Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2025

Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make a number of judgments, estimates, and assumptions that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income, expenses, gains, and losses during the reporting period. The most significant of these estimates is the accounting for derivatives and hedging activities. Actual results could differ significantly from these estimates.

Derivatives, Methods of Accounting, Hedging Derivatives

General. The Bank regularly enters into interest rate exchange agreements. For more information on the Bank’s derivative strategies and accounting for derivatives and hedging activities, see “Item 8. Financial Statements and Supplementary Data – Note 13 – Derivatives and Hedging Activities” in the Bank’s 2024 Form 10-K.

Derivatives, Policy

Credit Risk. The Bank’s use of clearing agents and central counterparties helps mitigate credit risk exposure by employing standard valuation processes over initial and variation margin processes.

Fair Value of Financial Instruments, Policy

The Bank has elected the fair value option for certain financial instruments to assist in mitigating potential earnings volatility that can arise from economic hedging relationships in which the carrying value of the hedged item is not adjusted for changes in fair value.For instruments for which the fair value option has been elected, the related contractual interest income and contractual interest expense are recorded as part of net interest income on the Statements of Income. The remaining changes in fair value for instruments for which the fair value option has been elected are recorded as net gains/ (losses) on financial instruments held under the fair value option in the Statements of Income.

Fair Value Transfer, Policy

For the periods presented, the Bank did not have any reclassifications for transfers in or out of level 3 of the fair value hierarchy.

Stockholders' Equity, Policy

Capital Requirements. The FHLBank Act and regulations governing the operations of the FHLBanks require that the Bank’s minimum capital stock requirement for shareholders must be sufficient to enable the Bank to meet its regulatory requirements for total regulatory capital, leverage capital, and risk-based capital.

New Accounting Pronouncements

Accounting Standards Update (ASU)

Description

Effective Date

Effect on the Financial Statements or Other Significant Matters

Disaggregation of Income Statement Expenses (ASU 2024-03)

This update requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses on an interim and annual basis.

This guidance becomes effective for the Bank for the annual period ending December 31, 2027, and for interim and annual periods thereafter. Early adoption is permitted.

The Bank does not intend to adopt this guidance early. While adoption of this guidance may affect the Bank’s disclosures, it is not expected to have any effect on the Bank’s financial condition, results of operations, or cash flows.