INDIANAPOLIS, Feb. 22, 2024 (GLOBE NEWSWIRE) — Today the Board of Directors of the Federal Home Loan Bank of Indianapolis (“FHLBank Indianapolis” or “Bank”) declared its fourth quarter 2023 dividends on Class B-2 activity-based capital stock and Class B-1 non-activity-based stock at annualized rates of 9.00% and 4.00%, respectively. The higher dividend rate on activity-based stock reflects the Board’s discretion under the Bank’s capital plan to reward members that use FHLBank Indianapolis in support of their liquidity needs.
The dividends will be paid in cash on February 23, 2024.
“Once again, our members-first focus produced impressive year-end results, including effective partnerships within our cooperative, strong advances activity, safe and sound lending practices, and smart investments in people and processes to support the business,” President and CEO Cindy Konich said. “I’m proud to share our continued success translated into another strong dividend to our members.”
She added: “Our forward focus promises an exciting, productive year ahead, too, as we look to expand our affordable housing and community development touch through more direct engagements with our members, and telling the story of how and why FHLBank Indianapolis is a critical economic force in our district of Michigan and Indiana.”
Earnings Highlights
Net income, for the fourth quarter of 2023, was $104 million, an increase of $35 million compared to the corresponding quarter in the prior year. The increase was substantially due to higher earnings on the portion of the Bank’s assets funded by its capital1, driven substantially by the increase in market interest rates.
Net income, for the year ended December 31, 2023, was $377 million, an increase of $200 million compared to the prior year. The increase was substantially due to higher earnings on the portion of the Bank’s assets funded by its capital1, driven substantially by the increase in market interest rates, and an increase in the average balances outstanding of interest-earning assets, primarily advances. Average advances outstanding increased by $6.2 billion, or 21%.
1 FHLBank Indianapolis earns interest income on advances to and mortgage loans purchased from its Michigan and Indiana member financial institutions, as well as on long- and short-term investments. Net interest income is primarily determined by the size of the Bank’s balance sheet and the spread between the interest earned on its assets and the interest cost of funding with consolidated obligations. Because of the Bank’s inherent relatively low interest-rate spread, it has historically derived a substantial portion of its net interest income from deploying its interest-free capital in floating-rate assets.
Affordable Housing Program Allocation
The Bank’s Affordable Housing Program (“AHP”) provides grant funding to support housing for low- and moderate-income families in communities served by its Michigan and Indiana members. Full-year 2023 AHP allocations2 of $44 million will be available to the Bank’s members in 2024 to help address their communities’ affordable housing needs, including construction, rehabilitation, accessibility improvements and homebuyer down-payment assistance.
In addition, the Bank voluntarily allocated $4 million, reported in other expenses, to further support its AHP and additional affordable housing, small business and community investment programs.
As a result, the Bank’s combined required and voluntary allocation in 2023 totaled $48 million, an increase of $22 million, or 83%, compared to the prior year.
Condensed Statements of Income
The following table presents unaudited condensed statements of income ($ amounts in millions):
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Interest income (a)
$
1,013
$
676
$
3,755
$
1,391
Interest expense (a)
873
586
3,260
1,100
Provision for credit losses
—
—
—
—
Net interest income after provision
140
90
495
291
Other income (b)
7