1Q Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2012 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-51404 FEDERAL HOME LOAN BANK OF INDIANAPOLIS (Exact name of registrant as specified in its charter) Federally chartered corporation 35-6001443 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number) 8250 Woodfield Crossing Boulevard Indianapolis, IN 46240 (Address of principal executive offices) (Zip code) (317) 465-0200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares outstanding as of April 30, 2012 Class B Stock, par value $100 20,349,940 Table of Contents Page Number PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS (unaudited) Statements of Condition as of March 31, 2012 and December 31, 2011 1 Statements of Income for the Three Months Ended March 31, 2012 and 2011 2 Statements of Comprehensive Income for the Three Months Ended March 31, 2012 and 2011 3 Statements of Capital for the Three Months Ended March 31, 2012 and 2011 4 Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 5 Notes to Financial Statements: Note 1 - Summary of Significant Accounting Policies 7 Note 2 - Recently Adopted and Issued Accounting Guidance 8 Note 3 - Available-for-Sale Securities 9 Note 4 - Held-to-Maturity Securities 11 Note 5 - Other-Than-Temporary Impairment Analysis 13 Note 6 - Advances 16 Note 7 - Mortgage Loans Held for Portfolio 17 Note 8 - Allowance for Credit Losses 18 Note 9 - Derivatives and Hedging Activities 23 Note 10 - Consolidated Obligations 25 Note 11 - Capital 26 Note 12 - Accumulated Other Comprehensive Income (Loss) 27 Note 13 - Segment Information 28 Note 14 - Estimated Fair Values 29 Note 15 - Commitments and Contingencies 35 Note 16 - Transactions with Related Parties 36 GLOSSARY OF TERMS 38 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Special Note Regarding Forward-Looking Statements 39 Executive Summary 40 Summary of Selected Financial Data 42 Results of Operations and Changes in Financial Condition 43 Business Segments 50 Analysis of Financial Condition 51 Liquidity and Capital Resources 53 Off-Balance Sheet Arrangements 54 Critical Accounting Policies and Estimates 54 Recent Accounting and Regulatory Developments 57 Risk Management 60 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 73 Item 4. CONTROLS AND PROCEDURES 75 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS 76 Item 1A. RISK FACTORS 76 Item 6. EXHIBITS 77 Signatures 79 Exhibit 31.1 Exhibit 31.2 Exhibit 31.3 Exhibit 32 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Federal Home Loan Bank of Indianapolis Statements of Condition (Unaudited, $ amounts and shares in thousands, except par value) March 31, December 31, 2012 2011 Assets: Cash and Due from Banks $ 301,367 $ 512,682 Interest-Bearing Deposits 144 15 Securities Purchased Under Agreements to Resell 1,750,000 — Federal Funds Sold 2,105,000 3,422,000 Available-for-Sale Securities (Note 3) 3,336,755 2,949,446 Held-to-Maturity Securities (Estimated Fair Values of $8,112,824 and $8,972,081, respectively) (Note 4) 7,957,238 8,832,178 Advances (Note 6) 18,042,308 18,567,702 Mortgage Loans Held for Portfolio, net (Notes 7 and 8) 5,840,182 5,955,142 Accrued Interest Receivable 88,776 87,314 Premises, Software, and Equipment, net 12,344 12,626 Derivative Assets, net (Note 9) 317 493 Other Assets 34,930 35,892 Total Assets $ 39,469,361 $ 40,375,490 Liabilities: Deposits: Interest-Bearing $ 1,302,142 $ 620,702 Non-Interest-Bearing 10,140 8,764 Total Deposits 1,312,282 629,466 Consolidated Obligations (Note 10): Discount Notes 5,968,864 6,536,109 Bonds 29,337,472 30,358,210 Total Consolidated Obligations, net 35,306,336 36,894,319 Accrued Interest Payable 103,142 102,060 Affordable Housing Program Payable 35,598 32,845 Derivative Liabilities, net (Note 9) 125,435 174,573 Mandatorily Redeemable Capital Stock (Note 11) 457,425 453,885 Other Liabilities 119,500 141,154 Total Liabilities 37,459,718 38,428,302 Commitments and Contingencies (Note 15) Capital (Note 11): Capital Stock Putable (at par value of $100 per share): Class B-1, issued and outstanding shares: 15,610 and 15,592, respectively 1,560,952 1,559,196 Class B-2, issued and outstanding shares: 40 and 39, respectively 3,968 3,860 Total Capital Stock Putable 1,564,920 1,563,056 Retained Earnings: Unrestricted 505,885 484,511 Restricted 21,452 13,162 Total Retained Earnings 527,337 497,673 Accumulated Other Comprehensive Income (Loss) (Note 12) (82,614) (113,541) Total Capital 2,009,643 1,947,188 Total Liabilities and Capital $ 39,469,361 $ 40,375,490 The accompanying notes are an integral part of these financial statements. 1 Federal Home Loan Bank of Indianapolis Statements of Income (Unaudited, $ amounts in thousands) Three Months Ended March 31, 2012 2011 Interest Income: Advances $ 45,369 $ 41,148 Prepayment Fees on Advances, net 474 1,134 Interest-Bearing Deposits 194 10 Securities Purchased Under Agreements to Resell 636 589 Federal Funds Sold 387 2,941 Available-for-Sale Securities 10,459 14,877 Held-to-Maturity Securities 43,992 45,513 Mortgage Loans Held for Portfolio, net 69,231 80,129 Other, net 941 521 Total Interest Income 171,683 186,862 Interest Expense: Consolidated Obligation Discount Notes 792 3,199 Consolidated Obligation Bonds 104,107 118,520 Deposits 30 73 Mandatorily Redeemable Capital Stock 3,911 4,825 Total Interest Expense 108,840 126,617 Net Interest Income 62,843 60,245 Provision for Credit Losses 419 976 Net Interest Income After Provision for Credit Losses 62,424 59,269 Other Income (Loss): Total Other-Than-Temporary Impairment Losses (6) (2,972) Non-Credit Portion Reclassified to (from) Other Comprehensive Income (Loss), net (3,282) (15,409) Net Other-Than-Temporary Impairment Losses, credit portion (3,288) (18,381) Net Gains (Losses) on Derivatives and Hedging Activities 1,176 (127) Service Fees 233 263 Standby Letters of Credit Fees 249 338 Loss on Extinguishment of Debt — (397) Other, net 277 182 Total Other Income (Loss) (1,353) (18,122) Other Expenses: Compensation and Benefits 8,767 8,743 Other Operating Expenses 3,930 2,830 Federal Housing Finance Agency 1,010 916 Office of Finance 675 821 Other 198 255 Total Other Expenses 14,580 13,565 Income Before Assessments 46,491 27,582 Assessments: Affordable Housing Program 5,040 2,744 Resolution Funding Corporation — 4,968 Total Assessments 5,040 7,712 Net Income $ 41,451 $ 19,870 The accompanying notes are an integral part of these financial statements. 2 Federal Home Loan Bank of Indianapolis Statements of Comprehensive Income (Unaudited, $ amounts in thousands) Three Months Ended March 31, 2012 2011 Net Income $ 41,451 $ 19,870 Other Comprehensive Income: Net Change in Unrealized Gains (Losses) on Available-for-Sale Securities (3,416) 4,263 Non-Credit Portion of Other-Than-Temporary Impairment Losses on Available-for-Sale Securities: Non-Credit Portion — (2,331) Net Change in Fair Value Not in Excess of Cumulative Non-Credit Losses 26,602 5,266 Unrealized Gains (Losses) 4,124 3,837 Reclassification of Non-Credit Portion to Other Income (Loss) 3,286 17,740 Net Non-Credit Portion of Other-Than-Temporary Impairment Losses on Available-for- Sale Securities 34,012 24,512 Non-Credit Portion of Other-Than-Temporary Impairment Losses on Held-to-Maturity Securities: Non-Credit Portion (4) — Accretion of Non-Credit Portion 27 1,070 Net Non-Credit Portion of Other-Than-Temporary Impairment Losses on Held-to- Maturity Securities 23 1,070 Pension Benefits 308 292 Total Other Comprehensive Income 30,927 30,137 Total Comprehensive Income $ 72,378 $ 50,007 The accompanying notes are an integral part of these financial statements. 3 Federal Home Loan Bank of Indianapolis Statements of Capital Three Months Ended March 31, 2011 and 2012 (Unaudited, $ amounts and shares in thousands) Capital Stock Accumulated

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