FHLBank Topeka's Net Income Dips 11% Amid Asset Growth

TL;DR

**FHLBank Topeka's slight profit dip is a yellow flag, but their asset growth shows members are still leaning on them for liquidity, so keep an eye on interest rate trends.**

AI Summary

Federal Home Loan Bank of Topeka (FHLBank Topeka) reported a net income of $288.008 million for the nine months ended September 30, 2025, a decrease of 10.95% from $323.415 million in the same period of 2024. Total assets increased by 5.23% to $79.872 billion as of September 30, 2025, from $75.901 billion at December 31, 2024. This growth was primarily driven by a $2.377 billion increase in advances to $44.029 billion and a $334.884 million rise in mortgage loans held for portfolio to $9.284 billion. Net interest income decreased slightly by 1.33% to $403.957 million for the nine months ended September 30, 2025, compared to $409.410 million in the prior year, largely due to a $361.806 million decrease in interest income from advances. Total liabilities also increased by 5.46% to $75.725 billion, mainly due to a $3.825 billion increase in consolidated obligations, with discount notes rising by $3.719 billion to $18.136 billion. The bank's total capital grew by 1.16% to $4.147 billion from $4.099 billion at year-end 2024, supported by retained earnings growth of $117.935 million.

Why It Matters

FHLBank Topeka's slight dip in net income and increased asset base signals a dynamic environment for its member institutions, primarily community banks and credit unions. The growth in advances and mortgage loans indicates continued demand for wholesale funding and liquidity from its members, which is crucial for supporting local housing and economic development. However, the decrease in interest income from advances suggests potential shifts in lending rates or member borrowing behavior, impacting FHLBank Topeka's profitability. For investors in FHLBank consolidated obligations, the increased liabilities and stable capital base reflect ongoing market confidence but also highlight the importance of monitoring interest rate risk and credit quality within the FHLBank system. The competitive landscape for wholesale funding remains intense, with FHLBank Topeka's performance influencing its ability to provide competitive rates and services to its members.

Risk Assessment

Risk Level: medium — The risk level is medium due to a 10.95% decrease in net income for the nine months ended September 30, 2025, to $288.008 million, compared to $323.415 million in the prior year. This decline is primarily driven by a significant $361.806 million reduction in interest income from advances, indicating potential challenges in asset yield or member demand. Additionally, the filing highlights risks such as 'Changes and volatility in interest rates and indices' and 'Defaults by, and the soundness of financial institutions,' which could further impact profitability and asset quality.

Analyst Insight

Investors should closely monitor FHLBank Topeka's net interest margin and the demand for advances from its member institutions. Given the decrease in net income, a deeper dive into the drivers of reduced interest income from advances is warranted to assess future profitability and the stability of its funding model. Consider the broader economic environment and interest rate outlook, as these directly impact FHLBank Topeka's core business.

Financial Highlights

debt To Equity

18.26

revenue

$403,957,000

operating Margin

N/A

total Assets

$79,872,254,000

total Debt

$74,106,526,000

net Income

$288,008,000

eps

N/A

gross Margin

N/A

cash Position

$27,455,000

revenue Growth

-1.33%

Revenue Breakdown

Key Numbers

• $288.008M — Net Income (Decreased by 10.95% for the nine months ended September 30, 2025, compared to $323.415M in 2024.)
• $79.872B — Total Assets (Increased by 5.23% from $75.901B at December 31, 2024, to September 30, 2025.)
• $44.029B — Advances (Increased by $2.377B from $41.652B at December 31, 2024, to September 30, 2025.)
• $18.136B — Discount Notes (Increased by $3.719B from $14.417B at December 31, 2024, to September 30, 2025.)
• $403.957M — Net Interest Income (Decreased by 1.33% for the nine months ended September 30, 2025, compared to $409.410M in 2024.)
• $361.806M — Decrease in Interest Income from Advances (Contributed to the decline in total interest income for the nine months ended September 30, 2025.)
• $4.147B — Total Capital (Increased by 1.16% from $4.099B at December 31, 2024, to September 30, 2025.)
• 10.95% — Net Income Decrease (Percentage decrease in net income for the nine months ended September 30, 2025.)
• 5.23% — Total Assets Increase (Percentage increase in total assets from December 31, 2024, to September 30, 2025.)
• 5.46% — Total Liabilities Increase (Percentage increase in total liabilities from December 31, 2024, to September 30, 2025.)

Key Players & Entities

• Federal Home Loan Bank of Topeka (company) — registrant of the 10-Q filing
• Federal Housing Finance Agency (regulator) — regulatory body overseeing FHLBank Topeka
• Office of Finance (company) — entity involved in FHLBank operations
• FHLBank Chicago (company) — Mortgage Partnership Finance (MPF) Program Provider
• $288.008 million (dollar_amount) — Net income for the nine months ended September 30, 2025
• $323.415 million (dollar_amount) — Net income for the nine months ended September 30, 2024
• $79.872 billion (dollar_amount) — Total assets as of September 30, 2025
• $75.901 billion (dollar_amount) — Total assets as of December 31, 2024
• $44.029 billion (dollar_amount) — Advances as of September 30, 2025
• $18.136 billion (dollar_amount) — Discount notes as of September 30, 2025

FAQ

Industry Context

Federal Home Loan Banks (FHLBanks) operate as a government-sponsored enterprise (GSE) providing liquidity, community lending, and other services to their member financial institutions. The industry is characterized by its role in supporting housing finance and community development. Competition comes from other funding sources available to member banks, such as the Federal Reserve's discount window and the private capital markets. Interest rate sensitivity is a key industry characteristic, as FHLBanks manage significant portfolios of interest-sensitive assets and liabilities.

Regulatory Implications

As a GSE, FHLBanks are subject to oversight by the Federal Housing Finance Agency (FHFA). Regulatory compliance is critical, and changes in regulations or capital requirements could impact FHLBank Topeka's operations and profitability. The bank's adherence to capital adequacy ratios and risk management practices is closely monitored.

What Investors Should Do

1. Monitor net interest margin trends.
2. Analyze the growth in consolidated obligations.
3. Evaluate the impact of market volatility on investment securities.
4. Assess the growth in advances and mortgage loans.

Glossary

Advances

Loans made by the FHLBank to its member institutions, typically secured by collateral. (A primary source of interest income for FHLBank Topeka, and a significant portion of its asset base. The decrease in interest income from advances impacted overall profitability.)

Consolidated obligations

Debt instruments issued by the FHLBank system to fund its operations and lending activities. (Represents the largest liability for FHLBank Topeka, indicating its reliance on wholesale funding. An increase in these obligations signifies growth in the bank's balance sheet.)

Discount notes

Short-term debt instruments issued by FHLBanks with a face value and sold at a discount. (A component of consolidated obligations, the significant increase in discount notes suggests increased short-term borrowing to fund asset growth.)

Available-for-sale securities

Debt or equity securities that are not classified as trading or held-to-maturity, reported at fair value with unrealized gains/losses in other comprehensive income. (A significant investment asset for FHLBank Topeka, contributing to interest income and subject to market valuation changes.)

Retained earnings

The accumulated profits of a company that have not been distributed to shareholders as dividends. (A key component of capital, growth in retained earnings strengthens the bank's capital base and supports its ability to absorb losses.)

Accumulated other comprehensive income (loss)

Unrealized gains or losses on certain investments and other items that are not included in net income but are reported separately in equity. (Reflects unrealized losses for FHLBank Topeka, which reduced total capital, though the overall capital position remains positive.)

Mandatorily redeemable capital stock

Capital stock that the issuer is obligated to redeem at a specified future date or upon the occurrence of a specified event. (A small but growing liability for FHLBank Topeka, representing obligations to redeem capital stock.)

Affordable Housing Program payable

Funds set aside by FHLBanks for programs that support affordable housing initiatives. (Represents a commitment by FHLBank Topeka to community development, increasing slightly in the period.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, FHLBank Topeka experienced a notable 10.95% decrease in net income, falling to $288.008 million from $323.415 million. This decline was largely attributed to a significant drop in interest income from advances. While total assets grew by 5.23% to $79.872 billion, driven by increases in advances and mortgage loans, total liabilities also rose by 5.46% due to higher consolidated obligations, particularly discount notes. The bank's capital base saw a modest increase of 1.16%.

Key Financial Figures

• $100 — ober 31, 2025 Class A Stock, par value $100 per share 3,083,244 Class B Stock, par

Filing Documents

• fhlbt-20250930.htm (10-Q) — 3365KB
• ex31109302025.htm (EX-31.1) — 13KB
• ex31209302025.htm (EX-31.2) — 13KB
• ex3209302025.htm (EX-32) — 9KB
• 0001325878-25-000235.txt ( ) — 15279KB
• fhlbt-20250930.xsd (EX-101.SCH) — 68KB
• fhlbt-20250930_cal.xml (EX-101.CAL) — 178KB
• fhlbt-20250930_def.xml (EX-101.DEF) — 574KB
• fhlbt-20250930_lab.xml (EX-101.LAB) — 878KB
• fhlbt-20250930_pre.xml (EX-101.PRE) — 694KB
• fhlbt-20250930_htm.xml (XML) — 3233KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION 5

Financial Statements

Item 1. Financial Statements 5 6 8 10 12 13

Notes to Financial Statements

Notes to Financial Statements 15

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Executive Level Overview 48 Financial Market Trends 48 Critical Accounting Policies and Estimates 49 Results of Operations 50 Financial Condition 61 Liquidity and Capital Resources 74 Risk Management 76 Recently Issued Accounting Standards 77 Legislative and Regulatory Developments 77

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 77

Controls and Procedures

Item 4. Controls and Procedures 82

OTHER INFORMATION

Part II OTHER INFORMATION 82

Legal Proceedings

Item 1. Legal Proceedings 82

Risk Factors

Item 1A. Risk Factors 82

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 82

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 82

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 82

Other Information

Item 5. Other Information 82

Exhibits

Item 6. Exhibits 83 2 Table of Contents Important Notice about Information in this Quarterly Report In this quarterly report, unless the context suggests otherwise, references to "FHLBank," "FHLBank Topeka," "we," "us" and "our" mean Federal Home Loan Bank of Topeka, and "FHLBanks" mean all Federal Home Loan Banks, including FHLBank Topeka. The information contained in this quarterly report is accurate only as of the date of this quarterly report and as of the dates specified herein. The product and service names used in this quarterly report are the property of FHLBank, and in some cases, other FHLBanks. Where the context suggests otherwise, the products, services and company names mentioned in this quarterly report are the property of their respective owners. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS With the exception of historical information, certain statements contained or incorporated by reference in this Form 10-Q may contain forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), such as those pertaining to FHLBank's objectives, projections, estimates or future predictions of FHLBank's operations. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of actual events. There is no assurance the events or circumstances reflected in the forward-looking statements will occur. These statements may be identified by the use of forward-looking terminology such as "anticipates," "believes," "may," "is likely," "could," "estimate," "expect," "will," "intend," "probable," "project," "should," or their negatives or other variations of these terms. Forward-looking statements necessarily are dependent on assumptions, data or methods that may be incorrect or imprecise. These forward-looking statements repre

: Financial Statements

Item 1: Financial Statements 5 Table of Contents FEDERAL HOME LOAN BANK OF TOPEKA (In thousands, except par value) 09/30/2025 12/31/2024 ASSETS Cash and due from banks $ 27,455 $ 25,575 Interest-bearing deposits 2,310,963 2,142,423 Securities purchased under agreements to resell (Note 9) 3,950,000 5,150,000 Federal funds sold 4,650,000 3,575,000 Investment securities: Trading securities (Note 3) 81,239 439,963 Available-for-sale securities, amortized cost of $ 14,768,637 and $ 13,197,724 (Note 3) 14,634,427 13,057,619 Held-to-maturity securities, fair value of $ 192,380 and $ 217,476 (Note 3) 193,081 219,826 Total investment securities 14,908,747 13,717,408 Advances (Note 4) 44,029,112 41,652,081 Mortgage loans held for portfolio, net of allowance for credit losses of $ 3,685 and $ 4,033 (Note 5) 9,284,317 8,949,433 Accrued interest receivable 256,970 249,199 Derivative assets, net (Notes 6, 9) 374,422 357,314 Other assets 80,268 82,547 TOTAL ASSETS $ 79,872,254 $ 75,900,980 LIABILITIES Deposits (Note 7) $ 1,046,036 $ 989,021 Consolidated obligations, net: Discount notes (Note 8) 18,135,569 14,417,047 Bonds (Note 8) 55,970,957 55,864,506 Total consolidated obligations, net 74,106,526 70,281,553 Mandatorily redeemable capital stock (Note 10) 5,923 3,225 Accrued interest payable 388,586 347,843 Affordable Housing Program payable 107,500 102,494 Derivative liabilities, net (Notes 6, 9) 2,560 6,131 Other liabilities 67,852 70,984 TOTAL LIABILITIES 75,724,983 71,801,251 Commitments and contingencies (Note 13) The accompanying notes are an integral part of these financial statements. 6 Table of Contents FEDERAL HOME LOAN BANK OF TOPEKA (In thousands, except par value) 09/30/2025 12/31/2024 CAPITAL Capital stock outstanding - putable: Class A ($ 100 par value; 2,617 and 4,649 shares issued and outstanding) (Note 10) $ 261,6

Notes to Financial Statements - Unaudited

Notes to Financial Statements - Unaudited September 30, 2025 NOTE 1 – BASIS OF PRESENTATION Basis of Presentation: The accompanying interim financial statements of FHLBank are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instruction provided by Article 10, Rule 10-01 of Regulation S-X. In the opinion of management, the financial statements contain all adjustments necessary to fairly present FHLBank's financial position, results of operations and cash flows for the interim periods presented. All such adjustments were of a normal recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period. FHLBank's significant accounting policies and certain other disclosures are set forth in the notes to the audited financial statements for the year ended December 31, 2024. The interim financial statements presented herein should be read in conjunction with FHLBank's audited financial statements and notes thereto, which are included in FHLBank's annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 13, 2025 (annual report on Form 10-K). The notes to the interim financial statements highlight significant changes to the notes included in the annual report on Form 10-K. Use of Estimates : The preparation of financial statements under GAAP requires management to make estimates and assumptions as of the date of the financial statements in determining the reported amounts of assets, liabilities and estimated fair values and in determining the disclosure of any contingent assets or liabilities. Estimates and assumptions by management also affect the reported amounts of income and expense during the reporting period. The most significant of these estimates include the fair value of derivativ

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