Federal Home Loan Bank of Des Moines

05/07/2026 | Press release | Distributed by Public on 05/07/2026 09:08

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Management's Discussion and Analysis (MD&A) of Financial Condition and Results of Operations should be read in conjunction with our financial statements and condensed notes at the beginning of this Form 10-Q and in conjunction with our MD&A and Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (SEC) on March 10, 2026. Our MD&A is designed to provide information that will help the reader develop a better understanding of our financial statements, key financial statement changes from quarter to quarter, and the primary factors driving those changes. Throughout this Form 10-Q, acronyms and terms used are defined in the Glossary of Terms. Unless the context otherwise requires, the terms "we," "us," and "our" refer to the Federal Home Loan Bank of Des Moines or its management. Our MD&A is organized as follows:
CONTENTS
Forward-Looking Information
29
Executive Overview
30
Conditions in the Financial Markets
31
Selected Financial Data
32
Results of Operations
33
Net Interest Income
33
Other Income (Loss)
35
Hedging Activities
36
Other Expense
37
Statements of Condition
38
Advances
38
Mortgage Loans
39
Investments
39
Consolidated Obligations
40
Capital
40
Derivatives
41
Liquidity and Capital Resources
41
Critical Accounting Estimates
44
Legislative and Regulatory Developments
44
Risk Management
45
FORWARD-LOOKING INFORMATION
Statements contained in this report, including statements describing the objectives, projections, estimates, or future predictions in our operations, may be forward-looking statements. These statements may be identified by the use of forward-looking terminology, such as believes, projects, expects, anticipates, estimates, intends, strategy, plan, could, should, may, and will or their negatives or other variations on these terms. By their nature, forward-looking statements involve risk or uncertainty, and actual results could differ materially from those expressed or implied or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. As a result, you are cautioned not to place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following:
•political or economic events, including legislative, regulatory, monetary, judicial, or other developments that affect us, our members, our counterparties, and/or our investors in the consolidated obligations of the 11 FHLBanks;
•the ability to meet capital and other regulatory requirements;
•competitive forces, including without limitation, other sources of funding available to our borrowers that could impact the demand for our advances, other entities purchasing mortgage loans in the secondary mortgage market, and other entities borrowing funds in the capital markets;
•reliance on a relatively small number of member institutions for a large portion of our advance business;
•member consolidations and failures;
•disruptions in the credit and debt markets and the effect on future funding costs, sources, and availability;
•general economic and market conditions that could impact the business we do with our members, including, but not limited to, the timing and volatility of market activity, inflation/deflation, employment rates, geopolitical instability or conflicts, housing market activity and housing prices, the level of mortgage prepayments, the valuation of pledged collateral, and the condition of the capital markets and the impact it has on our consolidated obligations;
•ineffective use of hedging strategies or the availability of derivative instruments in the types and quantities needed for risk management purposes from acceptable counterparties;
•the volatility of reported results due to changes in the fair value of certain assets, liabilities, and derivative instruments;
•risks related to the other FHLBanks that could trigger our joint and several liability for debt issued by the other FHLBanks;
•changes in the relative attractiveness of consolidated obligations due to actual or perceived changes in the FHLBanks' credit ratings or ratings outlook as well as the U.S. Government's long-term credit rating or rating outlook;
•increases in delinquency or loss estimates on mortgage loans;
•the ability to develop and support internal controls, business processes, information systems, and other operating technologies that effectively manage the risks we face, including but not limited to, cyber-attacks, widespread health emergencies, and other business interruptions;
•significant business interruptions resulting from third-party failures;
•the volatility of credit quality, market prices, interest rates, and other factors that could affect the value of collateral held by us as security for borrower and counterparty obligations;
•the ability to attract and retain key personnel; and
•natural disasters.
For additional information regarding these and other risks and uncertainties that could cause our actual results to differ materially from the expectations reflected in our forward-looking statements, see "Item 1A. Risk Factors" in this quarterly report and in our 2025 Form 10-K. Forward-looking statements apply only as of the date they are made, and we undertake no obligation to update or revise any forward-looking statement.
EXECUTIVE OVERVIEW
Liquidity Mission
We provide liquidity to our members to support the housing, business, and economic development needs of their communities. Members pledge mortgage loans and other collateral to access our core liquidity products of advances, letters of credit, and mortgage loans held for portfolio under the MPF program. During the three months ended March 31, 2026, advance balances averaged $127.9 billion, letters of credit averaged $18.3 billion, mortgage loan balances averaged $14.7 billion, and we held an average of $31.2 billion of short-term assets as a ready source of liquidity for our members.
Affordable Housing and Community Impact
Our housing and community development programs are central to our mission. We contribute 10 percent of our net income each year to our AHP, a grant program that supports the creation, rehabilitation, or purchase of affordable housing. This program includes a competitive AHP and two down payment assistance products called Home$tart and the Native American Homeownership Initiative. During the three months ended March 31, 2026, we accrued statutory AHP assessments of $26 million and voluntarily accrued $2 million, to be awarded through this program.
In addition to our AHP, we offer our members voluntary programs to further our housing mission. During the three months ended March 31, 2026, we recorded a total of $25 million in voluntary housing and community contributions, including the voluntary AHP contribution. Through our voluntary programs during the three months ended March 31, 2026, we:
•provided $39 million in 0% rate advances to members that originated or purchased mortgage loans from a Habitat for Humanity® affiliate or a non-depository CDFI and recorded $8 million in subsidy expense;
•funded $19 million of home mortgages with an interest rate lower than the current market rate under the Mortgage Rate Relief program, which provided $2 million in grants to those seeking affordable homeownership; and
•recorded contributions of $13 million to our Member Impact Fund to match member donations to local housing and community development organizations.
Financial Results
Our financial condition and results of operations are influenced by global and national economies, local economies within our district, member demand, and the conditions in the financial, housing, and credit markets, all of which impact the interest rate environment. The interest rate environment significantly impacts our profitability. FOMC actions in response to inflation, as well as trade disruptions, such as those arising from tariffs imposed or proposed by the U.S. or its trading partners, impact the interest rate environment, and in turn, our net interest income. Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Conditions in the Financial Markets" for additional discussion on economic conditions, including interest rates, impacting our financial results.
For the three months ended March 31, 2026, we recorded net income of $236 million compared to $205 million for the same period in 2025.
Net interest income increased $77 million during the three months ended March 31, 2026, when compared to the same period last year. The increase during the three months ended March 31, 2026 was primarily due to advance, mortgage loan, and MBS portfolio growth, along with changes in the interest rate environment, asset prepayment fee income, and the call of higher-costing consolidated obligation bonds.
Other income (loss) decreased $30 million during the three months ended March 31, 2026, when compared to the same period last year, primarily due to the net changes in fair value on our trading securities, fair value option instruments, and economic derivatives, including the related interest settlements.
Other expense increased $13 million during the three months ended March 31, 2026, when compared to the same period last year, primarily driven by an increase in our voluntary housing and community contributions.
Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" for additional discussion on our results of operations.
Our total assets increased to $202.2 billion at March 31, 2026, from $186.5 billion at December 31, 2025, driven primarily by an increase in advances. Advances increased $16.8 billion mainly due to an increase in borrowings by certain large depository institution and insurance company members.
Total capital increased to $11.4 billion at March 31, 2026, from $10.5 billion at December 31, 2025, primarily due to an increase in activity-based capital stock resulting from an increase in advance balances. Our regulatory capital ratio increased to 5.56 percent at March 31, 2026, from 5.54 percent at December 31, 2025, and remained above the required regulatory limit at each period end. Regulatory capital includes capital stock, MRCS, and retained earnings.
Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Statements of Condition" for additional discussion on our financial condition.
CONDITIONS IN THE FINANCIAL MARKETS
Economy and Financial Markets
Throughout 2026, the FOMC has maintained the target for the federal funds rate at a range of 3.50 to 3.75 percent. During its April 2026 meeting, the FOMC stated recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. In addition, inflation is elevated, in part reflecting the recent increase in global energy prices.
The following table shows information on key market interest rates1:
3-Month Average
Period End
March 31,
2026 		March 31,
2025 		March 31,
2026 		December 31,
2025
Federal funds 3.64 % 4.33 % 3.64 % 3.64 %
SOFR 3.66 4.33 3.68 3.87
2-year U.S. Treasury 3.58 4.15 3.79 3.47
10-year U.S. Treasury 4.20 4.45 4.30 4.18
30-year residential mortgage note 6.11 6.83 6.38 6.15
1 Source: Bloomberg.
Mortgage Markets
During the three months ended March 31, 2026, mortgage rates were lower, on average, when compared to the same period last year, and higher when compared to the prior year-end. Refinancing was the primary driver of activity within the mortgage markets during the three months ended March 31, 2026. New and existing home sales decreased relative to the prior year, while home prices and prepayment activity increased.
SELECTED FINANCIAL DATA
The following tables present selected financial data for the periods indicated (dollars in millions):
Statements of Condition March 31,
2026 		December 31,
2025 		September 30,
2025 		June 30,
2025 		March 31,
2025
Cash and due from banks $ 58 $ 44 $ 73 $ 30 $ 71
Investments1
59,599 61,015 64,360 61,353 60,775
Advances 127,032 110,230 109,981 114,845 93,790
Mortgage loans held for portfolio, net2
14,910 14,540 13,948 13,197 12,263
Total assets 202,213 186,499 189,291 190,022 167,471
Consolidated obligations
Discount notes 84,642 84,620 68,220 55,977 50,350
Bonds 103,417 89,249 108,134 120,793 105,488
Total consolidated obligations3
188,059 173,869 176,354 176,770 155,838
Mandatorily redeemable capital stock 72 30 31 34 9
Total liabilities 190,829 176,012 179,050 179,797 158,142
Capital stock - Class B putable 7,286 6,509 6,474 6,660 5,730
Retained earnings 3,887 3,797 3,731 3,617 3,558
Accumulated other comprehensive income (loss) 211 181 36 (52) 41
Total capital 11,384 10,487 10,241 10,225 9,329
Regulatory capital ratio4
5.56 5.54 5.41 5.43 5.55
For the Three Months Ended
Statements of Income March 31,
2026 		December 31,
2025 		September 30,
2025 		June 30,
2025 		March 31,
2025
Net interest income $ 325 $ 278 $ 335 $ 289 $ 248
Provision (reversal) for credit losses on mortgage loans - 1 - - -
Other income (loss)5
11 31 12 16 41
Voluntary housing and community contributions 25 10 13 43 12
All other expense6
49 50 46 47 49
AHP assessments 26 25 29 21 23
Net income 236 223 259 194 205
Selected Financial Ratios
Net interest spread7
0.43 % 0.36 % 0.43 % 0.38 % 0.32 %
Net interest margin8
0.64 0.59 0.67 0.64 0.59
Return on average equity (annualized) 8.42 8.64 9.71 7.86 8.56
Return on average capital stock (annualized) 13.18 14.04 15.07 12.27 13.87
Return on average assets (annualized) 0.46 0.47 0.51 0.42 0.48
Average equity to average assets 5.43 5.46 5.27 5.37 5.57
1 Investments include interest-bearing deposits, securities purchased under agreements to resell, federal funds sold, trading securities, AFS securities, and HTM securities.
2 Includes an allowance for credit losses of $6 million, $6 million, $5 million, $5 million, and $5 million at March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025.
3 The total par value of outstanding consolidated obligations of the 11 FHLBanks was $1,204.4 billion, $1,151.8 billion, $1,184.1 billion, $1,232.1 billion, and $1,154.9 billion at March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025.
4 Represents period-end regulatory capital expressed as a percentage of period-end total assets. Regulatory capital includes Class B capital stock (including MRCS) and retained earnings.
5 Other income (loss) includes, among other things, net gains (losses) on investment securities, net gains (losses) on derivatives, net gains (losses) on financial instruments held under fair value option, and standby letter of credit fees.
6 All other expense includes, among other things, compensation and benefits, professional fees, and contractual services.
7 Represents annualized yield on total interest-earning assets minus annualized cost of total interest-bearing liabilities.
8 Represents net interest income expressed as a percentage of average interest-earning assets.
RESULTS OF OPERATIONS
Net Interest Income
Our net interest income is impacted by changes in average interest-earning asset and interest-bearing liability balances, and the related yields and costs. The following table presents average balances and annualized yields/costs of major asset and liability categories (dollars in millions):
For the Three Months Ended March 31,
2026 2025
Average
Balance1
Yield/Cost2
Interest
Income/
Expense3
Average
Balance1
Yield/Cost2
Interest
Income/
Expense3
Interest-earning assets
Interest-bearing deposits $ 4,456 3.71 % $ 41 $ 4,745 4.58 % $ 53
Securities purchased under agreements to resell 18,162 3.72 166 10,221 4.41 111
Federal funds sold 8,616 3.69 78 12,911 4.39 140
MBS4,5,6
26,832 4.78 317 25,399 5.28 331
Other investments4,5,7
7,020 4.00 69 6,116 3.65 55
Advances5,8
127,930 4.10 1,293 100,180 4.81 1,187
Mortgage loans9
14,688 4.77 173 12,041 4.50 134
Loans to other FHLBanks 4 3.73 - 9 4.40 -
Total interest-earning assets 207,708 4.17 2,137 171,622 4.75 2,011
Non-interest-earning assets 1,746 - - 2,825 - -
Total assets $ 209,454 4.14 % $ 2,137 $ 174,447 4.68 % $ 2,011
Interest-bearing liabilities
Deposits $ 1,224 2.71 % $ 8 $ 1,216 3.40 % $ 10
Consolidated obligations
Discount notes5
97,791 3.68 888 63,395 4.45 696
Bonds5
96,977 3.82 914 96,704 4.43 1,057
Other interest-bearing liabilities10
72 9.29 2 25 6.33 -
Total interest-bearing liabilities 196,064 3.74 1,812 161,340 4.43 1,763
Non-interest-bearing liabilities 2,009 - - 3,396 - -
Total liabilities 198,073 3.71 1,812 164,736 4.34 1,763
Capital 11,381 - - 9,711 - -
Total liabilities and capital $ 209,454 3.51 % $ 1,812 $ 174,447 4.10 % $ 1,763
Net interest income and spread11
0.43 % $ 325 0.32 % $ 248
Net interest margin12
0.64 % 0.59 %
Average interest-earning assets to interest-bearing liabilities 105.94 % 106.37 %
1 Average balances are calculated on a daily weighted average basis and do not reflect the effect of derivative master netting arrangements with counterparties and/or clearing agents.
2 In instances where the average balance and/or related income/expense is less than $1 million, the yield/cost will continue to be presented, based on numbers in actuals.
3 Interest income and expense amounts reported for advances, MBS, other investments, and consolidated obligation bonds include gains (losses) on hedged items and derivatives in qualifying fair value hedge relationships.
4 The average balance of AFS and HTM securities is reflected at amortized cost.
5 Average balances reflect the impact of fair value hedging adjustments and/or fair value option adjustments.
6 Interest income on investment securities includes prepayment fees, net of related amortization, of $7 million and less than $1 million for the three months ended March 31, 2026 and 2025.
7 Other investments primarily include U.S. Treasury obligations, other U.S. obligations, GSE and TVA obligations, state or local housing agency obligations, and taxable municipal bonds.
8 Interest income includes net prepayment fees on advances.
9 Non-accrual loans are included in the average balance used to determine the average yield.
10 Other interest-bearing liabilities consist primarily of MRCS and/or borrowings from other FHLBanks.
11 Represents annualized yield on total interest-earning assets minus annualized yield on total interest-bearing liabilities. Amounts used to calculate net interest spread are based on unrounded numbers. Accordingly, recalculations using rounded numbers in millions may not produce the same results.
12 Represents net interest income expressed as a percentage of average interest-earning assets. Amounts used to calculate net interest margin are based on unrounded numbers. Accordingly, recalculations using rounded numbers in millions may not produce the same results.
The following table presents changes in interest income and interest expense. Changes in interest income and interest expense that are not identifiable as either volume-related or rate-related, but rather attributable to both volume and rate changes, are allocated to the volume and rate categories based on the proportion of the absolute value of the volume and rate changes (dollars in millions).
Three Months Ended
March 31, 2026 vs. March 31, 2025
Total Increase
(Decrease) Due to 		Total Increase
(Decrease)
Volume Rate
Interest income
Interest-bearing deposits $ (3) $ (9) $ (12)
Securities purchased under agreements to resell 75 (20) 55
Federal funds sold (42) (20) (62)
MBS 18 (32) (14)
Other investments 8 6 14
Advances 298 (192) 106
Mortgage loans 31 8 39
Total interest income 385 (259) 126
Interest expense
Deposits - (2) (2)
Consolidated obligations
Discount notes 328 (136) 192
Bonds 3 (146) (143)
Other interest-bearing liabilities 2 - 2
Total interest expense 333 (284) 49
Net interest income $ 52 $ 25 $ 77
NET INTEREST SPREAD AND MARGIN
Net interest spread represents the annualized yield on total interest-earning assets minus the annualized cost of total interest-bearing liabilities. Our net interest spread increased during the three months ended March 31, 2026, when compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily due to advance, MBS, and mortgage loan portfolio growth, along with changes in the interest rate environment, asset prepayment fee income, and the call of higher-costing consolidated obligation bonds. Our cost of funds does not include net interest settlements on economic hedges, which are recorded in other income (loss). As a result, our net interest spread does not reflect the full impact of our funding and hedging strategies and may experience volatility as interest rates change.
Net interest margin equals net interest income expressed as a percentage of average interest-earning assets. Our net interest margin increased during the three months ended March 31, 2026, when compared to the same period in 2025 due primarily to higher net interest spread, offset in part by lower interest rates, which reduced our earnings on invested capital.
ADVANCE PREPAYMENT FEES
The following table summarizes our advance prepayment fees (dollars in millions):
For the Three Months Ended
March 31,
2026 2025
Prepayment fees on advances, gross1
$ 5 $ 1
Basis adjustment amortization2
(3) -
Prepayment fees on advances, net
$ 2 $ 1
1 Includes symmetrical fees on advances for which we may charge the borrower a prepayment fee or pay the borrower a prepayment credit, depending on certain circumstances, such as movements in interest rates.
2 Basis adjustment amortization was less than $1 million during the three months ended March 31, 2025.
Other Income (Loss)
The following table summarizes the components of other income (loss) (dollars in millions):
For the Three Months Ended
March 31,
2026 2025
Net gains (losses) on trading securities $ (49) $ 47
Net gains (losses) on financial instruments held under fair value option 6 20
Net gains (losses) on derivatives 46 (35)
Other, net 8 9
Total other income (loss) $ 11 $ 41
Other income (loss) decreased $30 million during the three months ended March 31, 2026, when compared to the same period in 2025, primarily due to the net change in fair value on our trading securities, fair value option instruments, and economic derivatives, including the related interest settlements. We utilize economic derivatives to hedge certain instruments held at fair value that do not qualify for fair value hedge accounting. These fair value elections are made primarily in an effort to mitigate the potential income statement volatility that can arise when an economic derivative is adjusted for changes in fair value but the related hedged item is not. As a result, we review the related gains (losses) on these items on a net basis.
During the three months ended March 31, 2026, we recorded net combined gains of $3 million on our trading securities, fair value option instruments, and the related economic derivatives, compared to net combined gains of $32 million for the same period in 2025. The net decrease during the three months ended March 31, 2026 was primarily driven by the reversal of historic gains and losses on trading securities as they approach maturity. In addition, other income (loss) decreased due to lower derivative interest income as a result of a decline in the notional amount of discount note economic swaps. Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Hedging Activities" for additional discussion on our economic derivatives.
Hedging Activities
We use derivatives to manage interest rate risk. Accounting rules affect the timing and recognition of income and expense on derivatives and therefore we may be subject to income statement volatility. For additional discussion on hedging activities, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Hedging Activities" in our 2025 Form 10-K.
The following tables categorize the net effect of hedging activities on net income by product (dollars in millions):
For the Three Months Ended March 31, 2026
Net Effect of Hedging Activities Advances Investments Discount Notes Bonds Total
Net interest income:
Net amortization/accretion
$ 1 $ 6 $ - $ - $ 7
Net gains (losses) on derivatives and hedged items (1) - - (2) (3)
Price alignment amount on derivatives
- (2) - (1) (3)
Net interest settlements on derivatives
39 25 10 13 87
Total impact to net interest income 39 29 10 10 88
Other income (loss):
Net gains (losses) on derivatives
Gains (losses) related to derivatives not designated as hedging instruments
- 48 (2) - 46
Total net gains (losses) on derivatives
- 48 (2) - 46
Net gains (losses) on trading securities
- (49) - - (49)
Net gains (losses) on financial
instruments held under fair value option
- - 6 - 6
Total impact to other income (loss) - (1) 4 - 3
Total net effect of hedging activities1
$ 39 $ 28 $ 14 $ 10 $ 91
For the Three Months Ended March 31, 2025
Net Effect of Hedging Activities Advances Investments Discount Notes Bonds Total
Net interest income:
Net amortization/accretion
$ 9 $ 1 $ - $ - $ 10
Net gains (losses) on derivatives and hedged items 1 (1) - (10) (10)
Price alignment amount on derivatives
(7) (8) - (1) (16)
Net interest settlements on derivatives
117 58 - 6 181
Total impact to net interest income 120 50 - (5) 165
Other income (loss):
Net gains (losses) on derivatives
Gains (losses) related to derivatives not designated as hedging instruments
- (28) (7) - (35)
Total net gains (losses) on derivatives
- (28) (7) - (35)
Net gains (losses) on trading securities
- 47 - - 47
Net gains (losses) on financial
instruments held under fair value option
- - 20 - 20
Total impact to other income (loss) - 19 13 - 32
Total net effect of hedging activities1
$ 120 $ 69 $ 13 $ (5) $ 197
1 The hedging activity tables do not include the interest component on the related hedged items or the gross prepayment fee income on terminated advance or investment hedge relationships.
NET AMORTIZATION/ACCRETION
Net amortization/accretion of basis adjustments varies from period to period depending on our hedge relationship termination activities and the maturity, call, or prepayment of assets or liabilities previously in hedge relationships.
NET GAINS (LOSSES) ON DERIVATIVES AND HEDGED ITEMS
Net gains and losses on derivatives and hedged items designated in fair value hedge relationships are recorded in net interest income. Gains (losses) on derivatives and hedged items fluctuate with changes in market conditions and are based on a range of factors, including current and projected levels of interest rates and volatility.
PRICE ALIGNMENT AMOUNT ON DERIVATIVES
The price alignment amount on derivatives for which variation margin is characterized as a daily settled contract fluctuates with changes in the interest rate environment. The price alignment amount on derivatives that qualify for fair value hedge accounting is recorded in net interest income. The price alignment amount on economic derivatives is recorded in other income (loss) as "Net gains (losses) on derivatives" on our Statements of Income.
NET INTEREST SETTLEMENTS ON DERIVATIVES
Net interest settlements represent the interest component on derivatives that qualify for fair value hedge accounting. These amounts vary from period to period depending on our hedging activities and interest rates and are partially offset by the interest component on the related hedged item within net interest income. The hedging activity tables do not include the impact of the interest component on the related hedged item.
NET GAINS (LOSSES) ON DERIVATIVES
We utilize economic derivatives to manage certain risks on our Statements of Condition. Gains and losses on economic derivatives include interest settlements and price alignment amounts. Interest settlements represent the interest component on economic derivatives. These amounts vary from period to period depending on our hedging activities and interest rates.
Other Expense
The following table shows the components of other expense (dollars in millions):
For the Three Months Ended March 31,
2026 2025
Compensation and benefits $ 21 $ 22
Contractual services 7 7
Professional fees 3 3
Other operating expenses 6 5
Total operating expenses 37 37
Voluntary housing and community contributions 25 12
Federal Housing Finance Agency 3 4
Office of Finance 4 3
Other, net 5 5
Total other expense $ 74 $ 61
Other expense increased $13 million during the three months ended March 31, 2026, when compared to the same period last year primarily due to an increase in voluntary housing and community contributions.
STATEMENTS OF CONDITION
Advances
The following table summarizes our advances by type of institution (dollars in millions):
March 31,
2026 		December 31,
2025
Commercial banks $ 59,966 $ 47,532
Savings institutions 1,077 1,008
Credit unions 8,367 10,266
Insurance companies 56,636 50,861
CDFIs 37 14
Total member advances 126,083 109,681
Non-member borrowers 1,140 497
Total par value $ 127,223 $ 110,178
Our total advance par value increased $17.0 billion or 15 percent at March 31, 2026, when compared to December 31, 2025, primarily due to an increase in borrowings by certain large depository institution and insurance company members.
The following table summarizes our advances by interest rate payment terms (dollars in millions):
March 31, 2026 December 31, 2025
Amount % of Total Amount % of Total
Fixed rate $ 75,402 59 $ 73,457 67
Variable rate 40,372 32 25,282 23
Variable rate, callable1
10,385 8 10,382 9
Other2
1,064 1 1,057 1
Total advance par value 127,223 100 110,178 100
Premiums 2 2
Discounts (28) (22)
Fair value hedging adjustments3
(165) 72
Total $ 127,032 $ 110,230
1 Callable advances are those advances that may be contractually prepaid by the borrower on predetermined dates without incurring prepayment or termination fees.
2 Includes fixed rate amortizing and fixed rate callable advances.
3 Primarily represents fair value hedging adjustments on active hedging relationships driven by changes in interest rates.
At March 31, 2026 and December 31, 2025, advances outstanding to our top five borrowers totaled $70.9 billion and $51.6 billion, which represented 56 percent and 47 percent of our total advances outstanding. The following table summarizes our top five borrowers based on advances outstanding at March 31, 2026 (dollars in millions):
Amount % of Total Advances
Wells Fargo Bank, N.A. $ 30,000 24
Athene Annuity and Life Company 28,221 22
EquiTrust Life Insurance Company 4,550 4
UBS Bank USA 4,101 3
Symetra Life Insurance Company 4,037 3
Total par value $ 70,909 56
Mortgage Loans
The following table summarizes information on our mortgage loans held for portfolio (dollars in millions):
March 31,
2026 		December 31,
2025
Fixed rate conventional loans $ 14,472 $ 14,097
Fixed rate government-insured loans 351 356
Total unpaid principal balance 14,823 14,453
Premiums 158 156
Discounts (55) (54)
Basis adjustments from mortgage loan purchase commitments (10) (9)
Total mortgage loans held for portfolio 14,916 14,546
Allowance for credit losses (6) (6)
Total mortgage loans held for portfolio, net $ 14,910 $ 14,540
Our total mortgage loans increased $0.4 billion or three percent at March 31, 2026, when compared to December 31, 2025. The increase was primarily due to new loan purchases exceeding principal paydowns.
Investments
The following table summarizes the carrying value of our investments (dollars in millions):
March 31, 2026 December 31, 2025
Amount % of Total Amount % of Total
Short-term investments1
Interest-bearing deposits $ 4,553 7 $ 3,726 6
Securities purchased under agreements to resell 16,440 28 17,090 28
Federal funds sold 4,650 8 5,930 10
Total short-term investments 25,643 43 26,746 44
Long-term investments2
MBS
GSE single-family 492 1 516 1
GSE multifamily 20,578 34 20,882 34
U.S. obligations single-family3
5,886 10 5,708 9
Private-label residential 2 - 2 -
Total MBS 26,958 45 27,108 44
Non-MBS
U.S. Treasury obligations3
5,914 10 6,104 10
Other U.S. obligations3
60 - 71 -
GSE and TVA obligations 478 1 482 1
State or local housing agency obligations 433 1 391 1
Other4
113 - 113 -
Total non-MBS 6,998 12 7,161 12
Total long-term investments 33,956 57 34,269 56
Total investments $ 59,599 100 $ 61,015 100
1 Short-term investments have original maturities equal to or less than one year.
2 Long-term investments have original maturities of greater than one year.
3 Represents investment securities backed by the full faith and credit of the U.S. Government.
4 Consists of taxable municipal bonds.
Our investments decreased $1.4 billion, or two percent at March 31, 2026, when compared to December 31, 2025, due primarily to a decrease in federal funds sold and securities purchased under agreements to resell. This decrease was offset in part by an increase in interest-bearing deposits. At March 31, 2026, we had other U.S. obligation MBS purchases with a total par value of $192 million that were traded but not yet settled. These investments were recorded as "Available-for-sale" on our Statements of Condition with a corresponding payable recorded in "Other liabilities." At December 31, 2025, we had no investment purchases that were traded but not yet settled.
The Finance Agency limits our investments in MBS by requiring that the balance of our MBS not exceed three times regulatory capital at the time of purchase. Our ratio of MBS to regulatory capital was 2.42 and 2.64 at March 31, 2026 and December 31, 2025.
Consolidated Obligations
Consolidated obligations, which include bonds and discount notes, are the primary source of funds to support our advances, mortgage loans, and investments.
DISCOUNT NOTES
The following table summarizes our discount notes, all of which are due within one year (dollars in millions):
March 31,
2026 		December 31,
2025
Par value $ 85,352 $ 85,186
Discounts and concession fees1
(699) (586)
Fair value hedging adjustments
(8) 17
Fair value option adjustments
(3) 3
Total $ 84,642 $ 84,620
1 Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation discount notes.
Our discount notes remained relatively stable at March 31, 2026, when compared to December 31, 2025.
BONDS
The following table summarizes information on our bonds (dollars in millions):
March 31,
2026 		December 31,
2025
Par value $ 103,433 $ 89,188
Premiums 27 28
Discounts and concession fees1
(22) (23)
Fair value hedging adjustments
(21) 56
Total $ 103,417 $ 89,249
1 Concessions represent fees paid to dealers in connection with the issuance of certain consolidated obligation bonds.
Our bonds increased $14.2 billion or 16 percent at March 31, 2026, when compared to December 31, 2025. We increased our utilization of bonds in an effort to capture attractive funding and/or meet our liquidity requirements. Fair value hedging adjustments changed $77 million at March 31, 2026, when compared to December 31, 2025, driven primarily by the interest rate environment.
For additional information on our consolidated obligations, refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Liquidity - Sources of Liquidity."
Capital
The following table summarizes information on our capital (dollars in millions):
March 31,
2026 		December 31,
2025
Capital stock $ 7,286 $ 6,509
Retained earnings 3,887 3,797
Accumulated other comprehensive income (loss) 211 181
Total capital $ 11,384 $ 10,487
Our capital increased $0.9 billion, or nine percent at March 31, 2026, when compared to December 31, 2025, primarily due to an increase in activity-based capital stock resulting from an increase in advance balances. Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Capital" for additional information on our capital.
Derivatives
We use derivatives to manage interest rate risk. The notional amount of derivatives serves as a factor in determining periodic interest payments and cash flows received and paid. However, the notional amount of derivatives represents neither the actual amounts exchanged nor our overall exposure to credit and market risk.
The following table categorizes the notional amount of our derivatives by type (dollars in millions):
March 31,
2026 		December 31,
2025
Interest rate swaps
Non-callable $ 177,438 $ 171,040
Callable by counterparty 20,169 14,872
Callable by the Bank 59 33
Total interest rate swaps 197,666 185,945
Forward settlement agreements 319 111
Mortgage loan purchase commitments 328 106
Total notional amount $ 198,313 $ 186,162
The notional amount of our derivative contracts increased $12.2 billion, or seven percent, at March 31, 2026, when compared to December 31, 2025. The increase was primarily due to the utilization of interest rate swaps to hedge the growth in our balance sheet. During 2026, we increased our utilization of non-callable swaps on advances and consolidated obligations, and callable swaps on consolidated obligation bonds in an effort to capture attractive funding and/or meet our liquidity requirements. For additional discussion regarding our use of derivatives, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Credit Risk - Derivatives" in our 2025 Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital positions are actively managed in an effort to preserve stable, reliable, and cost-effective sources of funds to meet current and projected operating financial commitments, as well as regulatory, liquidity, and capital requirements.
Liquidity
SOURCES OF LIQUIDITY
We utilize several sources of liquidity to carry out our business activities. These include, but are not limited to, proceeds from the issuance of consolidated obligations, payments collected on advances and mortgage loans, proceeds from investment securities, member deposits, the issuance of capital stock, and current period earnings.
Our primary source of liquidity is proceeds from the issuance of consolidated obligations (bonds and discount notes) in the capital markets. During the three months ended March 31, 2026, proceeds from the issuance of bonds and discount notes were $36.9 billion and $283.4 billion compared to $32.0 billion and $329.0 billion for the same period in 2025. During the three months ended March 31, 2026, although we increased our utilization of consolidated obligation bonds, we continued to issue discount notes in an effort to capture attractive funding and/or meet our liquidity requirements.
Access to debt markets has been reliable because investors, driven by increased liquidity preference and our GSE status, have sought the FHLBanks' debt as an asset of choice. However, due to the short-term maturity of the debt, we may be exposed to additional risks associated with refinancing and our ability to access the capital markets.
We are focused on maintaining an adequate liquidity balance and a funding balance between our financial assets and financial liabilities and work collectively with the other FHLBanks to manage the system-wide liquidity and funding needs. We monitor our debt refinancing risk and liquidity position primarily by tracking the maturities of financial assets and financial liabilities. In managing and monitoring the amounts of assets that require refunding, we consider contractual maturities of our financial assets and liabilities, as well as certain assumptions regarding expected cash flows (i.e., estimated prepayments). External factors, including member borrowing needs, supply and demand in the debt markets, and other factors may affect liquidity balances and the funding balances between financial assets and financial liabilities. Refer to "Item 1. Financial Statements - Condensed Notes to the Unaudited Financial Statements" for additional information regarding the contractual maturities of certain of our financial assets and liabilities.
Our ability to raise funds in the capital markets as well as our cost of borrowing may be affected by our credit ratings. As of April 30, 2026, our consolidated obligations were rated AA+/A-1+ by S&P and Aa1/P-1 by Moody's, with stable outlooks. For further discussion of how credit rating changes and our ability to access the capital markets may impact us in the future, refer to "Item 1A. Risk Factors" in our 2025 Form 10-K.
Although we are primarily liable for the portion of consolidated obligations that are issued on our behalf, we are also jointly and severally liable with the other FHLBanks for the payment of principal and interest on all consolidated obligations issued by the FHLBank System. At March 31, 2026 and December 31, 2025, the total par value of outstanding consolidated obligations for which we are primarily liable was $188.7 billion and $174.4 billion. At March 31, 2026 and December 31, 2025, the total par value of outstanding consolidated obligations issued on behalf of other FHLBanks for which we are jointly and severally liable was $1,015.7 billion and $977.4 billion.
The Office of Finance and FHLBanks have contingency plans in place that prioritize the allocation of proceeds from the issuance of consolidated obligations during periods of financial distress if consolidated obligations cannot be issued in sufficient amounts to satisfy all FHLBank demand. In the event of significant market disruptions or local disasters, our President and CEO or designee is authorized to establish interim borrowing relationships with other FHLBanks. To provide further access to funding, the FHLBank Act also authorizes the U.S. Treasury to directly purchase new issue consolidated obligations of the GSEs, including FHLBanks, up to an aggregate principal amount of $4.0 billion. As of April 30, 2026, no purchases had been made by the U.S. Treasury under this authorization.
USES OF LIQUIDITY
We use our available liquidity, including proceeds from the issuance of consolidated obligations, primarily to repay consolidated obligations, fund advances, and purchase investments. During the three months ended March 31, 2026, repayments of consolidated obligations totaled $305.8 billion compared to $357.6 billion for the same period in 2025.
During the three months ended March 31, 2026, advance disbursements (excluding daily reset advances) totaled $166.1 billion compared to $170.6 billion for the same period in 2025. Advance disbursements vary from period to period depending on member needs. During the three months ended March 31, 2026 and 2025, investment purchases (excluding overnight investments) totaled $1.6 billion and $1.4 billion.
We also use liquidity to purchase mortgage loans, redeem member deposits, pledge collateral to derivative counterparties, redeem or repurchase capital stock, pay expenses, and pay dividends.
LIQUIDITY REQUIREMENTS
We are subject to certain liquidity requirements set forth by the Finance Agency and maintain a liquidity contingency funding plan designed to enable us to meet our obligations and the liquidity needs of our members in the event of short-term capital market disruptions, or operational disruptions at our Bank and/or the Office of Finance. For additional details on these liquidity requirements, refer to our 2025 Form 10-K. Our primary liquidity requirement is discussed further below.
Liquidity Guidance AB - This guidance requires us to maintain sufficient liquidity for a period of 10 to 30 calendar days. The base case scenario requires 20 days of positive daily cash balances and assumes that we cannot access the capital markets to issue debt, and during that time we will automatically renew maturing and called advances for all members, including large, highly-rated members, and we hold additional liquid assets equal to one percent of our letters of credit balances. At March 31, 2026 and December 31, 2025, we were in compliance with this base case liquidity guidance.
The Liquidity Guidance AB also specifies appropriate funding gap limits to address the risks associated with an FHLBank having too large a mismatch between the contractual maturities of its assets and liabilities. A funding gap measures the difference between assets and liabilities that are scheduled to mature during a specified period and is expressed as a percentage of total assets. The guidance provides recommended maximum funding gap limits of negative 15 percent at the three-month horizon and negative 30 percent at the one-year horizon. At March 31, 2026 and December 31, 2025, we adhered to these funding gap requirements.
Capital
CAPITAL REQUIREMENTS
We are subject to certain regulatory capital requirements imposed by the Finance Agency. At March 31, 2026 and December 31, 2025, we were in compliance with all Finance Agency regulatory capital requirements. Refer to "Item 1. Financial Statements - Note 9 - Capital" for information on our regulatory capital requirements.
CAPITAL STOCK
The capital stock requirements established in our Capital Plan are designed so that we can remain adequately capitalized as member activity changes. Our Board of Directors may make adjustments to the capital stock requirements within ranges established in our Capital Plan.
The following table summarizes our regulatory capital stock by type of member (dollars in millions):
March 31,
2026 		December 31,
2025
Commercial banks $ 3,622 $ 3,036
Savings institutions 97 97
Credit unions 775 849
Insurance companies 2,790 2,526
CDFIs 2 1
Total GAAP capital stock 7,286 6,509
MRCS 72 30
Total regulatory capital stock $ 7,358 $ 6,539
The increase in regulatory capital stock held at March 31, 2026, when compared to December 31, 2025, was due primarily to an increase in activity-based capital stock resulting from an increase in advance balances. For additional information on our capital stock, refer to "Item 1. Financial Statements - Note 9 - Capital."
Retained Earnings
Our risk management policies outline a targeted level of retained earnings based on the amount we believe necessary to help protect the redemption value of capital stock, facilitate safe and sound operations, maintain regulatory capital ratios, and support our ability to pay a relatively stable dividend. We monitor our achievement of this targeted level and may utilize tools such as restructuring our balance sheet, generating additional income, reducing our risk exposures, increasing capital stock requirements, or reducing our dividends to achieve this level of retained earnings. At March 31, 2026 and December 31, 2025, our actual retained earnings exceeded our targeted level of retained earnings.
We entered into a JCE Agreement with all of the other Federal Home Loan Banks in 2011. Under the JCE Agreement, we are required to allocate 20 percent of our quarterly net income to a separate restricted retained earnings account until the balance of that account, calculated as of the last day of each calendar quarter, equals at least one percent of our average balance of outstanding consolidated obligations for the calendar quarter. The restricted retained earnings are not available to pay dividends and are presented separately on our Statements of Condition. At both March 31, 2026 and December 31, 2025, our restricted retained earnings balance totaled $1.3 billion. One percent of our average balance of outstanding consolidated obligations for the three months ended March 31, 2026, was $1.9 billion.
Dividends
Our dividend philosophy is to pay a consistent dividend equal to or greater than the current market rate for a highly-rated investment (i.e. SOFR), and at a rate that the Board of Directors believes is sustainable under current and projected earnings to maintain an appropriate level of capital and retained earnings. Our dividend is determined quarterly by our Board of Directors, based on policies, regulatory requirements, actual performance, and other considerations that the Board of Directors determines to be appropriate.
The following table summarizes dividend-related information (dollars in millions):
For the Three Months Ended
March 31,
2026 2025
Aggregate cash dividends paid1
$ 146 $ 138
Effective combined annualized dividend rate paid on capital stock2
9.17 % 9.14 %
Annualized dividend rate paid on membership capital stock 6.00 % 6.00 %
Annualized dividend rate paid on activity-based capital stock 9.75 % 9.75 %
Average SOFR 3.66 % 4.33 %
1 Includes aggregate cash dividends paid during the period. Amount excludes cash dividends paid on MRCS. For financial reporting purposes, these dividends were recorded as interest expense on our Statements of Income.
2 Effective combined annualized dividend rate is paid on total capital stock, including MRCS.
CRITICAL ACCOUNTING ESTIMATES
For a discussion of our critical accounting estimates, refer to our 2025 Form 10-K. There have been no material changes to our critical accounting estimates during the three months ended March 31, 2026.
For a discussion of recently adopted or issued accounting standards, refer to "Item 8. Financial Statements and Supplementary Data - Note 2 - Recently Adopted and Issued Accounting Guidance" in our 2025 Form 10-K.
LEGISLATIVE AND REGULATORY DEVELOPMENTS
Regulatory Environment
We are subject to various legal and regulatory requirements and priorities. Certain actions, regulatory priorities, and areas of focus, such as deregulation, by the current administration have changed and continue to change the regulatory environment. These changes have affected, and likely will continue to affect, certain aspects of our business operations, and could affect our financial condition, results of operations, and reputation. For example, the Finance Agency repealed the Fair Lending, Fair Housing, and Equitable Housing Finance Plans regulation applicable to the FHLBanks, effective March 9, 2026, citing the administration's deregulatory priorities.
March 2026 Executive Orders. On March 13, 2026, the federal administration issued two executive orders that are relevant to the FHLBanks.
One executive order directs the Finance Agency and other federal financial regulators to consider measures to expand access to mortgage credit, including potential adjustments to capital requirements for mortgage-related exposures; modernization of collateral valuation and transfer systems between the Federal Reserve Banks and the FHLBanks; expansion of access to longer-dated FHLBank advances tied to residential mortgage assets; development of targeted FHLBank liquidity programs for entry-level housing, owner-occupied purchase loans, and small residential builders; acceleration of collateral boarding and valuation processes through standardized data and digital documentation; and refocusing the FHLBanks' Affordable Housing Programs to support faster execution and greater financial leverage for small-scale and owner-occupied housing projects. This executive order also directs the Finance Agency and the Federal Reserve Board to consider authorizing the FHLBanks' intermediate access to the Federal Reserve's discount window for the FHLBanks' depository institution members under standardized collateral, operational, and risk-management protocols. In addition, the executive order directs the Finance Agency and other federal agencies to consider standardizing the acceptance of e-notes and promoting digital mortgage standards. In addition, the Finance Agency, in consultation with other relevant federal agencies, is required to submit a report evaluating the efficiency of national housing finance markets and identifying potential regulatory or legislative recommendations to address any regulatory or oversight gaps.
The second executive order directs the Finance Agency and other federal agencies to consider reducing regulatory barriers to affordable housing construction, including by eliminating or reforming rules or programs that constrain residential development and affordability, particularly for affordable single-family homes.
While these executive orders could potentially affect our liquidity products, collateral and operational requirements, capital deployment, and housing-related initiatives, they do not, by themselves, change existing regulations or program requirements applicable to us and the other FHLBanks. The nature, timing, and scope of any resulting changes remain uncertain and subject to further Finance Agency action, such as rulemaking or guidance. We continue to monitor developments related to these executive orders and assess their potential effect on us and our members.
Considering the changes in the regulatory environment, there is uncertainty with respect to the ultimate nature and result of future regulatory actions and their ultimate effects on us and the FHLBank System. We continue to monitor these actions as they evolve and to evaluate their potential effect on us. For further discussion of related risks, see "Item 1A. Risk Factors" in our 2025 Form 10-K.
RISK MANAGEMENT
We have risk management policies, established by our Board of Directors, that allow us to monitor and control our exposure to various risks, including interest rate, liquidity, credit, operational, model, information security, legal, regulatory and compliance, strategic, and reputational, as well as capital adequacy. Our primary risk management objective is to manage our assets and liabilities in ways that ensure liquidity is available to our members and protect the par redemption value of our capital stock. We periodically evaluate our risk management policies in order to respond to changes in our financial position and general market conditions. The following sections outline our interest rate and credit risks. For additional details on all other risks noted above, please refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management" in our 2025 Form 10-K.
Interest Rate Risk
We define interest rate risk as the risk that changes in interest rates or spreads will adversely affect our financial condition (market value) or performance (income). Interest rate risk is the principal type of risk to which we are exposed, as our cash flows, and therefore earnings and equity value, can change significantly as interest rates change. Our general approach toward managing interest rate risk is to acquire and maintain a portfolio of assets, liabilities, and derivatives which, taken together, limit our expected exposure to interest rate risk. Our key interest rate risk measures are MVE and Projected 24-Month Income. Management regularly monitors these key measures, as discussed further in the sections below.
MARKET VALUE OF EQUITY
MVE measures the net present value of the Bank by either marking positions to market or discounting all future cash flows using market discount rates. MVE is measured as the market value of our assets minus the market value of our liabilities (excluding MRCS). MVE is an estimate of the Bank's value and takes into account short-term market price fluctuations.
We monitor and manage to MVE policy limits in an effort to ensure the stability of the Bank's value. Our policy limits are based on declines from the base case in parallel and non-parallel interest rate change scenarios. Any policy limit breach must be reported to the Enterprise Risk Committee of the Bank and the Risk and Compliance Committee of the Board of Directors and be remediated in a timely manner. At March 31, 2026 and December 31, 2025, our base case MVE was $11.5 billion and $10.7 billion, and the increase between periods was primarily due to higher asset balances and increased invested capital, specifically activity-based capital stock. At March 31, 2026 and December 31, 2025, we were in compliance with all MVE policy limits.
MVCS represents our MVE divided by the total outstanding shares of our capital stock (including MRCS). To ensure we remain adequately capitalized, we must ensure our MVCS remains at or above our $100 par value. Our base case MVCS was $156.5 at March 31, 2026, compared to $163.1 at December 31, 2025. The decrease in our base case MVCS was primarily attributable to the issuance of activity-based capital stock at par value, which was below the MVCS value at the time of issuance.
For more information on this risk measure, including policy limits, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Interest Rate Risk - Market Value of Equity" in our 2025 Form 10-K.
PROJECTED 24-MONTH INCOME
The projected 24-month income simulation measures our short-term earnings forecast over a two-year horizon based on forward interest rates and business assumptions. Our primary measure of profitability is the spread between projected AROCS and average SOFR. In this measure, AROCS adjusts GAAP net income for certain non-routine or unpredictable items, such as market value adjustments, prepayment fee income, and other non-routine items.
We monitor and manage to policy limits, which are based on the spread between our projected AROCS and average SOFR in parallel and non-parallel interest rate change scenarios. Additionally, there is a limit on the decline in projected AROCS from base case AROCS for certain basis shock scenarios to limit basis risk exposure. Any policy limit breach must be reported to the Enterprise Risk Committee of the Bank and the Risk and Compliance Committee of the Board of Directors and be remediated in a timely manner. We were in compliance with all projected 24-month income policy limits at March 31, 2026 and December 31, 2025.
For more information on this risk measure, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Interest Rate Risk - Projected 24-Month Income" in our 2025 Form 10-K.
CAPITAL ADEQUACY
An adequate capital position is necessary for facilitating safe and sound business operations, protecting the redemption value of our capital stock, maintaining regulatory capital ratios, and supporting our ability to pay dividends and redeem excess capital stock. To ensure capital adequacy, we maintain a targeted level of retained earnings to achieve business imperatives and cover unexpected losses. Our key capital adequacy measures are regulatory capital and targeted retained earnings in order to maintain capital levels in accordance with Finance Agency regulations. For additional information on our compliance with regulatory capital requirements, refer to "Item 1. Financial Statements - Note 9 - Capital." For additional information on our targeted retained earnings, refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Retained Earnings."
In addition, our risk management policies require that we maintain MVCS at or above our $100 par value. For additional information on MVCS, refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Interest Rate Risk - Market Value of Equity."
Credit Risk
We define credit risk as the risk that a member or counterparty will fail to meet its financial obligations. Our primary credit risks arise from our ongoing lending, investing, and hedging activities. Our overall objective in managing credit risk is to operate a sound credit granting process and to maintain appropriate credit administration, measurement, and monitoring practices.
ADVANCES
We manage our credit exposure to advances through a lending policy that provides for an established credit limit for each borrower, ongoing reviews of each borrower's financial condition and ability to repay, and detailed collateral and lending policies. During the three months ended March 31, 2026, we did not incur any credit loss on any of our advances, and management believes that it has adequate policies and procedures in place to manage our credit risk on advances effectively.
At March 31, 2026 and December 31, 2025, borrowers pledged $441.7 billion and $442.4 billion of collateral (net of applicable discounts) to support activity with us, including advances. At March 31, 2026 and December 31, 2025, all of our advances met the requirement to be collateralized at a minimum of 100 percent, net of applicable discounts. Borrowers pledge collateral in excess of their collateral requirement mainly to demonstrate available liquidity and to borrow additional amounts in the future.
We evaluate advances for credit losses on a quarterly basis. We have never experienced a credit loss on our advances. Based upon our collateral and lending policies, the collateral held as security, and the repayment history on advances, management has determined that there were no expected credit losses on our advances as of March 31, 2026 and December 31, 2025. Refer to "Item 8. Financial Statements and Supplementary Data - Note 5 - Advances" in our 2025 Form 10-K for additional information on our collateral management and allowance for credit losses.
MORTGAGE LOANS
Mortgage loan credit risk is the risk that we will not receive timely payments of principal and interest due from mortgage borrowers because of borrower defaults. Credit risk on mortgage loans is affected by a number of factors, including loan type, borrower's credit history, and other factors such as home price fluctuations, unemployment levels, and other economic factors in the local market or nationwide.
We manage the credit risk on mortgage loans by (i) adhering to our underwriting standards, (ii) using agreements to establish credit risk sharing responsibilities with our PFIs, and (iii) monitoring the performance of the mortgage loan portfolio and creditworthiness of PFIs. Management believes that it has adequate policies and procedures in place to manage credit risk on mortgage loans effectively. Refer to "Item 1. Financial Statements - Note 5 - Mortgage Loans Held for Portfolio" for additional information on the payment status of our conventional mortgage loans and "Item 8. Financial Statements and Supplementary Data - Note 6 - Mortgage Loans Held for Portfolio" in our 2025 Form 10-K for more information on our allowance for credit losses.
INVESTMENTS
We are subject to credit risk on investments consisting of investment securities, interest-bearing deposits, securities purchased under agreements to resell, and federal funds sold. To minimize credit risk on investments, we are prohibited by
Finance Agency regulations from investing in certain types of investments. We also seek to reduce the credit risk by investing in investment-quality securities.
In addition, Finance Agency regulations include limits on the amount of unsecured credit we may extend to a counterparty or to a group of affiliated counterparties. Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management - Credit Risk - Investments" in our 2025 Form 10-K for additional information on these regulatory limits, risk mitigation efforts, and allowance for credit losses.
At March 31, 2026, our unsecured short-term investment exposure consisted of overnight interest-bearing deposits and federal funds sold. The following table presents our unsecured short-term investment exposure by counterparty credit rating and domicile (dollars in millions):
March 31, 2026
Credit Rating1,2
Domicile of Counterparty AA A Total
Domestic $ 1,390 $ 3,160 $ 4,550
U.S. branches and agency offices of foreign commercial banks
Australia 1,450 - 1,450
Canada - 2,450 2,450
France - 100 100
Netherlands - 650 650
Total U.S. branches and agency offices of foreign commercial banks 1,450 3,200 4,650
Total unsecured short-term investment exposure $ 2,840 $ 6,360 $ 9,200
1 Represents either the lowest credit rating available for each counterparty based on an NRSRO, or the guarantor credit rating, if applicable. In instances where an NRSRO rating or guarantor rating is not available for the investment, the investment is classified as unrated.
2 Table excludes investments issued or guaranteed by the U.S. Government, U.S. government agencies, government instrumentalities, GSEs, and supranational entities, and does not include related accrued interest.
Investment Ratings
The following table summarizes the carrying value of our investments by credit rating (dollars in millions):
March 31, 2026
Credit Rating1
AAA AA A Unrated Total
Interest-bearing deposits2
$ - $ 1,393 $ 3,160 $ - $ 4,553
Securities purchased under agreements to resell3
- 1,250 3,700 11,490 16,440
Federal funds sold - 1,450 3,200 - 4,650
Investment securities:
MBS
GSE single-family - 492 - - 492
GSE multifamily - 20,578 - - 20,578
U.S. obligations single-family4
- 5,886 - - 5,886
Private-label residential - - - 2 2
Total MBS - 26,956 - 2 26,958
Non-MBS
U.S. Treasury obligations4
- 5,914 - - 5,914
Other U.S. obligations4
- 60 - - 60
GSE and TVA obligations - 478 - - 478
State or local housing agency obligations 293 140 - - 433
Other5
94 19 - - 113
Total non-MBS 387 6,611 - - 6,998
Total investments $ 387 $ 37,660 $ 10,060 $ 11,492 $ 59,599
1 Represents either the lowest credit rating available for each investment based on an NRSRO, or the guarantor credit rating, if applicable. In instances where an NRSRO rating or guarantor rating is not available for the investment, the investment is classified as unrated.
2 Balance includes $3 million of interest-bearing deposits with another FHLBank. These investments are rated AA, based on the credit rating of the FHLBank System.
3 Although a portion of the securities purchased under agreements to resell is with unrated counterparties, the underlying collateral supporting these investments is investment grade.
4 Represents investment securities backed by the full faith and credit of the U.S. Government.
5 Consists of taxable municipal bonds.
DERIVATIVES
The following table shows our derivative counterparty credit exposure (dollars in millions):
March 31, 2026
Credit Rating1
Notional Amount Net Derivatives
Fair Value Before Collateral 		Cash Collateral Pledged
To (From) Counterparty
Non-cash Collateral Pledged To (From) Counterparty
Net Credit Exposure
to Counterparties
Non-member counterparties:
Asset positions with credit exposure
Uncleared derivatives
A2
$ 3,022 $ 16 $ (16) $ - $ -
BBB2
1,286 8 (8) - -
Liability positions with credit exposure
Uncleared derivatives
A
8,363 (6) 9 - 3
BBB
5,166 (4) 8 - 4
Cleared derivatives3
175,713 (63) 1 1,613 1,551
Total derivative positions with credit exposure to non-member counterparties 193,550 (49) (6) 1,613 1,558
Member institutions2,4
114 - - - -
Total 193,664 $ (49) $ (6) $ 1,613 $ 1,558
Derivative positions without credit exposure 4,649
Total notional $ 198,313
1 Represents either the lowest credit rating available for each counterparty based on an NRSRO, or the guarantor credit rating, if applicable.
2 Net credit exposure is less than $1 million.
3 Represents derivative transactions cleared with CME Clearing and LCH Ltd., our clearinghouses. CME Clearing is not rated, but its parent, CME Group Inc. was rated Aa3 by Moody's and AA- by S&P at March 31, 2026. LCH Ltd. was rated AA- by S&P at March 31, 2026.
4 Represents mortgage loan purchase commitments with our member institutions.
Refer to "Item 1. Financial Statements - Note 6 - Derivatives and Hedging Activities" for additional information on our derivatives and hedging activities.
Federal Home Loan Bank of Des Moines published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 15:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]