability, or firm commitment is required to be accounted for at fair value through earnings. Both the net interest on the derivative and the fair value adjustments of a non-qualifying hedge are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

The derivatives used in intermediary activities do not qualify for hedge accounting treatment and are separately marked-to-market through earnings. These amounts are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. The net result of the accounting for these derivatives does not significantly impact the Bank's results of operations.

The net settlement 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 settlement of interest receivables and payables related to intermediated derivatives for members and other non-qualifying hedges are recognized in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

The Bank discontinues hedge accounting prospectively when (1) it determines that the derivative is no longer expected to be effective in offsetting changes in the fair value of a hedged risk, including hedged items such as firm commitments; (2) the derivative and/or the hedged item expires or is sold, terminated, or exercised; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) the bank determines that designating the derivative as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued due to the Bank's determination that a derivative no longer qualifies as an effective fair-value hedge of an existing hedged item, or when the bank decides to cease the specific hedging activity, the Bank will either (1) terminate the derivative; or (2) continue to carry the derivative on the Statements of Condition at its fair value, cease to adjust the hedged asset or liability for changes in fair value, and amortize the cumulative basis adjustment on the hedged item into earnings over the remaining life of the hedged item using the level-yield method. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Bank will carry the derivative at its fair value on the Statements of Condition, recognizing changes in the fair value of the derivative in current-period earnings.

The Bank may issue debt, make advances, or purchase financial instruments in which a derivative instrument may be “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 advance, debt, or purchased financial instruments (i.e., 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. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (2) 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 a stand-alone derivative instrument pursuant to a non-qualifying hedge. However, if the entire contract (the host contract and the embedded derivative) is to be measured at fair value, with changes in fair value reported in current-period earnings (e.g., an investment security classified as “trading”), or if the Bank could not identify and measure reliably the embedded derivative for purposes of separating that derivative from its host contract, the entire contract would be carried on the Statements of Condition at fair value, and no portion of the contract could be designated as a hedging instrument.

Premises, Equipment, and Software. The Bank records premises and equipment at cost less accumulated depreciation. The Bank's accumulated depreciation was $64 and $66 as of December 31, 2016 and 2015, respectively. The Bank computes depreciation using the straight-line method over the estimated useful lives of assets. The estimated useful lives in years are generally as follows: automobiles and computer hardware-three; office equipment-eight; office furniture and building improvements-10; and building-40. The Bank amortizes leasehold improvements using the straight-line method over the shorter of the estimated useful life of the improvement or the remaining term of the lease. The Bank capitalizes improvements and expenses ordinary maintenance and repairs when incurred. Depreciation expense was $4 for the years ended December 31, 2016, 2015, and 2014. The Bank includes gains and losses on disposal of premises and equipment in noninterest income (loss).

The Bank records the cost of purchased software and certain costs incurred in developing computer software for internal use at cost, less accumulated amortization. The Bank amortizes capitalized computer software cost using the straight-line method over an estimated useful life of five years. The gross carrying amount of computer software included in other assets was $55 and $58, and accumulated amortization was $48 and $49, as of December 31, 2016 and 2015, respectively. Amortization of computer software was $3 for the year ended December 31, 2016 and $5 for the years ended December 31, 2015 and 2014. The Bank includes gains and losses on disposal of capitalized software cost in noninterest income (loss).

Consolidated Obligations. The Bank records consolidated obligations at amortized cost. Additionally, the Bank pays concessions to dealers in connection with the issuance of certain consolidated obligations. The Federal Home Loan Bank Office of Finance (Office of Finance) prorates the concessions to the Bank based upon the percentage of the debt issued that is assumed by the Bank. The Bank records concessions paid on consolidated obligations as a direct deduction from their carrying amounts, consistent with the presentation of discounts on consolidated obligations. The Bank accretes discounts and amortizes premiums, as well as concessions and hedging basis adjustments on consolidated obligations, to interest expense using the contractual interest method over the contractual term of the corresponding consolidated obligation.

Mandatorily Redeemable Capital Stock. The Bank reclassifies stock that is subject to redemption from capital to a liability after a member submits a written redemption request, gives notice of intent to withdraw from membership, or attains non-member status through a merger or acquisition, charter termination, or involuntary termination from membership since the member shares will then meet the definition of a mandatorily redeemable financial instrument. Member shares meeting this definition are reclassified to a liability at fair value. Dividends declared on shares classified as a liability are accrued at the expected dividend rate and recorded as interest expense on the Statements of Income. The repurchase or redemption of these mandatorily redeemable financial instruments is recorded as cash outflows 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 mandatorily redeemable capital stock from a liability to capital. After the reclassification, dividends on the capital stock no longer will be classified as interest expense.

Restricted Retained Earnings. The FHLBanks entered into a Joint Capital Enhancement Agreement, as amended (Capital Agreement), which is intended to enhance the capital position of each FHLBank. Under the Capital Agreement, each FHLBank allocates 20 percent of its net income each quarter to a separate retained earnings account until the account balance equals at least one percent of the FHLBank’s average balance of outstanding consolidated obligations for the previous quarter. Restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

Finance Agency and Office of Finance Expenses. The Finance Agency allocates the FHLBanks' portion of its expenses and working capital fund among the FHLBanks based on the ratio between each FHLBank's minimum required regulatory capital and the aggregate minimum required regulatory capital of every FHLBank. Each FHLBank's proportionate share of the Office of Finance's operating and capital expenditures is calculated using a formula that is (1) two-thirds based upon each FHLBank's share of total consolidated obligations outstanding, and (2) one-third based upon an equal pro rata allocation.

Affordable Housing Program. The FHLBank Act requires each FHLBank to establish and fund an AHP that provides subsidies to members to assist in the purchase, construction, or rehabilitation of housing for very low-to-moderate-income households. The Bank charges the required funding for AHP against earnings and establishes a corresponding liability. The Bank issues AHP advances at interest rates below the customary interest rate for non-subsidized advances. A discount on the AHP advance and charge against the AHP liability is recorded for the present value of the variation in the cash flow caused by the difference in the interest rate between the AHP advance rate and the Bank's related cost of funds for comparable maturity funding. As an alternative, the Bank has the authority to make the AHP subsidy available to members as a grant. The discount on AHP advances is accreted to interest income on advances using the contractual interest method over the life of the advance.

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Recently Issued and Adopted Accounting Guidance

12 Months Ended

Dec. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Issued And Adopted Accounting Guidance

Recently Issued and Adopted Accounting Guidance

Recently Issued Accounting Guidance

Classification of Certain Cash Receipts and Cash Payments. In August 2016, the Financial Accounting Standards Board (FASB) issued guidance intended to reduce diversity in how cash receipts and cash payments are presented and classified on the Statements of Cash Flows for certain transactions. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2017, and early application is permitted. The adoption of this guidance will not have an impact on the Bank's financial condition, results of operations, or cash flows.

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued guidance intended to improve the timeliness of recording credit losses on loans and other financial instruments held by financial institutions and other organizations. This guidance requires all expected credit losses for financial assets that are held at the reporting date to be measured based on historical experience, current conditions, and reasonable and supportable forecasts. Credit losses related to available-for-sale securities will be recorded through an allowance for credit losses. Additionally, this guidance amends the accounting for purchased financial assets with credit deterioration and requires enhanced disclosures that provide additional information to help financial statement users better understand significant estimates and judgments. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2019. Early application is permitted for the interim and annual periods beginning after December 15, 2018 although the Bank does not intend to adopt this guidance early. The Bank is in the process of evaluating this guidance, and its impact on the Bank’s financial condition and results of operations will depend upon the composition of the financial assets held by the Bank at the adoption date, as well as the economic conditions and forecasts at that time.

Leases. In February 2016, the FASB issued guidance on accounting for leases and disclosure of key information about leasing arrangements. This guidance requires lessees to recognize the following for all operating and finance leases at the commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. This guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 15, 2018. Early application is permitted although the Bank does not intend to adopt this guidance early. This guidance will be applied on a modified retrospective basis for leases existing at, or entered into after, the earliest period presented in the financial statements. The adoption of this guidance is not expected to have a material impact on the Bank's financial condition or results of operations.

Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued guidance designed to improve the recognition, measurement, presentation, and disclosure of financial instruments through targeted changes to existing GAAP. These changes require the following: (1) entities to measure equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (2) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (3) entities to separately present financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (4) reporting entities to separately present in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, these changes eliminate the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. This guidance becomes effective for the Bank for the interim and annual periods beginning after December 31, 2017. The adoption of this guidance is not expected to have a material impact on the Bank’s financial condition or results of operations.

Revenue from Contracts with Customers. In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Financial instruments and other contractual rights are excluded from the scope of this new revenue recognition guidance and will continue to be accounted for under existing guidance. In 2017 and 2016, the FASB issued amendments, which did not change the core principle of the original guidance, but clarified certain aspects of the guidance. This guidance becomes effective for the Bank for the interim and annual reporting periods beginning after December 15, 2017. This guidance will be applied retrospectively either to each prior reporting period or with a cumulative effect recognized at the date of initial application. Early application is permitted for the interim and annual reporting periods beginning after December 15, 2016 although the Bank does not intend to adopt this guidance early. Because the majority of contracts with the Bank's members are excluded from the scope of this guidance, this guidance is not expected to have a material impact on the Bank’s financial condition or results of operations.

Recently Adopted Accounting Guidance

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued amended guidance that eliminates the concept of extraordinary items from GAAP. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. However, this guidance did not have an impact on the Bank’s financial condition or results of operations.

Amendments to the Consolidation Analysis. In February 2015, the FASB issued amended guidance intended to enhance consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The new guidance places more emphasis on risk of loss when determining a controlling financial interest. Additionally, this guidance reduces the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. However, this guidance did not have an impact on the Bank's financial condition or results of operations.

Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued guidance that requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2016. This amended guidance was applied on a retrospective basis to each individual period presented on the Statements of Condition. As a result, $7 of debt issuance costs that were included in other assets were reclassified as a reduction in the corresponding consolidated obligations balance. Specifically, the reclassification resulted in a $5 reduction in the consolidated bonds balance and a $2 reduction in the consolidated discount notes balance on the Bank's Statements of Condition as of December 31, 2015. Accordingly, the Bank's total assets and total liabilities each decreased by $7 as of December 31, 2015. However, the adoption of this guidance did not have an impact on the Bank's results of operations.

Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. In March 2016, the FASB issued amended guidance designed to clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Bank early adopted this guidance prospectively, and it became effective for the interim and annual periods beginning on January 1, 2016. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. In August 2014, the FASB issued guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide the related footnote disclosures. This guidance requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. This guidance became effective for the Bank for the annual period ending December 31, 2016, and the annual and interim periods thereafter. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

Contingent Put and Call Options in Debt Instruments. In March 2016, the FASB issued amended guidance to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance requires entities to apply only the four-step decision sequence when performing this assessment. Consequently, when a call (put) option is contingently exercisable, an entity should not assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. This guidance became effective for the Bank for the interim and annual periods beginning on January 1, 2017. This guidance was applied on a modified retrospective basis to existing debt instruments as of the beginning of the period for which the amendments are effective. However, the adoption of this guidance did not have an impact on the Bank's financial condition or results of operations.

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Cash and Due from Banks

12 Months Ended

Dec. 31, 2016

Cash and Cash Equivalents [Abstract]

Cash and Due from Banks

Cash and Due from Banks

The Bank maintains a collected cash balance with a commercial bank, which is a member, in return for certain services, and the average collected cash balance was $7 and $8 for the years ended December 31, 2016 and 2015, respectively. There are no legal restrictions regarding the withdrawal of these funds.

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Trading Securities

12 Months Ended

Dec. 31, 2016

Trading Securities [Abstract]

Trading Securities

Trading Securities

Major Security Types. The following table presents trading securities.

	As of December 31,
	2016		2015
Government-sponsored enterprises debt obligations	$	261	$	1,212
Another FHLBank’s bond (1)	—		52
State or local housing agency debt obligations	1		1
Total	$	262	$	1,265

 ____________

⁽¹⁾  The Federal Home Loan Bank of Chicago is the primary obligor of this consolidated obligation bond.

The following table presents net losses on trading securities.

	For the Years Ended December 31,
	2016			2015			2014
Net losses on trading securities held at year end	$	(8	)	$	(61	)	$	(53	)
Net losses on trading securities that matured during the year	(22		)	—			(7		)
Net losses on trading securities	$	(30	)	$	(61	)	$	(60	)

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Available-for-sale Securities

12 Months Ended

Dec. 31, 2016

Available-for-sale Securities [Abstract]

Available-for-sale Securities

Available-for-sale Securities

Major Security Type. The following table presents information on private-label residential mortgage-backed securities (MBS) that are classified as available-for-sale.

	Amortized   Cost		Other-than-temporary   Impairment Recognized in Accumulated Other Comprehensive Income		Gross   Unrealized   Gains		Gross   Unrealized   Losses		Estimated   Fair Value
As of December 31, 2016	$	1,221	$	6	$	130	$	—	$	1,345
As of December 31, 2015	$	1,567	$	19	$	114	$	—	$	1,662

The following table presents private-label residential MBS that are classified as available-for-sale with unrealized losses. The unrealized losses are aggregated by the length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses
As of December 31, 2016	1	$	14	$	—	10	$	189	$	6	11	$	203	$	6
As of December 31, 2015	3	$	107	$	2	10	$	247	$	17	13	$	354	$	19

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as available-for-sale.

	As of December 31,
	2016		2015
Variable-rate	$	1,202	$	1,540
Fixed-rate	19		27
Total amortized cost	$	1,221	$	1,567

The following table presents private-label residential MBS that are classified as available-for-sale and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Other-than-temporary Impairment Recognized in  Accumulated Other Comprehensive Income		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	792	$	5	$	102	$	—	$	889
As of December 31, 2015	$	1,037	$	16	$	77	$	—	$	1,098

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Held-to-maturity Securities

12 Months Ended

Dec. 31, 2016

Held-to-maturity Securities, Unclassified [Abstract]

Held-to-maturity Securities

Held-to-maturity Securities

Major Security Types. The following table presents held-to-maturity securities.

	As of December 31,
	2016								2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
State or local housing agency debt obligations	$	76	$	—	$	—	$	76	$	76	$	—	$	—	$	76
Government-sponsored enterprises debt obligations	6,041		3		5		6,039		5,693		—		12		5,681
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	209		2		—		211		279		4		—		283
Government-sponsored enterprises residential	10,752		44		43		10,753		11,958		88		31		12,015
Government-sponsored enterprises commercial	6,773		2		11		6,764		4,140		—		16		4,124
Private-label residential	790		5		5		790		1,093		4		13		1,084
Total	$	24,641	$	56	$	64	$	24,633	$	23,239	$	96	$	72	$	23,263

The following tables present held-to-maturity securities with unrealized losses. The unrealized losses are aggregated by major security type and by the length of time that the individual securities have been in a continuous unrealized loss position.

	As of December 31, 2016
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	10	$	2,532	$	5	—	$	—	$	—	10	$	2,532	$	5
Mortgage-backed securities:
Government-sponsored enterprises residential	46	2,813		22		63	2,206		21		109	5,019		43
Government-sponsored enterprises commercial	52	4,147		6		22	1,540		5		74	5,687		11
Private-label residential	6	10		—		56	432		5		62	442		5
Total	114	$	9,502	$	33	141	$	4,178	$	31	255	$	13,680	$	64

	As of December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	20	$	4,535	$	7	3	$	745	$	5	23	$	5,280	$	12
Mortgage-backed securities:
Government-sponsored enterprises residential	41	3,233		21		8	443		10		49	3,676		31
Government-sponsored enterprises commercial	31	2,680		9		25	1,037		7		56	3,717		16
Private-label residential	29	407		2		47	428		11		76	835		13
Total	121	$	10,855	$	39	83	$	2,653	$	33	204	$	13,508	$	72

Redemption Terms. The following table presents the amortized cost and estimated fair value of held-to-maturity securities by contractual maturity. Expected maturities of some securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment fees.

	As of December 31,
	2016				2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Non-mortgage-backed securities:
Due in one year or less	$	2,454	$	2,455	$	651	$	651
Due after one year through five years	3,487		3,484		5,118		5,106
Due after five years through ten years	176		176		—		—
Total non-mortgage-backed securities	6,117		6,115		5,769		5,757
Mortgage-backed securities	18,524		18,518		17,470		17,506
Total	$	24,641	$	24,633	$	23,239	$	23,263

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as held-to-maturity.

	As of December 31,
	2016		2015
Non-mortgage-backed securities:
Fixed-rate	$	2,413	$	1,915
Variable-rate	3,704		3,854
Total non-mortgage-backed securities	6,117		5,769
Mortgage-backed securities:
Fixed-rate	2,438		2,949
Variable-rate	16,086		14,521
Total mortgage-backed securities	18,524		17,470
Total amortized cost	$	24,641	$	23,239

The following table presents private-label residential MBS that are classified as held-to-maturity and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	177	$	—	$	2	$	175
As of December 31, 2015	$	286	$	—	$	5	$	281

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Other-than-temporary Impairment

12 Months Ended

Dec. 31, 2016

Other than Temporary Impairment Losses, Investments [Abstract]

Other-than-temporary Impairment

Other-than-temporary Impairment

Mortgage-backed Securities. The Bank’s investments in MBS consist of U.S. agency guaranteed securities and senior tranches of private-label MBS. The Bank has increased exposure to the risk of loss on its investments in MBS when the loans backing the MBS exhibit high rates of delinquency and foreclosures, as well as losses on the sale of foreclosed properties. To reduce its risk of loss on such securities, the Bank regularly requires high levels of credit enhancements from the structure of the collateralized mortgage obligation. Credit enhancements are defined as the percentage of subordinate tranches, overcollateralization, or excess spread, or the support of monoline insurance, if any, in a security structure that will absorb the losses before the security that the Bank purchased will take a loss. The Bank does not purchase credit enhancements for its MBS from monoline insurance companies.

The Bank’s investments in private-label MBS were rated “AAA” (or its equivalent) by a nationally recognized statistical rating organization (NRSRO), such as Moody’s Investors Service (Moody’s) and Standard and Poor’s Ratings Services (S&P), at their purchase dates. The “AAA”-rated securities achieved their ratings through credit enhancement, overcollateralization, and senior-subordinated shifting interest features; the latter results in subordination of payments by junior classes to ensure cash flows to the senior classes. The ratings on all of the Bank’s private-label MBS have changed since their purchase dates.

Non-private-label MBS. The unrealized losses related to U.S. agency MBS are caused by interest rate changes, not credit quality. These securities are guaranteed by government agencies or government-sponsored enterprises and the Bank does not expect these securities to be settled at a price less than their amortized cost basis. In addition, the Bank does not intend to sell these investments and it is not more likely than not that the Bank will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The Bank does not consider these investments to be other-than-temporarily impaired as of December 31, 2016.

Private-label MBS. To assess whether the entire amortized cost basis of its private-label MBS will be recovered, the Bank performs a cash flow analysis for each of its private-label MBS using two third-party models.

The first third-party model considers borrower characteristics and the particular attributes of the loans underlying the Bank’s securities, in conjunction with assumptions about future changes in home prices and interest rates, to project prepayments, defaults, and loss severities. A significant input to the first model is the forecast of future housing price changes for the relevant states and core based statistical areas (CBSA), which are based upon an assessment of the individual housing markets. The term CBSA refers collectively to metropolitan and micropolitan statistical areas as defined by the United States Office of Management and Budget; as currently defined, a CBSA must contain at least one urban area with a population of 10,000 or more people. The Bank’s housing price forecast as of December 31, 2016 included a short-term housing price forecast with projected changes ranging from a decrease of three percent to an increase of 10 percent over the 12 month period beginning October 1, 2016. For the vast majority of markets, the projected short-term housing price changes range from an increase of two percent to an increase of six percent. Thereafter, a unique path is projected for each geographic area based on an internally developed framework derived from historical data.

The month-by-month projections of future loan performance derived from the first model, which reflect projected prepayments, defaults, and loss severities, were then input into a second model. The second model allocates the projected loan level cash flows and losses to the various security classes in the securitization structure in accordance with its prescribed cash flow and loss allocation rules.

At each quarter end, the Bank compares the present value of the cash flows (discounted at the securities' effective yield) expected to be collected with respect to its private-label MBS to the amortized cost basis of the security to determine whether a credit loss exists. For the Bank’s variable rate and hybrid private-label MBS, the Bank uses a forward interest rate curve to project the future estimated cash flows. The Bank then uses the effective interest rate for the security prior to impairment for determining the present value of the future estimated cash flows. For securities previously identified as other-than-temporarily impaired, the Bank updates its estimate of future estimated cash flows on a quarterly basis.

The following table presents a summary of the significant inputs used to measure the amount of the credit loss recognized in earnings for those securities for which an other-than-temporary impairment was determined to have occurred during the year ended December 31, 2016, as well as the related current credit enhancement.

	Significant Inputs - Weighted Average (%) (1)
Classification of Securities	Prepayment Rates	Default Rates	Loss Severities	Current Credit Enhancement (%)
Prime	15.02	4.62	19.73	0.24
Alt-A	12.13	17.56	40.22	0.00
Total	12.31	16.76	38.95	0.02

____________

⁽¹⁾ The classification of securities is based on current characteristics and performance, which may be different from the securities’ classification as determined by the originator at the time of origination.

The following table presents a roll-forward of the amount of credit losses on the Bank’s investment securities recognized in earnings during the life of the securities for which a portion of the other-than-temporary loss was recognized in accumulated other comprehensive income.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	505		$	542		$	574
Amount related to credit loss for which an other-than-temporary impairment was previously recognized	3			5			3
Increase in cash flows expected to be collected, (accreted as interest income over the remaining lives of the applicable securities)	(53		)	(42		)	(35		)
Balance, end of year	$	455		$	505		$	542

Certain other private-label MBS that have not been designated as other-than-temporarily impaired have experienced unrealized losses and decreases in fair value due to interest rate volatility and illiquidity in the marketplace. These declines in fair value are considered temporary as the Bank expects to recover the amortized cost basis of the securities, the Bank does not intend to sell these securities, and it is not more likely than not that the Bank will be required to sell these securities before the anticipated recovery of the securities’ remaining amortized cost basis, which may be at maturity. This assessment is based on the fact that the Bank has sufficient capital and liquidity to operate its business and has no need to sell these securities, nor has the Bank entered into any contractual constraints that would require the Bank to sell these securities.

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Advances

12 Months Ended

Dec. 31, 2016

Advances [Abstract]

Advances

Advances

Redemption Terms. The Bank had advances outstanding at interest rates ranging from zero percent to 7.55 percent as of December 31, 2016. Advances with interest rates of zero percent are AHP and EDGE subsidized advances and certain structured advances. The following table presents the Bank's advances outstanding.

	As of December 31,
	2016			2015
Overdrawn demand deposit accounts	$	—		$	16
Due in one year or less	47,325			46,673
Due after one year through two years	8,244			12,747
Due after two years through three years	5,904			6,360
Due after three years through four years	5,859			2,994
Due after four years through five years	11,846			4,616
Due after five years	19,110			29,458
Total par value	98,288			102,864
Discount on AHP advances	(5		)	(6		)
Discount on EDGE advances	(4		)	(4		)
Hedging adjustments	798			1,315
Deferred commitment fees	—			(1		)
Total	$	99,077		$	104,168

The Bank offers callable advances to members that may be prepaid on prescribed dates (call dates) without incurring prepayment or termination fees. The Bank also offers prepayable advances, which are variable-rate advances that may be contractually prepaid by the borrower on specified dates without incurring prepayment or termination fees. Other advances may be prepaid only by paying a fee to the Bank, so the Bank is financially indifferent to the prepayment of the advance. The Bank had callable and prepayable advances outstanding of $27,459 and $25,565 as of December 31, 2016 and 2015, respectively.

The following table presents advances by year of contractual maturity or next call date for callable advances.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or callable in one year or less	72,404		71,243
Due or callable after one year through two years	7,680		11,593
Due or callable after two years through three years	3,740		5,545
Due or callable after three years through four years	2,289		2,214
Due or callable after four years through five years	4,570		2,371
Due or callable after five years	7,605		9,882
Total par value	$	98,288	$	102,864

Convertible advances offered by the Bank allow the Bank to convert the fixed-rate advance to a variable-rate advance at the current market rate on certain specified dates. The Bank had convertible advances outstanding of $1,497 and $2,394 as of December 31, 2016 and 2015, respectively.

The following table presents advances by year of contractual maturity or, for convertible advances, next conversion date.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or convertible in one year or less	47,935		48,743
Due or convertible after one year through two years	7,724		11,434
Due or convertible after two years through three years	5,943		5,768
Due or convertible after three years through four years	5,867		3,020
Due or convertible after four years through five years	11,866		4,609
Due or convertible after five years	18,953		29,274
Total par value	$	98,288	$	102,864

Interest-rate Payment Terms. The following table presents interest-rate payment terms for advances.

	As of December 31,
	2016		2015
Fixed-rate:
Due in one year or less	$	38,597	$	32,011
Due after one year	24,528		27,051
Total fixed-rate	63,125		59,062
Variable-rate:
Due in one year or less	8,728		14,678
Due after one year	26,435		29,124
Total variable-rate	35,163		43,802
Total par value	$	98,288	$	102,864

Credit Risk. The Bank’s potential credit risk from advances is concentrated in commercial banks, thrifts, and credit unions and further is concentrated in certain larger borrowing relationships. The concentration of the Bank's advances to its 10 largest borrowers was $67,493 and $75,842 as of December 31, 2016 and 2015, respectively. This concentration represented 68.7 percent and 73.7 percent of total advances outstanding as of December 31, 2016 and 2015, respectively.

Based on the collateral pledged as security for advances, the Bank's credit analysis of members’ financial condition, and prior repayment history, no allowance for credit losses on advances was deemed necessary by the Bank as of December 31, 2016 and 2015. No advance was past due as of December 31, 2016 and 2015.

For additional information related to the Bank's credit risk on advances and allowance for credit losses, see Note 2—Summary of Significant Accounting Policies.

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Mortgage Loans Held for Portfolio

12 Months Ended

Dec. 31, 2016

Mortgage Loans on Real Estate [Abstract]

Mortgage Loans Held for Portfolio

Mortgage Loans Held for Portfolio

The Bank purchased fixed-rate residential mortgage loans directly from PFIs, who service and credit enhance the residential mortgage loans that they sold to the Bank. The Bank ceased purchasing these loans directly from PFIs in 2008. The Bank may also acquire fixed-rate residential mortgage loans through participations in eligible mortgage loans purchased from other FHLBanks.

The following table presents information on mortgage loans held for portfolio by contractual maturity at the time of purchase.

	As of December 31,
	2016			2015
Medium-term (15 years or less)	$	40		$	66
Long-term (greater than 15 years)	485			521
Total unpaid principal balance	525			587
Premiums	2			2
Discounts	(3		)	(3		)
Total	$	524		$	586

The following table presents the unpaid principal balance of mortgage loans held for portfolio by collateral or guarantee type.

	As of December 31,
	2016		2015
Conventional mortgage loans	$	492	$	546
Government-guaranteed or insured mortgage loans	33		41
Total unpaid principal balance	$	525	$	587

The Bank records credit enhancement fees related to residential mortgage loans as a reduction to mortgage loan interest income.

For information related to the Bank's credit risk on mortgage loans and allowance for credit losses, see Note 11—Allowance for Credit Losses.

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Allowance for Credit Losses

12 Months Ended

Dec. 31, 2016

Allowance for Credit Losses [Abstract]

Allowance for Credit Losses

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses related to conventional residential mortgage loans.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	2		$	3		$	11
Reversal of provision for credit losses	(1		)	(1		)	(5		)
Charge-offs	—			—			(3		)
Balance, end of year	$	1		$	2		$	3

The following table presents the recorded investment in conventional residential mortgage loans by impairment methodology.

	As of December 31,
	2016		2015
Allowance for credit losses:
Collectively evaluated for impairment	$	1	$	2
Recorded investment:
Individually evaluated for impairment	$	12	$	15
Collectively evaluated for impairment	481		532
Total recorded investment	$	493	$	547

Key credit quality indicators for mortgage loans include the migration of past due mortgage loans, nonaccrual mortgage loans, and mortgage loans in process of foreclosure. The following tables present the Bank's recorded investment in mortgage loans by these key credit quality indicators.

	As of December 31, 2016
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	3			1			4
Past due 90 days or more	12			1			13
Total past due mortgage loans	32			6			38
Total current mortgage loans	461			27			488
Total mortgage loans (1)	$	493		$	33		$	526
Other delinquency statistics:
In process of foreclosure (2)	$	6		$	1		$	7
Seriously delinquent rate (3)	2.44		%	3.75		%	2.53		%
Past due 90 days or more and still accruing interest (4)	$	—		$	1		$	1
Mortgage loans on nonaccrual status (5)	$	12		$	—		$	12

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $2 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

	As of December 31, 2015
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	5			1			6
Past due 90 days or more	18			3			21
Total past due mortgage loans	40			8			48
Total current mortgage loans	507			34			541
Total mortgage loans (1)	$	547		$	42		$	589
Other delinquency statistics:
In process of foreclosure (2)	$	9		$	1		$	10
Seriously delinquent rate (3)	3.32		%	6.65		%	3.55		%
Past due 90 days or more and still accruing interest (4)	$	—		$	3		$	3
Mortgage loans on nonaccrual status (5)	$	18		$	—		$	18

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $3 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

A troubled debt restructuring is considered to have occurred when a concession that would not have been considered otherwise is granted to a borrower for economic or legal reasons related to the borrower's financial difficulties. The Bank has granted a concession when it does not expect to collect all amounts due under the original contract as a result of the restructuring. In the event the Bank grants a concession, the borrower's monthly payment is restructured for a period of up to 36 months to try to achieve a target housing expense ratio of not more than 31.0 percent of their qualifying income. To restructure the loan, the outstanding principal balance is first re-amortized to reflect a principal and interest payment for a term not to exceed 40 years. This results in a balloon payment at the original maturity date of the loan as the maturity date and number of remaining monthly payments are not adjusted. If the 31.0 percent housing expense ratio is not achieved through re-amortization, the interest rate is reduced below the original note rate in 0.125 percent increments to a floor rate of 3.00 percent until the target 31.0 percent housing expense ratio is met. These reductions in principal and interest payments are for the temporary payment modification period of up to 36 months. Additionally, a conventional residential mortgage loan in which the borrower filed for Chapter 7 bankruptcy and the bankruptcy court discharged the borrower's obligation to the Bank, is considered a troubled debt restructuring. Troubled debt restructurings are evaluated individually for impairment.

The following table presents the Bank's recorded investment balance in mortgage loans classified as troubled debt restructurings.

	As of December 31,
	2016						2015
	Performing		Non-performing		Total		Performing		Non-performing		Total
Conventional residential mortgage loans	$	10	$	2	$	12	$	13	$	2	$	15

Due to the minimal change in terms of modified loans (i.e., no write-offs of principal), the Bank's pre-modification recorded investment was not materially different than the post-modification recorded investment in troubled debt restructurings during the years ended December 31, 2016, 2015, and 2014.

The financial amounts related to the Bank's troubled debt restructurings and impaired loans are not material to the Bank's financial condition or results of operations for the periods presented.

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Deposits

12 Months Ended

Dec. 31, 2016

Deposits [Abstract]

Deposits

Deposits

The Bank offers demand and overnight deposits for members and qualifying non-members. A member that services mortgage loans may deposit funds in the Bank that were collected in connection with the mortgage loans, pending disbursement of such funds to the owners of the mortgage loans. The Bank records these items in "Interest-bearing deposits" on the Statements of Condition.

The Bank pays interest on demand and overnight deposits based on a daily interest rate.

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Consolidated Obligations

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Consolidated Obligations

Consolidated Obligations

Consolidated obligations, consisting of consolidated obligation bonds and discount notes, are the joint and several obligations of the FHLBanks and are backed only by the financial resources of the FHLBanks.

The Bank is primarily liable for its portion of consolidated obligations (i.e., those issued on its behalf) and also is jointly and severally liable with the other 10 FHLBanks for the payment of principal and interest on all consolidated obligations of each of the FHLBanks. The Finance Agency, at its discretion, may require any FHLBank to make principal or interest payments due on any consolidated obligation, whether or not the consolidated obligation represents a primary liability of such FHLBank. Although it has never occurred, to the extent that an FHLBank makes any payment on a consolidated obligation on behalf of another FHLBank that is primarily liable for such consolidated obligation, Finance Agency regulations provide that the paying FHLBank is entitled to reimbursement from the noncomplying FHLBank for any payments made on its behalf and any other associated costs (including interest to be determined by the Finance Agency). However, if the Finance Agency determines that the noncomplying FHLBank is unable to satisfy its repayment obligations, the Finance Agency may allocate the outstanding liabilities of the noncomplying FHLBank among the remaining FHLBanks on a pro rata basis in proportion to each FHLBank's participation in all consolidated obligations outstanding. The Finance Agency reserves the right to allocate the outstanding liabilities for the consolidated obligations among the FHLBanks in any other manner it may determine to ensure that the FHLBanks operate in a safe and sound manner. The par value of the FHLBanks' outstanding consolidated obligations, including consolidated obligations issued by the Bank, was $989,311 and $905,202 as of December 31, 2016 and 2015, respectively.

Regulations require each FHLBank to maintain, in the aggregate, unpledged qualifying assets equal to that FHLBank's consolidated obligations outstanding. Qualifying assets are defined as cash; secured advances; obligations of or fully guaranteed by the United States; mortgages guaranteed or insured by the United States or its agencies; participations, mortgages, or other securities of or issued by certain government-sponsored enterprises; and such securities as fiduciary and trust funds may invest in under the laws of the state in which the FHLBank is located. The Bank held unpledged qualifying assets of $138,097 and $141,848 as of December 31, 2016 and 2015, respectively, compared to a book value of $129,939 and $133,387 in consolidated obligations as of December 31, 2016 and 2015, respectively.

General Terms. Consolidated obligations are issued with either fixed- or variable-rate coupon payment terms that use a variety of indices for interest-rate resets including the London Interbank Offered Rate (LIBOR), Constant Maturity Treasury, and others. To meet the expected specific needs of certain investors in consolidated obligations, both fixed- and variable-rate consolidated obligation bonds may contain certain features, which may result in complex coupon payment terms and call options. When such consolidated obligations are issued, the Bank generally enters into derivatives containing offsetting features that, in effect, convert the terms of the consolidated obligation bond to those of a simple variable-rate consolidated obligation bond.

These consolidated obligations, beyond having fixed-rate or simple variable-rate coupon payment terms, may also have the following broad term regarding either principal repayment or coupon payment terms:

Optional Principal Redemption Consolidated Obligation Bonds (callable bonds) that the Bank may redeem in whole or in part at its discretion on predetermined call dates according to the terms of the consolidated obligation bond offerings.

With respect to interest payments, consolidated obligation bonds may have the following terms:

Step-up/down Consolidated Obligation Bonds have coupons at fixed rates for specified intervals over the lives of the consolidated obligation bonds. At the end of each specified interval, the coupon rate increases (or decreases) or steps up (or steps down). These consolidated obligation bond issues generally contain call provisions enabling the bonds to be called at the Bank's discretion; and

Variable-rate Capped Floater Consolidated Obligation Bonds pay interest at variable rates subject to an interest-rate ceiling.

Interest-rate Payment Terms. The following table presents the Bank’s consolidated obligation bonds by interest-rate payment type.

	As of December 31,
	2016		2015
Fixed-rate	$	23,674	$	40,512
Step up/down	2,534		4,239
Simple variable-rate	62,408		19,022
Total par value	$	88,616	$	63,773

Redemption Terms. The following table presents the Bank’s participation in consolidated obligation bonds outstanding by year of contractual maturity.

	As of December 31,
	2016				2015
	Amount			Weighted- average Interest Rate (%)	Amount			Weighted- average Interest Rate (%)
Due in one year or less	$	65,378		0.91	$	32,559		0.74
Due after one year through two years	17,065			1.05	17,132			1.41
Due after two years through three years	1,849			1.67	5,959			1.63
Due after three years through four years	1,482			1.68	2,124			1.67
Due after four years through five years	1,117			1.58	1,975			1.72
Due after five years	1,725			2.37	4,024			2.18
Total par value	88,616			1.00	63,773			1.16
Premiums	24				36
Discounts	(12		)		(20		)
Hedging adjustments	19				164
Total	$	88,647			$	63,953

The following table presents the Bank’s consolidated obligation bonds outstanding by call feature.

	As of December 31,
	2016		2015
Noncallable	$	83,487	$	53,432
Callable	5,129		10,341
Total par value	$	88,616	$	63,773

The following table presents the Bank’s consolidated obligation bonds outstanding, by year of contractual maturity, or for callable consolidated obligation bonds, by next call date.

	As of December 31,
	2016		2015
Due or callable in one year or less	$	70,232	$	41,410
Due or callable after one year through two years	15,250		16,277
Due or callable after two years through three years	1,399		3,461
Due or callable after three years through four years	1,103		1,055
Due or callable after four years through five years	162		1,023
Due or callable after five years	470		547
Total par value	$	88,616	$	63,773

Consolidated Obligation Discount Notes. Consolidated obligation discount notes are issued to raise short-term funds and have original contractual maturities of up to one year. These consolidated obligation discount notes are issued at less than their face amounts and redeemed at par value when they mature.

The following table presents the Bank's participation in consolidated obligation discount notes.

	Book Value		Par Value		Weighted-average Interest Rate (%)
As of December 31, 2016	$	41,292	$	41,334	0.48
As of December 31, 2015	$	69,434	$	69,481	0.27

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Afforable Housing Program

12 Months Ended

Dec. 31, 2016

Assessments [Abstract]

Affordable Housing Program

Affordable Housing Program

Affordable Housing Program. Annually, each FHLBank must set aside 10 percent of its income subject to assessment for the AHP, or such additional prorated sums as may be required so that the aggregate annual contribution of the FHLBanks is not less than $100. For purposes of the AHP calculation, each FHLBank's income subject to assessment is defined as the individual FHLBank's net income before assessments, plus interest expense related to mandatorily redeemable capital stock. The Bank accrues this expense monthly based on its income subject to assessment. The Bank reduces the AHP liability as members use subsidies.

If the Bank experienced a net loss during a quarter but had income subject to assessment in subsequent quarters, it would be required to contribute additional amounts to meet its calculated annual obligation based on the Bank's year-to-date income subject to assessment. If the Bank experienced a net loss for a full year, the Bank would have no obligation to the AHP for the year since each FHLBank's required annual AHP contribution is limited to its annual income subject to assessment. If the aggregate of 10 percent of income subject to assessment for all FHLBanks was less than $100, each FHLBank would be required to contribute additional amounts so that the aggregate contribution of the FHLBanks equals the required $100. Each FHLBanks' prorated contribution would be determined based on its income in relation to the income of all FHLBanks for the previous year. There was no shortfall in the years ended December 31,2016, 2015, or 2014. If an FHLBank finds that its required contributions are contributing to the financial instability of that FHLBank, it may apply to the Finance Agency for a temporary suspension of its contributions. No FHLBank made such an application in the years ended December 31,2016, 2015, or 2014. The Bank had outstanding principal in AHP-related advances of $27 and $30 as of December 31, 2016 and 2015, respectively.

The following table presents a rollforward of the Bank's AHP liability.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	63		$	65		$	74
AHP assessments	31			33			30
Subsidy usage, net	(25		)	(35		)	(39		)
Balance, end of year	$	69		$	63		$	65

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Capital and Mandatorily Redeemable Capital Stock

12 Months Ended

Dec. 31, 2016

Capital [Abstract]

Capital and Mandatorily Redeemable Capital Stock

Capital and Mandatorily Redeemable Capital Stock

Capital. The Bank is subject to the following three regulatory capital requirements under its capital plan, the FHLBank Act, and Finance Agency regulations.

Risk-Based Capital. The Bank must maintain, at all times, permanent capital in an amount at least equal to the sum of its credit risk capital requirement, its market risk capital requirement, and its operations risk capital requirement, calculated in accordance with the rules and regulations of the Finance Agency. Permanent capital is defined by the FHLBank Act and regulations as the sum of retained earnings and the amounts paid-in for Class B stock.Only permanent capital satisfies the risk-based capital requirement.The Finance Agency may require the Bank to maintain a greater amount of permanent capital than is required by the risk-based capital requirement as defined.

Total Regulatory Capital. The FHLBank Act requires the Bank to maintain total regulatory capital in an amount equal to at least four percent of total assets at all times. Total regulatory capital is defined as the sum of permanent capital, the amount paid-in for Class A stock (if any), the amount of the Bank's general allowance for losses (if any), and the amount of any other instruments identified in the capital plan and approved by the Finance Agency. The Bank has not issued any Class A stock, has no general allowance for losses, and has no other instruments identified in the capital plan and approved by the Finance Agency; therefore, the Bank's total regulatory capital is equal to its permanent capital as of December 31, 2016.

Leverage Capital. The FHLBank Act requires the Bank to maintain leverage capital in an amount equal to at least five percent of total assets at all times. Leverage capital is defined as the sum of permanent capital weighted 1.5 times and all other capital weighted 1.0 times. Although mandatorily redeemable capital stock is not included in capital for financial reporting purposes, such outstanding stock is considered capital for determining compliance with these regulatory capital requirements.

The following table presents the Bank's compliance with the Finance Agency's regulatory capital rules and requirements.

	As of December 31,
	2016						2015
	Required			Actual			Required			Actual
Risk-based capital	$	1,701		$	6,848		$	1,621		$	6,956
Total regulatory capital ratio	4.00		%	4.94		%	4.00		%	4.89		%
Total regulatory capital (1)	$	5,547		$	6,848		$	5,690		$	6,956
Leverage capital ratio	5.00		%	7.41		%	5.00		%	7.33		%
Leverage capital	$	6,934		$	10,273		$	7,113		$	10,433

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⁽¹⁾  Total regulatory capital does not include accumulated other comprehensive income but does include mandatorily redeemable capital stock.

The Bank offers two subclasses of Class B stock, each of which is issued, redeemed, and repurchased at a par value of $100 per share. Member shares cannot be purchased or sold except between the Bank and its members at $100 per share par value. Shares of subclass B1 capital stock are issued to meet the membership stock requirement under the capital plan and shares of subclass B2 capital stock are issued to meet the activity-based stock requirement under the capital plan. Activity-based stock held by a member is that amount of subclass B2 capital stock that the member is required to own for as long as certain transactions between the Bank and the member remain outstanding. The manner in which the activity-based stock requirement is determined under the capital plan is set forth below.

The minimum stock requirement for each member is the sum of the membership stock requirement and the activity-based stock requirement. The capital plan permits the Bank's board of directors to set the membership and activity-based stock requirements within a range as set forth in the capital plan. As of December 31, 2016, the membership stock requirement was an amount of subclass B1 capital stock equal to 0.09 percent (nine basis points) of the member's total assets as of December 31, 2015, subject to a cap of $15. The membership stock requirement is recalculated using the member's total assets as of the preceding calendar year-end at least annually by March 31. As of December 31, 2016, the activity-based stock requirement was an amount of subclass B2 capital stock equal to the sum of the following:

• 4.25 percent of the member's outstanding par value of advances and

• 8.00 percent of targeted debt/equity investments (such as multifamily residential mortgage loan assets) sold by the member to the Bank on or after December 17, 2004.

The activity-based stock requirement also may include a percentage of any outstanding balance of acquired member assets (such as residential mortgage loan assets) although this percentage was set at zero as of December 31, 2016 and 2015.

The FHLBank Act and Finance Agency regulations require that the minimum stock requirement for members must be sufficient to enable the Bank to meet its minimum regulatory capital requirement. Therefore, from time to time, the Bank's board of directors may adjust the membership stock requirement and the activity-based stock requirement within specified ranges set forth in the capital plan. Any adjustment outside the ranges would require an amendment to the capital plan and Finance Agency approval. Each member is required to comply promptly with any adjustment to the minimum stock requirement. The FHLBank Act provides that the Bank may repurchase, at its sole discretion, any member's capital stock investment that exceeds the required minimum amount (excess capital stock). Under certain circumstances, Finance Agency rules limit the ability of the Bank to create member excess stock. The Bank may not pay dividends in the form of capital stock or issue excess capital stock to any member if the Bank's excess capital stock exceeds one percent of its total assets or if the issuance of excess capital stock would cause the Bank's excess capital stock to exceed one percent of its total assets. As of December 31, 2016 and 2015, the Bank's excess capital stock did not exceed one percent of its total assets.

A member may redeem its excess Class B capital stock at par value payable in cash five years after providing written notice to the Bank. The Bank, at its option, may repurchase a member's excess capital stock before expiration of the five-year notice period. The Bank's authority to redeem or repurchase capital stock is subject to a number of limitations.

Under Finance Agency rules, the Bank's board of directors may, but is not required to, declare and pay non-cumulative dividends in cash or capital stock from unrestricted retained earnings and current earnings. All shares of capital stock share in any dividend without preference. Dividends are computed on the average daily balance of capital stock outstanding during the relevant time period. The Bank may not pay a dividend if the Bank is not in compliance with any of its regulatory capital requirements or if a payment would cause the Bank to fail to meet any of its regulatory capital requirements.

The concentration of the Bank's regulatory capital stock to its 10 largest shareholders was $3,018, or 60.9 percent, and $3,373, or 65.9 percent, as of December 31, 2016 and 2015, respectively.

The following table presents the activity in mandatorily redeemable capital stock.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	14		$	19		$	24
Net reclassification from capital during the year	7			21			7
Repurchase/redemption of mandatorily redeemable capital stock	(20		)	(26		)	(12		)
Balance, end of year	$	1		$	14		$	19

As of December 31, 2016, the Bank's outstanding mandatorily redeemable capital stock consisted of B1 membership stock and B2 activity-based stock. The Bank is not required to redeem activity-based stock until the later of the expiration of the redemption period, which is five years after notification is received, or until the activity no longer remains outstanding.

The following table presents the amount of mandatorily redeemable capital stock by year of redemption. The year of redemption in the table is the end of the five-year redemption period, or with respect to activity-based stock, the later of the expiration of the five-year redemption period or the activity’s maturity date.

	As of December 31,
	2016		2015
Due in one year or less	$	—	$	7
Due after one year through two years	—		1
Due after three years through four years	1		—
Due after four years through five years	—		6
Total	$	1	$	14

A member may cancel or revoke its written notice of redemption or its notice of withdrawal from membership at any time prior to the end of the five-year redemption period, subject to payment of a cancellation fee as set forth in the capital plan. If a member cancels its written notice of redemption or notice of withdrawal, the Bank will reclassify mandatorily redeemable capital stock from a liability to capital.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income

The following table presents the components comprising accumulated other comprehensive income.

	Pension and Postretirement Benefits			Noncredit Portion of Other-than- temporary Impairment  Losses on Available-for- sale Securities			Total  Accumulated Other Comprehensive Income
Balance, December 31, 2013	$	(13	)	$	125		$	112
Other comprehensive income before reclassifications:
Net change in fair value	—			(10		)	(10		)
Actuarial loss	(11		)	—			(11		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive loss	(10		)	(7		)	(17		)
Balance, December 31, 2014	(23		)	118			95
Other comprehensive income before reclassifications:
Net change in fair value	—			(28		)	(28		)
Actuarial gain	1			—			1
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			5			5
Amortization of pension and postretirement (1)	2			—			2
Net current period other comprehensive income (loss)	3			(23		)	(20		)
Balance, December 31, 2015	(20		)	95			75
Other comprehensive income before reclassifications:
Noncredit other-than-temporary impairment losses	—			(1		)	(1		)
Net change in fair value	—			27			27
Actuarial loss	(1		)	—			(1		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive income	—			29			29
Balance, December 31, 2016	$	(20	)	$	124		$	104

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⁽¹⁾ Included in Compensation and benefits on the Statements of Income.

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Pension and Post Retirement Benefit Plans

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension and Post Retirement Benefit Plans

Pension and Postretirement Benefit Plans

The Bank participates in the Pentegra Defined Benefit Plan for Financial Institutions (Pentegra Plan), a tax-qualified defined-benefit pension plan. The Pentegra Plan is treated as a multiemployer plan for accounting purposes but operates as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As a result, certain multiemployer plan disclosures are not applicable to the Pentegra Plan. Under the Pentegra Plan, contributions made by a participating employer may be used to provide benefits to employees of other participating employers because assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer.  Also, in the event a participating employer is unable to meet its contribution requirements, the required contributions for the other participating employers could increase proportionately. The Pentegra Plan covers substantially all officers and employees of the Bank hired before March 1, 2011.

The Pentegra Plan operates on a fiscal year from July 1 through June 30. The Pentegra Plan files one Form 5500 on behalf of all employers who participate in the plan. The Employer Identification Number is 13-5645888, and the three-digit plan number is 333. There are no collective bargaining agreements in place at the Bank.

The Pentegra Plan's annual valuation process includes separately calculating the plan's funded status and the funded status of each participating employer. The funded status is defined as the fair value of assets divided by the funding target (100 percent of the present value of all benefit liabilities accrued at that date). As permitted by ERISA, the Pentegra Plan accepts contributions for the prior plan year up to eight and a half months after the asset valuation date. As a result, the fair value of assets at the valuation date (July 1) will increase by any subsequent contributions designated for the immediately preceding plan year ended June 30.

The most recent Form 5500 available for the Pentegra Plan is for the year ended June 30, 2015. The contributions made by the Bank during 2016 and 2015 were more than five percent of the total contributions for each of the Pentegra Plan years ended June 30, 2015 and 2014.

The following table presents information on the net pension costs and funded status of the Pentegra Plan.

	2016			2015			2014
Net pension cost charged to compensation and benefit expense for the year ended December 31	$	12		$	11		$	10
Pentegra Plan funded status as of July 1(1)	104.12		%	107.01		%	111.44		%
Bank's funded status as of the plan year end	105.51		%	108.82		%	114.16		%

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⁽¹⁾The Pentegra Plan's funded status as of July 1 is preliminary and may increase because the plan's participants are permitted to make contributions through March 15 of the following year (i.e. through March 15, 2017 for the plan year ended June 30, 2016 and through March 15, 2016 for the plan year ended June 30, 2015). Contributions made before the March 15th deadline may be credited to the plan for the plan year ended June 30 of the previous year and included in the final valuation as of July 1 of the year the plan ended. The final funded status as of July 1 will not be available until the Form 5500 for the plan year July 1 through June 30 is filed. Form 5500 is due to be filed no later than April 2018 for the plan year July 1, 2016 through June 30, 2017 and April 2017 for the plan year July 1, 2015 through June 2016. Form 5500 was filed in April 2016 for the plan year July 1, 2014 through June 30, 2015.

The Bank also participates in a qualified defined contribution plan. The Bank's contribution to this plan is equal to a percentage of voluntary contributions, subject to certain limitations, plus contributions for all employees hired on or after March 1, 2011. The Bank contributed $2 to this plan during each of the years ended December 31, 2016, 2015, and 2014.

The Bank offers a supplemental nonqualified defined contribution retirement plan to eligible executives. The Bank's contribution to this plan is equal to a percentage of voluntary contributions. The Bank contributed less than $1 to this plan during each of the years ended December 31, 2016, 2015, and 2014.

In addition, the Bank maintains a nonqualified deferred compensation plan, available to Bank directors and officers at the senior vice president level and above, which is, in substance, an unfunded supplemental savings plan. The plan's liability consists of the accumulated compensation deferrals and accrued earnings on those deferrals. The Bank's minimum obligation from this plan was $3 and $2 as of December 31, 2016 and 2015, respectively. Operating expense includes deferred compensation and accrued earnings of $1 during each of the years ended December 31, 2016 and 2015, and less than $1 during the year ended December 31, 2014.

The Bank offers a supplemental nonqualified defined benefit pension plan to eligible executives and a postretirement health benefit plan to eligible retirees. There are no funded plan assets that have been designated to provide supplemental retirement plan or postretirement health benefits.

Amounts recognized in other liabilities (funded status) on the Statements of Condition for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan were $56 and $51 as of December 31, 2016 and 2015, respectively. The net periodic benefit costs recognized in “Compensation and benefits” on the Statements of Income for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan were $6 for each of the years ended December 31, 2016 and 2015, and $4 for the year ended December 31, 2014. The amount recognized in other comprehensive income (loss) related to pension and postretirement benefit plans on the Statements of Comprehensive Income for the Bank’s supplemental defined benefit pension plan and postretirement health benefit plan was income of less than $1 and$3for the years ended December 31, 2016 and 2015, respectively, and a loss of $10 for the year ended December 31, 2014.

The financial amounts related to the Bank's supplemental nonqualified defined benefit pension plan and postretirement health benefit plan are not material to the Bank's financial condition or results of operations.

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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

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 on its funding sources that finance these assets. 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 that it is willing to accept. In addition, the Bank monitors the risk to its interest income, net interest margin, and average maturity of its interest-earning assets and funding sources. The goal of the Bank’s interest-rate risk management strategies is not to eliminate interest-rate risk, but to manage it within appropriate limits.

The Bank enters into derivatives to manage the interest-rate risk exposure that is inherent in its otherwise unhedged assets and funding sources, to achieve the Bank's risk management objectives, and to act as an intermediary between its members and counterparties. Finance Agency regulations and the Bank's risk management policy prohibit the trading or speculative use of these derivative instruments and limit credit risk arising from these instruments. The use of derivatives is an integral part of the Bank's financial management strategy.

The most common ways in which the Bank uses derivatives are to:

• preserve a favorable interest-rate spread between the yield of an asset (e.g., an advance) and the cost of the related liability (e.g., the consolidated obligation bond used to fund the advance) by converting both fixed-rate instruments to a variable rate using interest-rate swaps;

• reduce funding costs by combining a derivative with a consolidated obligation because the cost of a combined funding structure can be lower than the cost of a comparable consolidated obligation bond;

• reduce the interest-rate sensitivity and repricing gaps of assets and liabilities;

• mitigate the adverse earnings effects from the shortening or lengthening of certain assets (e.g., mortgage assets);

• protect the value of existing asset or liability positions;

• manage embedded options in assets and liabilities; and

• achieve overall asset/liability management objectives.

Application of Derivatives

General. The Bank designates derivative instruments in the following three ways: (1) as a fair value hedge of an underlying financial instrument or a firm commitment; (2) as an intermediary transaction; or (3) as a non-qualifying hedge for purposes of asset or liability management.

The Bank reevaluates its hedging strategies from time to time and may change the hedging techniques it uses or adopt new strategies.

The Bank transacts most of its derivatives with large banks and major broker-dealers. Some of these banks and broker-dealers or their affiliates buy, sell, and distribute consolidated obligations. The Bank's over-the-counter derivative transactions may either be (1) uncleared derivatives, which are executed bilaterally with a counterparty; or (2) cleared derivatives, which are cleared through a Futures Commission Merchant (clearing agent) with a Derivative Clearing Organization (Clearinghouse).

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 as the counterparty. The Bank is not a derivative dealer and does not trade derivatives for short-term profit.

The Bank uses derivatives when they are considered to be the most cost-effective alternative to achieve the Bank's long-term financial and risk management objectives. Accordingly, the Bank may enter into derivatives that do not qualify for hedge accounting (non-qualifying hedges).

Types of Derivatives

The Bank may use the following derivatives to reduce funding costs and to manage its exposure to interest-rate risks inherent in the normal course of business.

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 paid 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 principal 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 principal amount at a variable rate for the same period of time. The variable rate received or paid by the Bank in most derivative transactions agreements is LIBOR.

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 when it is planning to lend or borrow funds in the future. The Bank may enter into both payer swaptions 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 Cap and Floor Agreements. In an interest-rate cap agreement, a cash flow is generated if the price or 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 rate of an underlying variable falls below a certain threshold (or floor) price. Caps may be used in conjunction with liabilities, and floors may be used in conjunction with assets. Caps and floors are designed to protect against the interest rate on a variable-rate asset or liability rising above or falling below a certain level.

Types of Hedged Items

At inception, the Bank documents all relationships between derivatives designated as hedging instruments and hedged items, its risk management objectives and strategies for undertaking various hedge transactions, and its method of assessing effectiveness. This process includes linking all derivatives that are designated as fair value hedges to (1) assets and liabilities on the Statements of Condition; or (2) firm commitments. The Bank also formally assesses (both at the hedge's inception and at least quarterly on an ongoing basis) whether the derivatives that it uses in hedging relationships have been effective in offsetting changes in the fair value of hedged items attributable to the hedged risk and whether those derivatives may be expected to remain effective in future periods. The Bank uses regression analyses to assess the effectiveness of its hedges.

Consolidated Obligations. While consolidated obligations are the joint and several obligations of the FHLBanks, each FHLBank has consolidated obligations for which it is the primary obligor. The Bank enters into derivatives to hedge the interest-rate risk associated with its specific debt issuances in conjunction with the associated interest-rate risk on advances. The Bank manages the risk arising from changing market prices and volatility of a consolidated obligation by matching the cash inflow on the derivative with the cash outflow on the consolidated obligation. For instance, in a typical transaction, fixed-rate consolidated obligations are issued for the Bank, and the Bank simultaneously enters into a matching derivative in which the counterparty pays fixed cash flows to the Bank designed to mirror cash outflows that the Bank pays on the consolidated obligation in timing and amount. The Bank pays a variable cash flow that closely matches the interest payments it receives on short-term or variable-rate advances (typically one- or three-month LIBOR). These transactions are typically treated as fair-value hedges. This intermediation between the capital and swap markets permits the Bank to raise funds at lower costs than otherwise would be available through the issuance of simple fixed-rate consolidated obligations in the capital markets.

Advances. The Bank offers a variety of advance structures to meet members' funding needs. These advances may have maturities of up to 30 years with variable or fixed rates and may include early termination features or options. The Bank may use derivatives to adjust the repricing and/or options characteristics of advances in order to more closely match the characteristics of the Bank's funding liabilities. In general, whenever a member executes a fixed- or a variable-rate advance with embedded options, the Bank simultaneously will execute a derivative with terms that offset the terms and embedded options in the advance. For example, the Bank may hedge a fixed-rate advance with an interest-rate swap in which 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.

Mortgage Assets. The Bank has invested in mortgage assets. The prepayment options embedded in mortgage assets may shorten or lengthen the expected repayment of these investments, depending on changes in estimated prepayment speeds. The Bank manages the interest-rate and prepayment risk associated with mortgages through a combination of debt issuance and derivatives. The Bank issues 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 use derivatives to match the expected prepayment characteristics of the mortgages.

Options (interest-rate caps, interest-rate floors and/or options) also may be used to hedge prepayment risk on the mortgages. Many options are not identified to specific mortgages and therefore, do not receive fair-value or cash-flow hedge accounting treatment. The Bank also may purchase interest-rate caps and floors, swaptions, callable swaps, calls, and puts to minimize the prepayment risk embedded in the mortgage loans. Although these derivatives are valid non-qualifying hedges against the prepayment risk of the loans, they do not receive either fair-value or cash-flow hedge accounting. These derivatives are marked-to-market through earnings.

Firm Commitments. Certain mortgage purchase commitments are considered derivatives. Mortgage purchase commitments are recorded on the balance sheet at fair value, with changes in fair value recognized in current-period earnings. When the mortgage purchase commitment derivative settles, the current fair value of the commitment is included with the basis of the mortgage loan and amortized accordingly.

The Bank also may enter into a fair value hedge of a firm commitment for a forward starting advance through the use of an interest-rate swap. In this case, the swap functions as the hedging instrument for both the firm commitment and the subsequent advance. The basis movement associated with the firm commitment is recorded as a basis adjustment of the advance at the time the commitment is terminated and the advance is issued. The basis adjustment is then amortized into interest income over the life of the advance using the level-yield method.

Investments. The Bank invests in MBS, U.S. agency obligations, certificates of deposit, and the taxable portion of state or local housing finance agency obligations. The interest-rate and prepayment risks associated with these investment securities are managed through a combination of debt issuance and derivatives. The Bank may manage the prepayment and interest-rate risks by funding investment securities with consolidated obligations that have call features, by hedging the prepayment risk with caps or floors, or by adjusting the duration of the securities by using derivatives to modify the cash flows of the securities. Investment securities may be classified as trading, available-for-sale, or held-to-maturity.

The Bank also may manage the risk arising from changing market prices and volatility of investment securities classified as trading by entering into derivatives (non-qualifying hedges) that offset the changes in fair value of these securities.

Financial Statement Effect and Additional Financial Information

Derivative Notional Amounts. The notional amount of derivatives serves as a factor in determining periodic interest payments or 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 overall risk is much smaller. 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 presents the fair value of derivative instruments, including 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.

	As of December 31,
	2016							2015
	Notional Amount of Derivatives		Derivative Assets		Derivative Liabilities			Notional Amount of Derivatives		Derivative Assets			Derivative Liabilities
Derivatives in hedging relationships:
Interest-rate swaps	$	65,027	$	256	$	1,029		$	80,290	$	312		$	1,467
Derivatives not designated as hedging instruments:
Interest-rate swaps	1,158		9		31			3,008		10			74
Interest-rate caps or floors	15,000		17		13			16,500		15			10
Mortgage delivery commitments	12		—		—			—		—			—
Total derivatives not designated as hedging instruments	16,170		26		44			19,508		25			84
Total derivatives before netting and collateral adjustments	$	81,197	282		1,073			$	99,798	337			1,551
Netting adjustments and cash collateral (1)			73		(966		)			(161		)	(1,427		)
Derivative assets and derivative liabilities			$	355	$	107				$	176		$	124

___________

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

The following table presents the components of net gains on derivatives and hedging activities as presented on the Statements of Income.

	For the Years Ended December 31,
	2016			2015			2014
Derivatives and hedged items in fair value hedging relationships:
Interest-rate swaps	$	120		$	269		$	147
Derivatives not designated as hedging instruments:
Interest-rate swaps	30			53			57
Interest-rate caps or floors	(1		)	(2		)	(14		)
Net interest settlements	(30		)	(59		)	(70		)
Total net losses related to derivatives not designated as hedging instruments	(1		)	(8		)	(27		)
Net gains on derivatives and hedging activities	$	119		$	261		$	120

The following tables present, by type of hedged item, the gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Bank’s net interest income.

	For the Year Ended December 31, 2016
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	524		$	(393	)	$	131		$	(529	)
Consolidated obligations:
Bonds	(154		)	146			(8		)	230
Discount notes	2			(5		)	(3		)	(3		)
Total	$	372		$	(252	)	$	120		$	(302	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

	For the Year Ended December 31, 2015
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	448		$	(169	)	$	279		$	(713	)
Consolidated obligations:
Bonds	(93		)	81			(12		)	469
Discount notes	(6		)	8			2			9
Total	$	349		$	(80	)	$	269		$	(235	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

	For the Year Ended December 31, 2014
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income(1)
Advances	$	(152	)	$	297		$	145	$	(875	)
Consolidated obligation bonds	135			(133		)	2		497
Total	$	(17	)	$	164		$	147	$	(378	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

Managing Credit Risk on Derivatives

The Bank is subject to credit risk to its derivative transactions due to the risk of nonperformance by counterparties and manages this risk through credit analysis, collateral requirements, and adherence to the requirements set forth in its policies, U.S. Commodity Futures Trading Commission regulations, and Finance Agency regulations. For uncleared derivatives, the degree of credit risk depends on the extent to which master netting arrangements are included in such contracts to mitigate the risk. The Bank requires collateral agreements with collateral delivery thresholds on all uncleared derivatives. Additionally, collateral related to derivatives with member institutions includes collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

For cleared derivatives, the Clearinghouse is the Bank's counterparty. The Clearinghouse notifies the clearing agent of the required initial and variation margin, and the clearing agent notifies the Bank. Because the Bank is required to post initial and variation margin through the clearing agent to the Clearinghouse, it 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 is posted daily through a clearing agent for changes in the fair value of cleared derivatives. The Bank has analyzed the enforceability of offsetting rights incorporated in its cleared derivative transactions and 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 Bank’s 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.

The Bank presents derivative instruments and the related cash collateral (including initial and variation margin) that is received or pledged, plus the associated accrued interest, on a net basis by clearing agent and/or by counterparty when it has met the netting requirements.

The following table presents the fair value of derivative instruments meeting or not meeting netting requirements, including the related collateral received from or pledged to counterparties.

	As of December 31,
	2016						2015
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
Gross recognized amount:
Uncleared derivatives	$	70		$	370		$	260		$	1,159
Cleared derivatives	212			703			77			392
Total gross recognized amount	282			1,073			337			1,551
Gross amounts of netting adjustments and cash collateral:
Uncleared derivatives	(69		)	(263		)	(258		)	(1,035		)
Cleared derivatives	142			(703		)	97			(392		)
Total gross amounts of netting adjustments and cash collateral	73			(966		)	(161		)	(1,427		)
Derivative assets and derivative liabilities:
Uncleared derivatives	1			107			2			124
Cleared derivatives	354			—			174			—
Total derivative assets and total derivative liabilities	355			107			176			124
Non-cash collateral received or pledged not offset- cannot be sold or repledged: (1)
Uncleared derivatives	—			—			2			—
Net unsecured amounts: (2)
Uncleared derivatives	1			107			—			124
Cleared derivatives	354			—			174			—
Total net unsecured amount	$	355		$	107		$	174		$	124

____________ 

⁽¹⁾  Collateral held with respect to derivatives with member institutions, in which the Bank is acting as an intermediary, represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

⁽²⁾  The Bank had net credit exposure of $346 and $170 as of December 31, 2016 and 2015, respectively, due to instances where the Bank’s pledged collateral to a counterparty exceeds the Bank’s net derivative liability position.

Certain of the Bank’s uncleared derivative instruments contain provisions that require the Bank to post additional collateral with its counterparties if there is deterioration in the Bank’s credit rating. If the Bank’s credit rating is lowered by an NRSRO, the Bank may be required to deliver additional collateral on uncleared derivative instruments in net liability positions. The aggregate fair value of all uncleared derivative instruments with credit-risk-related contingent features that were in a net liability position (before cash collateral and related accrued interest) as of December 31, 2016 was $296, for which the Bank has posted collateral with a fair value of $193 in the normal course of business. If the Bank’s credit ratings had been lowered from its current rating to the next lower rating that would have triggered additional collateral to be delivered, the Bank would have been required to deliver an additional $71 of collateral at fair value to its uncleared derivative counterparties as of December 31, 2016.

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Estimated Fair Values

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Estimated Fair Values

Estimated Fair Values

The Bank records trading securities, available-for-sale securities, derivative assets and liabilities, and grantor trust assets (publicly-traded mutual funds) at estimated fair value on a recurring basis. Fair value is a market-based measurement and is defined 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. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. In general, the transaction price will equal the exit price and therefore, represents the fair value of the asset or liability at initial recognition. In determining whether a transaction price represents the fair value of the asset or liability at initial recognition, each reporting entity is required to consider factors specific to the transaction, the asset or liability, the principal or most advantageous market for the asset or liability, and market participants with whom the entity would transact in the market.

A fair value hierarchy is used to prioritize the inputs of valuation techniques used to measure fair value. The inputs are evaluated, and an overall level for the fair value measurement is determined. This overall level is an indication of how market-observable the fair value measurement is and defines the level of disclosure. In order to determine the fair value or the exit price, entities must determine the unit of account, highest and best use, principal market, and market participants. These determinations allow the reporting entity to define the inputs for fair value and level of hierarchy.

Outlined below is the application of the “fair value hierarchy” to the Bank's financial assets and liabilities that are carried at fair value or disclosed in the notes to the financial statements.

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market for the 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. The Bank carried grantor trust assets at fair value hierarchy Level 1 as of December 31, 2016 and 2015.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Bank carried trading securities and derivatives at fair value hierarchy Level 2 as of December 31, 2016 and 2015.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are supported by limited market activity and reflect the entity's own assumptions. The Bank carried available-for-sale securities at fair value hierarchy Level 3 as of December 31, 2016 and 2015.

The Bank utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

For financial instruments carried at fair value, the Bank reviews the fair value hierarchy classification of financial assets and liabilities on a quarterly basis. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. Such reclassifications are reported as transfers in/out at fair value as of the beginning of the quarter in which the changes occur. There were no such transfers during the periods presented.

Estimated Fair Value Measurements on a Recurring Basis. The following tables present, for each fair value hierarchy level, the Bank’s financial assets and liabilities that are measured at fair value on a recurring basis on its Statements of Condition.

	As of December 31, 2016
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	261	$	—	$	—		$	261
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		262		—		—			262
Available-for-sale securities:
Private-label residential MBS	—		—		1,345		—			1,345
Derivative assets:
Interest-rate related	—		282		—		73			355
Grantor trust (included in Other assets)	37		—		—		—			37
Total assets at fair value	$	37	$	544	$	1,345	$	73		$	1,999
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,073	$	—	$	(966	)	$	107
Total liabilities at fair value	$	—	$	1,073	$	—	$	(966	)	$	107

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

	As of December 31, 2015
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	1,212	$	—	$	—		$	1,212
Another FHLBank’s bond	—		52		—		—			52
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		1,265		—		—			1,265
Available-for-sale securities:
Private-label residential MBS	—		—		1,662		—			1,662
Derivative assets:
Interest-rate related	—		337		—		(161		)	176
Grantor trust (included in Other assets)	31		—		—		—			31
Total assets at fair value	$	31	$	1,602	$	1,662	$	(161	)	$	3,134
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,551	$	—	$	(1,427	)	$	124
Total liabilities at fair value	$	—	$	1,551	$	—	$	(1,427	)	$	124

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

The following table presents a reconciliation of available-for-sale securities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	1,662		$	1,981		$	2,299
Total (losses) gains realized and unrealized: (1)
Included in net impairment losses recognized in earnings	(3		)	(5		)	(3		)
Included in other comprehensive income	29			(23		)	(7		)
Accretion of credit losses in net interest income	53			42			34
Settlements	(396		)	(333		)	(342		)
Balance, end of year	$	1,345		$	1,662		$	1,981

____________ 

⁽¹⁾  Related to available-for-sale securities held at year end.

Estimated Fair Value Measurements on a Nonrecurring Basis. The Bank periodically measures and recognizes certain assets at fair value on a nonrecurring basis in certain circumstances. Adjustments to fair value usually result from the application of lower of amortized cost or fair value accounting, or write-downs of individual assets due to impairment. The following table presents the fair value hierarchy and carrying value of all assets as of the last impairment date that were still held as of December 31, 2015, for which a nonrecurring fair value adjustment was recorded during the period presented. The carrying value for each of the assets presented in the following table was less than $1 as of December 31, 2016.

	As of December 31, 2015
	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
Mortgage loans held for portfolio	$	—	$	—	$	1	$	1
Real estate owned (included in Other assets)	—		—		3		3
Total nonrecurring assets at fair value	$	—	$	—	$	4	$	4

Described below are the Bank's fair value measurement methodologies for financial assets and liabilities measured or disclosed at fair value.

Cash and Due from Banks. The estimated fair value approximates the recorded carrying value due to the short-term nature and negligible credit risk.

Interest-bearing Deposits. The estimated fair value is determined by calculating the present value of the expected future cash flows from the deposits and reducing this amount for accrued interest receivable. The discount rates used in these calculations are the rates for deposits with similar terms and represents market observable rates.

Securities purchased under agreements to resell. The estimated fair value is determined by calculating the present value of the expected future cash flows. The discount rates used in these calculations are the rates for securities with similar terms and represent market observable rates.

Federal Funds Sold. The estimated fair values of overnight federal funds sold approximate the carrying values. The estimated fair values of term federal funds sold are determined by calculating the present value of the expected future cash flows. The discount rates used in these calculations are the rates for federal funds with similar terms and represent market observable rates.

Investment Securities.TheBank obtains prices from four designated third-party pricing vendors, when available, to estimate the fair value of its investment securities. The pricing vendors use various proprietary models to price investment securities. The inputs to those models are derived from various sources including, but not limited to, the following: benchmark yields, reported trades, dealer estimates, issuer spreads, benchmark securities, 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 challenge process in place for all investment securities valuations, which facilitates resolution of potentially erroneous prices identified by the Bank.

The Bank periodically conducts reviews of the four pricing vendors to confirm and further augment its understanding of the vendors' pricing processes, methodologies, and control procedures for U.S. agency and private-label MBS.

The Bank's valuation technique for estimating the fair value 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 does not provide evidence that an outlier is more representative of the 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.

If all prices received for a security are outside the tolerance threshold level of the median price, then there is no default price, and the final price is determined by an evaluation of all outlier prices as described above.

Four vendor prices were received for a majority of the Bank's investment securities holdings and the final prices for those securities were computed by averaging the prices received as of December 31, 2016 and 2015. 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 (or the Bank's additional analysis in those instances in which there were outliers or significant yield variances), the Bank believes that 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. Based on the lack of significant market activity for private-label MBS, the fair value measurement for those securities were classified as Level 3 within the fair value hierarchy as of December 31, 2016 and 2015.

Advances. The Bank determines the estimated fair values of advances by calculating the present value of expected future cash flows from the advances, excluding the amount of the accrued interest receivable. The discount rates used in these calculations are the equivalent to the replacement advance rates for advances with similar terms. The Bank calculates its replacement advance rates at a spread to its cost of funds. The Bank's cost of funds approximates the consolidated obligation curve (See "Consolidated Obligations" paragraph within this note for a discussion of the consolidated obligation curve). To estimate the fair values of advances with optionality, market-based expectations of future interest rate volatility implied from current market prices for similar options are also used. In accordance with the Finance Agency's advances regulations, advances with a maturity or repricing period greater than six months require a prepayment fee sufficient enough to make the Bank financially indifferent to the borrower's decision to prepay the advances, thereby removing prepayment risk from the fair value calculation. The Bank did not adjust the fair value measurement of advances for creditworthiness because advances were fully collateralized.

Mortgage Loans Held for Portfolio. The estimated fair values for mortgage loans are determined based on quoted market prices of similar mortgage loans available in the pass-through securities market. These prices, however, can change rapidly based upon market conditions and are highly dependent upon the underlying prepayment assumptions. The estimated fair values of impaired mortgage loans are based on the current property value, as provided by a third party vendor, adjusted for estimated selling costs.

Accrued Interest Receivable and Payable. The estimated fair value approximates the recorded carrying value due to the short-term nature and negligible credit risk.

Derivative Assets and Liabilities. The Bank calculates the fair value of derivatives using a discounted cash flow analysis. The Bank’s discounted cash flow analysis utilizes market-observable inputs. Inputs by class of derivatives are as follows:

• Interest-rate related - the Overnight Index Swap curve for collateralized derivatives; and

• Mortgage delivery commitments - to be announced (TBA) securities prices adjusted for differences in coupon, average loan rate, and seasoning.

Derivative instruments are transacted primarily in the institutional dealer market and priced with observable market assumptions at a mid-market valuation point. The Bank does not provide a credit valuation adjustment based on aggregate exposure by derivative counterparty when measuring the fair value of its derivatives. This is because the collateral provisions pertaining to the Bank's derivatives obviate the need to provide such a credit valuation adjustment. The fair values of the Bank's derivatives take into consideration the effects of legally enforceable master netting agreements, where applicable, that allow the Bank to settle positive and negative positions and offset cash collateral with the same counterparty on a net basis. The Bank and each uncleared derivative counterparty have collateral thresholds that take into account both the Bank's and the counterparty's credit ratings. As a result of these practices and agreements, the Bank has concluded that the impact of the credit differential between the Bank and its derivative counterparties was mitigated to an immaterial level, and no further adjustments were deemed necessary to the recorded fair values of derivative assets and liabilities on the Statements of Condition as of December 31, 2016 and 2015.

Grantor Trust Assets. Grantor trust assets, recorded in "Other assets" on the Statements of Condition, are carried at estimated fair value based on quoted market prices.

Interest-bearing Deposits. The Bank determines estimated fair values of Bank deposits by calculating the present value of expected future cash flows from the deposits and reducing this amount for accrued interest payable. The discount rate used in these calculations is based on LIBOR.

Consolidated Obligations. The Bank calculates the fair value of consolidated obligation bonds and discount notes by calculating the present value of future cash flows using cost of funds as the discount rate. The Office of Finance constructs an internal curve, referred to as the consolidated obligation curve, using the U.S. Treasury curve as a base curve that is then adjusted by adding indicative spreads obtained from market observable sources. These market indications are generally derived from pricing indications from dealers, historical pricing relationships, recent government-sponsored enterprise trades, and secondary market activity. To estimate the fair values of consolidated obligations with optionality, the Bank uses market based expectations of future interest rate volatility implied from current market prices for similar options.

Mandatorily Redeemable Capital Stock. The fair value of mandatorily redeemable capital stock is par value and also includes estimated dividends earned at the time of reclassification from capital to liabilities, until such amount is paid. Capital stock can be acquired by members only at par value and redeemed by the Bank at par value. Capital stock is not traded and no market mechanism exists for the exchange of capital stock outside the cooperative structure.

The following estimated fair value amounts have been determined by the Bank using available market information and the Bank’s best judgment of appropriate valuation methods. These estimates are based on pertinent information available to the Bank as of December 31, 2016 and 2015. Although the Bank uses its best judgment in estimating the fair values of these financial instruments, there are inherent limitations in any estimation technique or valuation methodology. For example, because an active secondary market does not exist for a portion of the Bank’s financial instruments, in certain cases, fair values are not subject to precise quantification or verification and may change as economic and market factors and evaluation of those factors change. Therefore, these estimated fair values are not necessarily indicative of the amounts that would be realized in current market transactions, although they do reflect the Bank’s judgment of how a market participant would estimate the fair value. The fair value tables presented below do not represent an estimate of the overall fair value of the Bank as a going concern, which would take into account future business opportunities and the net profitability of assets versus liabilities.

The following tables present the carrying values and estimated fair values of the Bank’s financial instruments.

	As of December 31, 2016
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,815	$	1,815	$	1,815	$	—	$	—	$	—
Interest bearing-deposits	1,106		1,106		—		1,106		—		—
Securities purchased under agreements to resell	1,386		1,386		—		1,386		—		—
Federal funds sold	7,770		7,770		—		7,770		—		—
Trading securities	262		262		—		262		—		—
Available-for-sale securities	1,345		1,345		—		—		1,345		—
Held-to-maturity securities	24,641		24,633		—		23,843		790		—
Advances	99,077		99,062		—		99,062		—		—
Mortgage loans held for portfolio, net	523		569		—		569		—		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	355		355		—		282		—		73
Grantor trust assets (included in Other assets)	37		37		37		—		—		—
Liabilities:
Interest-bearing deposits	1,118		1,118		—		1,118		—		—
Consolidated obligations, net:
Discount notes	41,292		41,293		—		41,293		—		—
Bonds	88,647		88,768		—		88,768		—		—
Mandatorily redeemable capital stock	1		1		1		—		—		—
Accrued interest payable	128		128		—		128		—		—
Derivative liabilities	107		107		—		1,073		—		(966		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

	As of December 31, 2015
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,751	$	1,751	$	1,751	$	—	$	—	$	—
Interest bearing-deposits	1,088		1,088		—		1,088		—		—
Securities purchased under agreements to resell	2,500		2,500		—		2,500		—		—
Federal funds sold	5,421		5,421		—		5,421		—		—
Trading securities	1,265		1,265		—		1,265		—		—
Available-for-sale securities	1,662		1,662		—		—		1,662		—
Held-to-maturity securities	23,239		23,263		—		22,179		1,084		—
Advances	104,168		104,021		—		104,021		—		—
Mortgage loans held for portfolio, net	584		647		—		646		1		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	176		176		—		337		—		(161		)
Grantor trust assets (included in Other assets)	31		31		31		—		—		—
Liabilities:
Interest-bearing deposits	1,084		1,084		—		1,084		—		—
Consolidated obligations, net:
Discount notes	69,434		69,432		—		69,432		—		—
Bonds	63,953		63,940		—		63,940		—		—
Mandatorily redeemable capital stock	14		14		14		—		—		—
Accrued interest payable	127		127		—		127		—		—
Derivative liabilities	124		124		—		1,551		—		(1,427		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Consolidated obligations are backed only by the financial resources of the FHLBanks. At any time, the Finance Agency may require any FHLBank to make principal or interest payments due on any consolidated obligation, whether or not the primary obligor FHLBank has defaulted on the payment of that obligation. No FHLBank has ever had to assume or pay the consolidated obligation of another FHLBank.

The par value of the other FHLBanks’ outstanding consolidated obligations for which the Bank is jointly and severally liable was $859,361 and $771,948 as of December 31, 2016 and 2015, respectively, exclusive of the Bank’s own outstanding consolidated obligations. None of the other FHLBanks defaulted on their consolidated obligations, the Finance Agency was not required to allocate any obligation among the FHLBanks, and no amount of the joint and several obligation was fixed as of December 31, 2016 and 2015. Accordingly, the Bank has not recognized a liability for its joint and several obligation related to the other FHLBanks' consolidated obligations as of December 31, 2016 and 2015.

The following table presents the Bank’s outstanding commitments, which represent off-balance sheet obligations.

	As of December 31,
	2016						2015
	Expire Within One Year		Expire After One Year		Total		Expire Within One Year		Expire After One Year		Total
Standby letters of credit (1)	$	10,934	$	21,734	$	32,668	$	8,693	$	23,823	$	32,516
Commitments to fund additional advances	100		200		300		207		100		307
Unsettled consolidated obligation discount notes, at par (2)	—		—		—		100		—		100
Unsettled consolidated obligation bonds, at par (2)	15		—		15		25		—		25
Commitments to purchase mortgage loans	12		—		12		—		—		—

____________

⁽¹⁾  "Expire Within One Year" includes 12 standby letters of credit for a total of $34 and 11 standby letters of credit for a total of $29 as of December 31, 2016 and 2015, respectively, that have no stated maturity date and are subject to renewal on an annual basis.

⁽²⁾  Expiration is based on settlement period rather than underlying contractual maturity of consolidated obligations.

The Bank issues standby letters of credit on behalf of its members for a fee. A standby letter of credit is a financing arrangement between the Bank and its member. If the Bank is required to make payment for a beneficiary's draw, the Bank in its discretion may convert such paid amount to an advance to the member and will require a corresponding activity-based capital stock purchase.

The Bank monitors the creditworthiness of its standby letters of credit based on an evaluation of the member. In addition, standby letters of credit are fully collateralized from the time of issuance. The Bank has established parameters for the measurement, review, classification, and monitoring of credit risk related to these standby letters of credit that results in an internal credit rating, which focuses primarily on an institution’s overall financial health and takes into account the quality of assets, earnings, and capital position. In general, borrowers categorized into the highest risk rating category have more restrictions on the types of collateral that they may use to secure standby letters of credit, may be required to maintain higher collateral maintenance levels and deliver loan collateral, and may face more stringent collateral reporting requirements.

The carrying value of the guarantees related to standby letters of credit is recorded in "Other liabilities" on the Statements of Condition and amounted to $135 and $136 as of December 31, 2016 and 2015, respectively. Based on the Bank's credit analyses and collateral requirements, the Bank does not deem it necessary to record any additional liability on these commitments.

The Bank may enter into commitments that unconditionally obligate it to purchase mortgage loans. Commitments are generally for periods not exceeding 91 days. Delivery commitments are recorded at fair value as derivative assets or derivative liabilities on the Statements of Condition.

The Bank charged to operating expenses net rental costs of $2 for each of the years ended December 31, 2016, 2015, and 2014.

Lease agreements for Bank premises generally provide for increases in the basic rentals resulting from increases in property taxes and maintenance expenses. Such increases are not expected to have a material effect on the Bank's results of operations.

The Bank is subject to legal proceedings arising in the normal course of business. After consultation with legal counsel, management does not anticipate, as of the date of the financial statements, that the ultimate liability, if any, arising out of these matters will have a material effect on the Bank’s financial condition or results of operations.

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Transactions with Shareholders

12 Months Ended

Dec. 31, 2016

Transactions With Shareholders [Abstract]

TransactionsWithShareholders

Transactions with Shareholders

The Bank is a cooperative whose member institutions own substantially all of the capital stock of the Bank. Former members and certain non-members, which own the Bank's capital stock as a result of a merger or acquisition of a member of the Bank, own the remaining capital stock to support business transactions still carried on the Bank’s Statements of Condition. All holders of the Bank’s capital stock receive dividends on their investments, to the extent declared by the Bank’s board of directors. All advances are issued to members and eligible “housing associates” under the FHLBank Act, and mortgage loans held for portfolio are purchased from members. The Bank also maintains demand deposit accounts primarily to facilitate settlement activities that are related directly to advances and mortgage loan purchases. Transactions with any member that has an officer or director who is also a director of the Bank are subject to the same Bank policies as transactions with other members.

Related Parties. In accordance with GAAP, financial statements are required to disclose material related-party transactions other than compensation arrangements, expense allowances, or other similar items that occur in the ordinary course of business. Under GAAP, related parties include owners of more than 10 percent of the voting interests of the Bank. Due to limits on member voting rights under the FHLBank Act and Finance Agency regulations, no member owned more than 10 percent of the total voting interests. Therefore, the Bank had no such related party transactions required to be disclosed for the periods presented.

Shareholder Concentrations. The Bank considers shareholder concentration as members or non-members with regulatory capital stock outstanding in excess of 10 percent of the Bank's total regulatory capital stock. The following tables present transactions with shareholders whose holdings of regulatory capital stock exceed 10 percent of total regulatory capital stock outstanding.

	As of December 31, 2016
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	745	15.03	$	17,176	17.48	$	16	1.41
Navy Federal Credit Union	589		11.88	13,495		13.73	156		13.93
Bank of America, National Association	504		10.17	11,511		11.71	—		0.01

	As of December 31, 2015
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	869	16.99	$	20,095	19.54	$	17	1.55
Navy Federal Credit Union	643		12.57	14,773		14.36	—		0.01
Bank of America, National Association	579		11.31	13,262		12.89	—		0.01

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Transactions with Other FHLBanks

12 Months Ended

Dec. 31, 2016

Transactions with Other FHLBanks [Abstract]

Transactions With Other FHLBanks

Transactions with Other FHLBanks

The Bank's activities with other FHLBanks are summarized below.

Loans to and Borrowings from Other FHLBanks. Occasionally, the Bank loans short-term funds to or borrows short-term funds from the other FHLBanks; however, there were no outstanding loans to or borrowings from the other FHLBanks as of December 31, 2016 and 2015. Interest income on loans to other FHLBanks was less than $1 for each of the years ended December 31, 2016, 2015, and 2014. Interest expense on borrowings from other FHLBanks was $0 for the year ended December 31, 2016, and less than $1 for each of the years ended December 31, 2015 and 2014.

The following table presents the cash flow activities for loans to and borrowings from other FHLBanks.

	For the Years Ended December 31,
	2016			2015			2014
Investing activities:
Loans made to other FHLBanks	$	(1,010	)	$	(11,759	)	$	(990	)
Principal collected on loans made to other FHLBanks	1,010			11,759			990
Net change in loans made to other FHLBanks	$	—		$	—		$	—
Financing activities:
Proceeds from short-term borrowings from other FHLBanks	$	—		$	927		$	1,038
Payments of short-term borrowings from other FHLBanks	—			(927		)	(1,038		)
Net change in borrowings from other FHLBanks	$	—		$	—		$	—

Investment in Another FHLBank's Consolidated Obligation Bond. Occasionally, the Bank purchases consolidated obligations issued by other FHLBanks through third-party dealers as investment securities. The balance of these investments is presented in Note 5—Trading Securities. Interest income earned on these consolidated obligation bonds totaled $2 for the year ended December 31, 2016 and $9 for each of the years ended December 31, 2015 and 2014.

Mortgage Loan Purchases of Participation Interests from Other FHLBanks. During 2016, the Bank and FHLBank Indianapolis began participating in the funding of a master commitment with a member of FHLBank Indianapolis. The Bank's outstanding balance related to these mortgage loan assets was $72 as of December 31, 2016.

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Subsequent Events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

On March 9, 2017, the Bank’s board of directors approved a cash dividend for the fourth quarter of 2016. The Bank will pay the fourth quarter 2016 dividend on March 14, 2017, in the amount of $58.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires the Bank's management to make subjective assumptions and estimates, which are based upon the information then available to the Bank and are inherently uncertain and subject to change. These assumptions and estimates may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. Actual results could differ significantly from these estimates.

Estimated Fair Values

Estimated Fair Values. The estimated fair value amounts, recorded on the Statements of Condition and in the note disclosures for the periods presented, have been determined by the Bank using available market and other pertinent information and reflect the Bank's best judgment of appropriate valuation methods. Although the Bank uses its best judgment in estimating the fair value of these 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.

Financial Instruments Meeting Netting Requirements

Financial Instruments Meeting Netting Requirements. The Bank has certain financial instruments, including derivative instruments and securities purchased under agreements to resell, that are subject to offset under master netting agreements or by operation of law. The Bank has elected to offset its derivative asset and liability positions, as well as cash collateral received or pledged, when it has the legal right of offset under these master agreements. The Bank does not have any offsetting liabilities related to its securities purchased under agreements to resell for the periods presented.

The net exposure for these financial instruments can change on a daily basis; 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. There may be a delay for excess collateral to be returned. For derivative instruments, any excess cash collateral received or pledged is recognized as a derivative liability or derivative asset based on the terms of the individual master agreement between the Bank and its derivative counterparty. Additional information regarding these agreements is provided in Note 18—Derivatives and Hedging Activities. Based on the fair value of the related securities held as collateral, the securities purchased under agreements to resell were fully collateralized for the periods presented.

Investments

Interest-bearing Deposits, Securities Purchased under Agreements to Resell, and Federal Funds Sold. These investments provide short-term liquidity and are carried at cost. The Bank treatssecurities purchased under agreements to resell as short-term collateralized loans, which are classified as assets on the Statements of Condition. Securities purchased under agreements to resell are held in safekeeping in the name of the Bank by third-party custodians approved by the Bank. Should the fair value of the underlying securities decrease below the fair value required as collateral, the counterparty has the option to (1) place an equivalent amount of additional securities in safekeeping in the name of the Bank, or (2) remit an equivalent amount of cash; otherwise, the dollar value of the resale agreement will be decreased accordingly. Federal funds sold consist of short-term, unsecured loans transacted with counterparties that are considered by the Bank to be of investment quality. Interest on interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold is accrued as earned and recorded in interest income on the Statements of Income.

Investment Securities. The Bank classifies certain investment securities acquired for purposes of liquidity and asset-liability management as trading investments and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in noninterest income (loss) as “Net losses on trading securities” on the Statements of Income, along with gains and losses on sales of investment securities using the specific identification method. The Bank does not participate in speculative trading practices in these investments and generally holds them until maturity, except to the extent management deems necessary to manage the Bank's liquidity position.

Investment securities that the Bank has both the ability and intent to hold to maturity are classified as held-to-maturity and are carried at amortized cost, adjusted for periodic principal repayments, amortization of premiums, and accretion of discounts. Amortization of premiums and accretion of discounts are computed using the contractual level-yield method (contractual interest method), adjusted for actual prepayments. The contractual interest method recognizes the income effects of premiums and discounts 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.

The Bank classifies certain securities that are not held-to-maturity or trading as available-for-sale and carries these securities at their estimated fair value. The Bank records changes in the fair value of these investments in other comprehensive income. The Bank intends to hold its available-for-sale securities for an indefinite period of time but may sell them prior to maturity in response to changes in interest rates, prepayment risk, or other factors.

Other-than-temporary Impairment of Investment Securities. The Bank evaluates its individual available-for-sale and held-to-maturity securities in unrealized loss positions for other-than-temporary impairment on a quarterly basis. A security is considered impaired when its fair value is less than its amortized cost. The Bank considers an other-than-temporary impairment to have occurred under any of the following circumstances:

• the Bank has an intent to sell the impaired debt security;

• if, based on available evidence, the Bank believes it is more likely than not that it will be required to sell the impaired debt security before the recovery of its amortized cost basis; or

• the Bank does not expect to recover the entire amortized cost basis of the impaired debt security.

If either of the first two conditions above is met, the Bank recognizes an other-than-temporary impairment loss in earnings equal to the entire difference between the security's amortized cost basis and its fair value as of the Statements of Condition date.

For securities in an unrealized loss position that meet neither of the first two conditions, the Bank performs a cash flow analysis to determine if it will recover the entire amortized cost basis of each of these securities. The present value of the cash flows expected to be collected is compared to the amortized cost basis of the debt security to determine whether a credit loss exists. If there is a credit loss (the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security), the carrying value of the debt security is adjusted to its fair value. However, rather than recognizing the entire difference between the amortized cost basis and fair value in earnings, only the amount of the impairment representing the credit loss (i.e., the credit component) is recognized in earnings, while the amount related to all other factors (i.e., the non-credit component) is recognized in other comprehensive income. The credit loss on a debt security is limited to the amount of that security's unrealized losses. The total other-than-temporary impairment is presented on the Statements of Income with an offset for the amount of the non-credit component of other-than-temporary impairment that is recognized in other comprehensive income. The remaining amount on the Statements of Income represents the credit loss for the period.

For subsequent accounting of an other-than-temporarily impaired security, the Bank records an additional other-than-temporary impairment if the present value of cash flows expected to be collected is less than the amortized cost of the security. The total amount of this additional other-than-temporary impairment (both credit and non-credit component, if any) is determined as the difference between the security's amortized cost, less the amount of other-than-temporary impairment recognized in other comprehensive income prior to the determination of this additional other-than-temporary impairment, and its fair value. Any additional credit loss is limited to that security's unrealized losses or the difference between the security's amortized cost and its fair value as of the Statements of Condition date. This additional credit loss, up to the amount in other comprehensive income related to the security, is reclassified out of other comprehensive income and recognized in earnings. Any credit loss in excess of the related other comprehensive income is recorded as additional total other-than-temporary impairment loss and recognized in earnings.

For debt securities classified as available-for-sale, the Bank does not accrete the other-than-temporary impairment recognized in accumulated other comprehensive income to the carrying value. Rather, subsequent related increases and decreases (if not an other-than-temporary impairment) in the fair value of available-for-sale securities are netted against the non-credit component of other-than-temporary impairment recognized previously in accumulated other comprehensive income.

Upon subsequent evaluation of a debt security where there is no additional other-than-temporary impairment, the Bank adjusts the accretable yield on a prospective basis if there is a significant increase in the security's expected cash flows. As of the impairment measurement date, a new accretable yield is calculated for the impaired investment security. This adjusted yield is then used to calculate the interest income recognized over the remaining life of the security so as to match the amount and timing of future cash flows expected to be collected. Subsequent significant increases in estimated cash flows change the accretable yield on a prospective basis.

Advances

Advances. The Bank reports advances (secured loans to members, former members, or housing associates), net of discounts on advances related to the Affordable Housing Program (AHP) and the Economic Development and Growth Enhancement Program (EDGE), unearned commitment fees, and hedging basis adjustments. The Bank accretes the discounts on advances and amortizes the recognized unearned commitment fees and hedging adjustments to interest income using the contractual interest method. The Bank records interest on advances to interest income as earned.

Prepayment Fees. The Bank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity date. The Bank records prepayment fees, net of basis adjustments related to hedging activities included in the carrying value of the advance as “Prepayment fees on advances, net” in the interest income section of the Statements of Income. In cases in which there is a prepayment of an existing advance and a contemporaneous funding of a new 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. If the new advance qualifies as a modification of the existing advance, the hedging basis adjustments and the net prepayment fee on the prepaid advance are recorded in the carrying value of the modified advance and amortized over the life of the modified advance using the contractual interest method. This amortization is recorded in advance interest income. If the Bank determines that the transaction does not qualify as a modification of an existing advance, it is treated as an advance termination with subsequent funding of a new advance, and the Bank records the net fees as “Prepayment fees, net” in the interest income section of the Statements of Income.

Mortgage Loans Held for Portfolio

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 unamortized premiums, unaccreted discounts, mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, and any allowance for credit losses.

The Bank defers and amortizes premiums and accretes discounts (1) paid to and received by the participating financial institutions (PFIs), and (2) of mark-to-market basis adjustments on loans initially classified as mortgage loan commitments, as interest income using the contractual interest method.

A mortgage loan is considered past due when the principal or interest payment is not received in accordance with the contractual terms of the loan. The Bank places a conventional mortgage loan on nonaccrual status when the collection of the contractual principal or interest from the borrower is 90 days or more past due. When a mortgage loan is placed on nonaccrual status, accrued but uncollected interest is reversed against interest income. The Bank records cash payments received on nonaccrual loans as interest income and as a reduction of principal as specified in the contractual agreement. A loan on nonaccrual status may be restored to accrual status when the contractual principal and interest are less than 90 days past due. A government-guaranteed or -insured loan is not placed on nonaccrual status when the collection of the contractual principal or interest is 90 days or more past due because of the (1) U.S. government guarantee or insurance on the loan, and (2) the contractual obligation of the loan servicer to repurchase the loan when certain criteria are met.

A mortgage loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the mortgage loan agreement. Interest income is recognized in the same manner as nonaccrual loans.

Finance Agency regulations require that mortgage loans held in the Bank's portfolios be credit enhanced so that the Bank's risk of loss is limited to the losses of an investor in at least an investment-grade category, such as “BBB.” For conventional mortgage loans, PFIs retain a portion of the credit risk on the loans they sell to the Bank by providing credit enhancement either through a direct liability to pay credit losses up to a specified amount or through a contractual obligation to provide supplemental mortgage insurance. PFIs are paid a credit enhancement fee (CE Fee) for assuming credit risk, and in some instances, all or a portion of the CE Fee may be performance based. CE Fees are paid monthly based on the remaining unpaid principal balance of the loans in a master commitment. CE Fees are recorded as an offset to mortgage loan interest income. To the extent that the Bank experiences losses in a master commitment, it may be able to recapture CE Fees paid to the PFI to offset these losses.

Allowance for Credit Losses. The allowance for credit losses is a valuation allowance separately established for each identified portfolio segment of financing receivables, if necessary, to provide for probable incurred losses in the Bank's portfolio as of the Statements of Condition date. A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology for determining its allowance for credit losses. The Bank has developed and documented a systematic methodology for determining an allowance for credit losses for the following portfolio segments of financing receivables: advances and standby letters of credit, government-guaranteed or -insured residential mortgage loans held for portfolio, conventional residential mortgage loans held for portfolio, term federal funds sold, and term securities purchased under agreements to resell.

A portfolio segment may be further disaggregated into classes of financing receivables to the extent that it is needed to understand the exposure to credit risk arising from these financing receivables; however, the Bank determined that no further disaggregation of the portfolio segments identified above is needed.

The Bank manages its credit exposure to advances through an integrated approach that includes (1) establishing a credit limit for each borrower; (2) an ongoing review of each borrower's financial condition; and (3) collateral and lending policies to limit risk of loss, while balancing each borrower's needs for a reliable source of funding. In addition, the Bank lends to financial institutions within its district and housing associates in accordance with federal statutes and Finance Agency regulations. Specifically, the Bank complies with the FHLBank Act, which requires the Bank to obtain sufficient collateral to fully secure advances. The estimated value of the collateral required to secure each borrower's advances is calculated by applying discounts to the fair value or unpaid principal balance of the collateral, as applicable. The Bank accepts certain investment securities, residential mortgage loans, deposits, and other real estate related assets as collateral. The Bank's capital stock owned by its member borrower is also pledged as additional collateral. Collateral arrangements may vary depending upon borrower credit quality, financial condition and performance, borrowing capacity, and the Bank's overall credit exposure to the borrower. The Bank can call for additional or substitute collateral to protect its security interest. The Bank believes that these policies effectively manage credit risk from advances.

Based upon the financial condition of the borrower, the Bank either allows a borrower to retain physical possession of the collateral pledged to it or requires the borrower to specifically assign the collateral to or place the collateral in physical possession of the Bank or its safekeeping agent. The Bank requires its borrowers to execute an advances and security agreement that establishes the Bank's security interest in all collateral pledged by the borrower to the Bank. The Bank perfects its security interest in all pledged collateral. The FHLBank Act affords any security interest granted to the Bank by a borrower priority over the claims or rights of any other party (including any receiver, conservator, trustee, or similar party having rights of a lien creditor), except for claims or rights of a third party that (1) would be entitled to priority under otherwise applicable law, and (2) is an actual bona fide purchaser for value or is an actual secured party whose security interest is perfected in accordance with state law.

Using a risk-based approach and taking into consideration each borrower's financial strength, the Bank considers the types and amounts of pledged collateral to be the primary indicator of credit quality on its advances. The Bank had rights to collateral on a borrower-by-borrower basis with an estimated value equal to or greater than its outstanding extensions of credit as of December 31, 2016 and 2015.

The Bank continues to evaluate and make changes to its collateral policies, as necessary, based on current market conditions. No advance was past due, on nonaccrual status, or considered impaired as of December 31, 2016 and 2015. In addition, there were no troubled debt restructurings related to advances as of December 31, 2016 and 2015.

Based upon the collateral held as security, the Bank's collateral policies, credit analysis, and the repayment history on advances, the Bank did not anticipate any credit losses on advances as of December 31, 2016 and 2015. Accordingly, the Bank has not recorded any allowance for credit losses on advances, nor has the Bank recorded any liability to reflect an allowance for credit losses for off-balance sheet credit exposure as of December 31, 2016 and 2015.

The Bank invested in government-guaranteed or -insured fixed-rate mortgage loans secured by one-to-four family residential properties. Government-guaranteed or -insured mortgage loans are mortgage loans guaranteed or insured by the Department of Veterans Affairs or the Federal Housing Administration. The servicer provides and maintains insurance or a guarantee from the applicable government agency. The servicer is responsible for compliance with all government agency requirements and for obtaining the benefit of the applicable insurance or guarantee with respect to defaulted government-guaranteed or -insured mortgage loans. Any losses incurred on these loans that are not recovered from the issuer or the guarantor are absorbed by the servicers. Therefore, the Bank only has credit risk for these loans if the servicer fails to pay for losses not covered by insurance or guarantees. Based on the Bank's assessment of its servicers, the Bank did not establish an allowance for credit losses for its government-guaranteed or -insured mortgage loan portfolio as of December 31, 2016 and 2015.

Modified loans that are considered a troubled debt restructuring are evaluated individually for impairment. All other conventional residential mortgage loans are evaluated collectively for impairment. The allowance for conventional residential mortgage loans is determined by an analysis (performed at least quarterly) that includes segregating the portfolio into various aging groups. For loans that are 60 days or less past due, the Bank calculates a loss severity, default rate, and the expected loss based on individual loan characteristics. For loans that are more than 60 days past due, the allowance is determined using an automated valuation model.

A modified loan that is considered a troubled debt restructuring is individually evaluated for impairment when determining its related allowance for credit losses. Credit loss is measured by factoring in expected cash shortfalls (i.e., loss severity rate) incurred as of the reporting date, as well as the economic loss attributable to delaying the original contractual principal and interest due dates.

A charge-off is recorded if the recorded investment in the loan will not be recovered. The Bank evaluates whether to record a charge-off on a conventional residential mortgage loan upon the occurrence of a confirming event. Once a loan is 180 days delinquent, the Bank classifies as a loss and charges off the portion of outstanding conventional residential mortgage loan balances in excess of the fair value of the underlying property, less costs to sell and adjusted for any available credit enhancements.

Term federal funds sold are generally short-term, their recorded balance approximates fair value, and they are transacted with counterparties that the Bank considers to be of investment quality. The Bank's investment in federal funds sold are evaluated for purposes of an allowance for credit losses only if the investment is not paid when due. All investments in federal funds sold are unsecured and were repaid or expected to be repaid according to the contracted terms as of December 31, 2016 and 2015.

Securities purchased under agreements to resell are considered collateralized financing arrangements and effectively represent short-term loans transacted with counterparties that the Bank considers to be of investment quality. The terms of these loans are structured such that if the fair value of the underlying securities decreases below the fair value required as collateral, the counterparty must place an equivalent amount of additional securities as collateral or remit an equivalent amount of cash. If an agreement to resell is deemed to be impaired, the difference between the fair value of the collateral and the amortized cost of the agreement is recognized in earnings. Based upon the collateral held as security, the Bank determined that no allowance for credit losses was needed for the securities purchased under agreements to resell as of December 31, 2016 and 2015.

Real Estate Owned

Real estate owned (REO) includes assets that have been received in satisfaction of debt through foreclosures. REO is initially recorded at fair value, less estimated selling costs and is subsequently carried at the lower of that amount or current fair value, less estimated selling costs. The Bank recognizes a charge-off to the allowance for credit losses if the fair value of the REO less estimated selling costs is less than the recorded investment in the loan at the date of transfer from loans to REO. Any subsequent realized gains, realized or unrealized losses, and carrying costs are included in noninterest income (loss) on the Statements of Income. REO is recorded in “Other assets” on the Statements of Condition. REO was $2 and $9 as of December 31, 2016 and 2015, respectively.

Derivatives

Derivatives. All derivatives are recognized on the Statements of Condition at their fair values and are reported as either derivative assets or derivative liabilities, net of cash collateral, including initial and variation margin, and accrued interest received from or pledged to clearing agents and/or counterparties. The fair values of derivatives are netted by the clearing agent and/or counterparty when the netting requirements have been met. If these netted amounts are positive, they are classified as an asset and, if negative, they are classified as a liability. Cash flows associated with derivatives 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. Derivatives not used for intermediary purposes are designated as either (1) a hedge of the fair value of (a) a recognized asset or liability or (b) an unrecognized firm commitment (a fair-value hedge); or (2) a non-qualifying hedge of an asset or liability for asset-liability management purposes. Changes in the fair value of a derivative that are effective as, and that are designated and qualify as, a fair-value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (including changes that reflect losses or gains on firm commitments), are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. Any hedge ineffectiveness (which represents the amount by which the change in the fair value of the derivative differs from the change in the fair value of the hedged item) is recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. A non-qualifying hedge is a derivative hedging specific or non-specific underlying assets, liabilities, or firm commitments that is an acceptable hedging strategy under the Bank's risk management program and Finance Agency regulatory requirements, but it does not qualify or was not designated for fair value or cash flow hedge accounting. A non-qualifying hedge introduces the potential for earnings variability because only the change in fair value of the derivative is recorded and is not offset by corresponding changes in the fair value of the non-qualifying hedged asset, liability, or firm commitment, unless such asset, liability, or firm commitment is required to be accounted for at fair value through earnings. Both the net interest on the derivative and the fair value adjustments of a non-qualifying hedge are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

The derivatives used in intermediary activities do not qualify for hedge accounting treatment and are separately marked-to-market through earnings. These amounts are recorded in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income. The net result of the accounting for these derivatives does not significantly impact the Bank's results of operations.

The net settlement 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 settlement of interest receivables and payables related to intermediated derivatives for members and other non-qualifying hedges are recognized in noninterest income (loss) as “Net gains on derivatives and hedging activities” on the Statements of Income.

The Bank discontinues hedge accounting prospectively when (1) it determines that the derivative is no longer expected to be effective in offsetting changes in the fair value of a hedged risk, including hedged items such as firm commitments; (2) the derivative and/or the hedged item expires or is sold, terminated, or exercised; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) the bank determines that designating the derivative as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued due to the Bank's determination that a derivative no longer qualifies as an effective fair-value hedge of an existing hedged item, or when the bank decides to cease the specific hedging activity, the Bank will either (1) terminate the derivative; or (2) continue to carry the derivative on the Statements of Condition at its fair value, cease to adjust the hedged asset or liability for changes in fair value, and amortize the cumulative basis adjustment on the hedged item into earnings over the remaining life of the hedged item using the level-yield method. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Bank will carry the derivative at its fair value on the Statements of Condition, recognizing changes in the fair value of the derivative in current-period earnings.

Embedded Derivatives

The Bank may issue debt, make advances, or purchase financial instruments in which a derivative instrument may be “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 advance, debt, or purchased financial instruments (i.e., 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. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (2) 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 a stand-alone derivative instrument pursuant to a non-qualifying hedge. However, if the entire contract (the host contract and the embedded derivative) is to be measured at fair value, with changes in fair value reported in current-period earnings (e.g., an investment security classified as “trading”), or if the Bank could not identify and measure reliably the embedded derivative for purposes of separating that derivative from its host contract, the entire contract would be carried on the Statements of Condition at fair value, and no portion of the contract could be designated as a hedging instrument.

Premises and Equipment

Premises, Equipment, and Software. The Bank records premises and equipment at cost less accumulated depreciation. The Bank's accumulated depreciation was $64 and $66 as of December 31, 2016 and 2015, respectively. The Bank computes depreciation using the straight-line method over the estimated useful lives of assets. The estimated useful lives in years are generally as follows: automobiles and computer hardware-three; office equipment-eight; office furniture and building improvements-10; and building-40. The Bank amortizes leasehold improvements using the straight-line method over the shorter of the estimated useful life of the improvement or the remaining term of the lease. The Bank capitalizes improvements and expenses ordinary maintenance and repairs when incurred. Depreciation expense was $4 for the years ended December 31, 2016, 2015, and 2014. The Bank includes gains and losses on disposal of premises and equipment in noninterest income (loss).

Software

The Bank records the cost of purchased software and certain costs incurred in developing computer software for internal use at cost, less accumulated amortization. The Bank amortizes capitalized computer software cost using the straight-line method over an estimated useful life of five years. The gross carrying amount of computer software included in other assets was $55 and $58, and accumulated amortization was $48 and $49, as of December 31, 2016 and 2015, respectively. Amortization of computer software was $3 for the year ended December 31, 2016 and $5 for the years ended December 31, 2015 and 2014. The Bank includes gains and losses on disposal of capitalized software cost in noninterest income (loss).

Consolidated Obligations

Consolidated Obligations. The Bank records consolidated obligations at amortized cost. Additionally, the Bank pays concessions to dealers in connection with the issuance of certain consolidated obligations. The Federal Home Loan Bank Office of Finance (Office of Finance) prorates the concessions to the Bank based upon the percentage of the debt issued that is assumed by the Bank. The Bank records concessions paid on consolidated obligations as a direct deduction from their carrying amounts, consistent with the presentation of discounts on consolidated obligations. The Bank accretes discounts and amortizes premiums, as well as concessions and hedging basis adjustments on consolidated obligations, to interest expense using the contractual interest method over the contractual term of the corresponding consolidated obligation.

Mandatorily Redeemable Capital Stock

Mandatorily Redeemable Capital Stock. The Bank reclassifies stock that is subject to redemption from capital to a liability after a member submits a written redemption request, gives notice of intent to withdraw from membership, or attains non-member status through a merger or acquisition, charter termination, or involuntary termination from membership since the member shares will then meet the definition of a mandatorily redeemable financial instrument. Member shares meeting this definition are reclassified to a liability at fair value. Dividends declared on shares classified as a liability are accrued at the expected dividend rate and recorded as interest expense on the Statements of Income. The repurchase or redemption of these mandatorily redeemable financial instruments is recorded as cash outflows 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 mandatorily redeemable capital stock from a liability to capital. After the reclassification, dividends on the capital stock no longer will be classified as interest expense.

Restricted Retained Earnings

Restricted Retained Earnings. The FHLBanks entered into a Joint Capital Enhancement Agreement, as amended (Capital Agreement), which is intended to enhance the capital position of each FHLBank. Under the Capital Agreement, each FHLBank allocates 20 percent of its net income each quarter to a separate retained earnings account until the account balance equals at least one percent of the FHLBank’s average balance of outstanding consolidated obligations for the previous quarter. Restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

Finance Agency and Office of Finance Expenses

Finance Agency and Office of Finance Expenses. The Finance Agency allocates the FHLBanks' portion of its expenses and working capital fund among the FHLBanks based on the ratio between each FHLBank's minimum required regulatory capital and the aggregate minimum required regulatory capital of every FHLBank. Each FHLBank's proportionate share of the Office of Finance's operating and capital expenditures is calculated using a formula that is (1) two-thirds based upon each FHLBank's share of total consolidated obligations outstanding, and (2) one-third based upon an equal pro rata allocation.

Affordable Housing Program

Affordable Housing Program. The FHLBank Act requires each FHLBank to establish and fund an AHP that provides subsidies to members to assist in the purchase, construction, or rehabilitation of housing for very low-to-moderate-income households. The Bank charges the required funding for AHP against earnings and establishes a corresponding liability. The Bank issues AHP advances at interest rates below the customary interest rate for non-subsidized advances. A discount on the AHP advance and charge against the AHP liability is recorded for the present value of the variation in the cash flow caused by the difference in the interest rate between the AHP advance rate and the Bank's related cost of funds for comparable maturity funding. As an alternative, the Bank has the authority to make the AHP subsidy available to members as a grant. The discount on AHP advances is accreted to interest income on advances using the contractual interest method over the life of the advance.

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Trading Securities (Tables) - Categories of Investments, Marketable Securities, Trading Securities [Member]

12 Months Ended

Dec. 31, 2016

Schedule of Trading Securities and Other Trading Assets [Line Items]

Schedule of Major Trading Securities

Major Security Types. The following table presents trading securities.

	As of December 31,
	2016		2015
Government-sponsored enterprises debt obligations	$	261	$	1,212
Another FHLBank’s bond (1)	—		52
State or local housing agency debt obligations	1		1
Total	$	262	$	1,265

 ____________

⁽¹⁾  The Federal Home Loan Bank of Chicago is the primary obligor of this consolidated obligation bond.

Schedule of Net Unrealized and Realized (Losses) Gains on Trading Securities

The following table presents net losses on trading securities.

	For the Years Ended December 31,
	2016			2015			2014
Net losses on trading securities held at year end	$	(8	)	$	(61	)	$	(53	)
Net losses on trading securities that matured during the year	(22		)	—			(7		)
Net losses on trading securities	$	(30	)	$	(61	)	$	(60	)

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Available-for-sale Securities (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Available-for-sale Securities [Line Items]

Available-for-Sale Securities Reconciliation

Major Security Type. The following table presents information on private-label residential mortgage-backed securities (MBS) that are classified as available-for-sale.

	Amortized   Cost		Other-than-temporary   Impairment Recognized in Accumulated Other Comprehensive Income		Gross   Unrealized   Gains		Gross   Unrealized   Losses		Estimated   Fair Value
As of December 31, 2016	$	1,221	$	6	$	130	$	—	$	1,345
As of December 31, 2015	$	1,567	$	19	$	114	$	—	$	1,662

Summary of Available-for-Sale MBS Issued by Members or Affiliates or Members

The following table presents private-label residential MBS that are classified as available-for-sale and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Other-than-temporary Impairment Recognized in  Accumulated Other Comprehensive Income		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	792	$	5	$	102	$	—	$	889
As of December 31, 2015	$	1,037	$	16	$	77	$	—	$	1,098

Categories of Investments, Marketable Securities, Available-for-sale Securities [Member]

Schedule of Available-for-sale Securities [Line Items]

Available-for-Sale Securities with Unrealized Losses

The following table presents private-label residential MBS that are classified as available-for-sale with unrealized losses. The unrealized losses are aggregated by the length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses		Number of   Positions	Estimated   Fair  Value		Gross   Unrealized   Losses
As of December 31, 2016	1	$	14	$	—	10	$	189	$	6	11	$	203	$	6
As of December 31, 2015	3	$	107	$	2	10	$	247	$	17	13	$	354	$	19

Schedule of Interest Rate Payment Terms For Investments

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as available-for-sale.

	As of December 31,
	2016		2015
Variable-rate	$	1,202	$	1,540
Fixed-rate	19		27
Total amortized cost	$	1,221	$	1,567

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Held-to-maturity Securities (Tables) - Held-to-maturity Securities [Member]

12 Months Ended

Dec. 31, 2016

Schedule of Held-to-maturity Securities [Line Items]

Schedule of Held-to-Maturity Securities

Major Security Types. The following table presents held-to-maturity securities.

	As of December 31,
	2016								2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
State or local housing agency debt obligations	$	76	$	—	$	—	$	76	$	76	$	—	$	—	$	76
Government-sponsored enterprises debt obligations	6,041		3		5		6,039		5,693		—		12		5,681
Mortgage-backed securities:
U.S. agency obligations-guaranteed residential	209		2		—		211		279		4		—		283
Government-sponsored enterprises residential	10,752		44		43		10,753		11,958		88		31		12,015
Government-sponsored enterprises commercial	6,773		2		11		6,764		4,140		—		16		4,124
Private-label residential	790		5		5		790		1,093		4		13		1,084
Total	$	24,641	$	56	$	64	$	24,633	$	23,239	$	96	$	72	$	23,263

Schedule of Unrealized Loss on Investments

The following tables present held-to-maturity securities with unrealized losses. The unrealized losses are aggregated by major security type and by the length of time that the individual securities have been in a continuous unrealized loss position.

	As of December 31, 2016
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	10	$	2,532	$	5	—	$	—	$	—	10	$	2,532	$	5
Mortgage-backed securities:
Government-sponsored enterprises residential	46	2,813		22		63	2,206		21		109	5,019		43
Government-sponsored enterprises commercial	52	4,147		6		22	1,540		5		74	5,687		11
Private-label residential	6	10		—		56	432		5		62	442		5
Total	114	$	9,502	$	33	141	$	4,178	$	31	255	$	13,680	$	64

	As of December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses		Number of Positions	Estimated Fair  Value		Gross Unrealized Losses
Government-sponsored enterprises debt obligations	20	$	4,535	$	7	3	$	745	$	5	23	$	5,280	$	12
Mortgage-backed securities:
Government-sponsored enterprises residential	41	3,233		21		8	443		10		49	3,676		31
Government-sponsored enterprises commercial	31	2,680		9		25	1,037		7		56	3,717		16
Private-label residential	29	407		2		47	428		11		76	835		13
Total	121	$	10,855	$	39	83	$	2,653	$	33	204	$	13,508	$	72

Amortized Cost and Estimated Fair Value of Held-to-Maturity Securities by Contractual Maturity

Redemption Terms. The following table presents the amortized cost and estimated fair value of held-to-maturity securities by contractual maturity. Expected maturities of some securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment fees.

	As of December 31,
	2016				2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Non-mortgage-backed securities:
Due in one year or less	$	2,454	$	2,455	$	651	$	651
Due after one year through five years	3,487		3,484		5,118		5,106
Due after five years through ten years	176		176		—		—
Total non-mortgage-backed securities	6,117		6,115		5,769		5,757
Mortgage-backed securities	18,524		18,518		17,470		17,506
Total	$	24,641	$	24,633	$	23,239	$	23,263

Schedule of Interest Rate Payment Terms For Investments

Interest-rate Payment Terms. The following table presents interest-rate payment terms for investment securities classified as held-to-maturity.

	As of December 31,
	2016		2015
Non-mortgage-backed securities:
Fixed-rate	$	2,413	$	1,915
Variable-rate	3,704		3,854
Total non-mortgage-backed securities	6,117		5,769
Mortgage-backed securities:
Fixed-rate	2,438		2,949
Variable-rate	16,086		14,521
Total mortgage-backed securities	18,524		17,470
Total amortized cost	$	24,641	$	23,239

Held-to-Maturity MBS Issued by Members or Affiliates of Members

The following table presents private-label residential MBS that are classified as held-to-maturity and issued by members or affiliates of members, all of which have been issued by Bank of America Corporation, Charlotte, NC.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
As of December 31, 2016	$	177	$	—	$	2	$	175
As of December 31, 2015	$	286	$	—	$	5	$	281

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Other-than-Temporary Impairment (Tables)

12 Months Ended

Dec. 31, 2016

Other than Temporary Impairment Losses, Investments [Abstract]

Schedule of Significant Inputs in Measuring Other than Temporary Impairments Recongized in Earnings

The following table presents a summary of the significant inputs used to measure the amount of the credit loss recognized in earnings for those securities for which an other-than-temporary impairment was determined to have occurred during the year ended December 31, 2016, as well as the related current credit enhancement.

	Significant Inputs - Weighted Average (%) (1)
Classification of Securities	Prepayment Rates	Default Rates	Loss Severities	Current Credit Enhancement (%)
Prime	15.02	4.62	19.73	0.24
Alt-A	12.13	17.56	40.22	0.00
Total	12.31	16.76	38.95	0.02

____________

⁽¹⁾ The classification of securities is based on current characteristics and performance, which may be different from the securities’ classification as determined by the originator at the time of origination.

Schedule of Roll-Forward Cumulative Credit Losses Recognized

The following table presents a roll-forward of the amount of credit losses on the Bank’s investment securities recognized in earnings during the life of the securities for which a portion of the other-than-temporary loss was recognized in accumulated other comprehensive income.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	505		$	542		$	574
Amount related to credit loss for which an other-than-temporary impairment was previously recognized	3			5			3
Increase in cash flows expected to be collected, (accreted as interest income over the remaining lives of the applicable securities)	(53		)	(42		)	(35		)
Balance, end of year	$	455		$	505		$	542

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Advances (Tables)

12 Months Ended

Dec. 31, 2016

Advances [Abstract]

Federal Home Loan Bank, Advances

The following table presents the Bank's advances outstanding.

	As of December 31,
	2016			2015
Overdrawn demand deposit accounts	$	—		$	16
Due in one year or less	47,325			46,673
Due after one year through two years	8,244			12,747
Due after two years through three years	5,904			6,360
Due after three years through four years	5,859			2,994
Due after four years through five years	11,846			4,616
Due after five years	19,110			29,458
Total par value	98,288			102,864
Discount on AHP advances	(5		)	(6		)
Discount on EDGE advances	(4		)	(4		)
Hedging adjustments	798			1,315
Deferred commitment fees	—			(1		)
Total	$	99,077		$	104,168

The Bank offers callable advances to members that may be prepaid on prescribed dates (call dates) without incurring prepayment or termination fees. The Bank also offers prepayable advances, which are variable-rate advances that may be contractually prepaid by the borrower on specified dates without incurring prepayment or termination fees. Other advances may be prepaid only by paying a fee to the Bank, so the Bank is financially indifferent to the prepayment of the advance. The Bank had callable and prepayable advances outstanding of $27,459 and $25,565 as of December 31, 2016 and 2015, respectively.

The following table presents advances by year of contractual maturity or next call date for callable advances.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or callable in one year or less	72,404		71,243
Due or callable after one year through two years	7,680		11,593
Due or callable after two years through three years	3,740		5,545
Due or callable after three years through four years	2,289		2,214
Due or callable after four years through five years	4,570		2,371
Due or callable after five years	7,605		9,882
Total par value	$	98,288	$	102,864

Convertible advances offered by the Bank allow the Bank to convert the fixed-rate advance to a variable-rate advance at the current market rate on certain specified dates. The Bank had convertible advances outstanding of $1,497 and $2,394 as of December 31, 2016 and 2015, respectively.

The following table presents advances by year of contractual maturity or, for convertible advances, next conversion date.

	As of December 31,
	2016		2015
Overdrawn demand deposit accounts	$	—	$	16
Due or convertible in one year or less	47,935		48,743
Due or convertible after one year through two years	7,724		11,434
Due or convertible after two years through three years	5,943		5,768
Due or convertible after three years through four years	5,867		3,020
Due or convertible after four years through five years	11,866		4,609
Due or convertible after five years	18,953		29,274
Total par value	$	98,288	$	102,864

Interest-rate Payment Terms. The following table presents interest-rate payment terms for advances.

	As of December 31,
	2016		2015
Fixed-rate:
Due in one year or less	$	38,597	$	32,011
Due after one year	24,528		27,051
Total fixed-rate	63,125		59,062
Variable-rate:
Due in one year or less	8,728		14,678
Due after one year	26,435		29,124
Total variable-rate	35,163		43,802
Total par value	$	98,288	$	102,864

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Mortgage Loans Held for Porfolio (Tables)

12 Months Ended

Dec. 31, 2016

Mortgage Loans on Real Estate [Abstract]

Schedule of Mortgage Loans Held for Portfolio

The following table presents information on mortgage loans held for portfolio by contractual maturity at the time of purchase.

	As of December 31,
	2016			2015
Medium-term (15 years or less)	$	40		$	66
Long-term (greater than 15 years)	485			521
Total unpaid principal balance	525			587
Premiums	2			2
Discounts	(3		)	(3		)
Total	$	524		$	586

Mortgage Loans Held for Portfolio by Collateral or Guarantee Type

The following table presents the unpaid principal balance of mortgage loans held for portfolio by collateral or guarantee type.

	As of December 31,
	2016		2015
Conventional mortgage loans	$	492	$	546
Government-guaranteed or insured mortgage loans	33		41
Total unpaid principal balance	$	525	$	587

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Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2016

Allowance for Credit Losses [Abstract]

Allowance for Credit Losses on Financing Receivables

The following table presents the activity in the allowance for credit losses related to conventional residential mortgage loans.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	2		$	3		$	11
Reversal of provision for credit losses	(1		)	(1		)	(5		)
Charge-offs	—			—			(3		)
Balance, end of year	$	1		$	2		$	3

Allowance for Credit Losses and Recorded Investment by Impairment Methodology

The following table presents the recorded investment in conventional residential mortgage loans by impairment methodology.

	As of December 31,
	2016		2015
Allowance for credit losses:
Collectively evaluated for impairment	$	1	$	2
Recorded investment:
Individually evaluated for impairment	$	12	$	15
Collectively evaluated for impairment	481		532
Total recorded investment	$	493	$	547

Past Due Financing Receivables

The following tables present the Bank's recorded investment in mortgage loans by these key credit quality indicators.

	As of December 31, 2016
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	3			1			4
Past due 90 days or more	12			1			13
Total past due mortgage loans	32			6			38
Total current mortgage loans	461			27			488
Total mortgage loans (1)	$	493		$	33		$	526
Other delinquency statistics:
In process of foreclosure (2)	$	6		$	1		$	7
Seriously delinquent rate (3)	2.44		%	3.75		%	2.53		%
Past due 90 days or more and still accruing interest (4)	$	—		$	1		$	1
Mortgage loans on nonaccrual status (5)	$	12		$	—		$	12

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $2 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

	As of December 31, 2015
	Conventional Residential Mortgage Loans			Government-guaranteed or Insured Residential Mortgage Loans			Total
Past due 30-59 days	$	17		$	4		$	21
Past due 60-89 days	5			1			6
Past due 90 days or more	18			3			21
Total past due mortgage loans	40			8			48
Total current mortgage loans	507			34			541
Total mortgage loans (1)	$	547		$	42		$	589
Other delinquency statistics:
In process of foreclosure (2)	$	9		$	1		$	10
Seriously delinquent rate (3)	3.32		%	6.65		%	3.55		%
Past due 90 days or more and still accruing interest (4)	$	—		$	3		$	3
Mortgage loans on nonaccrual status (5)	$	18		$	—		$	18

____________

⁽¹⁾ The difference between the recorded investment and the carrying value of total mortgage loans of $3 relates to accrued interest.

⁽²⁾ Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

⁽³⁾ Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

⁽⁴⁾ Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

⁽⁵⁾ Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

Troubled Debt Restructurings on Financing Receivables

The following table presents the Bank's recorded investment balance in mortgage loans classified as troubled debt restructurings.

	As of December 31,
	2016						2015
	Performing		Non-performing		Total		Performing		Non-performing		Total
Conventional residential mortgage loans	$	10	$	2	$	12	$	13	$	2	$	15

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Consolidated Obligations (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Consolidated Obligation Bonds by Interest-Rate Payment

Interest-rate Payment Terms. The following table presents the Bank’s consolidated obligation bonds by interest-rate payment type.

	As of December 31,
	2016		2015
Fixed-rate	$	23,674	$	40,512
Step up/down	2,534		4,239
Simple variable-rate	62,408		19,022
Total par value	$	88,616	$	63,773

Consolidated Obligation Bonds Outstanding, by Year of Contractual Maturity

Redemption Terms. The following table presents the Bank’s participation in consolidated obligation bonds outstanding by year of contractual maturity.

	As of December 31,
	2016				2015
	Amount			Weighted- average Interest Rate (%)	Amount			Weighted- average Interest Rate (%)
Due in one year or less	$	65,378		0.91	$	32,559		0.74
Due after one year through two years	17,065			1.05	17,132			1.41
Due after two years through three years	1,849			1.67	5,959			1.63
Due after three years through four years	1,482			1.68	2,124			1.67
Due after four years through five years	1,117			1.58	1,975			1.72
Due after five years	1,725			2.37	4,024			2.18
Total par value	88,616			1.00	63,773			1.16
Premiums	24				36
Discounts	(12		)		(20		)
Hedging adjustments	19				164
Total	$	88,647			$	63,953

Callable and Noncallable Consolidated Obligations Bonds Outstanding

The following table presents the Bank’s consolidated obligation bonds outstanding by call feature.

	As of December 31,
	2016		2015
Noncallable	$	83,487	$	53,432
Callable	5,129		10,341
Total par value	$	88,616	$	63,773

Summary of Callable Consolidated Obligation Bonds Outstanding, by Year of Contractual Maturity

The following table presents the Bank’s consolidated obligation bonds outstanding, by year of contractual maturity, or for callable consolidated obligation bonds, by next call date.

	As of December 31,
	2016		2015
Due or callable in one year or less	$	70,232	$	41,410
Due or callable after one year through two years	15,250		16,277
Due or callable after two years through three years	1,399		3,461
Due or callable after three years through four years	1,103		1,055
Due or callable after four years through five years	162		1,023
Due or callable after five years	470		547
Total par value	$	88,616	$	63,773

Consolidated Obligation Discount Notes

The following table presents the Bank's participation in consolidated obligation discount notes.

	Book Value		Par Value		Weighted-average Interest Rate (%)
As of December 31, 2016	$	41,292	$	41,334	0.48
As of December 31, 2015	$	69,434	$	69,481	0.27

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Affordable Housing Program (Tables)

12 Months Ended

Dec. 31, 2016

Assessments [Abstract]

Schedule of Activity in Affordable Housing Program Obligation

The following table presents a rollforward of the Bank's AHP liability.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	63		$	65		$	74
AHP assessments	31			33			30
Subsidy usage, net	(25		)	(35		)	(39		)
Balance, end of year	$	69		$	63		$	65

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Capital and Mandatorily Redeemable Capital Stock (Tables)

12 Months Ended

Dec. 31, 2016

Capital [Abstract]

Schedule of Compliance With Regulatory Capital Requirements

The following table presents the Bank's compliance with the Finance Agency's regulatory capital rules and requirements.

	As of December 31,
	2016						2015
	Required			Actual			Required			Actual
Risk-based capital	$	1,701		$	6,848		$	1,621		$	6,956
Total regulatory capital ratio	4.00		%	4.94		%	4.00		%	4.89		%
Total regulatory capital (1)	$	5,547		$	6,848		$	5,690		$	6,956
Leverage capital ratio	5.00		%	7.41		%	5.00		%	7.33		%
Leverage capital	$	6,934		$	10,273		$	7,113		$	10,433

___________

⁽¹⁾  Total regulatory capital does not include accumulated other comprehensive income but does include mandatorily redeemable capital stock.

Activity in Mandatorily Redeemable Capital Stock

The following table presents the activity in mandatorily redeemable capital stock.

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	14		$	19		$	24
Net reclassification from capital during the year	7			21			7
Repurchase/redemption of mandatorily redeemable capital stock	(20		)	(26		)	(12		)
Balance, end of year	$	1		$	14		$	19

Amount of Mandatorily Redeemable Capital Stock by Year of Redemption

The following table presents the amount of mandatorily redeemable capital stock by year of redemption. The year of redemption in the table is the end of the five-year redemption period, or with respect to activity-based stock, the later of the expiration of the five-year redemption period or the activity’s maturity date.

	As of December 31,
	2016		2015
Due in one year or less	$	—	$	7
Due after one year through two years	—		1
Due after three years through four years	1		—
Due after four years through five years	—		6
Total	$	1	$	14

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Components Comprising Accumulated Other Comprehensive Income

The following table presents the components comprising accumulated other comprehensive income.

	Pension and Postretirement Benefits			Noncredit Portion of Other-than- temporary Impairment  Losses on Available-for- sale Securities			Total  Accumulated Other Comprehensive Income
Balance, December 31, 2013	$	(13	)	$	125		$	112
Other comprehensive income before reclassifications:
Net change in fair value	—			(10		)	(10		)
Actuarial loss	(11		)	—			(11		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive loss	(10		)	(7		)	(17		)
Balance, December 31, 2014	(23		)	118			95
Other comprehensive income before reclassifications:
Net change in fair value	—			(28		)	(28		)
Actuarial gain	1			—			1
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			5			5
Amortization of pension and postretirement (1)	2			—			2
Net current period other comprehensive income (loss)	3			(23		)	(20		)
Balance, December 31, 2015	(20		)	95			75
Other comprehensive income before reclassifications:
Noncredit other-than-temporary impairment losses	—			(1		)	(1		)
Net change in fair value	—			27			27
Actuarial loss	(1		)	—			(1		)
Reclassification from accumulated other comprehensive income to net income:
Noncredit other-than-temporary impairment losses	—			3			3
Amortization of pension and postretirement (1)	1			—			1
Net current period other comprehensive income	—			29			29
Balance, December 31, 2016	$	(20	)	$	124		$	104

____________ 

⁽¹⁾ Included in Compensation and benefits on the Statements of Income.

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Pension and Post Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Schedule of Multiemployer Plan

The following table presents information on the net pension costs and funded status of the Pentegra Plan.

	2016			2015			2014
Net pension cost charged to compensation and benefit expense for the year ended December 31	$	12		$	11		$	10
Pentegra Plan funded status as of July 1(1)	104.12		%	107.01		%	111.44		%
Bank's funded status as of the plan year end	105.51		%	108.82		%	114.16		%

____________

⁽¹⁾The Pentegra Plan's funded status as of July 1 is preliminary and may increase because the plan's participants are permitted to make contributions through March 15 of the following year (i.e. through March 15, 2017 for the plan year ended June 30, 2016 and through March 15, 2016 for the plan year ended June 30, 2015). Contributions made before the March 15th deadline may be credited to the plan for the plan year ended June 30 of the previous year and included in the final valuation as of July 1 of the year the plan ended. The final funded status as of July 1 will not be available until the Form 5500 for the plan year July 1 through June 30 is filed. Form 5500 is due to be filed no later than April 2018 for the plan year July 1, 2016 through June 30, 2017 and April 2017 for the plan year July 1, 2015 through June 2016. Form 5500 was filed in April 2016 for the plan year July 1, 2014 through June 30, 2015.

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Derivatives and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments

The following table presents the fair value of derivative instruments, including 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.

	As of December 31,
	2016							2015
	Notional Amount of Derivatives		Derivative Assets		Derivative Liabilities			Notional Amount of Derivatives		Derivative Assets			Derivative Liabilities
Derivatives in hedging relationships:
Interest-rate swaps	$	65,027	$	256	$	1,029		$	80,290	$	312		$	1,467
Derivatives not designated as hedging instruments:
Interest-rate swaps	1,158		9		31			3,008		10			74
Interest-rate caps or floors	15,000		17		13			16,500		15			10
Mortgage delivery commitments	12		—		—			—		—			—
Total derivatives not designated as hedging instruments	16,170		26		44			19,508		25			84
Total derivatives before netting and collateral adjustments	$	81,197	282		1,073			$	99,798	337			1,551
Netting adjustments and cash collateral (1)			73		(966		)			(161		)	(1,427		)
Derivative assets and derivative liabilities			$	355	$	107				$	176		$	124

___________

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

Components of Net Gains on Derivatives and Hedging Activities

The following table presents the components of net gains on derivatives and hedging activities as presented on the Statements of Income.

	For the Years Ended December 31,
	2016			2015			2014
Derivatives and hedged items in fair value hedging relationships:
Interest-rate swaps	$	120		$	269		$	147
Derivatives not designated as hedging instruments:
Interest-rate swaps	30			53			57
Interest-rate caps or floors	(1		)	(2		)	(14		)
Net interest settlements	(30		)	(59		)	(70		)
Total net losses related to derivatives not designated as hedging instruments	(1		)	(8		)	(27		)
Net gains on derivatives and hedging activities	$	119		$	261		$	120

Gain (Losses) on Derivatives and Related Hedged Items Fair Value

The following tables present, by type of hedged item, the gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Bank’s net interest income.

	For the Year Ended December 31, 2016
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	524		$	(393	)	$	131		$	(529	)
Consolidated obligations:
Bonds	(154		)	146			(8		)	230
Discount notes	2			(5		)	(3		)	(3		)
Total	$	372		$	(252	)	$	120		$	(302	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

	For the Year Ended December 31, 2015
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness			Effect of Derivatives on Net Interest Income(1)
Advances	$	448		$	(169	)	$	279		$	(713	)
Consolidated obligations:
Bonds	(93		)	81			(12		)	469
Discount notes	(6		)	8			2			9
Total	$	349		$	(80	)	$	269		$	(235	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

	For the Year Ended December 31, 2014
Hedged Item Type	Gains (Losses) on Derivative			Gains (Losses) on Hedged Item			Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income(1)
Advances	$	(152	)	$	297		$	145	$	(875	)
Consolidated obligation bonds	135			(133		)	2		497
Total	$	(17	)	$	164		$	147	$	(378	)

____________

⁽¹⁾  The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

Offsetting of derivative assets and liabilities

The following table presents the fair value of derivative instruments meeting or not meeting netting requirements, including the related collateral received from or pledged to counterparties.

	As of December 31,
	2016						2015
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
Gross recognized amount:
Uncleared derivatives	$	70		$	370		$	260		$	1,159
Cleared derivatives	212			703			77			392
Total gross recognized amount	282			1,073			337			1,551
Gross amounts of netting adjustments and cash collateral:
Uncleared derivatives	(69		)	(263		)	(258		)	(1,035		)
Cleared derivatives	142			(703		)	97			(392		)
Total gross amounts of netting adjustments and cash collateral	73			(966		)	(161		)	(1,427		)
Derivative assets and derivative liabilities:
Uncleared derivatives	1			107			2			124
Cleared derivatives	354			—			174			—
Total derivative assets and total derivative liabilities	355			107			176			124
Non-cash collateral received or pledged not offset- cannot be sold or repledged: (1)
Uncleared derivatives	—			—			2			—
Net unsecured amounts: (2)
Uncleared derivatives	1			107			—			124
Cleared derivatives	354			—			174			—
Total net unsecured amount	$	355		$	107		$	174		$	124

____________ 

⁽¹⁾  Collateral held with respect to derivatives with member institutions, in which the Bank is acting as an intermediary, represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

⁽²⁾  The Bank had net credit exposure of $346 and $170 as of December 31, 2016 and 2015, respectively, due to instances where the Bank’s pledged collateral to a counterparty exceeds the Bank’s net derivative liability position.

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Estimated Fair Values (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

Estimated Fair Value Measurements on a Recurring Basis. The following tables present, for each fair value hierarchy level, the Bank’s financial assets and liabilities that are measured at fair value on a recurring basis on its Statements of Condition.

	As of December 31, 2016
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	261	$	—	$	—		$	261
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		262		—		—			262
Available-for-sale securities:
Private-label residential MBS	—		—		1,345		—			1,345
Derivative assets:
Interest-rate related	—		282		—		73			355
Grantor trust (included in Other assets)	37		—		—		—			37
Total assets at fair value	$	37	$	544	$	1,345	$	73		$	1,999
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,073	$	—	$	(966	)	$	107
Total liabilities at fair value	$	—	$	1,073	$	—	$	(966	)	$	107

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

	As of December 31, 2015
	Fair Value Measurements Using						Netting Adjustment (1)
	Level 1		Level 2		Level 3					Total
Assets
Trading securities:
Government-sponsored enterprises debt obligations	$	—	$	1,212	$	—	$	—		$	1,212
Another FHLBank’s bond	—		52		—		—			52
State or local housing agency debt obligations	—		1		—		—			1
Total trading securities	—		1,265		—		—			1,265
Available-for-sale securities:
Private-label residential MBS	—		—		1,662		—			1,662
Derivative assets:
Interest-rate related	—		337		—		(161		)	176
Grantor trust (included in Other assets)	31		—		—		—			31
Total assets at fair value	$	31	$	1,602	$	1,662	$	(161	)	$	3,134
Liabilities
Derivative liabilities:
Interest-rate related	$	—	$	1,551	$	—	$	(1,427	)	$	124
Total liabilities at fair value	$	—	$	1,551	$	—	$	(1,427	)	$	124

____________ 

⁽¹⁾ Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

Reconciliation of Available-For-Sale Securities Measured at Fair Value

The following table presents a reconciliation of available-for-sale securities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	For the Years Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	1,662		$	1,981		$	2,299
Total (losses) gains realized and unrealized: (1)
Included in net impairment losses recognized in earnings	(3		)	(5		)	(3		)
Included in other comprehensive income	29			(23		)	(7		)
Accretion of credit losses in net interest income	53			42			34
Settlements	(396		)	(333		)	(342		)
Balance, end of year	$	1,345		$	1,662		$	1,981

____________ 

⁽¹⁾  Related to available-for-sale securities held at year end.

Fair Value Measurements, Nonrecurring [Table Text Block]

The following table presents the fair value hierarchy and carrying value of all assets as of the last impairment date that were still held as of December 31, 2015, for which a nonrecurring fair value adjustment was recorded during the period presented. The carrying value for each of the assets presented in the following table was less than $1 as of December 31, 2016.

	As of December 31, 2015
	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
Mortgage loans held for portfolio	$	—	$	—	$	1	$	1
Real estate owned (included in Other assets)	—		—		3		3
Total nonrecurring assets at fair value	$	—	$	—	$	4	$	4

Carrying Values and Estimated Fair Values

The following tables present the carrying values and estimated fair values of the Bank’s financial instruments.

	As of December 31, 2016
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,815	$	1,815	$	1,815	$	—	$	—	$	—
Interest bearing-deposits	1,106		1,106		—		1,106		—		—
Securities purchased under agreements to resell	1,386		1,386		—		1,386		—		—
Federal funds sold	7,770		7,770		—		7,770		—		—
Trading securities	262		262		—		262		—		—
Available-for-sale securities	1,345		1,345		—		—		1,345		—
Held-to-maturity securities	24,641		24,633		—		23,843		790		—
Advances	99,077		99,062		—		99,062		—		—
Mortgage loans held for portfolio, net	523		569		—		569		—		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	355		355		—		282		—		73
Grantor trust assets (included in Other assets)	37		37		37		—		—		—
Liabilities:
Interest-bearing deposits	1,118		1,118		—		1,118		—		—
Consolidated obligations, net:
Discount notes	41,292		41,293		—		41,293		—		—
Bonds	88,647		88,768		—		88,768		—		—
Mandatorily redeemable capital stock	1		1		1		—		—		—
Accrued interest payable	128		128		—		128		—		—
Derivative liabilities	107		107		—		1,073		—		(966		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

	As of December 31, 2015
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3		Netting Adjustment (1)
Assets:
Cash and due from banks	$	1,751	$	1,751	$	1,751	$	—	$	—	$	—
Interest bearing-deposits	1,088		1,088		—		1,088		—		—
Securities purchased under agreements to resell	2,500		2,500		—		2,500		—		—
Federal funds sold	5,421		5,421		—		5,421		—		—
Trading securities	1,265		1,265		—		1,265		—		—
Available-for-sale securities	1,662		1,662		—		—		1,662		—
Held-to-maturity securities	23,239		23,263		—		22,179		1,084		—
Advances	104,168		104,021		—		104,021		—		—
Mortgage loans held for portfolio, net	584		647		—		646		1		—
Accrued interest receivable	171		171		—		171		—		—
Derivative assets	176		176		—		337		—		(161		)
Grantor trust assets (included in Other assets)	31		31		31		—		—		—
Liabilities:
Interest-bearing deposits	1,084		1,084		—		1,084		—		—
Consolidated obligations, net:
Discount notes	69,434		69,432		—		69,432		—		—
Bonds	63,953		63,940		—		63,940		—		—
Mandatorily redeemable capital stock	14		14		14		—		—		—
Accrued interest payable	127		127		—		127		—		—
Derivative liabilities	124		124		—		1,551		—		(1,427		)

____________ 

⁽¹⁾  Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Off Balance Sheet Commitments [Table Text Block]

The following table presents the Bank’s outstanding commitments, which represent off-balance sheet obligations.

	As of December 31,
	2016						2015
	Expire Within One Year		Expire After One Year		Total		Expire Within One Year		Expire After One Year		Total
Standby letters of credit (1)	$	10,934	$	21,734	$	32,668	$	8,693	$	23,823	$	32,516
Commitments to fund additional advances	100		200		300		207		100		307
Unsettled consolidated obligation discount notes, at par (2)	—		—		—		100		—		100
Unsettled consolidated obligation bonds, at par (2)	15		—		15		25		—		25
Commitments to purchase mortgage loans	12		—		12		—		—		—

____________

⁽¹⁾  "Expire Within One Year" includes 12 standby letters of credit for a total of $34 and 11 standby letters of credit for a total of $29 as of December 31, 2016 and 2015, respectively, that have no stated maturity date and are subject to renewal on an annual basis.

⁽²⁾  Expiration is based on settlement period rather than underlying contractual maturity of consolidated obligations.

XML

Transactions with Shareholders (Tables)

12 Months Ended

Dec. 31, 2016

Transactions With Shareholders [Abstract]

Schedule of Transactions with Shareholders [Table Text Block]

Shareholder Concentrations. The Bank considers shareholder concentration as members or non-members with regulatory capital stock outstanding in excess of 10 percent of the Bank's total regulatory capital stock. The following tables present transactions with shareholders whose holdings of regulatory capital stock exceed 10 percent of total regulatory capital stock outstanding.

	As of December 31, 2016
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	745	15.03	$	17,176	17.48	$	16	1.41
Navy Federal Credit Union	589		11.88	13,495		13.73	156		13.93
Bank of America, National Association	504		10.17	11,511		11.71	—		0.01

	As of December 31, 2015
	Regulatory Capital Stock Outstanding		Percent of Total Regulatory Capital Stock Outstanding	Par Value of Advances		Percent of Total Par Value Advances	Interest-bearing Deposits		Percent of Total Interest-bearing Deposits
Capital One, National Association	$	869	16.99	$	20,095	19.54	$	17	1.55
Navy Federal Credit Union	643		12.57	14,773		14.36	—		0.01
Bank of America, National Association	579		11.31	13,262		12.89	—		0.01

XML

Transaction with Other FHLBanks (Tables)

12 Months Ended

Dec. 31, 2016

Transactions with Other FHLBanks [Abstract]

Schedule of Loans to and From Other Federal Home Loan Banks

The following table presents the cash flow activities for loans to and borrowings from other FHLBanks.

	For the Years Ended December 31,
	2016			2015			2014
Investing activities:
Loans made to other FHLBanks	$	(1,010	)	$	(11,759	)	$	(990	)
Principal collected on loans made to other FHLBanks	1,010			11,759			990
Net change in loans made to other FHLBanks	$	—		$	—		$	—
Financing activities:
Proceeds from short-term borrowings from other FHLBanks	$	—		$	927		$	1,038
Payments of short-term borrowings from other FHLBanks	—			(927		)	(1,038		)
Net change in borrowings from other FHLBanks	$	—		$	—		$	—

XML

Nature of Operations (Details)	Dec. 31, 2016 bank
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Federal Home Loan Banks	11

XML

Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Accumulated depreciation and amortization	$ 64	$ 66
Depreciation and amortization expense	$ 4	4	$ 4
Joint Capital Enhancement Agreement percentage	20.00%
Other Assets [Member]
Property, Plant and Equipment [Line Items]
Real estate owned, acquired through foreclosure	$ 2	9
Automobiles and Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Useful life of premises and equipment (in years)	3 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful life of premises and equipment (in years)	8 years
Office Furniture and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful life of premises and equipment (in years)	10 years
Building [Member]
Property, Plant and Equipment [Line Items]
Useful life of premises and equipment (in years)	40 years
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Useful life of premises and equipment (in years)	5 years
Depreciation and amortization expense	$ 3	5	$ 5
Gross carrying amount of computer software capitalized	55	58
Accumulated amortization of computer software capitalized	$ 48	$ 49

XML

Recently Issued and Adopted Accounting Guidance (Details)	Dec. 31, 2015 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unamortized Debt Issuance Expense	$ 7
Consolidated Obligation Bonds [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unamortized Debt Issuance Expense	5
Discount Notes [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unamortized Debt Issuance Expense	$ 2

XML

Cash and Due from Banks (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash and Cash Equivalents [Line Items]
Average collected cash balances	$ 7	$ 8

XML

Trading Securities (Trading Securities by Major Security Type) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities		$ 262	$ 1,265
Government-sponsored enterprises debt obligations [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities		261	1,212
Another FHLBank’s bond [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	[1]	0	52
State or local housing agency debt obligations [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities		$ 1	$ 1

[1] The Federal Home Loan Bank of Chicago is the primary obligor of this consolidated obligation bond.

XML

Trading Securities (Net losses on Trading Securities) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Trading Securities [Abstract]
Net losses on trading securities	$ (8)	$ (61)	$ (53)
Net losses on trading securities that matured during the year	(22)	0	(7)
Net losses on trading securities	$ (30)	$ (61)	$ (60)

XML

Available-for-sale Securities (Available-for-sale by Major Security Type) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	$ 1,221	$ 1,567
Available-for-sale Securities	1,345	1,662
Residential Mortgage Backed Securities [Member] | Mortgage-backed Securities, Private-label residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	1,221	1,567
Other-than-temporary Impairment Recognized in Accumulated Other Comprehensive Income	6	19
Gross unrealized gains on available-for-sale securities	130	114
Gross unrealized losses on available-for-sale securities	0	0
Available-for-sale Securities	$ 1,345	$ 1,662

XML

Available-for-sale Securities (Summary of Available-for-sale Securities in a Continuous Unrealized Loss Position) (Details) - Residential Mortgage Backed Securities [Member] - Mortgage-backed Securities, Private-label residential [Member] $ in Millions	Dec. 31, 2016 USD ($) positions	Dec. 31, 2015 USD ($) positions
Schedule of Available-for-sale Securities [Line Items]
Number of available-for-sale securities in unrealzed loss position for less than 12 months | positions	1	3
Number of available-for-sale securities in unrealzed loss position for 12 months or more | positions	10	10
Number of available-for-sale securities in unrealzed loss position | positions	11	13
Estimated fair value of available-for-sale securities in unrealized loss position for less than 12 months	$ 14	$ 107
Estimated fair value of available-for-sale securities in unrealized loss position for 12 months or more	189	247
Estimated fair value of available-for-sale securities in unrealized loss position	203	354
Available For Sale Securities Continuous Unrealized Loss Position Less Than 12 Months Aggregate Losses Accumulated In Investments	0	2
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	6	17
Gross unrealized losses on available-for-sale securities	$ 6	$ 19

XML

Available-for-sale Securities Available-for-sale Securities (Interest Rate Payment Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	$ 1,221	$ 1,567
Variable-rate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	1,202	1,540
Fixed-rate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	$ 19	$ 27

XML

Available-for-sale Securities (Summary of Available-for-sale MBS issued by Members or Affiliates of Members) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	$ 1,221	$ 1,567
Available-for-sale Securities	1,345	1,662
Bank of America Corporation, Charlotte, NC [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of available-for-sale securities	792	1,037
Other-than-temporary Impairment Recognized in Accumulated Other Comprehensive Income	5	16
Gross unrealized gains on available-for-sale securities	102	77
Gross unrealized losses on available-for-sale securities	0	0
Available-for-sale Securities	$ 889	$ 1,098

XML

Held-to-maturity Securities (Held-to-maturity by Major Security Type) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	$ 24,641	$ 23,239
Held-to-maturity securities Gross Unrealized Gains	56	96
Gross Unrealized Losses on held-to-maturity securities	64	72
Held-to-maturity securities, fair value	24,633	23,263
State or local housing agency debt obligations [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	76	76
Held-to-maturity securities Gross Unrealized Gains	0	0
Gross Unrealized Losses on held-to-maturity securities	0	0
Held-to-maturity securities, fair value	76	76
Government-sponsored enterprises debt obligations [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	6,041	5,693
Held-to-maturity securities Gross Unrealized Gains	3	0
Gross Unrealized Losses on held-to-maturity securities	5	12
Held-to-maturity securities, fair value	6,039	5,681
Residential Mortgage Backed Securities [Member] | Mortgage-backed Securities, Private-label residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	790	1,093
Held-to-maturity securities Gross Unrealized Gains	5	4
Gross Unrealized Losses on held-to-maturity securities	5	13
Held-to-maturity securities, fair value	790	1,084
Single Family [Member] | U.S. agency obligations-guaranteed single-family residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	209	279
Held-to-maturity securities Gross Unrealized Gains	2	4
Gross Unrealized Losses on held-to-maturity securities	0	0
Held-to-maturity securities, fair value	211	283
Single Family [Member] | Mortgage-backed Securities, Government- sponsored enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	10,752	11,958
Held-to-maturity securities Gross Unrealized Gains	44	88
Gross Unrealized Losses on held-to-maturity securities	43	31
Held-to-maturity securities, fair value	10,753	12,015
Multifamily [Member] | Mortgage-backed Securities, Government- sponsored enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	6,773	4,140
Held-to-maturity securities Gross Unrealized Gains	2	0
Gross Unrealized Losses on held-to-maturity securities	11	16
Held-to-maturity securities, fair value	$ 6,764	$ 4,124

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Held-to-maturity Securities (Summary of Held-to-maturity Securities in a Continuous Unrealized Loss Postion) (Details) $ in Millions	Dec. 31, 2016 USD ($) positions	Dec. 31, 2015 USD ($) positions
Schedule of Held-to-maturity Securities [Line Items]
Number of unrealized loss positions held less than 12 months | positions	114	121
Number of unrealized loss positions held more than 12 months | positions	141	83
Total number of unrealized loss positions | positions	255	204
Estimated fair value of unrealized loss positions held less than 12 months	$ 9,502	$ 10,855
Estimated fair value of unrealized loss positions held 12 months or more	4,178	2,653
Total estimated fair value of positions in an unrealized loss	13,680	13,508
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	33	39
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	31	33
Total Gross Unrealized Loss	$ 64	$ 72
Government-sponsored enterprises debt obligations [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of unrealized loss positions held less than 12 months | positions	10	20
Number of unrealized loss positions held more than 12 months | positions	0	3
Total number of unrealized loss positions | positions	10	23
Estimated fair value of unrealized loss positions held less than 12 months	$ 2,532	$ 4,535
Estimated fair value of unrealized loss positions held 12 months or more	0	745
Total estimated fair value of positions in an unrealized loss	2,532	5,280
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	5	7
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	5
Total Gross Unrealized Loss	$ 5	$ 12
Mortgage-backed Securities, Private-label residential [Member] | Residential Mortgage Backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of unrealized loss positions held less than 12 months | positions	6	29
Number of unrealized loss positions held more than 12 months | positions	56	47
Total number of unrealized loss positions | positions	62	76
Estimated fair value of unrealized loss positions held less than 12 months	$ 10	$ 407
Estimated fair value of unrealized loss positions held 12 months or more	432	428
Total estimated fair value of positions in an unrealized loss	442	835
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	0	2
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	5	11
Total Gross Unrealized Loss	$ 5	$ 13
Single Family [Member] | Mortgage-backed Securities, Government-sponsored enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of unrealized loss positions held less than 12 months | positions	46	41
Number of unrealized loss positions held more than 12 months | positions	63	8
Total number of unrealized loss positions | positions	109	49
Estimated fair value of unrealized loss positions held less than 12 months	$ 2,813	$ 3,233
Estimated fair value of unrealized loss positions held 12 months or more	2,206	443
Total estimated fair value of positions in an unrealized loss	5,019	3,676
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	22	21
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	21	10
Total Gross Unrealized Loss	$ 43	$ 31
Multifamily [Member] | Mortgage-backed Securities, Government-sponsored enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of unrealized loss positions held less than 12 months | positions	52	31
Number of unrealized loss positions held more than 12 months | positions	22	25
Total number of unrealized loss positions | positions	74	56
Estimated fair value of unrealized loss positions held less than 12 months	$ 4,147	$ 2,680
Estimated fair value of unrealized loss positions held 12 months or more	1,540	1,037
Total estimated fair value of positions in an unrealized loss	5,687	3,717
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	6	9
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	5	7
Total Gross Unrealized Loss	$ 11	$ 16

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Held-to-maturity Securities (Redemption Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	$ 24,641	$ 23,239
Estimated fair value of held-to-maturity securites	24,633	23,263
Non-mortgage backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held -to-maturity securities due in one year or less	2,454	651
Amortized cost of held-to-maturity securities due after one year through five years	3,487	5,118
Amortized Cost of held-to-maturity securities due after five years through ten years	176	0
Amortized cost of held-to-maturity securities	6,117	5,769
Estimated fair value of held-to-maturity securities due in one year or less	2,455	651
Estimated fair value of held-to-maturity securities due after one year through five years	3,484	5,106
Estimated fair value of Held-to-maturity securities due after five years through ten years	176	0
Estimated fair value of held-to-maturity securites	6,115	5,757
Mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	18,524	17,470
Estimated fair value of held-to-maturity securites	$ 18,518	$ 17,506

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Held-to-maturity Securities (Interest-rate Payment Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	$ 24,641	$ 23,239
Non-mortgage backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	6,117	5,769
Mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	18,524	17,470
Fixed-rate [Member] | Non-mortgage backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	2,413	1,915
Fixed-rate [Member] | Mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	2,438	2,949
Variable-rate [Member] | Non-mortgage backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	3,704	3,854
Variable-rate [Member] | Mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized cost of held-to-maturity securities	$ 16,086	$ 14,521

XML

Held-to-maturity Securities Held-to-maturity Securities (Summary of Held-to-maturity MBS issued by Members or Affiliated of Members) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 24,641	$ 23,239
Held-to-maturity securities Gross Unrealized Gains	56	96
Gross Unrealized Losses on held-to-maturity securities	64	72
Held-to-maturity securities, fair value	24,633	23,263
Mortgage-backed Securities, Private-label residential [Member] | Bank of America Corporation, Charlotte, NC [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	177	286
Held-to-maturity securities Gross Unrealized Gains	0	0
Gross Unrealized Losses on held-to-maturity securities	2	5
Held-to-maturity securities, fair value	$ 175	$ 281

XML

Other-than-temporary Impairment (Housing Price Forecast Narrative) (Details)	Dec. 31, 2016
Schedule of Projected Home Price Recovery Ranges [Line Items]
Number of Third Party Models to Assess Recovery of Amortized Cost Basis of Securities	2
Projected Change In The Twelve Month Housing Price Percentage Rate, Maximum Decrease	3.00%
Projected Change In The Twelve Month Housing Price Percentage Rate, Maximum Increase	10.00%
Projected Change In The Short-term Housing Price Percentage Rate, Maximum Decrease In Vast Majority Of Markets	2.00%
Projected Change In The Short-term Housing Price Percentage Rate, Maximum Increase In Vast Majority Of Markets	6.00%
Minimum [Member]
Schedule of Projected Home Price Recovery Ranges [Line Items]
Core Based Statistical Areas Current Requirements Number of Urban Areas	1
Minimum number of people under CBSA	10,000

XML

Other-than-temporary Impairment (Summary of Significant Inputs) (Details) - Mortgage-backed Securities, Private-label residential [Member] - Residential Mortgage Backed Securities [Member]	12 Months Ended
	Dec. 31, 2016	[1]
Other-than-Temporary Impairment, Credit Losses Recognized [Abstract]
Significant Inputs Weighted Average Percentage Rate, Prepayment Rate	12.31%
Significant Inputs Weighted Average Percentage Rate, Default Rate	16.76%
Significant Inputs Weighted Average Percentage Rate, Loss Severities	38.95%
Significant Inputs Weighted Average Percentage Rate Current Credit Enhancement	0.02%
Alt- A [Member]
Other-than-Temporary Impairment, Credit Losses Recognized [Abstract]
Significant Inputs Weighted Average Percentage Rate, Prepayment Rate	12.13%
Significant Inputs Weighted Average Percentage Rate, Default Rate	17.56%
Significant Inputs Weighted Average Percentage Rate, Loss Severities	40.22%
Significant Inputs Weighted Average Percentage Rate Current Credit Enhancement	0.00%
Prime [Member]
Other-than-Temporary Impairment, Credit Losses Recognized [Abstract]
Significant Inputs Weighted Average Percentage Rate, Prepayment Rate	15.02%
Significant Inputs Weighted Average Percentage Rate, Default Rate	4.62%
Significant Inputs Weighted Average Percentage Rate, Loss Severities	19.73%
Significant Inputs Weighted Average Percentage Rate Current Credit Enhancement	0.24%

[1] The classification of securities is based on current characteristics and performance, which may be different from the securities’ classification as determined by the originator at the time of origination.

XML

Other-than-temporary Impairment (Roll-forward of Credit Losses) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Roll-Forward Cumulative Credit Losses Recognized
Balance, beginning of year	$ 505	$ 542	$ 574
Amount related to credit loss for which an other-than-temporary impairment was previously recognized	3	5	3
Increase in cash flows expected to be collected, (accreted as interest income over the remaining lives of the applicable securities)	(53)	(42)	(35)
Balance, end of year	$ 455	$ 505	$ 542

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Advances (Redemption Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Advances [Abstract]
Overdrawn demand deposit accounts	$ 0	$ 16
Due in one year or less	47,325	46,673
Due after one year through two years	8,244	12,747
Due after two years through three years	5,904	6,360
Due after three years through four years	5,859	2,994
Due after four years through five years	11,846	4,616
Due after five years	19,110	29,458
Federal Home Loan Bank Advances at par value	98,288	102,864
Discount on AHP advances	(5)	(6)
Discount on EDGE advances	(4)	(4)
Hedging adjustments	798	1,315
Deferred commitment fees	0	(1)
Federal Home Loan Bank Advances	$ 99,077	$ 104,168

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Advances (Advances by Year of Contractual Maturity or Next Call Date for Callable Advances) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Advances [Abstract]
Overdrawn demand deposit accounts	$ 0	$ 16
Due or callable in one year or less	72,404	71,243
Due or callable after one year through two years	7,680	11,593
Due or callable after two years through three years	3,740	5,545
Due or callable after three years through four years	2,289	2,214
Due or callable after four years through five years	4,570	2,371
Due or callable after five years	7,605	9,882
Federal Home Loan Bank Advances at par value	$ 98,288	$ 102,864

XML

Advances (Advances by Year of Contracutal Maturity for Convertible Advances) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Advances [Abstract]
Overdrawn demand deposit accounts	$ 0	$ 16
Due or convertible in one year or less	47,935	48,743
Due or convertible after one year through two years	7,724	11,434
Due or convertible after two years through three years	5,943	5,768
Due or convertible after three years through four years	5,867	3,020
Due or convertible after four years through five years	11,866	4,609
Due or convertible after five years	18,953	29,274
Federal Home Loan Bank Advances at par value	$ 98,288	$ 102,864

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Advances (Interest-rate Payment Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Advances [Abstract]
Fixed-rate, due in one year or less	$ 38,597	$ 32,011
Fixed-rate, due after one year	24,528	27,051
Total fixed-rate	63,125	59,062
Variable-rate, due in one year or less	8,728	14,678
Variable-rate, due after one year	26,435	29,124
Total variable-rate	35,163	43,802
Federal Home Loan Bank Advances at par value	$ 98,288	$ 102,864

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Advances (Narrative) (Details) $ in Millions	Dec. 31, 2016 USD ($) Institutions	Dec. 31, 2015 USD ($) Institutions
Advances (Textual) [Abstract]
Federal Home Loan Bank, Advances, Interest Rate on Affordable Housing Program Subsidized Loans	0.00%
Federal Home Loan Bank Advances at par value	$ 98,288	$ 102,864
Number of Top Advances Borrowers | Institutions	10	10
Federal Home Loan Bank Advances to Ten Largest Borrowers	$ 67,493	$ 75,842
Federal Home Loan Bank Advances Ten Largest Borrowers Percent of Total	68.70%	73.70%
Allowance for credit losses on advances	$ 0	$ 0
Advances past due	0	0
Federal Home Loan Bank, Advances, Callable Option [Member]
Advances (Textual) [Abstract]
Federal Home Loan Bank Advances at par value	27,459	25,565
Federal Home Loan Bank, Advances, Convertible Option [Member]
Advances (Textual) [Abstract]
Federal Home Loan Bank Advances at par value	$ 1,497	$ 2,394
Minimum [Member]
Advances (Textual) [Abstract]
Federal Home Loan Bank advances interest rate	0.00%
Maximum [Member]
Advances (Textual) [Abstract]
Federal Home Loan Bank advances interest rate	7.55%

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Mortgage Loans Held for Portfolio (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Mortgage Loans on Real Estate [Line Items]
Unpaid principal balance	$ 525	$ 587
Premiums	2	2
Discounts	(3)	(3)
Total	524	586
Fixed-rate medium-term residential mortgage loans [Member]
Mortgage Loans on Real Estate [Line Items]
Unpaid principal balance	$ 40	66
Mortgage loans on real estate, original contract terms	15 years
Fixed-rate long-term residential mortgage loans [Member]
Mortgage Loans on Real Estate [Line Items]
Unpaid principal balance	$ 485	521
Conventional loans [Member]
Mortgage Loans on Real Estate [Line Items]
Unpaid principal balance	492	546
Government-guaranteed or insured mortgage loans [Member]
Mortgage Loans on Real Estate [Line Items]
Unpaid principal balance	$ 33	$ 41

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Allowance for Credit Losses (Rollforward of Allowance for Credit Losses) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of year	$ 2
Reversal of provision for credit losses	(1)	$ (1)	$ (5)
Balance, end of year	1	2
Residential Portfolio Segment [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of year	2	3	11
Reversal of provision for credit losses	(1)	(1)	(5)
Charge-offs	0	0	(3)
Balance, end of year	$ 1	$ 2	$ 3

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Allowance for Credit Losses (Mortgage Loan Portfolio by Impairment Methodology) (Details) - USD ($) $ in Millions	Dec. 31, 2016		Dec. 31, 2015		Dec. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Total allowance for credit losses	$ 1		$ 2
Residential Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total recorded investment	526	[1]	589	[2]
Residential Portfolio Segment [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for credit losses, collectively evaluated for impairment	1		2
Total allowance for credit losses	1		2		$ 3	$ 11
Recorded investment, individually evaluated for impairment	12		15
Recorded investment, collectively evaluated for impairment	481		532
Total recorded investment	$ 493	[1]	$ 547	[2]

[1] The difference between the recorded investment and the carrying value of total mortgage loans of $2 relates to accrued interest.

[2] The difference between the recorded investment and the carrying value of total mortgage loans of $3 relates to accrued interest.

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Allowance for Credit Losses (Credit Quality Indicators) (Details) - Residential Portfolio Segment [Member] - USD ($) $ in Millions		Dec. 31, 2016		Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		$ 38		$ 48
Total current mortgage loans		488		541
Total recorded investment		526	[1]	589	[2]
In process foreclosure	[3]	$ 7		$ 10
Seriously delinquent rate	[4]	2.53%		3.55%
Past due 90 days or more and still accruing interest	[5]	$ 1		$ 3
Mortgage loans on nonaccrual status	[6]	12		18
Accrued Interest on Mortgage Loans		2		3
Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		32		40
Total current mortgage loans		461		507
Total recorded investment		493	[1]	547	[2]
In process foreclosure	[3]	$ 6		$ 9
Seriously delinquent rate	[4]	2.44%		3.32%
Past due 90 days or more and still accruing interest	[5]	$ 0		$ 0
Mortgage loans on nonaccrual status	[6]	12		18
Troubled debt restructurings		12		15
Government-guaranteed or insured mortgage loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		6		8
Total current mortgage loans		27		34
Total recorded investment		33	[1]	42	[2]
In process foreclosure	[3]	$ 1		$ 1
Seriously delinquent rate	[4]	3.75%		6.65%
Past due 90 days or more and still accruing interest	[5]	$ 1		$ 3
Mortgage loans on nonaccrual status	[6]	0		0
Performing Financial Instruments [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Troubled debt restructurings		10		13
Nonperforming Financial Instruments [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Troubled debt restructurings		2		2
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		21		21
Financing Receivables, 30 to 59 Days Past Due [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		17		17
Financing Receivables, 30 to 59 Days Past Due [Member] | Government-guaranteed or insured mortgage loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		4		4
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		4		6
Financing Receivables, 60 to 89 Days Past Due [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		3		5
Financing Receivables, 60 to 89 Days Past Due [Member] | Government-guaranteed or insured mortgage loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		1		1
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		13		21
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Conventional Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		12		18
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Government-guaranteed or insured mortgage loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total past due mortgage loans		$ 1		$ 3

[1] The difference between the recorded investment and the carrying value of total mortgage loans of $2 relates to accrued interest.

[2] The difference between the recorded investment and the carrying value of total mortgage loans of $3 relates to accrued interest.

[3] Includes mortgage loans where the decision of foreclosure or similar alternative, such as a pursuit of deed-in lieu, has been reported. Mortgage loans in the process of foreclosure are included in past due or current mortgage loans depending on their delinquency status.

[4] Mortgage loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total mortgage loan portfolio segment.

[5] Mortgage loans insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs.

[6] Represents mortgage loans with contractual principal or interest payments 90 days or more past due and not accruing interest.

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Allowance for Credit Losses (Narrative) (Details) - Residential Portfolio Segment [Member] - Conventional Mortgage Loans [Member]	12 Months Ended
	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructuring Modification Period	36 months
Target housing expense ratio	31.00%
Maximum loan reamortization period	40 years
Incremental interest rate reduction	0.125%
Interest rate floor on loan modifications	3.00%
Troubled Debt Restructuring Modification Interest Rate Reduction Period if Expense Ratio is Not Met	36 months

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Consolidated Obligations (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2016 USD ($) bank	Dec. 31, 2015 USD ($)
Schedule of Short-term and Long-term Debt [Line Items]
Number of Federal Home Loan Banks | bank	11
Par Value FHLBanks' Outstanding Consolidated Obligations	$ 989,311	$ 905,202
Unpledged qualifying assets held by the Bank	138,097	141,848
Federal Home Loan Bank, Consolidated Obligations	$ 129,939	$ 133,387
Maximum contractual maturity period of discount notes (up to one year)	1 year
Other FHLBanks [Member]
Schedule of Short-term and Long-term Debt [Line Items]
Number of Federal Home Loan Banks | bank	10

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Consolidated Obligations (Interest-rate Payment Terms) (Details) - Consolidated Obligation Bonds [Member] - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Consolidated Obligation Bonds by Interest-Rate Payment [Line Items]
Bonds par value	$ 88,616	$ 63,773
Fixed-rate [Member]
Consolidated Obligation Bonds by Interest-Rate Payment [Line Items]
Bonds par value	23,674	40,512
Step up/down [Member]
Consolidated Obligation Bonds by Interest-Rate Payment [Line Items]
Bonds par value	2,534	4,239
Simple variable-rate [Member]
Consolidated Obligation Bonds by Interest-Rate Payment [Line Items]
Bonds par value	$ 62,408	$ 19,022

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Consolidated Obligations (Redemption Terms) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Federal Home Loan Bank, Consolidated Obligations, Bonds	$ 88,647	$ 63,953
Consolidated Obligation Bonds [Member]
Debt Instrument [Line Items]
Bonds, Due in one year or less	65,378	32,559
Bonds, Due after one year through two years	17,065	17,132
Bonds, Due after two years through three years	1,849	5,959
Bonds, Due after three years through four years	1,482	2,124
Bonds, Due after four years through five years	1,117	1,975
Bonds, Due after five years	1,725	4,024
Bonds par value	88,616	63,773
Premiums	24	36
Discounts	(12)	(20)
Hedging adjustments	19	164
Federal Home Loan Bank, Consolidated Obligations, Bonds	$ 88,647	$ 63,953
Bonds, Due in one year or less, weighted average interest rate	0.91%	0.74%
Bonds, Due after one year through two years, weighted average interest rate	1.05%	1.41%
Bonds, Due after two years through three years, weighted average interest rate	1.67%	1.63%
Bonds, Due after three years through four years, weighted average interest rate	1.68%	1.67%
Bonds, Due after four years through five years, weighted average interest rate	1.58%	1.72%
Bonds, Due after five years, weighted average interest rate	2.37%	2.18%
Total, weighted average interest rate	1.00%	1.16%

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Consolidated Obligations (Bonds by Callable Feature) (Details) - Consolidated Obligation Bonds [Member] - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Bonds par value	$ 88,616	$ 63,773
Noncallable [Member]
Debt Instrument [Line Items]
Bonds par value	83,487	53,432
Callable [Member]
Debt Instrument [Line Items]
Bonds par value	$ 5,129	$ 10,341

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Consolidated Obligations (Bonds by Maturity or Call Date) (Details) - Consolidated Obligation Bonds [Member] - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Bonds, Due in one year or less	$ 65,378	$ 32,559
Bonds, Due after one year through two years	17,065	17,132
Bonds, Due after two years through three years	1,849	5,959
Bonds, Due after three years through four years	1,482	2,124
Bonds, Due after four years through five years	1,117	1,975
Bonds, Due after five years	1,725	4,024
Bonds par value	88,616	63,773
Earlier of Contractual Maturity or Next Call Date [Member]
Debt Instrument [Line Items]
Bonds, Due in one year or less	70,232	41,410
Bonds, Due after one year through two years	15,250	16,277
Bonds, Due after two years through three years	1,399	3,461
Bonds, Due after three years through four years	1,103	1,055
Bonds, Due after four years through five years	162	1,023
Bonds, Due after five years	$ 470	$ 547

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Consolidated Obligations (Discount Notes) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Short-term Debt [Line Items]
Discount notes	$ 41,292	$ 69,434
Short-term Debt [Member]
Short-term Debt [Line Items]
Discount notes	41,292	69,434
Discount notes par value	$ 41,334	$ 69,481
Discount notes weighted average interest rate	0.48%	0.27%

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Affordable Housing Program (Roll-forward) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Affordable Housing Program [Roll Forward]
AHP Obligation, beginning balance	$ 63	$ 65	$ 74
AHP Assessments	31	33	30
Subsidy usage, net	(25)	(35)	(39)
AHP Obligation, ending balance	$ 69	$ 63	$ 65

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Affordable Housing Program (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Assessments [Abstract]
Affordable Housing Program required aggregate contribution amount	$ 100
Federal Home Loan Bank, Advances, Affordable Housing Program, Principal Outstanding	$ 27	$ 30
Affordable Housing Program required contribution percentage	10.00%

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Capital and Mandatorily Redeemable Capital Stock (Narrative) (Details) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2016 USD ($) class investor $ / shares	Dec. 31, 2015 USD ($) $ / shares
Capital and Mandatorily Redeemable Capital Stock (Textual) [Abstract]
Number of Finance Agency Regulatory Capital Requirements	3
Total regulatory capital ratio, Required	4.00%	4.00%
Required leverage ratio	5.00%	5.00%
Weight applied to permanent capital in computing leverage ratio	1.5
Weight applied to nonpermanent capital in computing leverage ratio	1.0
Number of subclasses of capital stock | class	2
Capital stock Class B putable par value (per share) | $ / shares	$ 100	$ 100
Membership stock requirement percentage	0.09%
Membership stock requirement, maximum	$ 15
Activity based capital stock required by members as a percent of total advances and mortgage loans oustanding as disclosed in the statement of condition	4.25%
Activity based capital stock required by members as a percent of targeted debt or equity investments sold by member to the bank	8.00%
Activity based capital stock required by member as a percentage of outstanding balance of acquired member assets	0.00%	0.00%
Redemption period for excess capital stock (in years)	5 years
Number of largest holders of capital stock | investor	10
Aggregate amount of capital stock held by ten largest holders of capital stock	$ 3,018	$ 3,373
Aggregate percentage of capital stock held by ten largest holders of capital stock	60.90%	65.90%

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Capital and Mandatorily Redeemable Capital Stock (Regulatory Capital Rules and Requirements) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Capital [Abstract]
Risk based capital, Required		$ 1,701	$ 1,621
Risk based capital, Actual		$ 6,848	$ 6,956
Total regulatory capital ratio, Required		4.00%	4.00%
Total regulatory capital ratio, Actual		4.94%	4.89%
Total regulatory capital, Required	[1]	$ 5,547	$ 5,690
Total regulatory capital, Actual	[1]	$ 6,848	$ 6,956
Leverage capital ratio, Required		5.00%	5.00%
Leverage capital ratio, Actual		7.41%	7.33%
Leverage Capital, Required		$ 6,934	$ 7,113
Leverage Capital, Actual		$ 10,273	$ 10,433

[1] Total regulatory capital does not include accumulated other comprehensive income but does include mandatorily redeemable capital stock.

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Capital and Mandatorily Redeemable Capital Stock (Mandatorily Redeemable Capital Stock Roll-forward) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Activity In Mandatorily Redeemable Capital Stock
Balance, beginning of year	$ 14	$ 19	$ 24
Net Shares Reclassified to Mandatorily Redeemable Capital Stock, Value	7	21	7
Repurchase/redemption of mandatorily redeemable capital stock	(20)	(26)	(12)
Balance, end of year	$ 1	$ 14	$ 19

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Capital and Mandatorily Redeemable Capital Stock (Mandatorily Redeemable Capital Stock by Year of Redemption) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Capital [Abstract]
Due in one year or less	$ 0	$ 7
Due after one year through two years	0	1
Due after three years through four years	1	0
Due after four years through five years	0	6
Mandatorily redeemable capital stock	$ 1	$ 14	$ 19	$ 24

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net change in fair value		$ 27	$ (28)	$ (10)
Reclassification of noncredit portion of other-than-temporary impairment losses included in net income		3	5	3
Other comprehensive income (loss) related to pension and postretirement benefit plans		0	3	(10)
Pension and Postretirement Benefits [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning of period		(20)	(23)	(13)
Noncredit other-than-temporary impairment losses		0
Net change in fair value		0	0	0
Actuarial (loss) gain		(1)	1	(11)
Reclassification of noncredit portion of other-than-temporary impairment losses included in net income		0	0	0
Other comprehensive income (loss) related to pension and postretirement benefit plans	[1]	1	2	1
Net current period other comprehensive income (loss)		0	3	(10)
Accumulated Other Comprehensive Income (Loss), End of period		(20)	(20)	(23)
Total Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning of period		75	95	112
Noncredit other-than-temporary impairment losses		(1)
Net change in fair value		27	(28)	(10)
Actuarial (loss) gain		(1)	1	(11)
Reclassification of noncredit portion of other-than-temporary impairment losses included in net income		3	5	3
Other comprehensive income (loss) related to pension and postretirement benefit plans	[1]	1	2	1
Net current period other comprehensive income (loss)		29	(20)	(17)
Accumulated Other Comprehensive Income (Loss), End of period		104	75	95
Available-for-sale Securities [Member] | Noncredit Portion of Other Than Temporary Impairment Losses [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning of period		95	118	125
Noncredit other-than-temporary impairment losses		(1)
Net change in fair value		27	(28)	(10)
Actuarial (loss) gain		0	0	0
Reclassification of noncredit portion of other-than-temporary impairment losses included in net income		3	5	3
Other comprehensive income (loss) related to pension and postretirement benefit plans		0	0	0
Net current period other comprehensive income (loss)		29	(23)	(7)
Accumulated Other Comprehensive Income (Loss), End of period		$ 124	$ 95	$ 118

[1] Included in Compensation and benefits on the Statements of Income.

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Pension and Post Retirement Benefit Plans (Multi-employer Plan) (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Jul. 01, 2016	Jul. 01, 2015	Jul. 01, 2014
Multiemployer Plans [Line Items]
Multiemployer plan number		333
Pentegra Defined Benefit Plan [Member]
Multiemployer Plans [Line Items]
Pension Expense		$ 12	$ 11	$ 10
Pentegra Plan funded status as of July 1	[1]				104.12%	107.01%	111.44%
Bank's funded status as of the plan year end					105.51%	108.82%	114.16%
Multiemployer Plans, Pension [Member]
Multiemployer Plans [Line Items]
Entity tax identification number		135645888

[1] The Pentegra Plan's funded status as of July 1 is preliminary and may increase because the plan's participants are permitted to make contributions through March 15 of the following year (i.e. through March 15, 2017 for the plan year ended June 30, 2016 and through March 15, 2016 for the plan year ended June 30, 2015). Contributions made before the March 15th deadline may be credited to the plan for the plan year ended June 30 of the previous year and included in the final valuation as of July 1 of the year the plan ended. The final funded status as of July 1 will not be available until the Form 5500 for the plan year July 1 through June 30 is filed. Form 5500 is due to be filed no later than April 2018 for the plan year July 1, 2016 through June 30, 2017 and April 2017 for the plan year July 1, 2015 through June 2016. Form 5500 was filed in April 2016 for the plan year July 1, 2014 through June 30, 2015.

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Pension and Post Retirement Benefit Plans (Defined Contribution Plan) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Qualifed Defined Contribution Plan [Member]
Defined Contribution Plan Disclosures [Line Items]
Defined Contribution Plan, Cost Recognized	$ 2	$ 2	$ 2
Nonqualifed Defined Contribution Plan [Member]
Defined Contribution Plan Disclosures [Line Items]
Defined Contribution Plan, Cost Recognized	$ 1	$ 1	$ 1

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Pension and Post Retirement Benefit Plans (Deferred Compensation) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Minimum obligation under deferred compensation plan	$ 3	$ 2
Deferred compensation and accrued earnings included in operating expenses (less than $1 million during the year ended December 31, 2014)	$ 1	$ 1	$ 1

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Pension and Post Retirement Benefit Plans (Defined Benefit Plan) (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Other Liabilities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan amounts recognized in other liabilities	$ 56	$ 51

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Pension and Post Retirement Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net pension cost charged to compensation and benefit expense for the year ended December 31	$ 6	$ 6	$ 4

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Pension and Post Retirement Benefit Plans (Pension Recognized in Other Comprehensive Income) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Total recognized in other comprehensive income (loss)	$ 0	$ 3	$ (10)

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Derivatives and Hedging Activities (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Derivative Liability, Collateral, Right to Reclaim Cash, Offset		$ 1,061	$ 1,293
Derivative Asset, Collateral, Obligation to Return Cash, Offset		22	27
Total notional amount of derivatives before netting and collateral adjustments		81,197	99,798
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		282	337
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		1,073	1,551
Derivative, Collateral, Right to Reclaim Cash	[1]	73
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[1]		(161)
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(966)	(1,427)	[1]
Derivative assets		355	176
Derivative liabilities		107	124
Designated as Hedging Instrument [Member] | Interest Rate Swaps [Member]
Derivative [Line Items]
Total notional amount of derivatives before netting and collateral adjustments		65,027	80,290
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		256	312
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		1,029	1,467
Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Total notional amount of derivatives before netting and collateral adjustments		16,170	19,508
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		26	25
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		44	84
Not Designated as Hedging Instrument [Member] | Interest Rate Swaps [Member]
Derivative [Line Items]
Total notional amount of derivatives before netting and collateral adjustments		1,158	3,008
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		9	10
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		31	74
Not Designated as Hedging Instrument [Member] | Interest Rate Caps or Floors [Member]
Derivative [Line Items]
Total notional amount of derivatives before netting and collateral adjustments		15,000	16,500
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		17	15
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		13	10
Not Designated as Hedging Instrument [Member] | Mortgages [Member]
Derivative [Line Items]
Total notional amount of derivatives before netting and collateral adjustments		12	0
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement		0	0
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement		$ 0	$ 0

[1] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

XML

Derivatives and Hedging Activities (Net Gains (Losses) on Derivatives and Hedging Activities) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Net gains (losses) on derivatives not designated as hegding instruments	$ (1)	$ (8)	$ (27)
Net gains on derivatives and hedging activities	119	261	120
Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Net gains (losses) on derivatives and hedged items in fair value hedging relationships	120	269	147
Net gains (losses) on derivatives not designated as hegding instruments	30	53	57
Interest Rate Caps or Floors [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Net gains (losses) on derivatives not designated as hegding instruments	(1)	(2)	(14)
Net Interest Settlements [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Net gains (losses) on derivatives not designated as hegding instruments	$ (30)	$ (59)	$ (70)

XML

Derivatives and Hedging Activities (Effect of Fair Value Hedged Related Derivative Instruments) (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative		$ 372	$ 349	$ (17)
Gains (Losses) on Hedged Item		(252)	(80)	164
Net Fair Value Hedge Ineffectiveness		120	269	147
Effect of Derivatives on Net Interest Income	[1]	(302)	(235)	(378)
Advances [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative		524	448	(152)
Gains (Losses) on Hedged Item		(393)	(169)	297
Net Fair Value Hedge Ineffectiveness		131	279	145
Effect of Derivatives on Net Interest Income	[1]	(529)	(713)	(875)
Consolidated Obligation Bonds [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative		(154)	(93)	135
Gains (Losses) on Hedged Item		146	81	(133)
Net Fair Value Hedge Ineffectiveness		(8)	(12)	2
Effect of Derivatives on Net Interest Income	[1]	230	469	$ 497
Short-term Debt [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Derivative		2	(6)
Gains (Losses) on Hedged Item		(5)	8
Net Fair Value Hedge Ineffectiveness		(3)	2
Effect of Derivatives on Net Interest Income	[1]	$ (3)	$ 9

[1] The net interest on derivatives in fair value hedge relationships is presented in the interest income or expense line item of the respective hedged item.

XML

Derivatives and Hedging Activities (Offsetting of Derivative Assets and Derivative Liabilities) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset		$ 282	$ 337
Derivative Liability, Fair Value, Gross Liability		1,073	1,551
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[1]		(161)
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(966)	(1,427)	[1]
Derivative, Collateral, Right to Reclaim Cash	[1]	73
Derivative assets		355	176
Derivative liabilities		107	124
Derivative Asset, Fair Value, Amount Offset Against Collateral		355	174
Derivative Liability, Fair Value, Amount Offset Against Collateral		107	124
Credit Risk Contract [Member]
Derivatives, Fair Value [Line Items]
Credit Derivative Exposure Net		346	170
Over the Counter [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset		70	260
Derivative Liability, Fair Value, Gross Liability		370	1,159
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset		(69)	(258)
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(263)	(1,035)
Derivative assets		1	2
Derivative liabilities		107	124
Derivative, Collateral, Obligation to Return Securities That Cannot Be Sold or Repledged	[2]	0	2
Derivative, Collateral, Right to Reclaim Securities That Cannot Be Sold or Repledged	[2]	0	0
Derivative Asset, Fair Value, Amount Offset Against Collateral		1	0
Derivative Liability, Fair Value, Amount Offset Against Collateral		107	124
Exchange Cleared [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset		212	77
Derivative Liability, Fair Value, Gross Liability		703	392
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(703)	(392)
Derivative Asset Fair Value Gross Liability and Right To Reclaim Cash Offset		142	97
Derivative assets		354	174
Derivative liabilities		0	0
Derivative Asset, Fair Value, Amount Offset Against Collateral	[3]	354	174
Derivative Liability, Fair Value, Amount Offset Against Collateral		$ 0	$ 0

[1] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

[2] Collateral held with respect to derivatives with member institutions, in which the Bank is acting as an intermediary, represents the amount of eligible collateral physically held by or on behalf of the Bank or collateral assigned to the Bank, as evidenced by a written security agreement, and held by the member institution for the benefit of the Bank.

[3] The Bank had net credit exposure of $346 and $170 as of December 31, 2016 and 2015, respectively, due to instances where the Bank’s pledged collateral to a counterparty exceeds the Bank’s net derivative liability position.

XML

Derivatives and Hedging Activities (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2016 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Federal Home Loan Bank, Advances, Maximum Contractual Maturity Period	30 years
Derivative credit-risk-related contingent features net liability position aggregate fair value	$ 296
Collateral already posted, aggregate fair value	193
Additional collateral	$ 71

XML

Estimated Fair Values (Estimated Fair Value Measurements on a Recurring Basis) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Assets:
Trading securities		$ 262	$ 1,265
Available-for-sale Securities		1,345	1,662
Derivative assets		355	176
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[1]		(161)
Derivative, Collateral, Right to Reclaim Cash	[1]	73
Liabilities:
Derivative liabilities		107	124
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(966)	(1,427)	[1]
Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		261	1,212
Another FHLBank’s bond [Member]
Assets:
Trading securities	[2]	0	52
State or local housing agency debt obligations [Member]
Assets:
Trading securities		1	1
Fair Value, Measurements, Recurring [Member]
Assets:
Trading securities		0	0
Available-for-sale Securities		0	0
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[3]		(161)
Derivative, Collateral, Right to Reclaim Cash	[4]	73
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset	[4]	(966)	(1,427)
Fair Value, Measurements, Recurring [Member] | Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Measurements, Recurring [Member] | Another FHLBank’s bond [Member]
Assets:
Trading securities			0
Fair Value, Measurements, Recurring [Member] | State or local housing agency debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Private-label residential [Member]
Assets:
Available-for-sale Securities		0	0
Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Assets:
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset			(161)
Derivative, Collateral, Right to Reclaim Cash		73
Liabilities:
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(966)	(1,427)
Fair Value, Inputs, Level 1 [Member]
Assets:
Trading securities		0	0
Available-for-sale Securities		0	0
Derivative assets		0	0
Grantor trust assets (included in Other assets)		37	31
Liabilities:
Derivative liabilities		0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Trading securities		0	0
Grantor trust assets (included in Other assets)		37	31
Total recurring assets at fair value		37	31
Liabilities:
Total liabilities at fair value		0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Another FHLBank’s bond [Member]
Assets:
Trading securities			0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | State or local housing agency debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Private-label residential [Member]
Assets:
Available-for-sale Securities		0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Assets:
Derivative assets		0	0
Liabilities:
Derivative liabilities		0	0
Fair Value, Inputs, Level 2 [Member]
Assets:
Trading securities		262	1,265
Available-for-sale Securities		0	0
Derivative assets		282	337
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Derivative liabilities		1,073	1,551
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Trading securities		262	1,265
Grantor trust assets (included in Other assets)		0	0
Total recurring assets at fair value		544	1,602
Liabilities:
Total liabilities at fair value		1,073	1,551
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		261	1,212
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Another FHLBank’s bond [Member]
Assets:
Trading securities			52
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | State or local housing agency debt obligations [Member]
Assets:
Trading securities		1	1
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Private-label residential [Member]
Assets:
Available-for-sale Securities		0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Assets:
Derivative assets		282	337
Liabilities:
Derivative liabilities		1,073	1,551
Fair Value, Inputs, Level 3 [Member]
Assets:
Trading securities		0	0
Available-for-sale Securities		1,345	1,662
Derivative assets		0	0
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Derivative liabilities		0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Trading securities		0	0
Grantor trust assets (included in Other assets)		0	0
Total recurring assets at fair value		1,345	1,662
Liabilities:
Total liabilities at fair value		0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Another FHLBank’s bond [Member]
Assets:
Trading securities			0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | State or local housing agency debt obligations [Member]
Assets:
Trading securities		0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Private-label residential [Member]
Assets:
Available-for-sale Securities		1,345	1,662
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Assets:
Derivative assets		0	0
Liabilities:
Derivative liabilities		0	0
Estimate of Fair Value Measurement [Member]
Assets:
Trading securities		262	1,265
Available-for-sale Securities		1,345	1,662
Derivative assets		355	176
Grantor trust assets (included in Other assets)		37	31
Liabilities:
Derivative liabilities		107	124
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Trading securities		262	1,265
Grantor trust assets (included in Other assets)		37	31
Total recurring assets at fair value		1,999	3,134
Liabilities:
Total liabilities at fair value		107	124
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Government-sponsored enterprises debt obligations [Member]
Assets:
Trading securities		261	1,212
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Another FHLBank’s bond [Member]
Assets:
Trading securities			52
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | State or local housing agency debt obligations [Member]
Assets:
Trading securities		1	1
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities, Private-label residential [Member]
Assets:
Available-for-sale Securities		1,345	1,662
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Assets:
Derivative assets		355	176
Liabilities:
Derivative liabilities		$ 107	$ 124

[1] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

[2] The Federal Home Loan Bank of Chicago is the primary obligor of this consolidated obligation bond.

[3] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

[4] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

XML

Estimated Fair Values (Roll-forward of Level 3 Assets and Liabilities) (Details) - Fair Value, Measurements, Recurring [Member] - Fair Value, Inputs, Level 3 [Member] - Available-for-Sale Securities, Private Label Residential Mortgage Backed Securities [Member] - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of Available-For-Sale Securities Measured at Fair Value
Balance, beginning of year		$ 1,662	$ 1,981	$ 2,299
Included in net impairment losses recognized in earnings	[1]	(3)	(5)	(3)
Included in other comprehensive loss	[1]	29	(23)	(7)
Accretion of credit losses in net interest income	[1]	53	42	34
Settlements		(396)	(333)	(342)
Balance, end of year		$ 1,345	$ 1,662	$ 1,981

[1] Related to available-for-sale securities held at year end.

XML

Estimated Fair Values Estimated Fair Value Measurements on a Nonrecurring Basis (Details) - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	$ 0	$ 0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	569	646
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	0	1
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	0	0
Real estate owned (included in Other assets)	0	0
Total nonrecurring assets at fair value	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	0	0
Real estate owned (included in Other assets)	0	0
Total nonrecurring assets at fair value	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	0	1
Real estate owned (included in Other assets)	0	3
Total nonrecurring assets at fair value	0	4
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net	569	647
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for portfolio, net		1
Real estate owned (included in Other assets)	0	3
Total nonrecurring assets at fair value	$ 0	$ 4

XML

Estimated Fair Values (Fair Value Summary) (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015		Dec. 31, 2014	Dec. 31, 2013
Assets:
Cash and due from banks		$ 1,815	$ 1,751		$ 915	$ 4,374
Trading securities		262	1,265
Available-for-sale Securities		1,345	1,662
Held-to-maturity Securities		24,641	23,239
Held-to-maturity securities		24,633	23,263
Interest Receivable		171	171
Derivative assets		355	176
Derivative, Collateral, Right to Reclaim Cash	[1]	73
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[1]		(161)
Liabilities:
Mandatorily redeemable capital stock		1	14		$ 19	$ 24
Accrued interest payable		128	127
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset		(966)	(1,427)	[1]
Derivative liabilities		107	124
Fair Value, Inputs, Level 1 [Member]
Assets:
Cash and due from banks		1,815	1,751
Interest bearing-deposits		0	0
Securities purchased under agreements to resell		0	0
Federal funds sold		0	0
Trading securities		0	0
Available-for-sale Securities		0	0
Held-to-maturity securities		0	0
Advances		0	0
Mortgage loans held for portfolio, net		0	0
Interest Receivable		0	0
Derivative assets		0	0
Grantor trust assets (included in Other assets)		37	31
Liabilities:
Interest-bearing deposits		0	0
Mandatorily redeemable capital stock		1	14
Accrued interest payable		0	0
Derivative liabilities		0	0
Fair Value, Inputs, Level 1 [Member] | Consolidated Obligation Bonds [Member]
Liabilities:
Bonds		0	0
Fair Value, Inputs, Level 1 [Member] | Short-term Debt [Member]
Liabilities:
Discount notes			0
Fair Value, Inputs, Level 1 [Member] | Discount Notes [Member]
Liabilities:
Discount notes		0
Fair Value, Inputs, Level 2 [Member]
Assets:
Cash and due from banks		0	0
Interest bearing-deposits		1,106	1,088
Securities purchased under agreements to resell		1,386	2,500
Federal funds sold		7,770	5,421
Trading securities		262	1,265
Available-for-sale Securities		0	0
Held-to-maturity securities		23,843	22,179
Advances		99,062	104,021
Mortgage loans held for portfolio, net		569	646
Accrued interest receivable		171	171
Derivative assets		282	337
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Interest-bearing deposits		1,118	1,084
Mandatorily redeemable capital stock		0	0
Accrued interest payable		128	127
Derivative liabilities		1,073	1,551
Fair Value, Inputs, Level 2 [Member] | Consolidated Obligation Bonds [Member]
Liabilities:
Bonds		88,768	63,940
Fair Value, Inputs, Level 2 [Member] | Short-term Debt [Member]
Liabilities:
Discount notes		41,293	69,432
Fair Value, Inputs, Level 3 [Member]
Assets:
Cash and due from banks		0	0
Interest bearing-deposits		0	0
Securities purchased under agreements to resell		0	0
Federal funds sold		0	0
Trading securities		0	0
Available-for-sale Securities		1,345	1,662
Held-to-maturity securities		790	1,084
Advances		0	0
Mortgage loans held for portfolio, net		0	1
Interest Receivable		0	0
Derivative assets		0	0
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Interest-bearing deposits		0	0
Mandatorily redeemable capital stock		0	0
Accrued interest payable		0	0
Derivative liabilities		0	0
Fair Value, Inputs, Level 3 [Member] | Consolidated Obligation Bonds [Member]
Liabilities:
Bonds		0	0
Fair Value, Inputs, Level 3 [Member] | Short-term Debt [Member]
Liabilities:
Discount notes			0
Fair Value, Inputs, Level 3 [Member] | Discount Notes [Member]
Liabilities:
Discount notes		0
Carrying Value [Member]
Assets:
Cash and due from banks		1,815	1,751
Interest bearing-deposits		1,106	1,088
Securities purchased under agreements to resell		1,386	2,500
Federal funds sold		7,770	5,421
Trading securities		262	1,265
Available-for-sale Securities		1,345	1,662
Held-to-maturity Securities		24,641	23,239
Advances		99,077	104,168
Mortgage loans held for portfolio, net		523	584
Interest Receivable		171	171
Derivative assets		355	176
Grantor trust assets (included in Other assets)		37	31
Liabilities:
Interest-bearing deposits		1,118	1,084
Mandatorily redeemable capital stock		1	14
Accrued interest payable		128	127
Derivative liabilities		107	124
Carrying Value [Member] | Consolidated Obligation Bonds [Member]
Liabilities:
Bonds		88,647	63,953
Carrying Value [Member] | Short-term Debt [Member]
Liabilities:
Discount notes			69,434
Carrying Value [Member] | Discount Notes [Member]
Liabilities:
Discount notes		41,292
Estimate of Fair Value Measurement [Member]
Assets:
Cash and due from banks		1,815	1,751
Interest bearing-deposits		1,106	1,088
Securities purchased under agreements to resell		1,386	2,500
Federal funds sold		7,770	5,421
Trading securities		262	1,265
Available-for-sale Securities		1,345	1,662
Held-to-maturity securities		24,633	23,263
Advances		99,062	104,021
Mortgage loans held for portfolio, net		569	647
Accrued interest receivable		171	171
Derivative assets		355	176
Grantor trust assets (included in Other assets)		37	31
Liabilities:
Interest-bearing deposits		1,118	1,084
Mandatorily redeemable capital stock		1	14
Accrued interest payable		128	127
Derivative liabilities		107	124
Estimate of Fair Value Measurement [Member] | Consolidated Obligation Bonds [Member]
Liabilities:
Bonds		88,768	63,940
Estimate of Fair Value Measurement [Member] | Short-term Debt [Member]
Liabilities:
Discount notes			69,432
Estimate of Fair Value Measurement [Member] | Discount Notes [Member]
Liabilities:
Discount notes		41,293
Fair Value, Measurements, Recurring [Member]
Assets:
Securities purchased under agreements to resell			0
Trading securities		0	0
Available-for-sale Securities		0	0
Held-to-maturity securities		0	0
Derivative, Collateral, Right to Reclaim Cash	[2]	73
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset	[3]		(161)
Grantor trust assets (included in Other assets)		0	0
Liabilities:
Mandatorily redeemable capital stock		0	0
Derivative Liability, Fair Value, Gross Asset and Right to Reclaim Cash, Offset	[2]	(966)	(1,427)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Trading securities		0	0
Grantor trust assets (included in Other assets)		37	31
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Trading securities		262	1,265
Grantor trust assets (included in Other assets)		0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Trading securities		0	0
Grantor trust assets (included in Other assets)		0	0
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Assets:
Trading securities		262	1,265
Grantor trust assets (included in Other assets)		$ 37	$ 31

[1] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral and related accrued interest held or placed with the same clearing agents and/or counterparty. Cash collateral posted and related accrued interest was $1,061 and $1,293 as of December 31, 2016 and 2015, respectively. Cash collateral received and related accrued interest was $22 and $27 as of December 31, 2016 and 2015, respectively.

[2] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

[3] Amounts represent the application of the netting requirements that allow the Bank to settle positive and negative positions and also cash collateral held or placed with the same clearing agents and/or counterparties.

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Commitments and Contingencies (Details) $ in Millions		Dec. 31, 2016 USD ($) letter_of_credit	Dec. 31, 2015 USD ($) letter_of_credit
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Number Of Outstanding Standby Letters Of Credit Renewable Annually | letter_of_credit		12	11
Standby Letters Of Credit Issued Renewable Annually		$ 34	$ 29
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year	[1]	10,934	8,693
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year	[1]	21,734	23,823
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	[1]	32,668	32,516
Commitments to Fund Additional Advances [Member]
Loss Contingencies [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year		100	207
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year		200	100
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability		300	307
Short-term Debt [Member]
Loss Contingencies [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year		0	100
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year		0	0
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability		0	100
Unsettled Consolidation Obligation Bonds [Member]
Loss Contingencies [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year	[2]	15	25
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year	[2]	0	0
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	[2]	15	25
Mortgages [Member]
Loss Contingencies [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring Within One Year	[2]	12	0
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Expiring After One Year	[2]	0	0
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	[2]	$ 12	$ 0

[1] Expire Within One Year" includes 12 standby letters of credit for a total of $34 and 11 standby letters of credit for a total of $29 as of December 31, 2016 and 2015, respectively, that have no stated maturity date and are subject to renewal on an annual basis.

[2] Expiration is based on settlement period rather than underlying contractual maturity of consolidated obligations.

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
The FHLBank's outstanding consolidated obligations for which the Bank is jointly and severally liable		$ 859,361	$ 771,948
Operating leases rent expense		2	2	$ 2
Carrying value guarantees related to standby letters of credit		$ 358	431
CommitmentsToPurchaseMortgageLoansMaximumTerm		91 days
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	[1]	$ 32,668	32,516
Carrying value guarantees related to standby letters of credit		$ 135	$ 136

[1] Expire Within One Year" includes 12 standby letters of credit for a total of $34 and 11 standby letters of credit for a total of $29 as of December 31, 2016 and 2015, respectively, that have no stated maturity date and are subject to renewal on an annual basis.

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Transactions with Shareholders (Details) - USD ($) $ in Millions		Dec. 31, 2016	Dec. 31, 2015
Minimum
RelatedPartyTransactionDefinitionOfRelatedPartyCapitalStockPercentage		10.00%
Definition of shareholder concentration, percentage		10.00%
Federal Home Loan Bank, Regulatory Capital, Actual	[1]	$ 6,848	$ 6,956
Par Value of Advance		99,077	104,168
Capital One, National Association [Member]
Minimum
Federal Home Loan Bank, Regulatory Capital, Actual		$ 745	$ 869
Percent of Total Regulatory Capital Stock Outstanding		15.03%	16.99%
Par Value of Advance		$ 17,176	$ 20,095
Percent of Total Par Value Advances		17.48%	19.54%
Interest-bearing Deposits		$ 16	$ 17
Percent of Total Interest-bearing Deposits		1.41%	1.55%
Navy Federal Credit Union [Member]
Minimum
Federal Home Loan Bank, Regulatory Capital, Actual		$ 589	$ 643
Percent of Total Regulatory Capital Stock Outstanding		11.88%	12.57%
Par Value of Advance		$ 13,495	$ 14,773
Percent of Total Par Value Advances		13.73%	14.36%
Interest-bearing Deposits		$ 156	$ 0
Percent of Total Interest-bearing Deposits		13.93%	0.01%
Bank of America [Member]
Minimum
Federal Home Loan Bank, Regulatory Capital, Actual		$ 504	$ 579
Percent of Total Regulatory Capital Stock Outstanding		10.17%	11.31%
Par Value of Advance		$ 11,511	$ 13,262
Percent of Total Par Value Advances		11.71%	12.89%
Interest-bearing Deposits		$ 0	$ 0
Percent of Total Interest-bearing Deposits		0.01%	0.01%

[1] Total regulatory capital does not include accumulated other comprehensive income but does include mandatorily redeemable capital stock.

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Transaction with Other FHLBanks (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Other Transactions [Line Items]
Interest expense on loans to other FHLBanks (less than $1 million)	$ 0	$ 1	$ 1
Loans made to other FHLBanks	(1,010)	(11,759)	(990)
Principal collected on loans made to other FHLBanks	1,010	11,759	990
Net change in loans made to other FHLBanks	0	0	0
Interest Income, Loans to Other Federal Home Loan Banks	1	1	1
Proceeds from short-term borrowings from other FHLBanks	0	927	1,038
Payments of short-term borrowings from other FHLBanks	0	(927)	(1,038)
Net change in borrowings from other FHLBanks	0	0	0
Interest income on consolidated obligation bonds	38	68	75
FHLBank of Chicago [Member]
Schedule of Other Transactions [Line Items]
Interest income on consolidated obligation bonds	2	$ 9	$ 9
FHLBank of Indianapolis [Member]
Schedule of Other Transactions [Line Items]
Participation interests purchased from other banks	$ 72

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Subsequent Events (Details) $ in Millions	Mar. 09, 2017 USD ($)
Subsequent Events [Abstract]
Payments of Dividends	$ 58