Federal Home Loan Bank of Topeka

11/10/2026 | Press release | Distributed by Public on 11/10/2026 13:30

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to assist the reader in understanding our business and assessing our operations both historically and prospectively. This discussion should be read in conjunction with our interim financial statements and related notes presented under Part I, Item 1 of this quarterly report on Form 10-Q and the annual report on Form 10-K for the year ended December 31, 2025, which includes audited financial statements and related notes for the year ended December 31, 2025. Our MD&A includes the following sections:
•Selected Financial Data - a tabular summary of selected balances, financial ratios and other financial information;
•Executive Level Overview - a general description of our business and financial highlights;
•Financial Market Trends - a discussion of current trends in the financial markets and overall economic environment, including the related impact on our operations;
•Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical estimates and assumptions;
•Results of Operations - an analysis of our operating results, including disclosures about the sustainability of our earnings;
•Financial Condition - an analysis of our financial position;
•Liquidity and Capital Resources - an analysis of our cash flows and capital position;
•Risk Management - a discussion of our risk management strategies;
•Recently Issued Accounting Standards; and
•Legislative and Regulatory Developments.
Executive Level Overview
Table 1 presents selected financial data for the periods indicated (dollar amounts in thousands):
Table 1
09/30/2026 06/30/2026 03/31/2026 12/31/2025 09/30/2025
Statement of Condition (as of period end):
Total assets $ 85,602,120 $ 82,554,043 $ 81,254,233 $ 77,505,029 $ 79,872,254
Advances 48,584,573 46,952,435 47,314,100 43,667,540 44,029,112
Mortgage loans, net 9,661,136 9,584,120 9,423,774 9,351,305 9,284,317
Short-term liquidity investments1
10,506,145 10,007,960 8,736,707 8,910,137 10,910,963
Investment securities
16,056,206 15,229,194 15,055,808 14,834,298 14,908,747
Total liabilities 81,030,567 78,064,575 76,826,416 73,317,391 75,724,983
Deposits 1,160,239 1,169,420 1,410,778 909,553 1,046,036
Consolidated obligations, net2
79,212,543 76,285,587 74,893,362 71,857,035 74,106,526
Total capital 4,571,553 4,489,468 4,427,817 4,187,638 4,147,271
Capital stock 2,828,998 2,718,153 2,713,586 2,510,362 2,555,364
Retained earnings 1,835,016 1,822,841 1,806,347 1,763,624 1,726,021
Statement of Income (for the quarterly period ended):
Net interest income 112,076 118,854 132,492 136,317 131,714
Other income (loss) 2,473 4,861 4,496 3,095 4,977
Voluntary housing and community investment program contributions3
6,207 10,509 383 9,730 7,364
Other expenses 26,954 26,669 26,357 28,027 25,831
Income before assessments 81,296 85,714 109,337 101,693 104,346
AHP assessments
8,259 8,596 10,945 10,181 10,447
Net income 73,037 77,118 98,392 91,512 93,899
Selected Financial Ratios and Other Financial Data (for the quarterly period ended):
Total average interest-earning assets
87,593,929 85,993,904 81,891,203 78,660,346 81,750,993
Average advances
51,282,645 50,290,340 46,594,106 43,561,465 46,770,546
Total average interest-bearing liabilities
82,462,064 80,875,702 77,059,821 74,075,557 76,979,163
Dividends paid 60,861 60,625 55,668 53,909 57,194
Weighted average dividend rate4
8.62 % 8.52 % 8.57 % 8.55 % 8.65 %
Dividend payout ratio5
83.33 % 78.61 % 56.58 % 58.91 % 60.91 %
Return on average equity 6.28 % 6.69 % 9.12 % 8.74 % 8.89 %
Return on average assets
0.33 % 0.36 % 0.49 % 0.46 % 0.45 %
Average equity to average assets 5.25 % 5.36 % 5.32 % 5.26 % 5.11 %
Net interest margin6
0.51 % 0.55 % 0.66 % 0.69 % 0.64 %
Total capital ratio7
5.34 % 5.44 % 5.45 % 5.40 % 5.19 %
Regulatory capital ratio8
5.49 % 5.59 % 5.57 % 5.52 % 5.37 %
1 Includes interest-bearing deposits, securities purchased under agreements to resell, and Federal funds sold.
2 Consolidated obligations are bonds and discount notes that we are primarily liable to repay. See Note 12 to the financial statements for a description of the par amount of consolidated obligations of all FHLBanks for which we are jointly and severally liable.
3 Voluntary housing and community investment program contributions are expensed in the period they are approved by the board of directors and/or awarded.
4 Dividends paid in cash and stock on both classes of stock as a percentage of average capital stock eligible for dividends.
5 Ratio disclosed represents dividends declared and paid during the period as a percentage of net income for the period presented. FHFA regulation requires that dividends be paid out of known income prior to declaration date.
6 Net interest income as a percentage of average earning assets.
7 GAAP capital stock, which excludes mandatorily redeemable capital stock, plus retained earnings and accumulated other comprehensive income as a percentage of total assets.
8 Regulatory capital (i.e., permanent capital and Class A Common Stock) as a percentage of total assets.
Performance Highlights:
•Total Assets: Total assets increased $8.1 billion, or 10.4 percent, from prior year end to $85.6 billion driven by a $4.9 billion increase in advances, a $1.6 billion increase in short-term liquidity investments, and a $1.2 billion increase in investment securities.
•Advances: Advances increased $4.9 billion, or 11.3 percent, from prior year end to $48.6 billion driven by increased utilization among insurance company and large depository members, with the majority of the growth in line of credit advances. Advances represented 56.8 percent of total assets, compared to 56.3 percent at prior year end.
•Mortgage loans: Mortgage loans increased $0.3 billion to $9.7 billion, representing 11.3 percent of total assets, compared to 12.1 percent at prior year end.
•Investment securities: Investment securities increased $1.2 billion to $16.1 billion, driven by purchases of multifamily mortgage-backed securities. Investment securities represented 18.8 percent of total assets compared to 19.1 percent at prior year end.
•Net Income: Net income declined year over year, decreasing $20.9 million to $73.0 million for the quarter ended September 30, 2026, compared to $93.9 million for the prior-year quarter.
•Net interest income/margin: Net interest income was $112.1 million for the quarter ended September 30, 2026, $19.6 million lower than the prior-year quarter. The decline in net interest income was driven by fair value hedge accounting adjustments on investment securities. Net interest margin decreased thirteen basis points to 0.51 percent between quarterly periods, while net interest spread decreased ten basis points to 0.29 percent between quarterly periods. The margin and spread declines reflect fair value hedge accounting adjustments that reduced net interest income on hedged investment securities during the quarter.
•Performance ratios: Return on average equity decreased to 6.3 percent for the current quarter compared to 8.9 percent for the prior year quarter. The decrease reflects lower net income and higher average balance of capital stock resulting from increased advance utilization.
Financial Market Trends
The primary external factors that affect net interest income are market interest rates and the general state of the economy, as discussed in greater detail below.
General discussion of the level of market interest rates:
Table 2 presents selected market interest rates as of the dates or for the periods shown.
Table 2
09/30/2026 09/30/2025 09/30/2026 09/30/2025 09/30/2026 12/31/2025
Market Instrument Three-month Three-month Nine-month Nine-month Ending Ending
Average Average Average Average Rate Rate
SOFR1
3.67 % 4.33 % 3.65 % 4.33 % 3.90 % 3.87 %
Federal funds effective rate1
3.67 4.30 3.65 4.32 3.88 3.64
Federal Reserve interest rate on reserve balances1
3.69 4.37 3.66 4.39 3.90 3.65
3-month U.S. Treasury bill1
3.87 4.19 3.75 4.27 4.12 3.63
2-year U.S. Treasury note1
4.36 3.73 3.97 3.92 4.89 3.47
5-year U.S. Treasury note1
4.50 3.80 4.13 4.01 5.09 3.73
10-year U.S. Treasury note1
4.75 4.26 4.46 4.36 5.29 4.17
30-year residential mortgage note rate1,2
6.83 6.65 6.53 6.79 7.30 6.32
1 Source is Bloomberg.
2 Mortgage Bankers Association weekly 30-year fixed-rate mortgage contract rate.
At its October 2026 meeting, the Federal Open Market Committee (FOMC) of the Federal Reserve maintained the target range for the federal funds rate at 3.75 percent to 4.00 percent. The FOMC noted that inflation remains elevated and geopolitical developments added to uncertainty, while domestic spending remained resilient and the unemployment rate held steady. It indicated that future adjustments to the target range would depend on incoming data. The ongoing conflict in the Middle East, along with concerns over oil prices and supply, European sovereign debt, and debt financing of artificial intelligence infrastructure contributed to heightened interest rate volatility during 2026. These developments did not adversely affect the FHLBank System's access to capital markets.
For further discussion of FHLBank debt, see this Item 2 - "Financial Condition - Consolidated Obligations."
Critical Accounting Policies and Estimates
The preparation of our financial statements in accordance with GAAP requires management to make a number of judgments, estimates, and assumptions that affect our reported results and disclosures.
The accounting policies that management believes are the most critical to an understanding of our financial results and condition and require complex management judgment are described under Part II, Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in our annual report on Form 10-K for the year ended December 31, 2025, incorporated by reference herein. There were no material changes to our critical accounting policies and estimates during the quarter ended September 30, 2026.
Results of Operations
Table 3 presents changes in the major components of our net income (dollar amounts in thousands):
Table 3
Increase (Decrease) in Earnings Components
Three Months Ended Nine Months Ended
09/30/2026 vs. 09/30/2025 09/30/2026 vs. 09/30/2025
Dollar Change Percentage Change Dollar Change Percentage Change
Total interest income $ (68,676) (7.2) % $ (230,129) (8.3) %
Total interest expense (49,038) (6.0) (189,594) (8.0)
Net interest income (19,638) (14.9) (40,535) (10.0)
Provision (reversal) for credit losses on mortgage loans 942 110.8 1,816 18,160.0
Net interest income after mortgage loan loss provision (20,580) (15.5) (42,351) (10.5)
Net gains (losses) on trading securities (987) (108.3) (5,350) (101.4)
Net gains (losses) on derivatives (1,503) (347.1) 5,333 116.2
Other non-interest income (14) (0.4) 534 5.0
Total other income (loss) (2,504) (50.3) 517 4.6
Operating expenses 1,566 7.6 5,005 8.3
Voluntary housing and community investment program contributions
(1,157) (15.7) (2,275) (11.7)
Other non-interest expenses (443) (8.4) (874) (5.6)
Total other expenses (34) (0.1) 1,856 1.9
AHP assessments (2,188) (20.9) (4,228) (13.2)
NET INCOME $ (20,862) (22.2) % $ (39,462) (13.7) %
For the three- and nine-months ended September 30, 2026, net income decreased $20.9 million and $39.5 million, respectively, compared to the same periods in the prior year. The decline in both the quarter and year-to-date periods is attributed primarily to a decrease in net interest income, as discussed in greater detail below.
Net Interest Income: Net interest income and net interest margin are impacted by balance sheet composition, market interest rates and trends, derivative and hedging activities, and net interest spread. For the quarter ended September 30, 2026, net interest income decreased $19.6 million, or 14.9 percent, to $112.1 million compared to $131.7 million for the prior year period. Net interest income decreased $40.5 million, or 10.0 percent, to $363.4 million for the nine months ended September 30, 2026 compared to $404.0 million for the corresponding prior-year period. The decline in net interest income for both the three- and nine-month periods was due primarily to hedge accounting adjustments on maturing swapped Treasury securities. Average short-term interest rates declined between periods but the impact was partially offset by the increase in the average balances of interest-earning assets between quarterly periods.
Net interest margin decreased by thirteen basis points for the current quarter and ten basis points for the nine-months ended September 30, 2026 (see Tables 8 and 10), primarily due to the hedge accounting adjustments during the period. Net interest spread, which represents the difference between the yield on interest-earning assets and the average cost of funding, declined ten basis points for the current quarter and seven basis points for the current nine-month period. For further discussion of earning assets, see "Financial Condition" under this Item 2.
Net interest income and net interest margin are also impacted by derivative and hedging activities, as net interest settlements on derivatives, amortization/accretion of hedging activities, and the changes in fair values of hedged items and the corresponding derivative instruments designated in fair value hedging relationships are recorded in net interest income. Interest income on fair value hedges declined $47.5 million and $124.6 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in the prior year due to declines in short-term interest rates between periods and hedge accounting adjustments on maturing swapped Treasury securities. These securities were purchased at discounts and hedged with strategies that measured the change in fair value using the full contractual coupon, resulting in a residual basis adjustment recognized at maturity that offset the cumulative discount accretion recognized over the life of the security. Additional hedge accounting adjustments on maturing swapped Treasury securities will be recognized as they mature periodically through the third quarter of 2028. Tables 4 through 7 present the impact of derivatives and hedging activities recorded in net interest income (in thousands):
Table 4
Three Months Ended 09/30/2026
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds Total
Unrealized gains (losses) due to fair value changes
$ 1,594 $ (20,121) $ - $ (277) $ (103) $ (18,907)
Net amortization/accretion of hedging activities
789 - 454 - 105 1,348
Net interest received (paid) 11,806 12,559 - 64 (8,460) 15,969
Price alignment amount1
(1,786) (2,860) - 14 (1) (4,633)
TOTAL $ 12,403 $ (10,422) $ 454 $ (199) $ (8,459) $ (6,223)
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 5
Three Months Ended 09/30/2025
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds Total
Unrealized gains (losses) due to fair value changes
$ (223) $ (3,171) $ - $ - $ (176) $ (3,570)
Net amortization/accretion of hedging activities
903 - 215 - 102 1,220
Net interest received (paid) 42,328 36,137 - (1,471) (31,730) 45,264
Price alignment amount1
(599) (1,034) - 15 (11) (1,629)
TOTAL $ 42,409 $ 31,932 $ 215 $ (1,456) $ (31,815) $ 41,285
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 6
Nine Months Ended 09/30/2026
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds Total
Unrealized gains (losses) due to fair value changes
$ 2,410 $ (30,288) $ - $ 301 $ 161 $ (27,416)
Net amortization/accretion of hedging activities
1,759 - 825 - 310 2,894
Net interest received (paid) 38,127 42,642 - 2,472 (32,085) 51,156
Price alignment amount1
(3,162) (5,065) - 36 (31) (8,222)
TOTAL $ 39,134 $ 7,289 $ 825 $ 2,809 $ (31,645) $ 18,412
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 7
Nine Months Ended 09/30/2025
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds Total
Unrealized gains (losses) due to fair value changes
$ (2,105) $ 15,442 $ - $ (190) $ (375) $ 12,772
Net amortization/accretion of hedging activities
2,694 - 613 - 301 3,608
Net interest received (paid) 125,373 104,174 - (1,654) (91,667) 136,226
Price alignment amount1
(3,851) (5,698) - 35 (117) (9,631)
TOTAL $ 122,111 $ 113,918 $ 613 $ (1,809) $ (91,858) $ 142,975
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Average Balances and Yields: Table 8 presents average balances and annualized yields of major earning asset categories and the sources funding those earning assets (dollar amounts in thousands):
Table 8
Three Months Ended
09/30/2026 09/30/2025
Average
Balance 		Interest
Income/
Expense 		Yield Average
Balance 		Interest
Income/
Expense 		Yield
Interest-earning assets:
Interest-bearing deposits $ 2,758,927 $ 25,686 3.69 % $ 2,764,494 $ 31,405 4.51 %
Securities purchased under agreements to resell
3,508,707 33,115 3.74 3,409,239 37,835 4.40
Federal funds sold 4,607,554 43,249 3.72 4,671,446 51,438 4.37
Investment securities1,2
15,757,825 151,303 3.81 14,850,910 181,913 4.86
Advances1,2
51,282,645 522,876 4.05 46,770,546 550,890 4.67
Mortgage loans3,4
9,643,271 103,002 4.24 9,249,358 94,426 4.05
Other interest-earning assets 35,000 175 1.98 35,000 175 1.98
Total earning assets 87,593,929 879,406 3.98 81,750,993 948,082 4.60
Other non-interest-earning assets 287,344 248,148
Total assets $ 87,881,273 $ 81,999,141
Interest-bearing liabilities:
Deposits $ 1,153,602 $ 9,817 3.38 % $ 983,202 $ 10,009 4.04 %
Consolidated obligations1:
Discount Notes 17,754,179 166,140 3.71 13,351,460 143,296 4.26
Bonds 63,443,968 589,644 3.69 62,596,878 662,625 4.20
Other borrowings 110,315 1,729 6.22 47,623 438 3.65
Total interest-bearing liabilities 82,462,064 767,330 3.69 76,979,163 816,368 4.21
Capital and other non-interest-bearing funds
5,419,209 5,019,978
Total funding $ 87,881,273 $ 81,999,141
Net interest income and net interest spread5
$ 112,076 0.29 % $ 131,714 0.39 %
Net interest margin6
0.51 % 0.64 %
1 Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.
2 Interest income includes prepayment/yield maintenance fees.
3 Credit enhancement income payments made to PFIs are netted against interest earnings on the mortgage loans. The expense related to these payments was $2.1 million and $2.0 million for the three months ended September 30, 2026 and 2025, respectively.
4 Mortgage loans average balance includes outstanding principal for non-performing conventional loans. However, these loans no longer accrue interest.
5 Net interest spread is the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
6 Net interest margin is defined as net interest income as a percentage of average interest-earning assets.
Changes in the volume of interest-earning assets and the level of interest rates influence changes in net interest income, net interest spread and net interest margin. Table 9 summarizes changes in interest income and interest expense (in thousands):
Table 9
Three Months Ended
09/30/2026 vs. 09/30/2025
Increase (Decrease) Due to
Volume1,2
Rate1,2
Total
Interest Income3:
Interest-bearing deposits $ (63) $ (5,656) $ (5,719)
Securities purchased under agreements to resell 1,077 (5,797) (4,720)
Federal funds sold (695) (7,494) (8,189)
Investment securities 10,580 (41,190) (30,610)
Advances 50,161 (78,175) (28,014)
Mortgage loans 4,111 4,465 8,576
Total interest-earning assets 65,171 (133,847) (68,676)
Interest Expense3:
Deposits 1,589 (1,781) (192)
Consolidated obligations:
Discount notes 42,893 (20,049) 22,844
Bonds 8,857 (81,838) (72,981)
Other borrowings 841 450 1,291
Total interest-bearing liabilities 54,180 (103,218) (49,038)
Change in net interest income $ 10,991 $ (30,629) $ (19,638)
1 Changes in interest income and interest expense not identifiable as either volume-related or rate-related have been allocated to volume and rate based upon the proportion of the absolute value of the volume and rate changes.
2 Amounts used to calculate volume and rate changes are based on numbers in dollars. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same results.
3 Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.
Table 10 presents average balances and yields of major earning asset categories and the sources funding those earning assets (dollar amounts in thousands):
Table 10
Nine Months Ended
09/30/2026 09/30/2025
Average
Balance 		Interest
Income/Expense 		Yield Average
Balance 		Interest
Income/Expense 		Yield
Interest-earning assets:
Interest-bearing deposits $ 2,756,358 $ 75,722 3.67 % $ 2,772,605 $ 91,522 4.41 %
Securities purchased under agreements to resell
3,528,125 98,360 3.73 3,186,952 105,257 4.42
Federal funds sold 4,592,659 127,088 3.70 4,625,696 151,842 4.39
Investment securities1,2
15,354,921 465,300 4.05 14,481,214 549,744 5.08
Advances1,2
49,406,205 1,484,034 4.02 46,075,771 1,607,592 4.66
Mortgage loans3,4
9,507,300 299,477 4.21 9,116,497 274,123 4.02
Other interest-earning assets
35,000 525 2.01 35,916 555 2.07
Total earning assets 85,180,568 2,550,506 4.00 80,294,651 2,780,635 4.63
Other non-interest-earning assets
274,970 247,808
Total assets $ 85,455,538 $ 80,542,459
Interest-bearing liabilities:
Deposits $ 1,160,613 29,287 3.37 $ 914,577 27,907 4.08
Consolidated obligations1:
Discount Notes 20,944,380 575,752 3.68 11,601,669 374,585 4.32
Bonds 57,974,129 1,579,256 3.64 62,997,603 1,972,976 4.19
Other borrowings 73,195 2,789 5.09 46,153 1,210 3.50
Total interest-bearing liabilities
80,152,317 2,187,084 3.65 75,560,002 2,376,678 4.21
Capital and other non-interest-bearing funds
5,303,221 4,982,457
Total funding $ 85,455,538 $ 80,542,459
Net interest income and net interest spread5
$ 363,422 0.35 % $ 403,957 0.42 %
Net interest margin6
0.57 % 0.67 %
1 Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.
2 Interest income includes prepayment/yield maintenance fees.
3 Credit enhancement income payments made to PFIs are netted against interest earnings on the mortgage loans. The expense related to these payments was $6.2 million and $5.8 million for the nine months ended September 30, 2026 and 2025, respectively.
4 Mortgage loans average balance includes outstanding principal for non-performing conventional loans. However, these loans no longer accrue interest.
5 Net interest spread is the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
6 Net interest margin is defined as net interest income as a percentage of average interest-earning assets.
Changes in the volume of interest-earning assets and the level of interest rates influence changes in net interest income, net interest spread and net interest margin. Table 11 summarizes changes in interest income and interest expense (in thousands):
Table 11
Nine Months Ended
09/30/2026 vs. 09/30/2025
Increase (Decrease) Due to
Volume1,2
Rate1,2
Total
Interest Income3:
Interest-bearing deposits $ (533) $ (15,267) $ (15,800)
Securities purchased under agreements to resell
10,553 (17,450) (6,897)
Federal funds sold (1,077) (23,677) (24,754)
Investment securities 31,628 (116,072) (84,444)
Advances 110,673 (234,231) (123,558)
Mortgage loans 12,016 13,338 25,354
Other assets (14) (16) (30)
Total earning assets 163,246 (393,375) (230,129)
Interest Expense3:
Deposits 6,717 (5,337) 1,380
Consolidated obligations:
Discount notes 263,813 (62,646) 201,167
Bonds (149,547) (244,173) (393,720)
Other borrowings 890 689 1,579
Total interest-bearing liabilities 121,873 (311,467) (189,594)
Change in net interest income $ 41,373 $ (81,908) $ (40,535)
1 Changes in interest income and interest expense not identifiable as either volume-related or rate-related have been allocated to volume and rate based upon the proportion of the absolute value of the volume and rate changes.
2 Amounts used to calculate volume and rate changes are based on numbers in dollars. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same results.
3 Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.
Net Gains (Losses) on Derivatives: Tables 12 through 15 present the earnings impact of derivatives by financial instrument as recorded in other non-interest income (in thousands):
Table 12
Three Months Ended 09/30/2026
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds
Balance Sheet
Total
Derivatives not designated as hedging instruments:
Economic hedges - unrealized gains (losses) due to fair value changes
$ 1,267 $ (107) $ - $ - $ - $ 1,148 $ 2,308
Mortgage delivery commitments - - (3,728) - - - (3,728)
Economic hedges - net interest received (paid)
81 280 - - - - 361
Price alignment amount1
(11) - - - - - (11)
Net gains (losses) on derivatives 1,337 173 (3,728) - - 1,148 (1,070)
Net gains (losses) on trading securities hedged on an economic basis with derivatives
- (60) - - - (60)
TOTAL $ 1,337 $ 113 $ (3,728) $ - $ - $ 1,148 $ (1,130)
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 13
Three Months Ended 09/30/2025
Advances Investments Mortgage Loans Consolidated
Obligation Discount Notes 		Consolidated
Obligation Bonds
Balance Sheet
Total
Derivatives not designated as hedging instruments:
Economic hedges - unrealized gains (losses) due to fair value changes
$ (468) $ (464) $ - $ 1,419 $ 312 $ (574) $ 225
Mortgage delivery commitments - - 688 - - - 688
Economic hedges - net interest received (paid)
591 506 - (1,294) (318) 38 (477)
Price alignment amount1
(7) (1) - 5 - - (3)
Net gains (losses) on derivatives 116 41 688 130 (6) (536) 433
Net gains (losses) on trading securities hedged on an economic basis with derivatives
- 883 - - - 883
TOTAL $ 116 $ 924 $ 688 $ 130 $ (6) $ (536) $ 1,316
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 14
Nine Months Ended 09/30/2026
Advances Investments Mortgage Loans Consolidated Obligation Discount Notes Consolidated Obligation Bonds
Balance Sheet
Total
Derivatives not designated as hedging instruments:
Economic hedges - unrealized gains (losses) due to fair value changes
$ 2,451 $ (55) $ - $ (1,828) $ 232 $ 2,212 $ 3,012
Mortgage delivery commitments - - (4,861) - - - (4,861)
Economic hedges - net interest received (paid)
271 823 - 1,599 (85) - 2,608
Price alignment amount1
(19) - - 2 - - (17)
Net gains (losses) on derivatives 2,703 768 (4,861) (227) 147 2,212 742
Net gains (losses) on trading securities hedged on an economic basis with derivatives
- (69) - - - - (69)
TOTAL $ 2,703 $ 699 $ (4,861) $ (227) $ 147 $ 2,212 $ 673
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Table 15
Nine Months Ended 09/30/2025
Advances Investments Mortgage Loans Consolidated
Obligation Discount Notes 		Consolidated
Obligation Bonds
Balance Sheet
Total
Derivatives not designated as hedging instruments:
Economic hedges - unrealized gains (losses) due to fair value changes
$ (3,134) $ (4,885) $ - $ (183) $ 584 $ (3,405) $ (11,023)
Mortgage delivery commitments - - 1,505 - - - 1,505
Economic hedges - net interest received (paid) 1,781 4,463 - (596) (685) 39 5,002
Price alignment amount1
(50) (2) - 9 (32) - (75)
Net gains (losses) on derivatives (1,403) (424) 1,505 (770) (133) (3,366) (4,591)
Net gains (losses) on trading securities hedged on an economic basis with derivatives
- 5,257 - - - - 5,257
TOTAL $ (1,403) $ 4,833 $ 1,505 $ (770) $ (133) $ (3,366) $ 666
1 Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.
Other Expenses: Other expenses, which includes compensation and benefits, other operating expenses and voluntary housing and community investment program contributions, were flat for the three months ended September 30, 2026 and increased $1.9 million for the nine months ended September 30, 2026 compared with the corresponding prior-year periods. The nine-month increase was driven primarily by higher compensation and benefits and other operating expense, partially offset by lower voluntary housing contributions.
For 2026, FHLBank has voluntarily committed an additional $25.5 million above statutory requirements, or five percent of its 2025 net income before assessments and voluntary contributions, to support housing and community development programs.
Financial Condition
Overall: Table 16 presents the percentage concentration of the major components of our Statements of Condition:
Table 16
Component Concentration
09/30/2026 12/31/2025
Assets:
Cash and due from banks - % - %
Interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold 12.3 11.6
Investment securities 18.8 19.1
Advances 56.8 56.3
Mortgage loans, net 11.3 12.1
Other assets 0.8 0.9
Total assets 100.0 % 100.0 %
Liabilities:
Deposits 1.5 % 1.3 %
Consolidated obligation discount notes, net 13.1 27.5
Consolidated obligation bonds, net 79.4 65.2
Other liabilities 0.7 0.6
Total liabilities 94.7 94.6
Capital:
Capital stock outstanding 3.3 3.2
Retained earnings 2.1 2.3
Accumulated other comprehensive income (loss) (0.1) (0.2)
Total capital 5.3 5.4
Total liabilities and capital 100.0 % 100.0 %
Table 17 presents changes in the major components of our Statements of Condition (dollar amounts in thousands):
Table 17
Increase (Decrease)
in Components
09/30/2026 vs. 12/31/2025
Dollar
Change 		Percent
Change
Assets:
Cash and due from banks $ (144) (0.7) %
Interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold 1,596,008 17.9
Investment securities 1,221,908 8.2
Advances 4,917,033 11.3
Mortgage loans, net 309,831 3.3
Other assets 52,455 7.3
Total assets $ 8,097,091 10.4 %
Liabilities:
Deposits $ 250,686 27.6 %
Consolidated obligation discount notes, net (10,074,472) (47.3)
Consolidated obligation bonds, net 17,429,980 34.5
Other liabilities 106,982 19.4
Total liabilities 7,713,176 10.5
Capital:
Capital stock outstanding 318,636 12.7
Retained earnings 71,392 4.0
Accumulated other comprehensive income (loss) (6,113) 7.1
Total capital 383,915 9.2
Total liabilities and capital $ 8,097,091 10.4 %
Total assets increased $8.1 billion between periods, from $77.5 billion at December 31, 2025 to $85.6 billion at September 30, 2026. The increase was driven by a $4.9 billion increase in advances, a $1.6 billion increase in short-term liquidity investments, and a $1.2 billion increase in investment securities. Asset composition remained relatively consistent between years, with advances continuing to comprise the largest asset on the balance sheet, increasing from 56.3 percent of total assets at December 31, 2025 to 56.8 percent at September 30, 2026.
Total liabilities increased $7.7 billion over the same period, consistent with the growth in assets, but the composition of debt shifted. Consolidated obligation bonds and discount notes represented 70.3 percent and 29.7 percent of total consolidated obligations, respectively, at December 31, 2025 compared to 85.8 percent and 14.2 percent at September 30, 2026. This shift reflects an increase in short-term variable-rate and swapped fixed-rate callable bonds.
Total capital increased $383.9 million, or 9.2 percent, from December 31, 2025 to September 30, 2026 due to an increase in capital stock resulting from increased advance utilization and growth in retained earnings in excess of dividends paid, partially offset by merger-related transfers to mandatorily redeemable capital stock (see Table 22).
Advances: Advances are a primary means of providing liquidity to members and were our largest asset at September 30, 2026 and December 31, 2025. Advance par value increased by $5.2 billion, or 12.0 percent, from $43.7 billion at December 31, 2025 to $48.9 billion at September 30, 2026 (see Table 18). Advance demand has remained strong among FHLBank membership, especially among insurance companies and large depository institutions, which accounted for most of the growth in the first nine months of 2026 as advance rates became more attractive relative to other wholesale funding.
The advance portfolio remained concentrated in advances that reprice or mature on a relatively short-term basis. Overnight line of credit, adjustable-rate advances, and short-term fixed-rate advances represented 68.5 percent of the portfolio at September 30, 2026 compared to 61.2 percent as of December 31, 2025. This increase primarily reflected growth of $4.7 billion in overnight line of credit, particularly among large members, driven by competitive pricing relative to other wholesale funding. Large members also drove the shift from short-term fixed-rate to regular adjustable-rate advances between periods. Increasing deposit balances and/or declining loan demand at depository members could soften advance demand in future periods.
To manage interest rate risk, we use swaps to convert a significant portion of longer-term fixed-rate advances to short-term indices, synthetically creating adjustable-rate advances. Including short-term fixed-rate and adjustable-rate advances, advances that effectively reprice at least every three months represented 97.7 percent and 97.8 percent of the portfolio as of September 30, 2026 and December 31, 2025, respectively.
As of September 30, 2026 and December 31, 2025, 61.2 percent and 59.3 percent, respectively, of our members carried outstanding advance balances. Members have access to other wholesale funding sources, which may impact the demand for advances on the basis of relative cost.
Table 18 summarizes advances outstanding by product (dollar amounts in thousands). An individual advance may be reclassified between periods (e.g., from fixed-rate callable advance to regular fixed-rate advance) due to the occurrence of a triggering event such as the passing of a call date.
Table 18
09/30/2026 12/31/2025
Dollar Percent Dollar Percent
Line of Credit:
Overnight line of credit1
$ 11,845,476 24.2 % $ 7,190,659 16.5 %
Adjustable-rate:
Standard advance products:
Regular adjustable-rate advances 20,229,000 41.4 14,391,900 33.0
Adjustable-rate callable advances
769,250 1.6 974,350 2.2
Standard housing and community development advances:
Adjustable-rate callable advances 13,535 - 18,535 -
Total adjustable-rate term advances 21,011,785 43.0 15,384,785 35.2
Fixed-rate:
Standard advance products:
Short-term fixed-rate advances2
636,413 1.3 4,130,111 9.5
Regular fixed-rate advances 12,579,016 25.7 12,514,440 28.7
Fixed-rate callable advances
43,292 0.1 52,572 0.1
Fixed-rate putable advances
1,952,700 4.0 3,362,100 7.7
Standard housing and community development advances:
Regular fixed-rate advances 164,097 0.3 184,270 0.4
Fixed-rate callable advances
458 - 458 -
Total fixed-rate term advances 15,375,976 31.4 20,243,951 46.4
Amortizing:
Standard advance products:
Fixed-rate amortizing advances 501,402 1.0 663,998 1.5
Fixed-rate callable amortizing advances 15,587 - 16,080 -
Standard housing and community development advances:
Fixed-rate amortizing advances 142,387 0.4 159,289 0.4
Fixed-rate callable amortizing advances 14,236 - 12,249 -
Total amortizing advances 673,612 1.4 851,616 1.9
TOTAL PAR VALUE $ 48,906,849 100.0 % $ 43,671,011 100.0 %
1 Represents fixed-rate line of credit advances with daily maturities.
2 Represents non-amortizing, non-prepayable loans with terms to maturity from 3 to 93 days.
Table 19 presents information on our five largest borrowers (dollar amounts in thousands). If the borrower was not one of our top five borrowers for one of the periods presented, the applicable columns are left blank.
Table 19
Borrower Name 09/30/2026 12/31/2025
Advance
Par Value
Percent of Total
Advance Par
Advance
Par Value
Percent of Total
Advance Par
MidFirst Bank $ 13,250,000 27.1 % $ 12,620,000 28.9 %
Pacific Life Insurance Co. 4,039,976 8.3 2,289,976 5.2
United of Omaha Life Ins. Co. 3,996,300 8.2 3,204,117 7.3
BOKF, N.A. 3,730,000 7.6 2,700,000 6.2
Security Life of Denver Ins. 2,125,000 4.3 1,840,000 4.2
TOTAL $ 27,141,276 55.5 % $ 22,654,093 51.8 %
Interest income from our five largest borrowers represented 58.5 percent and 54.6 percent of advance interest income for the nine months ended September 30, 2026 and 2025, respectively.
MPF Program: The MPF Program is a secondary mortgage market alternative for our members, predominately utilized by the smaller institutions in our district. We participate in the MPF Program through the MPF Provider, a division of FHLBank Chicago. Under the MPF Program, participating members can sell us fixed-rate conventional and government residential mortgage loans.
The mortgage loan portfolio increased to $9.7 billion at September 30, 2026 compared to $9.4 billion at December 31, 2025. As mortgage interest rates decline, we generally expect increases in prepayments and new originations of mortgage loans. When rates increase, prepayments and originations typically decline. Acquisition activity has outpaced prepayments since the end of the year, despite marginal prepayment speed acceleration during the first half of 2026, due to origination activity at larger average loan amounts and refinance activity. Net mortgage loans as a percentage of total assets decreased from 12.1 percent as of December 31, 2025 to 11.3 percent as of September 30, 2026, primarily because higher advance balances increased total assets. The amount of new mortgage loans acquired from our PFIs during the nine months ended September 30, 2026 was $1.3 billion.
Investments: We use investments to generate income, provide liquidity, and support the primary and secondary markets for U.S. housing securities. Long-term investment securities increased $1.2 billion from December 31, 2025 to September 30, 2026 primarily due to purchases of multifamily agency commercial MBS. The short-term liquidity portfolio increased $1.6 billion from December 31, 2025 to September 30, 2026. All investments are rated single A or higher by nationally recognized statistical rating organizations (NRSRO).
Liquidity Portfolio - Our liquidity portfolio is used to provide funds for our members, maintain on-balance sheet liquidity holdings, meet other financial obligations such as debt servicing, and enhance income. It is comprised of short-term investments, primarily interest-bearing deposits, reverse repurchase agreements, Federal funds sold, and certificates of deposit. Fluctuations in the liquidity portfolio reflect the impact of regulatory requirements, anticipated member liquidity needs, and the timing of paydowns, maturities, and investment opportunities on liquidity management practices.
Table 20 presents the carrying value of our unsecured credit exposure with private counterparties by investment type (in thousands). This exposure is generally to U.S. branches and agency offices of foreign commercial banks on an overnight basis. The unsecured investment credit exposure presented may not reflect the average or maximum exposure during the period as the balances presented reflect the balances at period end.
Table 20
09/30/2026 12/31/2025
Interest-bearing deposits $ 1,786,118 $ 1,910,110
Federal funds sold 4,595,000 2,850,000
TOTAL UNSECURED INVESTMENT CREDIT EXPOSURE1
$ 6,381,118 $ 4,760,110
1 Excludes unsecured investment credit exposure to U.S. government, U.S. government agencies, instrumentalities, GSEs and supranational entities and does not include related accrued interest.
We actively monitor our credit exposures and the credit quality of our counterparties, including an assessment of each counterparty's financial performance, capital adequacy, sovereign support, and the current market perceptions of the counterparties. General macro-economic, political, and market conditions may also be considered when deciding on unsecured exposure. As a result, we may further limit existing exposures.
We manage our credit risk by conducting pre-purchase credit due diligence and ongoing surveillance described previously and generally investing in unsecured investments of highly-rated counterparties. We may extend unsecured credit to qualified members by investing in overnight Federal funds issued by them. As of September 30, 2026, all unsecured investments were rated as investment grade based on NRSROs.
Major Security Types - See Note 3 of the Notes to Financial Statements under Part I, Item 1 of this quarterly report for additional information on our different investment classifications including the types of securities held under each classification. The carrying values by contractual maturities of our investments as of September 30, 2026 are summarized by security type in Table 21 (dollar amounts in thousands) with certain weighted average yield metrics along with carrying values as of December 31, 2025. Expected maturities of MBS will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or yield maintenance fees. At September 30, 2026 and December 31, 2025, 27.1 percent and 28.8 percent of our investment securities were variable-rate investment securities and were primarily indexed to SOFR. The majority of fixed-rate investment securities are swapped to SOFR.
Table 21
09/30/2026 12/31/2025
Due in
one year
or less
Due after
one year
through five years
Due after
five years
through 10 years
Due after
10 years 		Carrying
Value 		Carrying
Value
Trading securities:
GSE MBS $ 71,961 $ - $ 6,096 $ 130 $ 78,187 $ 80,741
Total trading securities 71,961 - 6,096 130 78,187 80,741
Available-for-sale securities:
U.S. Treasury obligations 298,586 2,978,755 - - 3,277,341 3,149,986
U.S. obligation MBS - - - 48,576 48,576 60,428
GSE MBS 284,857 2,799,857 6,455,637 2,875,755 12,416,106 11,302,381
State or local housing agency obligations - - 52,623 20,494 73,117 57,956
Total available-for-sale securities 583,443 5,778,612 6,508,260 2,944,825 15,815,140 14,570,751
Held-to-maturity securities:
State or local housing agency obligations - 24,395 - - 24,395 25,615
GSE MBS - 16,121 13,156 109,207 138,484 157,191
Total held-to-maturity securities - 40,516 13,156 109,207 162,879 182,806
Total securities 655,404 5,819,128 6,527,512 3,054,162 16,056,206 14,834,298
Interest-bearing deposits 1,786,145 - - - 1,786,145 1,910,137
Federal funds sold 4,595,000 - - - 4,595,000 2,850,000
Securities purchased under agreements to resell
4,125,000 - - - 4,125,000 4,150,000
TOTAL INVESTMENTS $ 11,161,549 $ 5,819,128 $ 6,527,512 $ 3,054,162 $ 26,562,351 $ 23,744,435
Weighted average yields1:
Available-for-sale securities 2.88 % 3.70 % 4.52 % 5.05 %
Held-to-maturity securities - % 3.06 % 2.59 % 1.63 %
1 The weighted average yields are calculated as the sum of each debt security using the period end balances multiplied by the coupon rate adjusted by the impact of amortization and accretion of premiums and discounts, divided by the total debt securities in the applicable portfolio. The result is then multiplied by 100 to express it as a percentage.
Consolidated Obligations: Consolidated obligation bonds and discount notes are our primary source of funding for advances, mortgage loans, and investments. Capital markets have traditionally treated FHLBank obligations as U.S. government agency debt. Although these obligations are not explicitly guaranteed by the U.S. government, we generally have stable access to funding at spreads to U.S. Treasury rates that we consider favorable.
We are primarily and directly liable for consolidated obligations issued on our behalf, and we are jointly and severally liable with the other FHLBanks for principal and interest on all consolidated obligations. As discussed under Part I, Item 3 - "Quantitative and Qualitative Disclosures About Market Risk," we issue debt with a range of maturities and option features to manage interest rate risk and maintain sufficient levels of liquidity. We also use derivatives in conjunction with specific debt issuances to synthetically structure funding terms and costs.
Total consolidated obligations increased $7.4 billion, or 10.2 percent, from December 31, 2025 to September 30, 2026, in line with the growth in total assets. Consolidated obligation bonds represented 85.8 percent of total consolidated obligations at September 30, 2026, compared to 70.3 percent at December 31, 2025. This shift reflects an increase in short-term variable rate and swapped fixed-rate callable bonds. Callable bonds outstanding increased from $15.6 billion to $17.9 billion over the same period.
Swapped callable bonds typically pay higher coupons because the issuer has the option to redeem them. In a swapped callable bond transaction, we typically call the hedged bond if the counterparty calls the swap. Although asset composition generally drives our funding mix, market conditions may also lead us to adjust the mix of unswapped obligations and obligations swapped or indexed to SOFR or the Overnight Index Swap (OIS) rate. For additional information on market trends impacting the cost of issuing debt, see "Financial Market Trends", "Liquidity and Capital Resources - Liquidity - Sources and Uses of Liquidity" under this Item 2.
Derivatives: The notional amount of outstanding derivatives decreased $5.1 billion, from $55.7 billion at December 31, 2025 to $50.6 billion at September 30, 2026, primarily due to decreases in interest rate swaps hedging discount notes. This decline reflects the change in debt composition discussed above. For additional information regarding the types of derivative instruments and risks hedged, see Table 26 under Part I, Item 3 - "Quantitative and Qualitative Disclosures About Market Risk".
Liquidity and Capital Resources
Our structure as a member-owned cooperative allows our assets, liabilities, and capital to expand and contract in response to changes in member credit demand, membership composition, and market conditions. As a result, the assets and liabilities utilized for liquidity purposes can vary significantly in the normal course of business based on the amount and timing of cash flows as a result of these factors. Our primary source of liquidity is our access to the capital markets through issuance of consolidated obligations, which is described in Part I, Item 1 - "Business - Debt Financing - Consolidated Obligations" of the 2025 Annual Report on Form 10-K. Our capital resources are governed by our Capital Plan, certain portions of which are described below.
Sources and Uses of Liquidity - We manage our liquidity position to serve as a reliable and cost-effective funding source for our members, with consideration for market conditions, member demand, and the maturity profile of our assets and liabilities. We are required to comply with minimum liquidity requirements established by FHFA regulations and guidance, as well as policies established by management and our board of directors. Our primary sources of liquidity are proceeds from the issuance of consolidated obligations, our short-term liquidity portfolio, deposit inflows, repayments of advances and mortgage loans, maturing investments, trading and available-for-sale investments, other secured and unsecured borrowings, interest income, and sales of unencumbered assets. During the nine months ended September 30, 2026, we maintained continuous access to funding and used these sources to fund advances, purchase mortgage loans and investments, repay member deposits, pledge collateral to derivative counterparties, and redeem or repurchase capital stock.
During the nine months ended September 30, 2026, proceeds from the issuance of bonds and discount notes (net of premiums and discounts) were $64.4 billion and $491.8 billion, respectively, compared to $61.0 billion and $441.0 billion for the nine months ended September 30, 2025. The difference between the proceeds from bonds and discount notes reflects the cumulative effect of issuing discount notes. High demand for Agency debt has kept the spread to U.S. Treasury obligations relatively narrow. Our ability to issue debt remains robust, but supply of debt and volatility in the capital markets can impact the demand for and cost of debt issued by the FHLBanks.
Short-term liquidity includes cash, Federal funds sold, interest-bearing demand deposits, reverse repurchase agreements, and long-term investments with remaining maturities of one year or less. The maturities of our short-term liquidity investments are structured to provide periodic cash flows to support our ongoing liquidity needs. Short-term liquidity increased between periods, from $10.6 billion as of December 31, 2025 to $11.2 billion as of September 30, 2026. Fluctuations in short-term liquidity reflect the impact of regulatory requirements, anticipated member liquidity needs, and the timing of paydowns, maturities, and investment opportunities on liquidity management practices.
Investment securities on our balance sheet are also a source of potential liquidity. U.S. Treasury obligations and GSE MBS can be sold or pledged as collateral for financing in the securities repurchase agreement market. In addition to balance sheet sources of liquidity, we have established lines of credit with numerous counterparties in the Federal funds market as well as with the other FHLBanks.
During the nine months ended September 30, 2026, advance disbursements totaled $193.4 billion compared to $190.5 billion for the prior year period. Investment purchases (excluding overnight investments) totaled $3.9 billion in the nine months ended September 30, 2026 compared to $2.3 billion for the same period in 2025. Payments on maturing and retired consolidated obligation bonds and discount notes were $46.9 billion and $501.8 billion, respectively, for the nine months ended September 30, 2026 compared to $61.0 billion and $437.3 billion for the prior year period, reflecting the cumulative effect of issuing and repaying discount notes discussed previously.
Regulatory Liquidity Requirements - We are required to maintain liquidity in accordance with certain FHFA guidance. Under these policies and guidelines, we are required to maintain contingency liquidity in an amount at least equal to anticipated net cash outflows under certain scenarios. One scenario assumes that we cannot access the capital markets for a period of 20 days and during that time members would renew any maturing, prepaid or called advances. In addition, we are required to perform and report to the FHFA the results of an annual liquidity stress test.
The FHFA also provides guidance related to asset/liability maturity funding gap limits. Funding gap metrics measure the difference between assets and liabilities that are scheduled to mature during a specified period of time and are expressed as a percentage of total assets. The current regulatory requirement for funding gaps is between -10 percent to -20 percent for the three-month maturity horizon and is between -25 percent to -35 percent for the one-year maturity horizon. During the nine months ended September 30, 2026, we operated within those limits.
During the nine months ended September 30, 2026, we were in compliance with all regulatory liquidity requirements.
Capital: Total capital increased $383.9 million, or 9.2 percent, from December 31, 2025 to September 30, 2026 primarily due to an increase in capital stock related to advance utilization and retained earnings in excess of dividends paid, partially offset by merger-related transfers to mandatorily redeemable capital stock (see Table 22).
Table 22 provides a summary of member capital requirements under our current capital plan as of September 30, 2026 and December 31, 2025 (in thousands):
Table 22
Requirement 09/30/2026 12/31/2025
Asset-based (Class A Common Stock only) $ 191,986 $ 188,598
Activity-based (additional Class B Common Stock)1
2,368,802 2,128,046
Total Required Stock2
2,560,788 2,316,644
Excess Stock (Class A and B Common Stock) 304,048 199,554
Total Regulatory Capital Stock2
$ 2,864,836 $ 2,516,198
Activity-based Requirements:
Advances3
$ 2,198,292 $ 1,962,101
Letters of credit 17,485 18,050
AMA assets (mortgage loans)4
287,227 277,664
Total Activity-based Requirement 2,503,004 2,257,815
Asset-based Requirement (Class A Common Stock) not supporting member activity1
57,784 58,829
Total Required Stock2
$ 2,560,788 $ 2,316,644
1 Class A Common Stock, up to a member's asset-based stock requirement, will be used to satisfy a member's activity-based stock requirement before any Class B Common Stock is purchased by the member.
2 Includes mandatorily redeemable capital stock.
3 Advances to housing associates have no activity-based requirements because housing associates cannot own FHLBank stock.
4 Non-members previously required to purchase AMA activity-based stock are subject to the stock requirement in place at the time their membership ended as long as there are unpaid principal balances outstanding.
We are subject to various capital requirements under provisions of the GLB Act, the FHFA's capital structure regulation and our RMP. See Part I, Item 1 - "Business - Capital, Capital Rules and Dividends" in our annual report on Form 10-K for the year ended December 31, 2025 for details on the various capital requirements. We have been in compliance with each of the capital rules and requirements at all times, as applicable, since the implementation of our capital plan. See Note 9 of the Notes to Financial Statements under Part I, Item 1 for additional information and compliance as of September 30, 2026 and December 31, 2025.
Capital Distributions: Dividends may be paid in cash or capital stock as authorized by our board of directors. Quarterly dividends can be paid out of current and previous unrestricted retained earnings, subject to FHFA regulation and our capital plan.
Dividends paid to members totaled $177.2 million for the nine months ended September 30, 2026 compared to $170.1 million for the same period in the prior year. The weighted average dividend rate was 8.62 percent and 8.57 percent for the three and nine months ended September 30, 2026, respectively, which represented a dividend payout ratio of 83.3 percent and 71.3 percent over the same respective periods. The weighted average dividend rate was 8.65 percent and 8.68 percent for the three and nine months ended September 30, 2025, respectively, which represented a dividend payout ratio of 60.9 percent and 59.1 percent over the same respective periods. The dividend payout ratio increased during 2026 due to a decline in net income while maintaining a dividend rate consistent with recent periods. The dividend payout ratio represents dividends declared and paid during a period as a percentage of net income for the period, although FHFA regulation requires dividends be paid out of known income prior to the declaration date. For example, dividends declared and paid in September 2026 were based on income earned during the three months ended August 31, 2026. (See Part I, Item 1 - "Business - Capital, Capital Rules and Dividends" in our annual report on Form 10-K for the year ended December 31, 2025 for other factors that contribute to the level of dividends paid.)
In accordance with our capital plan, we must pay holders of Class A Common Stock the dividend parity threshold (DPT) rate before paying a higher rate to holders of Class B Common Stock. The DPT is a dividend rate expressed as a percentage per annum up to which the dividends paid per share on Class A Common Stock and Class B Common Stock must be equal. When the overnight Federal funds effective rate is below 2.00 percent, the DPT is zero for that dividend period (i.e., the DPT is floored at zero). Table 23 presents the dividend rates per annum paid on capital stock under our capital plan for the quarterly periods indicated:
Table 23
Applicable Rate per Annum 09/30/2026 06/30/2026 03/31/2026 12/31/2025 09/30/2025
Class A Common Stock 3.75 % 3.75 % 3.75 % 4.00 % 4.25 %
Class B Common Stock 9.25 9.25 9.25 9.25 9.25
Weighted Average1
8.62 8.52 8.57 8.55 8.65
Dividend Parity Threshold:
Average effective overnight Federal funds rate 3.67 % 3.63 % 3.64 % 3.90 % 4.30 %
Spread to index (2.00) (2.00) (2.00) (2.00) (2.00)
TOTAL (floored at zero percent) 1.67 % 1.63 % 1.64 % 1.90 % 2.30 %
1 Weighted average dividend rates are dividends paid in cash and stock on both classes of stock divided by the average of capital stock eligible for dividends.
Historically, dividend rates have moved directionally with short-term interest rates. Market conditions and movements in short-term interest rates can be unpredictable, and adverse market conditions may result in lower dividend rates in future quarters. If there is a change to the DPT in the future, the capital plan requires that we provide members notice of that change 90 days prior to a dividend payment.
Risk Management
Active risk management continues to be an essential part of our operations and a key determinant of our ability to maintain earnings to return an acceptable dividend to our members, support our affordable housing mission, and meet retained earnings thresholds. See Part II, Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management" in our annual report on Form 10-K for information on our enterprise risk management program. A separate discussion of market risk is included under Part I, Item 3 - "Quantitative and Qualitative Disclosures About Market Risk."
Recently Issued Accounting Standards
For a discussion of recently issued accounting standards, see Note 2 of the Notes to Financial Statements under Part I, Item 1 - "Financial Statements".
Legislative and Regulatory Developments
FHLBank is 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 FHLBank's business operations, and could affect the financial condition, results of operations, and reputation of FHLBank. Additionally, FHLBank is subject to extensive regulatory oversight, including ongoing monitoring and targeted examinations by our regulator, which could affect our business operations and financial results.
Considering the changes in the regulatory environment, there is uncertainty with respect to the ultimate result of future regulatory actions and their ultimate impact on the housing market, FHLBank Topeka and the FHLBank System. We continue to monitor the legislative and regulatory environments as they evolve and to evaluate their potential impact on us. For a discussion of related risks, see Part I, Item 1A. - "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2025.
Federal Home Loan Bank of Topeka published this content on November 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 10, 2026 at 19:30 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]