# EDGAR Filing Document

**Accession Number:** 0001325878
**File Stem:** 0001325878-26-000054
**Filing Date:** 2026-3
**Character Count:** 701254
**Document Hash:** 94119c42e5edeb2b3a5cfcbf7aaf9522
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001325878-26-000054.hdr.sgml**: 20260312

**ACCESSION NUMBER**: 0001325878-26-000054

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 112

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260312

**DATE AS OF CHANGE**: 20260312

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Federal Home Loan Bank of Topeka
- **CENTRAL INDEX KEY:** 0001325878
- **STANDARD INDUSTRIAL CLASSIFICATION:** FEDERAL & FEDERALLY-SPONSORED CREDIT AGENCIES [6111]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 480561319
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-52004
- **FILM NUMBER:** 26747580

**BUSINESS ADDRESS:**
- **STREET 1:** 500 SW WANAMAKER ROAD
- **STREET 2:** PO BOX 176
- **CITY:** TOPEKA
- **STATE:** KS
- **ZIP:** 66601-0176
- **BUSINESS PHONE:** 785 233 0507

**MAIL ADDRESS:**
- **STREET 1:** 500 SW WANAMAKER ROAD
- **STREET 2:** PO BOX 176
- **CITY:** TOPEKA
- **STATE:** KS
- **ZIP:** 66601-0176

?xml version='1.0' encoding='ASCII'? fhlbt-20251231

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K** 

**☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2025** 

**OR**

**☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from ________ to ________**

**Commission File Number 000-52004**

**FEDERAL HOME LOAN BANK OF TOPEKA**

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **Federally chartered corporation of the United States** | **48-0561319** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification No.) |
| **500 SW Wanamaker Road**<br>**Topeka, KS** | **66606** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: 785**.**233.0507

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange<br>on which registered** |
| None | N/A | N/A |

---

Securities registered pursuant to Section 12(g) of the Act:

Class A Common Stock, $100 per share par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. **☐** Yes **☒** No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. **☐** Yes **☒** No

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 requirements for the past 90 days. **☒** Yes **☐** No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). **☒** Yes **☐** No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;Large accelerated filer **☐**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer **☐**

&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer **☒**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smaller reporting company **☐**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Emerging growth company **☐**

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. **☐**

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. **☒**

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. **☐**

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). **☐**

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). **☐** Yes **☒** No

Registrant's common stock is not publicly traded and is only issued to members of the registrant. Such stock is issued, redeemed and repurchased at par value, $100 per share, with all issuances, redemptions and repurchases subject to the registrant's capital plan as well as certain statutory and regulatory requirements. As of June 30, 2025, the aggregate par value of stock held by current and former members of the registrant was $2,593,145,000, and 25,931,450 total shares were outstanding.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

---

| | |
|:---|:---|
| | **Shares outstanding as of**<br>**February 27, 2026** |
| Class A Stock, par value $100 per share | 3066551 |
| Class B Stock, par value $100 per share | 22343926 |

---

Documents incorporated by reference: None

------

.**FEDERAL HOME LOAN BANK OF TOPEKA**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| **PART I** |  | [6](#ic7e87acbb8464bab9ca9a49ac22002a4_517) |
| &nbsp;&nbsp;Item 1. | Business | [6](#ic7e87acbb8464bab9ca9a49ac22002a4_517) |
| &nbsp;&nbsp;Item 1A. | Risk Factors | [17](#ic7e87acbb8464bab9ca9a49ac22002a4_526) |
| &nbsp;&nbsp;Item 1B. | Unresolved Staff Comments | [25](#ic7e87acbb8464bab9ca9a49ac22002a4_532) |
| &nbsp;&nbsp;Item 1C. | Cybersecurity | [25](#ic7e87acbb8464bab9ca9a49ac22002a4_532) |
| &nbsp;&nbsp;Item 2. | Properties | [27](#ic7e87acbb8464bab9ca9a49ac22002a4_535) |
| &nbsp;&nbsp;Item 3. | Legal Proceedings | [27](#ic7e87acbb8464bab9ca9a49ac22002a4_538) |
| &nbsp;&nbsp;Item 4. | Mine Safety Disclosures | [27](#ic7e87acbb8464bab9ca9a49ac22002a4_541) |
| **PART II** |  | [27](#ic7e87acbb8464bab9ca9a49ac22002a4_544) |
| &nbsp;&nbsp;Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | [27](#ic7e87acbb8464bab9ca9a49ac22002a4_544) |
| &nbsp;&nbsp;Item 6. | [Reserved] |  |
| &nbsp;&nbsp;Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | [28](#ic7e87acbb8464bab9ca9a49ac22002a4_265) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Executive Level Overview | [30](#ic7e87acbb8464bab9ca9a49ac22002a4_280) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Financial Market Trends | [30](#ic7e87acbb8464bab9ca9a49ac22002a4_289) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Critical Accounting Policies and Estimates | [31](#ic7e87acbb8464bab9ca9a49ac22002a4_292) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Results of Operations | [33](#ic7e87acbb8464bab9ca9a49ac22002a4_301) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Financial Condition | [41](#ic7e87acbb8464bab9ca9a49ac22002a4_355) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Liquidity and Capital Resources | [57](#ic7e87acbb8464bab9ca9a49ac22002a4_433) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Risk Management | [61](#ic7e87acbb8464bab9ca9a49ac22002a4_472) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Recently Issued Accounting Standards | [67](#ic7e87acbb8464bab9ca9a49ac22002a4_496) |
| &nbsp;&nbsp;Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | [67](#ic7e87acbb8464bab9ca9a49ac22002a4_502) |
| &nbsp;&nbsp;Item 8. | Financial Statements and Supplementary Data | [72](#ic7e87acbb8464bab9ca9a49ac22002a4_547) |
| &nbsp;&nbsp;Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | [72](#ic7e87acbb8464bab9ca9a49ac22002a4_550) |
| &nbsp;&nbsp;Item 9A. | Controls and Procedures | [72](#ic7e87acbb8464bab9ca9a49ac22002a4_553) |
| &nbsp;&nbsp;Item 9B. | Other Information | [73](#ic7e87acbb8464bab9ca9a49ac22002a4_568) |
| &nbsp;&nbsp;Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | [73](#ic7e87acbb8464bab9ca9a49ac22002a4_574) |
| **PART III** |  |  |
| &nbsp;&nbsp;Item 10. | Directors, Executive Officers and Corporate Governance | [74](#ic7e87acbb8464bab9ca9a49ac22002a4_577) |
| &nbsp;&nbsp;Item 11. | Executive Compensation | [80](#ic7e87acbb8464bab9ca9a49ac22002a4_580) |
| &nbsp;&nbsp;Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | [96](#ic7e87acbb8464bab9ca9a49ac22002a4_583) |
| &nbsp;&nbsp;Item 13. | Certain Relationships and Related Transactions, and Director Independence | [97](#ic7e87acbb8464bab9ca9a49ac22002a4_586) |
| &nbsp;&nbsp;Item 14. | Principal Accountant Fees and Services | [99](#ic7e87acbb8464bab9ca9a49ac22002a4_589) |
| **PART IV** |  |  |
| &nbsp;&nbsp;Item 15. | Exhibit and Financial Statement Schedules | [101](#ic7e87acbb8464bab9ca9a49ac22002a4_601) |
| &nbsp;&nbsp;Item 16. | Form 10-K Summary | [102](#ic7e87acbb8464bab9ca9a49ac22002a4_613) |

---

------

**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**Important Notice about Information in this Annual Report**

In this annual 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 annual report is accurate only as of the date of this annual report and as of the dates specified herein.

The product and service names used in this annual 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 annual 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-K 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 represent FHLBank's intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond FHLBank's ability to control or predict. For further discussion of these factors see "Summary Risk Factors" below and Item 1A – "Risk Factors."

You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to FHLBank or any person acting on FHLBank's behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by law, FHLBank does not undertake any obligation to release publicly any revisions to its forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K.

**SUMMARY RISK FACTORS**

FHLBank cautions that by their nature forward-looking statements involve varying degrees of risks or uncertainties and that actual results may differ materially from those expressed in any forward-looking statements as a result of such risks and uncertainties. You should carefully review and consider the full discussion of our risk factors in Item 1A – "Risk Factors." If any of these risks occur, our business, financial condition or results of operations could be materially and adversely affected. Principal risk factors relating to FHLBank's business include, but are not limited to:

• Changes in the general economy;

• Political events, including legislative, regulatory, and judicial events and actions that affect FHLBank, its members, counterparties, other FHLBanks or investors in the consolidated obligations of the FHLBanks, such as any government-sponsored enterprise (GSE) reforms, any changes resulting from FHFA's review and analysis of the FHLBank System, changes in the Federal Home Loan Bank Act of 1932, as amended (FHLBank Act), changes in applicable sections of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, or changes in other statutes or regulations applicable to the FHLBanks;

• Natural disasters, including those related to climate change, severe weather, public health crises, acts of war or terrorism or other external events;

• Governmental responses to an economic downturn, recession, inflation or other macro-level events or conditions;

• The uncertain, complex body of laws and regulations applicable to the FHLBanks;

• Competition from alternative loan and funding providers;

• Membership changes, including changes resulting from member creditworthiness, member failures or mergers, changes due to member eligibility or housing mission focus, or changes in the principal place of business of members;

• A high concentration of advances and capital with a few members;

• Changes in credit ratings of FHLBank Topeka, the other FHLBanks and the U.S. government;

• Joint and several liability of all or a portion of the consolidated obligations for which one or more of the other FHLBanks are the primary obligors;

------

**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

• Declines in U.S. home prices or weaknesses in activity in the U.S. housing and mortgage markets undermining the need for wholesale funding, thus impairing the volume and quality of mortgage loans originated and sold by members;

• Defaults by, and the soundness of financial institutions, including clearinghouses, FHLBank members, non-member borrowers, counterparties and the other FHLBanks and their members, non-member borrowers and counterparties;

• Changes in the fair value and economic value of pledged collateral securing advances or other extensions of credit to FHLBank members or non-member borrowers or collateral pledged by reverse repurchase and derivative counterparties;

• Interruptions in FHLBank's access to the capital markets;

• Changes and volatility in interest rates and indices and FHLBank's ability to manage interest rate risk;

• The ability to enter into effective derivative instruments on acceptable terms;

• FHLBank's ability to meet obligations as they come due or meet the credit and liquidity needs of our members in a timely and cost-effective manner;

• FHLBank's ability to declare dividends or to pay dividends at rates consistent with past practices;

• The lack of a public market and restrictions on transferring our capital stock and associated illiquidity;

• Volatile market conditions impairing the ability of FHLBank's financial models to produce reliable results;

• Reliance on counterparties and third-parties to provide accurate and complete information;

• Potential costs and effects of litigation, regulatory actions, investigations or similar matters, or adverse facts and developments related thereto;

• The ability of FHLBank to keep pace with technological changes and innovation such as artificial intelligence (AI), and the ability to develop and support technology and information systems;

• Cybersecurity threats, cybersecurity risk management and FHLBank's ability to respond to cybersecurity incidents;

• Judgments, assumptions and estimates in the preparation of our financial statements;

• Effectiveness of FHLBank's risk management framework in mitigating risks of losses;

• Effectiveness of FHLBank's internal control over financial reporting to report accurate and timely financial results;

• Employee error and member, employee and third-party misconduct;

• Fraudulent activity;

• Third-party service providers fail to provide services, terminate their services or fail to comply with banking regulations;

• The ability of FHLBank to attract, onboard and retain skilled individuals, including qualified executive officers; and

• Reliance on FHLBank Chicago as Mortgage Partnership Finance<sup>®</sup> (MPF<sup>®</sup>) Program Provider. "Mortgage Partnership Finance," "MPF," "MPF Xtra," and "MPF Direct" are registered trademarks of FHLBank Chicago.

------

**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**PART I**

**Item 1: Business**

**<u>General</u>**

One of 11 FHLBanks, Federal Home Loan Bank of Topeka ("we," "us," "our," "FHLBank" or "FHLBank Topeka") is a federally chartered corporation organized on October 13, 1932 under the authority of the Federal Home Loan Bank Act of 1932, as amended (Bank Act). The FHLBanks are U.S. GSEs. Each FHLBank is a cooperative owned by member institutions located within a defined geographic district and operates as a separate corporate entity with its own management, employees and board of directors. The members purchase capital stock in an FHLBank and generally receive dividends on their capital stock investment. Our defined geographic district is Colorado, Kansas, Nebraska, and Oklahoma.

Our mission is to be a reliable provider of funding, liquidity, and services to promote housing, jobs and general prosperity through products and services that assist our members in supporting their communities. Our primary business is making collateralized loans, known as advances, to member institutions (members) and certain qualifying non-members (housing associates) and acquiring residential mortgage loans from members. We also provide members and housing associates with letters of credit and certain correspondent services, such as safekeeping, wire transfers, and cash management. We are generally limited to providing products and services only to members and qualifying non-members. Section 1433 of the Bank Act provides that FHLBanks are exempt from federal, state, and local taxation, except for real property taxes. FHLBank Topeka manages its operations as a single operating segment. Management allocates resources and assesses financial performance on an enterprise-wide basis. We do not have any wholly or partially owned subsidiaries and do not have an equity position in any partnerships, corporations, or off-balance sheet special purpose entities.

We are supervised and regulated by the Federal Housing Finance Agency (FHFA), an independent agency in the executive branch of the U.S. government. The FHFA's mission is to ensure the housing GSEs fulfill their mission by operating in a safe and sound manner to serve as a reliable source of liquidity and funding for housing finance and community investment.

Any federally insured depository institution, federally or privately insured credit union, or insurance company, engaged in residential housing finance can apply for membership in FHLBank. Community development financial institutions (CDFI) certified by the CDFI fund of the U.S. Department of the Treasury, including community development loan funds, community development venture capital funds, and state-chartered credit unions without federal insurance, are also eligible to become members. (See Table 35 under Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources" for counts and balances by member type.) Community Financial Institutions (CFI) are defined in the Bank Act, as amended by the Housing and Economic Recovery Act of 2008 (Recovery Act), as all institutions insured by the Federal Deposit Insurance Corporation (FDIC) with average total assets over the three-year period preceding measurement of less than $1.0 billion, as adjusted annually for inflation. For 2025, this specified amount was $1.5 billion.

Our members are required to purchase and hold our capital stock as a condition of membership and in proportion to their asset size and business activity with us. All capital stock transactions are governed by our capital plan, which was developed under, is subject to, and operates within specific regulatory and statutory requirements. Our capital stock is not publicly traded and is owned entirely by current or former members and certain non-members that own our capital stock as a result of a merger with or acquisition of a member or by former members that retain capital stock to support advances or other obligations that remain outstanding. Because we operate as a cooperative, as a result of the stock purchase requirements, we conduct business with related parties in the normal course of business. For disclosure purposes, transactions with related party includes 1) transactions with any beneficial owner of more than five percent of any class of our voting stock; and 2) transactions with management, defined to include any person who is, or at any time since the beginning of our last fiscal year was, one of our executive officers or a member of our board of directors. Information on business activities with related parties is provided in Tables 61 and 62 under Item 12 – "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

Our debt and equity securities are exempt from registration under the Securities Act and are "exempted securities" under the Exchange Act. As required by the Recovery Act, each FHLBank has voluntarily registered a class of its equity securities with the Securities and Exchange Commission (SEC) under Section 12(g) of the Exchange Act. As a registrant, FHLBank is subject to the periodic reporting and disclosure regime as administered and interpreted by the SEC. The SEC maintains an Internet site (https://www.sec.gov) that contains reports and other information filed with the SEC. Reports and other information we file with the SEC are also available free of charge through our website at www.fhlbtopeka.com. To access these reports and other information through FHLBank's website, click on "About Us," then "Investor Relations" and then "SEC Filings". The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Information on these websites, or that can be accessed through these websites, does not constitute a part of this annual report.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

FHFA regulations require that our strategic business plan describes how our business activities will achieve our mission, consistent with the FHFA's core mission achievement guidance. Our strategic business plan includes a balance sheet management strategy consistent with this guidance, which includes emphasis on the issuance of advances and acquisition of member mortgage loans through the MPF Program. The Primary Mission Asset ratio, as defined by the FHFA, is calculated as average advances and average mortgage loans to average consolidated obligations less average U.S. Treasury securities classified as trading or available for sale with maturities of ten years or less utilizing par balances. As of December 31, 2025, our Primary Mission Asset ratio was 77 percent. We generally intend to maintain the Primary Mission Asset ratio within the range of 70 to 80 percent, which exceeds the FHFA's recommended minimum ratio of 70 percent. This ratio, however, is dependent on several variables, such as member demand for our advance and mortgage loan products, and we may be unable to maintain the ratio at this level indefinitely.

We obtain our funds from several sources. Our primary funding source is the issuance of FHLBank debt issued to the public in the capital markets, known as "consolidated obligations." All new debt is jointly issued by the FHLBanks through the Office of Finance, which serves as their fiscal agent in accordance with the Bank Act and applicable regulations. The FHFA and the U.S. Secretary of the Treasury oversee the issuance of all FHLBank debt. Generally, consolidated obligations are traded in the over-the-counter market. All 11 FHLBanks are jointly and severally liable for the repayment of all consolidated obligations. Although consolidated obligations are not obligations of or guaranteed by the U.S. government, the capital markets have historically effectively treated the FHLBanks' consolidated obligations as federal agency debt, providing the FHLBanks with access to funding at relatively favorable rates. Deposits, other borrowings and the proceeds from the issuance of capital stock to members are also sources of funds.

**<u>Products and Services</u>**

*Advances:* We fulfill our mission by making advances to our members and housing associates. The following table summarizes the advance product offerings as of December 31, 2025:

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| | | |
|:---|:---|:---|
| **Product** | **Description** | **Maturity** |
| Overnight Line of Credit Advances | Reprices and matures daily, non-prepayable | Overnight |
| Short-term Fixed-rate Advances | Non-amortizing, non-prepayable | 3 days to 93 days |
| Fixed-rate Advances | Amortizing or non-amortizing, prepayable with a fee | 94 days to 360 months |
| Adjustable-rate Advances | Non-amortizing, prepayable with fee (if any) on interest rate reset dates | 1 month to 120 months |
| Callable Advances | Fixed or variable, with an option to prepay without a fee on specified dates | 12 months to 360 months for fixed rate, 4 months to 180 months for variable rate |
| Putable Advances | Fixed rate, member sells option that allows advance to be put (called away) after a predetermined lockout period | 24 months to 180 months, with lockout periods up to 60 months |
| Forward-Settling Advances | Commitment to lock in rate and term of a fixed-rate advance | Up to 24 months prior to settlement date |

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FHFA regulations require us to price our credit products consistently and on a non-discriminatory basis. Specifically, FHFA regulations prohibit us from pricing advances below our marginal cost of raising matching term and maturity funds in the marketplace, including embedded options, and the administrative and operating costs associated with making such advances to members. Consequently, advances are typically priced at spreads above our cost of funds. However, we are permitted to differentially price our products based on the creditworthiness of the member, volume, or other reasonable criteria applied consistently to all members.

We also offer a variety of specialized advance products to address housing and community development needs. These advance products address needs for low-cost funding to create affordable rental and homeownership opportunities, and for commercial and economic development activities, including those that benefit low- and moderate-income neighborhoods. Refer to Item 1 – "Business – Other Mission-Related Activities" for more details.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

In addition to members, we may make advances to housing associates that meet regulatory eligibility requirements, including approval as a lender under Title II of the National Housing Act of 1934. Eligible housing associates must be chartered under law, be subject to inspection and supervision by a governmental agency and lend their own funds as their principal activity in the mortgage field. Housing associates are not subject to certain provisions of the Bank Act that are applicable to members, such as the capital stock purchase requirements, but the same regulatory lending requirements generally apply to them as apply to members and restrictive collateral provisions apply if the housing associate does not qualify as a state housing finance agency (HFA). FHLBank must approve each applicant. As of December 31, 2025, we have approved and maintain customer relationships with three housing associates who are all state HFAs.

We are required by regulation to obtain sufficient collateral to fully secure advances. A member's lending limit is based on the collateral lending value of its residential mortgages and other eligible collateral, which is calculated by applying discounts, or haircuts, to the unpaid principal or market value, as applicable, of the collateral. As additional security for a member's indebtedness, we have a statutory lien on that member's FHLBank stock. We may require additional collateral to secure a member's or housing associate's outstanding credit obligations at any time (whether or not such collateral would be eligible to originate an advance), at our discretion. A description of our credit risk management and collateral practices as they relate to advance activity is contained in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations – Risk Management – Credit Risk Management – Lending and AMA Activities.

Table 21 under Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition" presents information on our five largest borrowers as of December 31, 2025 and 2024.

*Standby Letters of Credit:* We issue standby letters of credit on behalf of members to support certain obligations of the members to third-party beneficiaries, often as collateral for deposits from public sector entities or for residential housing financing and community lending. Generally, the term of a letter of credit is one year renewable annually with a final expiration date of up to ten years after issuance. Members are required to fully collateralize the face amount of any letter of credit issued. Members are charged a fee based on the face amount of the letter of credit. If we are required to make a payment for a beneficiary's draw, the amount must be reimbursed by the member immediately or, subject to our discretion, may be converted into an advance to the member. The underwriting and collateral requirements for letters of credit are the same as they are for advances. Letters of credit are subject to an activity stock purchase requirement. For additional details on our letters of credit, see Note 14 of the Notes to Financial Statements under Item 8 – " Financial Statements and Supplementary Data".

*Mortgage Loans:* We purchase residential mortgage loan products from members and housing associates, referred to as participating financial institutions (PFI), through the MPF Program, a secondary mortgage market structure developed by FHLBank Chicago. Under the MPF Program, we invest in qualifying conventional conforming and government-guaranteed or government-insured fixed-rate mortgage loans. The MPF Program helps fulfill our housing mission and provides an additional source of liquidity to our members that choose to sell mortgage loans into the secondary market rather than holding them in their own portfolios. MPF Program portfolio mortgage loans are considered Acquired Member Assets (AMA), a core mission activity of the FHLBanks, as defined by FHFA regulations. Our AMA risk tolerance limit for our investment in mortgage loans held for portfolio is 20 percent of total assets.

MPF Original, MPF 125, and MPF Government are closed loan products in which we purchase loans acquired or originated by the PFI. Under these MPF portfolio products, the PFI performs all traditional retail loan origination functions. In addition to the MPF portfolio products, we also offer MPF Xtra and MPF Government mortgage-backed securities (MBS). MPF Xtra is an off-balance sheet product structured to facilitate a loan sale from the PFI to FHLBank Chicago and simultaneously to the Federal National Mortgage Association (Fannie Mae). MPF Government MBS is an off-balance sheet product structured to facilitate a loan sale of government-guaranteed or government-insured loans from the PFI to FHLBank Chicago for securitization into Government National Mortgage Association (Ginnie Mae) MBS. We receive a counterparty fee from our PFIs for our role in MPF Xtra and MPF Government MBS.

*PFI Eligibility* – Members and housing associates may apply to become PFIs. We review the general eligibility of the member or housing associate, its servicing qualifications, and its ability to supply documents, data, and reports required to be delivered by PFIs under the MPF Program.

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*MPF Provider* – FHLBank Chicago serves as the MPF Provider and master servicer for the MPF Program. It maintains the structure of MPF residential mortgage loan products and the eligibility rules for MPF loans, including MPF Xtra loans and MPF Government MBS loans, which primarily fall under the rules and guidelines provided by Fannie Mae and Ginnie Mae, respectively. In addition, the MPF Provider manages the pricing and delivery mechanism for MPF loans and the back-office processing of MPF loans in its role as master servicer and program custodian. The MPF Provider publishes and maintains documentation (referred to as Guides) that details the requirements PFIs must follow in originating, underwriting or selling and servicing MPF loans. The MPF Provider also monitors compliance with MPF Program rules and requirements. The MPF Provider maintains the infrastructure through which we can fund or purchase MPF loans through our PFIs. We pay the MPF Provider a fee for providing these services.

*MPF Servicing* – PFIs selling residential mortgage loans under the MPF Program may either retain the servicing function or release the servicing and the servicing rights to an MPF Program-approved servicer. If a PFI chooses to retain the servicing, it receives a servicing fee. If a PFI chooses to release the servicing rights, it will receive a servicing-released premium. PFIs that retain the servicing may utilize approved subservicers to perform the servicing duties, while maintaining the servicing rights.

*Mortgage Standards* – PFIs are required to deliver residential mortgage loans that meet the eligibility requirements in the MPF Guides. The eligibility guidelines in the MPF Guides applicable to the conventional mortgage loans in our portfolio are broadly summarized as follows:

▪ Mortgage characteristics: MPF loans must be qualifying 5 - 30-year conforming conventional, fixed-rate, fully amortizing mortgage loans, secured by first liens on owner-occupied 1 - 4-unit single-family residential properties and single-unit second homes.

▪ Loan-to-value (LTV) ratio and private mortgage insurance (PMI): Conventional MPF mortgage loans with LTVs greater than 80 percent are insured by PMI from a mortgage insurance company that has successfully passed an internal credit review and is approved under the MPF Program. Generally, the maximum LTV for conventional MPF loans is 95 percent. Affordable Housing Program (AHP) MPF mortgage loans may have LTVs up to 100 percent.

▪ Conventional loans must have a minimum Fair Isaac Corporation (FICO<sup>®</sup>) score of 620.

▪ Documentation and compliance: Mortgage documents and transactions are required to comply with all applicable laws. MPF mortgage loans are documented using standard Fannie Mae or Federal Home Loan Mortgage Corporation (Freddie Mac) uniform instruments.

▪ Government loans: Government mortgage loans sold under the MPF Program have substantially the same parameters as conventional MPF mortgage loans except that their LTVs may not exceed the LTV limits set by the applicable government agency and they must meet all requirements to be insured or guaranteed by the applicable government agency (Federal Housing Administration, the Department of Veterans Affairs, the U.S. Department of Agriculture, or the Department of Housing and Urban Development).

Loans not eligible for sale under the MPF Program include residential mortgage loans unable to be rated by Standard & Poor's (S&P), loans not meeting eligibility requirements, loans classified as high cost, high rate, high risk, Home Ownership and Equity Protection Act loans or loans in similar categories defined under predatory or abusive lending laws, or subprime, non-traditional, or higher-priced mortgage loans.

*Allocation of Risk:* The MPF Program is designed to allocate risks associated with residential mortgage loans between the PFIs and FHLBank in accordance with the FHFA AMA regulation requirements. PFIs have direct knowledge of their mortgage markets and have developed expertise in underwriting and servicing residential mortgage loans. By allowing PFIs to originate residential mortgage loans, whether through retail or wholesale operations, and to retain or sell servicing rights of residential mortgage loans, the PFI retains control of the functions that impact credit quality the most. We are responsible for managing the interest rate, prepayment, and liquidity risks associated with holding residential mortgage loans in portfolio. To share the credit risk with our PFIs, a third-party model is used to determine the amount of credit enhancement obligation (CE obligation) needed to achieve credit quality that is permissible under the AMA regulation and consistent with our risk appetite. PFIs' CE obligations must be fully collateralized with assets considered eligible under our collateral policy. PFIs are paid monthly income for sharing credit risk. See Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Risk Management – Credit Risk Management – Lending and AMA Activities" for a discussion of eligible collateral.

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**<u>Investments</u>**

We maintain a portfolio of investments for liquidity and asset/liability management purposes and to enhance income. The type of investments we may purchase are limited by regulation. We may hold short-term investments in highly rated institutions, including overnight Federal funds, term Federal funds, interest-bearing certificates of deposit and demand deposits, commercial paper, and securities purchased under agreements to resell (i.e., reverse repurchase agreements). Our long-term investment portfolio primarily includes securities issued or guaranteed by the U.S. government, U.S. government agencies and GSEs, as well as MBS issued by U.S. government agencies and housing GSEs (GSE securities are not explicitly guaranteed by the U.S. government). Regulation prohibits the purchase of MBS if the aggregate value of MBS owned exceeds 300 percent of our month-end total regulatory capital, as most recently reported to the FHFA, on the day we purchase the securities. Further, quarterly increases in holdings of MBS are restricted to no more than 50 percent of regulatory capital as of the beginning of such quarter. As of December 31, 2025, the aggregate value of our MBS portfolio represented 273 percent of our regulatory capital. For details on our investment portfolio, see Note 3 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data" and Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Investments." For additional discussion of our investments and their related credit risk, see Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Risk Management – Credit Risk Management."

**<u>Debt Financing – Consolidated Obligations</u>**

Consolidated obligations, consisting of bonds and discount notes, are our primary liabilities and represent our principal source of funding. Consolidated obligations are the joint and several obligations of the FHLBanks, backed only by the financial resources of the FHLBanks. Consolidated obligations are not obligations of the U.S. government, and the U.S. government does not guarantee them; however, the capital markets have traditionally viewed the FHLBanks' obligations as federal agency debt. As such, the FHLBanks historically have had reasonably stable access to funding at relatively favorable spreads to U.S. Treasury obligations. Our ability to access the capital markets through the sale of consolidated obligations, across the maturity spectrum and through a variety of debt structures, assists us in managing our balance sheet effectively and efficiently. S&P currently rates the long-term senior unsecured debt issues of the FHLBank System and all FHLBanks (including FHLBank Topeka) at AA+. S&P rates all FHLBanks and the FHLBank System's short-term debt issues at A-1+. S&P's rating outlook for the FHLBank System's senior unsecured debt and all FHLBanks is stable. Moody's Investor Service (Moody's) has affirmed the long-term Aaa rating on the senior unsecured debt issues of the FHLBank System and the FHLBanks and a short-term issuer rating of P-1, with a rating outlook of negative for senior unsecured debt. These ratings measure the likelihood of timely payment of principal and interest on consolidated obligations and also reflect the FHLBanks' status as GSEs, which generally implies the expectation of a high degree of support by the U.S. government even though their obligations are not guaranteed by the U.S. government.

FHFA regulations govern the issuance of debt on behalf of the FHLBanks and related activities, and authorize the FHLBanks to issue consolidated obligations, through the Office of Finance as their agent, under the authority of Section 11(a) of the Bank Act. No FHLBank is permitted to issue individual debt under Section 11(a) without FHFA approval. We are primarily and directly liable for the portion of consolidated obligations issued on our behalf. In addition, we are jointly and severally liable with the other FHLBanks for the payment of principal and interest on the consolidated obligations of all FHLBanks under Section 11(a). The FHFA, at its discretion, may require any FHLBank to make principal or interest payments due on any consolidated obligations for which that FHLBank is not the primary obligor. Although it has never occurred, to the extent that an FHLBank would be required to make a payment on a consolidated obligation on behalf of another FHLBank, the paying FHLBank would be entitled to reimbursement from the non-complying FHLBank. However, if the FHFA determines that the non-complying FHLBank is unable to satisfy its obligations, then the FHFA may allocate the non-complying FHLBank's outstanding consolidated obligation debt among the remaining FHLBanks on a pro rata basis in proportion to each FHLBank's participation in all consolidated obligations outstanding, or on any other basis the FHFA may determine. If the principal or interest on any consolidated obligation issued on behalf of a specific FHLBank is not paid in full when due, that FHLBank may not pay dividends to, or redeem or repurchase shares of stock from, any member of that specific FHLBank.

Table 1 presents the par value of our consolidated obligations and the combined consolidated obligations of all the FHLBanks as of December 31, 2025 and 2024 (in millions):

**<u>Table 1</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Par value of consolidated obligations of FHLBank Topeka | $72058 | $70579 |
| Par value of consolidated obligations of all FHLBanks | $1151784 | $1192968 |

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FHFA regulations provide that we must maintain aggregate assets of the following types, free from any lien or pledge, in an amount at least equal to the amount of our consolidated obligations outstanding:

▪ Cash;

▪ Obligations of, or fully guaranteed by, the U.S. government;

▪ Secured advances;

▪ Mortgages that have any guaranty, insurance or commitment from the U.S. government or any agency of the U.S. government; and

▪ Investments described in Section 16(a) of the Bank Act, which, among other items, includes securities that a fiduciary or trust fund may purchase under the laws of the state in which the FHLBank is located.

Table 2 illustrates our compliance with the FHFA's regulations for maintaining aggregate assets at least equal to the amount of consolidated obligations outstanding as of December 31, 2025 and 2024 (dollar amounts in thousands):

**<u>Table 2</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Total non-pledged assets | $77030682 | $75460330 |
| Total carrying value of consolidated obligations | $71857035 | $70281553 |
| Ratio of non-pledged assets to consolidated obligations | 1.07 | 1.07 |

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The Office of Finance has responsibility for facilitating and executing the issuance of the consolidated obligations on behalf of the FHLBanks. It also prepares the FHLBanks' Combined Quarterly and Annual Financial Reports, services all outstanding debt, serves as a source of information for the FHLBanks on capital market developments and manages the FHLBanks' relationship with the nationally recognized statistical ratings organizations (NRSRO) with respect to ratings on consolidated obligations.

*Consolidated Obligation Bonds:* Consolidated obligation bonds are primarily used to satisfy our funding needs. Typically, the maturities of these bonds range from less than one year to 30 years, but the maturities are not subject to any statutory or regulatory limit. Consolidated obligation bonds can be issued and distributed through negotiated or competitively bid transactions with approved underwriters or selling group members.

Consolidated obligation bonds generally are issued with either fixed or variable-rate payment terms that use a variety of standardized indices for interest rate resets including, but not limited to, Secured Overnight Financing Rate (SOFR). In addition, to meet the specific needs of certain investors in consolidated obligations, both fixed and variable-rate bonds may also contain certain embedded features, which result in complex coupon payment terms and call features.

*Consolidated Obligation Discount Notes:* The Office of Finance also sells consolidated obligation discount notes on behalf of the FHLBanks that generally are used to meet short-term funding needs. These securities have maturities up to one year and are offered daily through certain securities dealers in a discount note selling group. In addition to the daily offerings of discount notes, the FHLBanks auction discount notes with fixed maturity dates ranging from 4 to 26 weeks through competitive auctions held twice a week utilizing the discount note selling group. The amount of discount notes sold through the auctions varies based upon market conditions, investor demand, and/or on the funding needs of the FHLBanks. Discount notes are sold at a discount and mature at par.

**<u>Derivatives</u>**

FHLBank's Risk Management Policy (RMP) establishes guidelines for our use of derivatives. Interest rate swaps, interest rate cap and floor agreements, and other derivatives can be used as part of our interest rate risk management and funding strategies. The RMP, along with FHFA regulations, prohibits trading in, or the speculative use of, derivatives and limits credit risk to counterparties that arise from derivatives. In general, we have the ability to use derivatives to reduce funding costs for consolidated obligations and to manage other risk elements such as interest rate risk and mortgage prepayment risk.

See Item 7A – "Quantitative and Qualitative Disclosures About Market Risk" for further information on derivatives.

**<u>Deposits</u>**

The Bank Act allows us to accept deposits from our members, housing associates, any institution for which we are providing correspondent services, other FHLBanks, and other government instrumentalities. We offer several types of deposit programs, including demand, overnight, and term deposits.

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*Liquidity Requirements:* To support deposits, FHFA regulations require us to have at least an amount equal to current deposits received from our members invested in obligations of the U.S. government, deposits in eligible banks or trust companies, or advances with remaining maturities not exceeding five years. In addition, we must meet the additional liquidity policies and guidelines outlined in our RMP. See Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Risk Management – Liquidity Risk Management" for further discussion of our liquidity requirements.

**<u>Capital, Capital Rules and Dividends</u>**

*FHLBank Capital Adequacy and Form Rules:* We must comply with regulatory requirements for total regulatory capital, leverage capital, and risk-based capital. Our RMP requires that we also maintain a ratio of total regulatory capital to total assets of not less than 4.6 percent of total assets, total capital stock to total assets of 2 percent, and permanent capital must exceed our risk-based capital requirement. To satisfy these capital requirements, we maintain a capital plan. The Gramm-Leach-Bliley Act (GLB Act) allows us to have two classes of stock, and each class may have sub-classes. Under our capital plan, we have two classes of authorized stock – Class A Common Stock and Class B Common Stock. Both classes have $100 par value per share. Class A Common Stock is required for membership. Class B Common Stock supports member activities with us, to the extent Class A Common Stock is insufficient to support the calculated activity requirement. The GLB Act and the FHFA rules and regulations define total capital for regulatory capital adequacy purposes as the sum of an FHLBank's permanent capital, plus the amounts paid in by its stockholders for Class A Common Stock; any general loss allowance, if consistent with U.S. generally accepted accounting principles (GAAP) and not established for specific assets; and other amounts from sources determined by the FHFA as available to absorb losses. The GLB Act and FHFA regulations define permanent capital for the FHLBanks as the amount paid in for Class B Common Stock plus the amount of an FHLBank's retained earnings, as determined in accordance with GAAP.

Under the GLB Act and the FHFA rules and regulations, we are subject to risk-based capital rules. We may not redeem or repurchase any of our capital stock without FHFA approval if the FHFA or our board of directors determines that we have incurred, or are likely to incur, losses that result in, or are likely to result in, charges against our capital, even if we are in compliance with our minimum regulatory capital requirements. Therefore, a member's right to have its excess shares of capital stock redeemed is conditional on, among other factors, FHLBank maintaining compliance with regulatory capital requirements.

See Item 5 – "Market for Registrant's Common Equity – Related Stockholder Matters and Issuer Purchases of Equity Securities," Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources - Capital" and Note 11 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data" for additional information regarding capital.

*Dividends:* We may pay dividends from unrestricted retained earnings and current income. (For a discussion regarding restricted retained earnings, please see *Joint Capital Enhancement Agreement* under this Item 1.) Our board of directors may declare and pay dividends in either cash or capital stock. Under our capital plan, all dividends that are payable in capital stock must be paid in the form of Class B Common Stock, regardless of the class of stock upon which the dividend is being paid.

Consistent with FHFA guidance in Advisory Bulletin (AB) 2003-AB-08, *Capital Management and Retained Earnings,* and other respective guidance, we adopted guidelines to establish a minimum or threshold level for our retained earnings in light of alternative possible future financial and economic scenarios, which are currently included under our RMP. The calculation of our minimum (threshold) level of retained earnings incorporates regulatory-based estimates of market risk and credit risk, and includes estimates for risk exposure from operational risk, settlement risk related to unsettled consolidated obligations, and net income volatility. The retained earnings threshold fluctuates from period to period because it is a function of the size and composition of our balance sheet and the risks contained therein at that point in time. As of December 31, 2025, our retained earnings threshold was $0.8 billion. Retained earnings of $1.8 billion exceeded our retained earnings threshold by $1.0 billion at December 31, 2025.

The retained earnings threshold is calculated quarterly and considered by the board of directors as part of each quarterly dividend declaration. The RMP also provides that meeting the established retained earnings threshold has priority over the payment of dividends, but that the board of directors must balance dividends on capital stock against the period over which the retained earnings threshold is met. During the year ended December 31, 2025, the threshold did not significantly affect the amount of dividends declared and paid.

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*Joint Capital Enhancement Agreement (JCE Agreement)* – We, along with the other FHLBanks, entered into a JCE Agreement intended to enhance the capital position of each FHLBank. More specifically, the intent of the JCE Agreement is to allocate a portion of each FHLBank's earnings to a Separate Restricted Retained Earnings Account (RRE Account) at that FHLBank. Thus, in accordance with the JCE Agreement, each FHLBank allocates 20 percent of its net income to an RRE Account and will do so until the balance of the account equals at least one percent of that FHLBank's average balance of outstanding consolidated obligations calculated as of the last day of each calendar quarter. Additionally, the JCE Agreement provides that amounts in restricted retained earnings in excess of 150 percent of an FHLBank's restricted retained earnings minimum (i.e., one percent of that FHLBank's average balance of outstanding consolidated obligations calculated as of the last day of each calendar quarter) may be released from restricted retained earnings. Restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

**<u>Tax Status</u>**

Section 1433 of the Bank Act provides that we and the other FHLBanks are exempt from all federal, state and local taxation except for real property taxes.

**<u>Assessments</u>**

We are subject to a statutory AHP assessment based on a percentage of our earnings. The FHLBanks are required to set aside annually the greater of an aggregate of $100 million or 10 percent of their current year's income subject to assessment to be contributed to the following year's AHP. In accordance with FHFA guidance for the calculation of AHP expense, interest expense on mandatorily redeemable capital stock is added back to income before charges for AHP. Voluntary contribution amounts expensed as Other Expense reduce pre-assessment net income, which is the basis of the statutory AHP calculation, so the FHLBanks have agreed to contribute the amount of this impact to AHP as a voluntary "make-whole" contribution.

**<u>Other Mission-Related Activities</u>**

One of our core missions is to provide funding to support and sustain affordable housing and community lending in our district. We administer and fund a number of programs specifically designed to fulfill that mission. These programs provide housing opportunities for thousands of very low-, low- and moderate-income households and strengthen communities primarily in Colorado, Kansas, Nebraska, and Oklahoma.

As we continue to look for opportunities to support our members, we have increased our commitment to voluntary programs designed to support and sustain affordable housing and community lending in our district. For 2025 and beyond, we committed to provide 5 percent of prior year net earnings. The 2025 funds primarily supported the Native American Housing Initiative (NAHI) program, Homeownership Possibilities Expanded (HOPE), Community Assistance Recovery Effort (CARE) disaster relief program, Mortgage Rate Reduction Product (MRRP), Lending Enhancement Advance Program (LEAP), and AHP Extra. Each of our programs are detailed below.

*Affordable Housing Program:* Amounts specified by the statutory AHP requirements described in Item 1 – "Business – Assessments" are reserved for this program. AHP provides cash grants to members in partnership with sponsors (i.e., housing authorities, for-profit and not-for-profit organizations, developers, etc.) to finance the purchase, construction, or rehabilitation of very low-, low-, and moderate-income owner occupied or rental housing. As a competitive program, applications are scored based on commitments made to support housing needs in our district. Our assessments also finance the Homeownership Set-aside Program (HSP), which provides down payment, closing cost, and purchase-related repair assistance to very low-, low-, and moderate-income first-time households in Colorado, Kansas, Nebraska, and Oklahoma.

*Voluntary Housing and Community Investment Programs*

• Homeownership Possibilities Expanded: Providing access to homeownership to the "missing middle," HOPE supports households in our district that traditionally do not receive assistance but need subsidy to make homeownership accessible and affordable. HOPE is not limited to first-time homebuyers, and income limitations are expected to serve a wider range of households.

• Native American Housing Initiatives Grants Program: The NAHI program is a voluntary grant program that provides Native American tribes and tribally designated housing entities with access to grant funds intended to build their communities in support of housing for tribal members in FHLBank's district. NAHI supports tribal organizations working at the grassroots level, which are in the best position to identify tribal needs.

• Community Assistance Recovery Effort: CARE provides assistance to members in the form of a matching grant to enhance the support our members provide to their communities when natural disasters occur. FHLBank members are in the best position to determine local needs following a disaster and to direct assistance where it will have the greatest impact.

• Mortgage Rate Reduction Product: MRRP allows members to provide eligible households a reduced mortgage interest rate compared to the current market rate.

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• Lending Enhancement Advance Product: LEAP allows members to borrow at below regular advance interest rates to support targeted types of lending.

*Community Investment Cash Advance (CICA) Program:* CICA loans to members specifically target underserved markets in both rural and urban areas. CICA loans represented 0.9 percent, 1.1 percent, and 1.2 percent of total advances outstanding as of December 31, 2025, 2024, and 2023, respectively. Programs offered during 2025 under the CICA Program, which is not funded through the AHP, include:

• Community Housing Program (CHP) – CHP makes loans available to members for financing the construction, acquisition, rehabilitation, and refinancing of owner-occupied housing for households whose incomes do not exceed 115 percent of the median income for the area and rental housing occupied by or affordable for households whose incomes do not exceed 115 percent of the median income for the area. For rental projects, at least 51 percent of the units must have tenants that meet the income guidelines, or at least 51 percent of the units must have rents affordable to tenants that meet the income guidelines. We provide advances for CHP-based loans to members at our estimated cost of funds for a comparable maturity plus a mark-up for administrative costs; and

• Community Development Program (CDP) – CDP provides advances to members to finance CDP-qualified member financing including loans to small businesses, small farms, small agribusiness or for community development purposes that meet one of the following criteria: (1) loans to firms that meet the Small Business Administration's (SBA) definition of a small business concern; (2) financing for businesses or projects located in an urban neighborhood, Census tract or other area with a median income at or below 100 percent of the area median; (3) financing for businesses, farms, ranches, agribusinesses, or projects located in a rural community, neighborhood, Census tract, or unincorporated area with a median income at or below 115 percent of the area median; (4) firms or projects located in a Native American Area or any Federally Declared Disaster Area; (5) projects in urban areas in which at least 51 percent of the employees of the project, or at least 51 percent of the families benefiting from or receiving services from the project, earn at or below 100 percent of the area median; or (6) projects in rural areas in which at least 51 percent of the employees of the project, or at least 51 percent of the families benefiting from or receiving services from the project, earn at or below 115 percent of the area median. We provide advances for CDP-based loans to members at our estimated cost of funds for a comparable maturity plus a mark-up for administrative costs.

**<u>Competition</u>**

*Advances:* Demand for advances is influenced by the cost and availability of alternative sources of liquidity, including customer deposits and other funding options such as the Federal Reserve Bank's discount window. Members primarily obtain alternative funding through Federal funds purchased, the brokered deposit market, and repurchase agreements with financial counterparties. Large members may have access to broader channels, including repurchase agreements with investment and commercial banks and access to the national and global credit markets.

The availability and relative cost of these alternative funding sources are key drivers of member demand for advances. Other factors include FHLBank product availability, dividend rates on FHLBank stock, member creditworthiness, ease of execution, diversification objectives, and the availability of collateral for other borrowings.

FHLBank adjusts its advance product offerings as competitive and market conditions evolve. All product development initiatives include an assessment of market opportunity relative to operational requirements, while maintaining strong risk-management and regulatory compliance standards. Certain initiatives may also require filing a New Business Activity Notice and receiving a non-objection from the FHFA.

*Mortgage Loans:* We face competition in purchasing conventional, conforming fixed-rate residential mortgage loans and government-guaranteed residential mortgage loans. Competitors differentiate themselves through pricing, customer service, and in ancillary services such as automated underwriting. Our most direct competition for purchasing residential mortgage loans comes from the other housing GSEs—Fannie Mae and Freddie Mac—that also purchase conventional, conforming fixed-rate mortgage loans. To a lesser extent, we also compete with regional and national financial institutions that buy or invest in mortgage loans and may hold, securitize, or sell these assets, depending on market conditions. We continuously reassess our ability to attract and retain members for our mortgage loan products and services. We compete for the purchase of mortgage loans primarily on the basis of price, products and product features, and services offered.

*Debt Issuance:* We compete with the U.S. government (including debt programs explicitly guaranteed by the U.S. government), U.S. government agencies, Fannie Mae, Freddie Mac, and other GSEs, as well as corporate, sovereign, and supranational issuers for funding in the global and national unsecured debt markets. Fannie Mae, Freddie Mac, and the FHLBanks are collectively known as the housing GSEs, and the cost of the debt for each can be positively or negatively affected by political, financial, or other news that reflects upon government and government agency debt. If the supply of competing debt increases without a corresponding increase in demand, our funding costs may increase. We compete for debt issuance primarily on the basis of rate, term, structure, liquidity of the instrument, and perceived risk of the issuer.

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*Derivatives:* The issuance of callable debt and the simultaneous execution of callable interest rate swaps with options that mirror the options in the debt have been an important source of competitive funding for us. As such, the depth of the markets for callable debt and mirror-image derivatives is an important factor of our relative cost of funds. There is considerable competition among high-credit-quality issuers, especially among the three housing GSEs, for callable debt and for derivatives. There can be no assurance that the current breadth and depth of these markets will be sustained.

**<u>Regulatory Oversight, Audits and Examinations</u>**

*General:* Our business is subject to extensive regulation and supervision. As discussed throughout this Form 10-K, the laws, regulations, and regulatory guidance to which we are subject cover all key aspects of our business, and directly and indirectly affect our product and service offerings, collateral practices, pricing, competitive position, relationship with members and third parties, capital structure, and liquidity practices. As a result, such laws and regulations have a significant effect on our results of operations and financial condition. For a discussion of risks relating to the complex body of laws and regulations to which we are subject, see Item 1A – "Risk Factors – Business Risk – Legislative and Regulatory". For a discussion of recent regulatory and legislative developments impacting us, see "Legislative and Regulatory Developments" under this Item 1.

We are supervised and regulated by the FHFA, an independent agency in the executive branch of the U.S. government. The FHFA is responsible for providing supervision, regulation and housing mission oversight of the FHLBanks to ensure they fulfill their mission by operating in a safe and sound manner to serve as a reliable source of liquidity and funding for housing finance and community investment. The FHFA is funded in part through assessments from the FHLBanks, with the remainder of its funding provided by Fannie Mae and Freddie Mac; no tax dollars or other appropriations support the operations of the FHFA or the FHLBanks. To assess our safety and soundness, the FHFA conducts comprehensive annual examinations, as well as periodic reviews. Additionally, we are required to submit monthly information about our financial condition and results of operations to the FHFA. This information is available to all FHLBanks.

Before a government corporation issues and offers obligations to the public, the Government Corporation Control Act provides that the Secretary of the Treasury will prescribe the form, denomination, maturity, interest rate, and conditions of the obligations; the manner and time issued; and the selling price. The Bank Act also authorizes the Secretary of the Treasury, at their discretion, to purchase consolidated obligations up to an aggregate principal amount of $4 billion. No borrowings under this authority have been outstanding since 1977.

The U.S. Treasury receives the FHFA's annual report to Congress, monthly reports reflecting securities transactions of the FHLBanks, and other reports reflecting the operations of the FHLBanks. We must submit annual management reports to Congress, the President of the United States, the Office of Management and Budget, and the Comptroller General. These reports include a statement of financial condition, a statement of operations, a statement of cash flows, a statement of internal accounting and administrative control systems, and the report of the independent public accounting firm on the financial statements.

*Audits and Examinations:* We have an internal audit department, and our board of directors has an audit committee. The Chief Audit Executive reports directly to the audit committee. In addition, an independent registered public accounting firm audits our annual financial statements and effectiveness of internal controls over financial reporting. The independent registered public accounting firm conducts these audits following standards of the Public Company Accounting Oversight Board (United States) and *Government Auditing Standards* issued by the Comptroller General of the United States. The FHLBanks, the FHFA, and Congress all receive the audit reports.

The Comptroller General has authority under the Bank Act to audit or examine the FHFA and the individual FHLBanks and to decide the extent to which they fairly and effectively fulfill the purposes of the Bank Act. Furthermore, the Government Corporation Control Act provides that the Comptroller General may review any audit of the financial statements conducted by an independent registered public accounting firm. If the Comptroller General conducts such a review, the results of the review and any recommendations must be reported to Congress, the Office of Management and Budget, and the applicable FHLBank. The Comptroller General may also conduct an audit of any financial statements of any individual FHLBank.

**<u>Human Capital Resources</u>**

Our workforce is a vital contributor to the success of our strategic business objectives. In supporting our people, we focus on our workforce profile and the various programs and philosophies described below.

*Workforce Profile:* Our workforce is primarily comprised of corporate employees, with our principal operations in one location. As of December 31, 2025, we had 260 full-time and 3 part-time employees. We strive to both develop talent from within the organization and supplement with external hires. We believe that developing talent internally results in institutional strength and

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continuity and promotes loyalty and commitment in our employee base, which strengthens our success. Adding new employees contributes to new ideas, continuous improvement, and our goals of having a diverse and inclusive workforce with a sense of belonging and an equitable workplace. As of December 31, 2025, the average tenure of our employees was 9.8 years. There are no collective bargaining agreements with our employees.

*Total Rewards:* We seek to attract, develop and retain talented employees to achieve our strategic business initiatives, enhance business performance, increase shareholder value and provide members a reasonable return on their investment in FHLBank. To achieve this objective, we focus on a combination of development programs, benefits and employee wellness programs and strive to recognize and reward performance. Specifically, our programs include:

• Cash compensation – competitive base salary, company performance-based incentives and other cash subsidies;

• Benefits – health insurance, life and accidental death and dismemberment insurance, supplemental life insurance, and a 401(k) retirement savings plan with a competitive employer match;

• Wellness program – employee assistance program, interactive education sessions focused on employee total health, and sporting events sponsorships;

• Time away from work – including paid time off for vacation, illness, well-being, personal, holiday, and volunteer opportunities;

• Development – leadership, professional and personal development opportunities; fee reimbursement for external development programs; employee engagement opportunities to drive our Employer of Choice vision; and educational assistance programs;

• Work/Life balance – flexible work arrangements, including one remote workday per week, two-thirds paid salary continuation for short-term disability, 100 percent paid parental, grandparent, military, bereavement, jury duty and court appearances leave;

• Management succession planning – our board of directors and leadership actively engage in management succession planning, with a defined plan for our Executive Team, which is reviewed and adjusted annually, to support smooth transitions in the event of an unplanned or planned absence of an executive and to help assure successor executives are fully qualified to assume responsibility for ongoing operations; and

• Performance Management framework – planned quarterly, documented discussions are coordinated between manager and employee. At the start of every quarter, managers and employees work together to set new goals or update existing goals and review the previous quarter's goals. In addition to encouraging goal alignment with ever-changing business needs, this quarterly framework is intended to provide a natural opportunity for feedback and development conversations to occur between employee and manager throughout the year.

*Culture:* FHLBank's culture is integral to our success. A key strategic focus is exceptional employee engagement, built upon our business partnership culture and core values. We focus on ensuring our business partners' talents are optimized and we celebrate our successes together. FHLBank endeavors to ensure leaders recognize and leverage every employee's talent and qualifications in the improvement and execution of business processes, the support and services we provide members, as well as how we work together. To help employees achieve excellence, we offer a range of development opportunities for our employees to connect and to grow both personally and professionally. We consider learning and innovation an important component of who we are. We evaluate our recruiting, promotion and succession planning processes regularly to ensure an objective and merit-based process.

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**<u>Legislative and Regulatory Developments</u>**

Significant regulatory actions and developments for the period covered by this report not previously disclosed are summarized below.

FHLBank is subject to various legal and regulatory requirements and priorities. Certain actions, regulatory priorities, and areas of focus, such as deregulation, by the federal executive administration have changed and continue to change the regulatory environment. For example, FHFA repealed the Fair Lending, Fair Housing, and Equitable Housing Finance Plans regulation applicable to the FHLBanks, effective March 9, 2026, citing the federal executive administration's deregulatory priorities. Furthermore, during 2025, withdrawals and rescissions of certain rules, proposed rules, and advisory, regulatory, or technical guidance have affected, and likely will continue to affect, certain aspects of FHLBank's business operations. These changes could have impact on FHLBank's financial condition, results of operations, and reputation.

On January 20, 2026, the federal executive administration issued an executive order that seeks to restrict acquisitions by large institutional investors of single-family homes. Among other things, the executive order directs certain agencies, including FHFA, to issue guidance to (i) prevent agencies and government-sponsored enterprises from providing for, approving, insuring, guaranteeing, securitizing, or facilitating the acquisition by a large institutional investor of a single-family home that could otherwise be purchased by an individual owner-occupant, or disposing of federal assets in a manner that transfers a single-family home to a large institutional investor; and (ii) promote sales to individual owner-occupants, including through anti-circumvention provisions, first-look policies, and disclosure requirements. The executive order also calls for legislative recommendations to codify related policies and directs certain agencies to conduct reviews and consider additional measures to combat speculation by large institutional investors in single-family housing markets. FHLBank is unable to predict the nature of the guidance, measures, or recommendations, or how each may impact FHLBank's business.

Considering the changes in the regulatory environment, there is uncertainty with respect to the ultimate result of future regulatory actions and the impact they may have on FHLBank and the FHLBank System. FHLBank also cannot predict the federal executive administration's actions on U.S. housing finance and government-sponsored enterprises, including relating to the revision or end of conservatorships of Fannie Mae and Freddie Mac or potential reforms or enhancements to their capital structure, the imposition of new requirements or limitations on their existing authorities or changes in the nature of their government backed guarantees, or any corresponding impacts to the FHLBank System, the secondary mortgage and mortgage-backed securities market, or the mortgage industry. FHLBank continues to monitor these actions as they evolve and to evaluate their potential impact on FHLBank. For further discussion of related risks, see Part I, Item 1A. – "Risk Factors".

**Item 1A: Risk Factors**

In addition to the other information set forth in this report, you should carefully consider the following factors, which could materially affect our business, financial condition, results of operations, cash flows or ability to pay dividends in future periods. While we believe we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties not currently known to us or that we currently deem to be immaterial that may adversely affect our business, financial condition, results of operations, cash flows or ability to pay dividends in the future.

**<u>Business Risk - General</u>**

*Changes in general economic and political conditions could have a material adverse effect on our business, results of operations or ability to pay dividends.* Because our operations are concentrated in Colorado, Kansas, Nebraska, and Oklahoma, we are particularly sensitive to housing market trends and regional economic shifts. Adverse conditions may arise from factors beyond our control, including Federal Reserve actions, interest rate changes, inflationary pressures, geopolitical conflicts, consumer and business confidence, sanctions, commodity prices, recessions, trade policies, currency fluctuations, policy shifts, natural disasters, pandemics, cyberattacks, civil unrest, or other disruptive events. Any of these could reduce demand for our products and services, impair collateral values, and negatively impact our results.

Political volatility and geopolitical instability may further weaken market conditions, economic growth, and investor confidence, creating risks for us and our members. Trade policy changes, such as tariffs, could drive inflation, reduce borrower profitability, and impair loan repayment. Fiscal policy uncertainty, long-term federal budget concerns, and future tax rates also pose risks. In addition, U.S. monetary and fiscal policies, including Federal Reserve actions, directly influence interest rates on our assets and liabilities and may reduce demand for advances and consolidated obligations, adversely affecting our financial condition and results of operations.

*Natural disasters, including those related to climate change, severe weather, public health crises, acts of war or terrorism or other external events could have a material adverse impact on our members and our business.* Regions within our district are subject to risks from tornadoes, floods, drought, pandemics or other health crises, acts of war or terrorism and other adverse external events. Climate change is increasing the frequency and intensity of these severe weather events. Such events could damage our facilities, disrupt member operations, impair collateral securing advances, mortgages, or securities, and negatively affect borrowers' livelihoods,

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causing significant economic dislocation. Any of these outcomes may adversely affect our financial condition and results of operations.

**<u>Business Risk - Legislative and Regulatory</u>**

*We are subject to a complex body of laws and regulatory and other requirements that could change in a manner detrimental to our operations*. The FHLBanks are GSEs organized under the authority of the Bank Act, and, as such, are governed by federal laws, regulations and other guidance adopted and applied by the FHFA. We are, or may also become, subject to further regulations promulgated by the SEC, Commodity Futures Trade Commission (CFTC), Federal Reserve Bank, Financial Crimes Enforcement Network, and other regulatory agencies. Historically, Congress has amended the Bank Act and amended or enacted other legislation in ways that have significantly affected the FHLBanks and the manner in which the FHLBanks carry out their housing finance mission and business operations. Changes to legislation enacted by Congress or states and regulations or policies implemented by the FHFA could have a negative effect on our ability to conduct business or on our cost of doing business or affect our members' ability or motivation to acquire or own our capital stock or use of our products and services. We note continuing developments in FHFA's and the current federal executive administration's areas of focus and regulatory priorities that may result in potential changes in FHLBank's regulatory environment, including without limitation, as discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Legislative and Regulatory Developments. Legislative or regulatory changes at the federal or state level could increase our costs, limit business activities, affect member participation, or otherwise negatively impact our financial condition, results of operations, or ability to pay dividends and redeem or repurchase capital stock. Such changes may influence funding costs, capital requirements, accounting policies, liquidity, debt issuance, hedging, permissible activities, AHP contributions, membership eligibility, and the scope of lending, investment, and mortgage programs. We cannot predict the effect of future regulations or guidance.

We also cannot predict the federal executive administration's or FHFA's actions on U.S. housing finance and government-sponsored enterprises, including actions taken relating to large institutional investor purchases of single family homes, actions regarding the revision or end of conservatorships of Fannie Mae and Freddie Mac or potential reforms or enhancements to their capital structure, the imposition of new requirements or limitations on their existing authorities or changes in the nature of their government backed guarantees, or any corresponding impacts to the FHLBank System, the secondary mortgage and mortgage-backed securities market, or the mortgage industry. Any such changes, as well as any resulting increased scrutiny of FHLBank and the FHLBank System and its mission and activities, however, could materially affect FHLBank's business operations, results of operations and reputation, and the value of FHLBank membership.

See Item 1 – "Business – Legislative and Regulatory Developments" for more information on potential future legislation and other regulatory activity affecting us.

**<u>Business Risk - Strategic</u>**

*We face competition for advances and access to funding, which could adversely affect our business, financial condition or results of operations.* Our primary business is making advances to our members. We compete with other suppliers of wholesale funding, including investment banks, commercial banks, and, in certain circumstances, other FHLBanks. Members may access alternative funding with more favorable terms, reducing demand for our advances. Adjusting pricing to remain competitive could lower profitability, further impacting our financial condition and results of operations.

Our mortgage loan acquisitions also face competition, particularly from Fannie Mae and Freddie Mac, which may limit our market share and income. In capital markets, we compete with other GSEs and corporate, sovereign, and supranational issuers for debt funding. Increased supply of competing debt products may raise our funding costs or reduce issuance capacity. These competitive pressures could negatively affect our financial condition, results of operations, and ability to pay dividends or redeem or repurchase capital stock.

*Member mergers or consolidations, failures, changes in member eligibility, or other losses or changes in member business with us could have a material adverse effect on our business and results of operations.* Industry consolidation has led to membership withdrawals and lower business levels, and future acquisitions may result in members merging into institutions outside our district. Most of our membership is small community banks, many of which serve and finance rural communities that are dependent on agriculture or the oil and gas industry. Stress in these sectors could lead to mergers or failures of smaller community banks. Various factors, including regulatory requirements, have contributed to increased consolidation in the financial services industry, and could reduce the number of current and potential members. For example, depository institutions continue to experience consolidation due to, among other things, increased regulatory burden, greater competition from non-bank 'Fintech' companies, lower interest margin, and/or higher technology costs that incentivize increased scale. Our risk of loss resulting from the loss of a single member would become proportionately greater if our advances and capital become more concentrated.

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We may also be affected by reduced business volume from member failures. While pledged collateral can be liquidated upon default, failures are typically resolved through FDIC repayment or assumption of advances by another institution. Financially distressed members may face reduced lending limits or loss of access to liquidity if collateral is insufficient, which could worsen their condition. Such outcomes may harm our reputation and negatively impact our financial condition and results of operations.

*We have a high concentration of advances and capital with a few members, and a loss of or change in business activities with, such institutions could have a material adverse effect on our business and results of operations.* We have a concentration of advances and capital with a few institutions (see Table 21). At December 31, 2025, our largest borrower accounted for 28.9 percent of total advances outstanding. Our top five borrowers collectively accounted for 51.9 percent of total advances outstanding. If one or more of our largest borrowers ceased membership, or if we were to experience a decrease in business with one or more of our largest borrowers, whether as the result of a merger or other transaction, or as a result of other market conditions, competition or otherwise, our financial condition and results of operations could be negatively affected. Although our business model enables us to expand and contract our balance sheet with member credit needs, a prolonged material decline in advances could adversely affect our business, results of operations or ability to pay dividends.

*Changes in our credit ratings, the credit standing of the U.S. Government or other FHLBanks, including the credit ratings assigned to the U.S. Government or those FHLBanks, could adversely affect us or our business operations.* As of February 27, 2026, we are rated Aa1 with a stable outlook by Moody's and AA+ with a stable outlook by S&P. Any downgrade or withdrawal of our credit ratings could adversely affect our business transactions with counterparties or members. FHLBank System debt is linked closely to the U.S. sovereign rating because of the FHLBanks' status as GSEs and the public perception that the FHLBank System would likely receive U.S. government support in the event of a crisis. A negative rating action on the U.S. government would likely extend to the FHLBanks.

FHLBanks issue consolidated obligations backed jointly by all FHLBanks. Adverse developments affecting the credit standing of any FHLBank, including rating changes, could increase the cost of consolidated obligations and limit our ability to issue consolidated obligations, which would negatively affect our financial condition. As of February 27, 2026, the consolidated obligations of the FHLBanks are rated Aa1/P-1 by Moody's and AA+/A-1+ by S&P. All of the FHLBanks are rated Aa1 with a stable outlook by Moody's and AA+ with a stable outlook by S&P.

**<u>Credit Risk</u>**

*An increase in credit risk exposure from advances, mortgage loans, or other credit products or FHLBank member failures could adversely affect our financial condition, results of operations, and reputation.* We are exposed to credit risk as part of our normal business operations through funding advances, purchasing mortgage loans, and extending other credit products, such as lines of credit, standby letters of credit and other commitments. We require advances and other extensions of credit to be fully secured with collateral and require borrowers to pledge additional collateral when deemed necessary. We evaluate the types of collateral pledged by the member and assign a borrowing capacity to the collateral, based on the risk associated with that type of collateral. If borrowers are unable to pledge additional collateral to fully secure their obligations with us, whether due to significant financial stress, market volatilities, or otherwise, it could cause the advance levels to decrease or credit risk to increase. If we have insufficient collateral before or after an event of default or failure of the member or are unable to liquidate the collateral, or transfer the collateral to an acquirer or receiver, for the value assigned to it in the event of a default or failure of a member, we could experience a credit loss.

During economic downturns or periods of significant economic and financial disruptions and uncertainties, the number of members exhibiting significant financial stress may increase, which may expose us to additional credit risk. We also exposed to credit risk from our mortgage loans held in portfolios. While our mortgage loan assets are collateralized by the underlying real estate and are generally credit-enhanced to further mitigate credit risk, natural disasters or a deterioration in economic conditions could result in decline in residential real estate values or increase in unemployment rate. These factors could lead to an escalation of borrower defaults and cause us to incur credit losses on our mortgage loans. A deterioration of the U.S. housing market and national decline in home prices could adversely impact the financial condition of our members, particularly those whose businesses are concentrated in the mortgage industry. A reduction in mortgage lending or mortgage assets held by member institutions may reduce their demand for wholesale funding. Deterioration in the residential mortgage markets could also affect the value of collateral securing our mortgage loan portfolio, increasing the risk of loss due to credit impairment, as well as possible realized losses if we were forced to liquidate the collateral if members default on their obligations to us.

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*Securities or loans pledged as collateral by our members or collateral securing mortgage loans or MBS investments could be adversely affected by the devaluation of, or inability to liquidate, the collateral in the event of a default. M*embers may default due to financial stress, reduced liquidity, operational failures, or borrower insolvency. Although advances are fully secured, market volatility, natural disasters, or other factors may erode collateral value, leading to credit losses and adversely affecting our business and results. If borrowers are unable to pledge additional collateral, advance levels could decrease and/or credit risk could increase. Economic downturns or financial disruptions may increase member distress and further expose us to credit risk, while reduced market liquidity could have similar effects.

There are continued challenges associated with the commercial real estate sector due to weak leasing demand, lower occupancy rates and higher interest rates, and policy or legal actions in certain jurisdictions which may lead to continued declines in the value of commercial real estate loan related collateral we hold and could contribute to additional financial stress of our members, in particular smaller regional and community banks with significant exposure to commercial real estate and high reliance on uninsured deposits may be more severely impacted. If a member defaults on its obligations or, in the case of a failed institution, the FDIC, or other receiver, fails to either promptly repay all of that failed institution's obligations or assume the outstanding advances, then we may be required to liquidate the collateral pledged by the troubled or failed institution. If the proceeds realized from the liquidation of pledged collateral are not sufficient to fully satisfy the amount of the troubled or failed institution's obligations and the operational cost of liquidating the collateral, we could incur losses. In addition, a default by a member with significant unsecured obligations could result in significant losses.

*Defaults by one or more of our institutional counterparties, including a derivatives clearinghouse, on its obligations to us could adversely affect our results of operations or financial condition.* We have a high concentration of credit risk exposure to financial institutions as counterparties, some of which are outside of the United States. Our primary exposures to institutional counterparty risk are with: (1) mortgage servicers of pledged loans; (2) third-party providers of credit enhancements on the MBS that we hold in our investment portfolio, including mortgage insurers, bond insurers, and financial guarantors; (3) uncleared derivative counterparties; (4) custodians and futures commission merchants for cleared derivatives; and (5) unsecured money market and Federal funds investment transactions. A default by a counterparty could result in losses if our credit exposures are under-collateralized or our credit obligations are over-collateralized and may impair affect our ability to operate efficiently and cost-effectively, adversely impacting our business, results of operations, or ability to pay dividends or redeem or repurchase capital stock.

*Our financial condition and results of operations, and the value of FHLBank membership, could be adversely affected by our exposure to credit risk*. We are exposed to credit risk principally through advances or commitments to our members, MPF Loans and related exposures, derivatives counterparties, unsecured counterparties, repurchase agreement transactions and issuers of investment securities or the collateral underlying them. We assume secured and unsecured credit risk exposure associated with the risk that a borrower or counterparty could default, and we could suffer a loss if we are unable to fully recover amounts owed on a timely basis.

In addition, we have exposure to credit risk because of the financial condition of the borrower or counterparty, including the borrower's or counterparty's ability to meet outstanding obligations; the fair value of collateral may decline as a result of deterioration in the creditworthiness of the obligor or the credit quality of a security instrument (whether due to economic conditions or otherwise); or because the value of the collateral may not be what we assigned to it (whether as a result of misrepresentation or inaccurate valuation). We have a high concentration of credit risk exposure to financial institutions and mortgage assets. If we have insufficient collateral before or after an event of default, or we are unable to liquidate the collateral for the value assigned to it in the event of default, we could experience a credit loss, which could adversely affect our financial condition and results of operations.

We follow internal and FHFA mandated guidelines on unsecured extensions of credit, which only permit us to have unsecured credit exposure to highly rated counterparties, the U.S. government, and other FHLBs, and limits the amounts and terms of such exposure. However, there can be no assurance that following these guidelines will prevent losses due to defaults on these assets.

To the extent our members are under financial stress, we are exposed to the risk that they may default on their outstanding obligations to us, including the repayment of advances. If a member defaults on its obligations, or the FDIC, or any other applicable receiver, fails either to timely repay all of that failed institution's obligations or to assume the outstanding advances, then we may be required to liquidate the collateral pledged by the failed institution. The volatility of market prices and interest rates could affect the value of the collateral. The proceeds realized from the liquidation of pledged collateral may not be sufficient to fully satisfy the amount of the failed institution's obligations or the operational cost of liquidating the collateral. Default by a member with significant outstanding obligations to us could adversely affect our results of operations and financial condition. Although we closely monitor our credit and collateral agreement processes, we may experience credit losses, and our business may be adversely affected if we are unable to sufficiently collateralize our risk exposures in the event of potential default by or resolution of members.

We face uncertainties as we increase credit outstanding to our more non-federally insured members and non-depository institutions (e.g., housing associates and insurance companies). As we update our collateral loan eligibility criteria to accept more complex loan structures and additional commercial loan property types, we face risks relating to valuing and liquidating collateral with these characteristics. We currently have three non-member housing associate counterparties, which are not generally subject to banking or

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insurance regulations. We take steps to mitigate this risk, which may include requiring specific over-collateralization levels or limits on eligible collateral.

Insurance companies have different risk characteristics than our depository members. For example, the priority granted to our security interests under Section 10(e) of the Bank Act, which generally affords any security interest granted to us by a member or any affiliate of the member or any nonmember borrower priority over claims or rights of any other party, may not apply when lending to insurance company members due to the anti-preemption provision contained in the McCarran-Ferguson Act in which Congress declared that federal law would not preempt state insurance law unless the federal law expressly regulates the business of insurance. Thus, if state law conflicts with Section 10(e) of the Bank Act, the protection afforded by this provision may not be available to us.

Our hedging strategies are highly dependent on our ability to enter into cleared and uncleared (over-the-counter) derivative instrument transactions with counterparties on acceptable terms to reduce interest-rate risk and funding costs. If we experience disruptions in the credit markets, it may increase the likelihood that one or more of our derivatives counterparties will fail to meet their obligations to us. If a counterparty defaults on payments due to us, we may need to enter into a replacement derivative contract with a different counterparty, which may be at a higher cost, or we may be unable to obtain a replacement contract on acceptable terms or at all. Additionally, the insolvency of one or more of our counterparties representing a relatively large portion of our derivatives portfolio, combined with an adverse change in the market before we are able to transfer or replace the affected derivative transaction could adversely affect our financial condition and results of operations. We may also be exposed to collateral losses to the extent that we have pledged collateral and its value declines or could experience losses if the counterparty fails to return the collateral. These losses may be greater to the extent we have high volumes of derivatives with counterparties with more exposure to market swings or that are concentrated in option-based products. Losses from any of the foregoing could negatively affect our financial condition and results of operations and the value of FHLB membership.

We invest in Federal Funds sold and deposits with banks in order to ensure the availability of funds to meet members' credit and liquidity needs and for income. Our credit policies and FHFA regulations regulating unsecured investments restrict these investments to short-term maturities and certain eligible counterparties. Disruptions in the credit markets may increase the likelihood that one of our Federal Funds or deposit counterparties could experience liquidity or financial constraints that may cause them to become insolvent or otherwise default on their obligations to us.

We also invest in securities purchased under agreements to resell in order to ensure the availability of funds to meet members' liquidity and credit needs and for income. These investments are secured by marketable securities held by a third-party custodian. If the credit markets experience disruptions, it may increase the likelihood that one or more of our counterparties could experience liquidity or financial constraints that may cause them to become insolvent or otherwise default on their obligations to us. If the collateral pledged to secure those obligations has decreased in value, we may suffer a credit loss. We could also experience losses if a receiver were to be successful in claiming that we did not liquidate its collateral in an orderly and commercially reasonable manner.

*We may become liable for all or a portion of the consolidated obligations for which one or more of the other FHLBanks are the primary obligors, which could have a material adverse effect on our business and results of operations.* We are jointly and severally liable with other FHLBanks for all consolidated obligations issued through the Office of Finance, regardless of whether we receive the proceeds. If another FHLBank defaults, the FHFA may allocate its liability to us and other FHLBanks. We also cannot pay dividends or redeem capital stock unless all principal and interest on our consolidated obligations is fully paid. Accordingly, our ability to return capital or pay dividends depends not only on our financial condition but also on that of the other FHLBanks.

**<u>Market Risk</u>**

*Changes in interest rates or an inability to successfully manage interest rate risk could have a material adverse effect on our business and results of operations*. Our profitability depends on our net interest income, which is driven by spreads between assets and liabilities. This spread is also impacted by changes in the fair value of interest rate derivatives and any associated hedged items. Spreads on our assets tend to be narrow compared to those of other financial institutions due to our cooperative business model. We began to experience spread compression in 2025 due to a flat or inverted yield curve. Market conditions, competition, and market risk exposure could cause compression to these already narrow asset spreads, could have an adverse effect on our business, results of operations or ability to pay dividends or redeem or repurchase capital stock.

Our performance is also influenced by U.S. fiscal and monetary policies, including Federal Reserve actions, which are difficult to predict. The Federal Open Market Committee (FOMC) decreased the target range for the Federal funds rate to between 3.50 percent and 3.75 percent at the December 2025 meeting, with future decreases dependent on unemployment, inflation, and international developments.

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We monitor and hedge interest rate risk through various measures, but financial market volatility and uncertainty limit the accuracy of assumptions such as mortgage loan volumes and pricing, market conditions for our consolidated obligations, interest rate spreads and prepayment speeds, implied volatility of interest rates and options contracts, and other model related assumptions. Actual results may differ significantly from projections, and heightened volatility could impair our ability to manage interest rate risk effectively.

*Our funding depends on our ability to access the capital markets, an interruption of which could have a material adverse effect on our business and results of operations.* We conduct our business primarily by acting as an intermediary between our members and the capital markets. Our ability to obtain funds through the sale of consolidated obligations depends in part on prevailing conditions in the capital markets (including investor demand). Our counterparties in the capital markets are also subject to regulations that could alter the balance sheet composition, market activities, and behavior in a way that could be detrimental to our access to the capital markets and overall financial market liquidity, which could have a negative impact on our funding costs and results of operations. Further, a failure or interruption of services provided by the Office of Finance could hinder our ability to access the capital markets. The FHLB System currently plays a predominant role as lenders in the federal funds market. Therefore, any disruption in the federal funds market or any related regulatory or policy change may impact our cash management activities, results of operation, and reputation. Cybersecurity incidents, financial or geopolitical disruptions, or other external events could limit or prevent us from accessing the capital markets. External forces are unpredictable; accordingly, we cannot assure future funding on acceptable terms. If we cannot obtain funding when needed, our ability to meet member credit and liquidity needs would be impaired, adversely affecting our business, financial condition, results of operations, and ability to pay dividends or redeem or repurchase capital stock.

Additionally, we have a significant amount of discount notes outstanding with maturities of one year or less. We are exposed to liquidity risk if there is any significant disruption in the short-term debt markets. If a disruption were prolonged, we may not be able to obtain funding on acceptable terms, or at all. Without access to the short-term debt markets, the alternative longer-term funding, if available, would increase funding costs and could cause us to increase advance rates, potentially adversely affecting demand for advances. If we cannot access funding when needed on acceptable terms, our ability to support and continue operations could be adversely affected. As a result, our inability to manage our liquidity position or our contingency liquidity plan to meet our obligations, as well as the credit and liquidity needs of our members, could adversely affect our financial condition and results of operations and the value of FHLB membership.

**<u>Liquidity and Capital Risk</u>**

*We may not be able to meet our obligations as they come due or meet the credit and liquidity needs of our members in a timely and cost-effective manner.* We manage liquidity to meet member needs and to pay our obligations without maintaining excessive holdings of low-yielding liquid investments or incurring high borrowing costs. We are subject to various regulatory liquidity requirements, including a contingency funding plan designed to protect against temporary access disruptions to the FHLBank debt markets in response to a rise in capital market volatility. Managing liquidity under these constraints could have an adverse effect on our net interest income, and thereby, our financial condition and results of operations.

*We may not be able to pay dividends at rates consistent with past practices, which could result in lower investment returns for members.* Under FHFA regulations and our capital plan, we may declare dividends on our capital stock only out of our unrestricted retained earnings and current net income, subject to statutory and regulatory capital requirements. New regulations or other requirements by the FHFA that would require higher levels of required or restricted retained earnings could result in lower amounts of unrestricted retained earnings available to be paid as dividends. Failure to meet any of our regulatory capital requirements would prevent us from paying any dividend. A decline in net income could result in a decline in dividend rates. A decline in dividend rates may diminish members' interest in holding FHLBank capital stock and could decrease demand for advances, AMA, or letters of credit.

*Lack of a public market and restrictions on transferring our stock could result in an illiquid investment for the holder.* Our capital stock lacks a public market and is subject to transfer restrictions, making it a potentially illiquid investment. Ownership is limited to members (and certain former or successor institutions), and transfers require our approval, which may not be granted. Redemption or repurchase of capital stock is prohibited if it would cause us or a member to fail minimum capital requirements, and we cannot guarantee redemption at the end of the required periods.

FHFA approval for redemptions or repurchases is required if we have incurred, or are likely to incur, losses that result in, or are likely to result in, charges against our capital. We may also be prohibited from repurchasing or redeeming our capital stock if the principal and interest due on any consolidated obligations have not been paid in full or if we fail to meet regulatory liquidity requirements.

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**<u>Operational Risk</u>**

*Volatile market conditions increase the risk that our financial models will produce unreliable results.* We rely on financial models to manage our market and credit risk, guide business decisions, and support financial reporting. Sudden shifts in economic conditions may increase the risk that models produce unreliable results or estimates that vary widely or prove to be inaccurate. Such inaccuracies could have a material adverse effect on our business, results of operations and ability to pay dividends or redeem or repurchase capital stock.

*Failure to keep pace with technological change, including the development and use of artificial intelligence, could adversely affect our business.* The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including those incorporating data analytics, artificial intelligence (AI), generative AI, and machine learning. The development and use of AI present a number of risks and challenges to our business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving. These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful. In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.

Our ability to compete depends on timely, cost-effective adoption of new technologies. Competitors with greater resources may adapt more quickly, while our ability to compete depends on our ability to adapt technology on a timely and cost-effective basis. We may not be able to effectively or timely implement new technology-driven products and services or be successful in marketing these products and services to our members. Technology implementation and upgrades may cause service interruptions, errors, or delays, and future improvements may require significant capital expenditures, which could have a material adverse effect on our business, results of operations and ability to pay dividends.

*Any disruption, failure, cybersecurity incident or threat to our information systems or other technology or those of critical vendors and third parties upon which we rely, such as the Federal Reserve Banks, could adversely impact our business, reputation, financial condition or results of operations.* We rely heavily upon information systems and other technology to conduct and manage our business. We own some of these systems and technology, whereas other systems and technology we rely upon are furnished by third parties. We rely on the Office of Finance for, among other things, the placement of consolidated obligations, our primary source of funds. A disruption in this service would disrupt our access to these funds. Our information systems rely on certain critical vendors to provide technological solutions. Computer systems, software and networks can be vulnerable to failures and interruptions, including as the result of any cybersecurity threats or incidents (e.g., breaches, unauthorized access, misuse, computer viruses or other malicious code and other events) or other breaches of technology security, that may derive from human error or malfeasance on the part of employees or third parties, other disruptions during the process of upgrading or replacing computer software or hardware, failure to implement key information technology initiatives or accidental technological failure. These failures, interruptions, or cyberattacks could jeopardize the confidentiality or integrity of information, including personally identifiable information, result in fraudulent wire transfers, or otherwise interrupt our ability to conduct and manage our business effectively, including, without limitation, its deposit account management, hedging activities and advances activities. We maintain and tests business continuity plans and have established backup facilities away from our headquarters. We also have a reciprocal backup agreement in place with another FHLBank to provide its members short-term loans and debt servicing in the event that Topeka facilities are inoperable. We can make no assurance that we or our third-party vendors will be able to prevent, timely and adequately address or mitigate the negative effects of any such failure, interruption, or cybersecurity threats or incidents.

*Cybersecurity threats and potential security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer.* We depend upon data processing, software, communications and information systems from a number of third parties to conduct our business. Our business involves the storage and transmission of proprietary information and security breaches could expose us to the risk of loss or misuse of such information, litigation and potential liability. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. We, our members and other financial institutions with which we interact, are subject to increasingly frequent, continuous attempts, including ransomware and malware attacks, to penetrate key systems by individual hackers, organized criminals, and in some cases, state-sponsored organizations. Our operations are also vulnerable to disruptions from human error, natural disasters, power loss, computer viruses, unauthorized access and other unforeseen events. Undiscovered data corruption could render our member information inaccurate. These risks are further heightened by factors such as developments in generative AI, increased remote working and geopolitical turmoil. Cyberattacks and security breaches may also cause significant increases in operating costs, including the costs of compensating members for any resulting losses they may incur, and the costs and capital expenditures required to correct any deficiencies and strengthen the security of data processing and storage systems, and these costs may exceed coverage limits under our cyber insurance policies.

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While we believe we are in compliance with all applicable privacy and data security laws, a cyber incident could put our members' confidential information at risk and expose us to significant liability. To date, we have no knowledge of a material cyber incident or other material information security incident affecting the systems we operate and control. However, financial institutions are one of the top targets for cyberattacks, and we can never be certain that all of our systems are entirely free from vulnerability to breaches of security or other technological difficulties or failures. Cybersecurity threats have predominantly occurred through phishing, social engineering scams, and ransomware. The perpetual evolution of known cyber threats requires us to devote significant resources to maintain, regularly update and backup our data security systems and processes, as we may not be able to anticipate, or effectively implement preventative measures against, all cyberattacks. We also incur significant costs in maintaining cybersecurity protections, including costs associated with maintaining cyber insurance coverage. Due to the increasing sophistication of threats, including those enabled by AI and other emerging technologies that may be used maliciously, we may be required to expend significant additional resources to modify or enhance its layers of defense. A security breach or other cyber incident could have an adverse impact on, among other things, our revenue, ability to attract and maintain members and our reputation. In addition, a security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and possible financial liability, all of which could have a material adverse effect on our business, results of operations, ability to pay dividends, system availability and operational support. Any failure, interruption, or breach could adversely affect our member business, member relations, risk management, reputation, or profitability, which could then negatively affect our financial condition, results of operations, or ability to pay dividends or redeem or repurchase capital stock.

For additional information on information system and security threats, see "Risk Management – Operations Risk Management" under Item 7. For additional information on cybersecurity, see "Item 1C – Cybersecurity."

*We may be unable to attract and retain a highly qualified workforce, including key management.* Our success depends on the talents and efforts of our employees, and particularly our management. While turnover has remained low,we must remain competitive in terms of employment and total rewards to retain key management and attract highly qualified employees. Failure to do so, or to implement effective succession planning for key leaders, could adversely affect our financial condition and results of operations.

*The MPF Program has different risks than those related to our traditional advance business, which could adversely impact our profitability.* In its role as MPF Provider, FHLBank Chicago provides the infrastructure, operational support, and maintenance of investor relations for the MPF Program and is also responsible for publishing and maintaining the MPF Guides, which include the requirements PFIs must follow in originating or selling and servicing MPF mortgage loans. If FHLBank Chicago changes its role, ceases operations, or experiences system failures or interruptions, our mortgage loan assets, net interest margin, and profitability could be adversely impacted. Similarly, operational or contractual difficulties by FHLBank Chicago's third-party vendors or investors in the MPF Program could negatively affect our business and results of operations.

In addition, compared to our traditional member advance programs, the MPF Program is relatively more sensitive to competitive pressures, more susceptible to loan losses and also carries more interest rate risk, prepayment risk, operational complexity and potential for fraud. General changes in market conditions could have a negative effect on the mortgage loan market resulting in a negative impact on the profitability of the MPF Program, which could include rising or elevated interest rates or housing prices resulting in slowing mortgage loan originations; an economic downturn creating increased defaults and lowered housing prices; innovative alternative products to the MPF Program; and new government programs or mandates.

The rate and timing of unscheduled payments and collections of principal on mortgage loans are difficult to predict and can be affected by a variety of factors, including the level of prevailing interest rates, the availability of lender credit, and other economic, demographic, geographic, tax and legal factors. We manage prepayment risk through a combination of consolidated obligation issuance and, to a lesser extent, derivatives. If the level of actual prepayments is higher or lower than expected, our net interest income may be adversely affected. For certain MPF Program products, increased prepayments may also reduce credit enhancements available to absorb credit losses. To the extent one or more of the geographic areas in which our MPF loan portfolio is concentrated experiences considerable declines in the local housing market, declining economic conditions or a natural disaster, we could experience an increase in the required allowance for credit losses on this portfolio.

**Item 1B: Unresolved Staff Comments**

Not applicable.

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**Item 1C: Cybersecurity**

FHLBank Topeka recognizes the critical importance of maintaining the trust and confidence of our members, business partners, employees and other stakeholders. We have implemented processes for assessing, identifying, and managing material risks from cybersecurity threats or incidents that may directly or indirectly impact our business strategy, results of operations, or financial condition.

Our cybersecurity risk management framework for assessing, identifying, and managing material risks from cybersecurity threats seeks to protect the confidentiality, security and availability of the information that we collect and store by focusing on identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.

Cybersecurity risk management is part of our Enterprise Risk Management (ERM) Program, which includes specific controls and processes for mitigation, monitoring and reporting associated with cybersecurity and information risks. Specifically, cybersecurity controls and processes include the Enterprise Security Policy, the Security Incident Response Plan, and the Business Resiliency Management Policy. The Risk Oversight committee of the board of directors oversees these controls and processes and annually recommends each for approval. The full board of directors annually reviews and approves each of our Enterprise Security Policy, Security Incident Response Plan, and Business Resiliency Management Policy.

The Enterprise Security Policy establishes administrative, technical, and physical safeguards designed to protect the security, confidentiality, and integrity of FHLBank physical and intangible information technology assets.

The Security Incident Response Plan determines how cybersecurity threats and incidents are identified, classified, and escalated, including for the purposes of reporting, and providing relevant information to the Risk Oversight committee and the full board of directors. The Security Incident Response Plan also requires assessment of materiality of the threat or incident for the purposes of public disclosure.

The Business Resiliency Management Policy is designed to ensure our critical business functions remain available during business disruptions and to minimize the impact of such disruptions, including the unavailability of information technology assets due to unintentional events like fire, power loss, and other technical incidents such as hardware failures. The Business Resiliency Management Policy includes, among other items, business impact analysis for developing effective plans and a disaster recovery plan to respond, recover, resume, and restore technology assets critical for FHLBank to operate.

We regularly engage with third parties to assist in the testing, maintenance, and development of our cybersecurity risk management practices and to assess, identify, and manage cybersecurity incident and threat risk.

Our Security Incident Response Plan includes third-party cybersecurity incidents and threats. Through our vendor management program, we undertake due diligence of third-party systems with which we will interact and vendors with whom we will interact, including regular reviews and oversight of these service providers through performance and technological reviews and escalation of any unsatisfactory reviews.

As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect FHLBank, including FHLBank's business strategy, results of operations or financial condition.

**<u>Cybersecurity Governance</u>**

Our board of directors devotes significant time and attention to data and systems protection, including cybersecurity and information security risk. Our board of directors oversees the ERM Program, the Enterprise Security Program and Information Security through policies and principles including the Enterprise Security Policy, the Security Incident Response Plan, and the Business Resiliency Management Policy. The board of directors oversees management's approach to staffing, policies, processes, and practices to gauge and address cybersecurity and information security risk.

Our board of directors has oversight of our ERM Program, the Enterprise Security Program, and Information Security areas which include risks from cybersecurity threats and has approved specific controls for the mitigation, monitoring and reporting associated with those risks. The Risk Oversight Committee and Operations Committee of the board of directors receive regular reporting (at least quarterly) on the risks and are responsible for overseeing cybersecurity and information risks, including receiving Enterprise Security Program updates from the Information Security Officer (ISO), Information Technology status updates, and reviewing enterprise risk analysis and status information, and annually reviews the Business Resiliency Management Policy and Program.

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Our Enterprise Security Program is led by the ISO. The ISO reports to the Chief Risk Officer (CRO). FHLBank's Information Security area is led by the Director of Information Security, who reports to the Chief Information Officer (CIO). The Business Resiliency Management Program is led by the Director of Enterprise Risk Management, who reports to the CRO.

We have a Technology Committee, which reviews and discusses all technology-related methodologies and initiatives related to information technology and cybersecurity, among other topics. The Technology Committee is a management committee and reports to the Strategic Operations Management Committee (SOMC). We also have an Operations Risk Committee (ORC), which is a management committee, and is the secondary venue for reviewing enterprise security initiatives. The ORC also serves as the primary governance venue for the Business Resiliency Management Program and escalates business resiliency concerns and risk issues, among other matters, to the Strategic Risk Management Committee (SRMC). The ORC is responsible for annually reviewing and providing recommendations on FHLBank's Security Incident Response Plan and receives monthly updates on the Enterprise Security Program. The ISO is a required member of both the Technology Committee and the ORC.

The SOMC and SRMC are comprised of senior leadership and executive-level officers, including FHLBank's CRO and CIO. The SOMC is responsible for receiving reports on issues escalated from the Technology Committee. The SRMC is responsible for management of operational risk and implementation of the cybersecurity risk management framework within the ERM Program as approved by the board of directors and receives reports on issues escalated from the ORC.

The Executive Team, comprised of chief-level officers, annually reviews and provides recommendations on the Enterprise Security Policy, Security Incident Response Plan, and the Business Resiliency Management Policy. The President and Chief Executive Officer (CEO) annually approve each policy for submission to the board of directors for its consideration and ultimate approval.

In addition to the board of directors and management committees, we have an Information Security Working Group (ISWG). Membership in the ISWG consists of leadership and business partners from a cross section of areas, including operational risk, information security, information technology, legal, operations, and others throughout FHLBank. The breadth and depth of experience of members of the ISWG allows for detailed discussions on information security trends and emerging risks which can be elevated to the Technology Committee for action or further discussion, as necessary and appropriate.

We have an Information Security area of the Information Technology department comprised of specialized professionals responsible for the day-to-day hands-on management of cybersecurity risk. The area handles processes and procedures to mitigate and implement protective, proactive and reactive measures to protect FHLBank against cybersecurity risks and is responsible for the practices designed to prevent unauthorized access, use, disclosure, disruption, modification, inspection, recording or destruction of information.

Those responsible for assessing and managing FHLBank's material risks from cybersecurity threats have expertise and experience relevant to their roles. FHLBank's CIO has served in technology and leadership roles for over 30 years, including 28 years of experience with FHLBank. During the last 15 years, the CIO has provided oversight and strategic direction for the Information Security area of the Information Technology department, including cybersecurity risk management, cybersecurity governance, and incident response. The ISO has more than 25 years of information technology experience, including 25 in the financial industry, and 23 years of experience managing information security. The ISO has a Bachelor of Science degree in Computer Science Information Systems. The Director of Information Security is a retired United States Air Force Lt. Colonel whose primary career focus was in intelligence analysis. The Director of Information Security also has 15 years of experience building and leading cybersecurity programs, including cyber threat intelligence programs and cyber regulatory compliance; 17 years of cyber intelligence analysis experience, including military and civilian; five years of continuity of operations and business continuity program development; and holds a Master of Arts degree in Strategic Intelligence Studies and is a Certified Information System Security Professional.

The Technology Committee and ORC, as appropriate, receive regular and prompt information from the Information Security area as reported by the ISO, which in turn provide periodic, regular and prompt reporting to the SRMC and SOMC on topics such as threat intelligence, major cybersecurity risk areas, technologies and best practices, and any cybersecurity incidents that may have impacted FHLBank, as applicable and needed. The SRMC and SOMC may escalate reporting as applicable and needed to the Executive Team or board of directors.

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The board of directors receives prompt and timely information from the Security Incident Response Team, which includes the CRO, CIO, ISO, and Director of Information Security, among others, as set forth in the Security Incident Response Plan, on any cybersecurity or information security incident that may pose significant risk to FHLBank and continues to receive regular reports on the incident until its conclusion. The board of directors, Risk Oversight Committee and Operations Committee each receive regular presentations and reports throughout the year on cybersecurity and information security risk. These presentations and reports address a broad range of topics, including updates on technology trends, regulatory developments, legal issues, policies and practices, information security resources and organization, the threat environment and vulnerability assessments, and specific and ongoing efforts to prevent, detect, and respond to internal and external incidents and critical threats. At least quarterly, the board discusses cybersecurity and information security risks with the ISO and CRO.

**Item 2: Properties**

We own our primary facility located at 500 SW Wanamaker Road, Topeka, Kansas. Our facility has Leadership in Energy and Environment Design Certified Gold status, in alignment with our commitment to sustainability, energy efficiency, and natural resource conservation.

**Item 3: Legal Proceedings**

We are subject to various pending legal proceedings arising in the normal course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.

**Item 4: Mine Safety Disclosures**

Not applicable.

**PART II**

**Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

FHLBank is a cooperative whose members own substantially all of FHLBank's capital stock. The majority of our board directors are officers or directors of members, and directors are elected by members (or selected by the board of directors to fill mid-term vacancies).Former members (including certain non-members that own FHLBank capital stock as a result of merger or acquisition, relocation, charter termination, or involuntary termination of an FHLBank member) own the remaining capital stock to support outstanding business transactions initiated while still members that remain on our balance sheet. Our capital stock is not publicly traded, and there is no established marketplace for our capital stock. Members may be required to purchase additional shares of stock from time to time to meet minimum stock purchase requirements under our capital plan.

We issue two classes of capital stock that both have a par value of $100 per share: Class A Common Stock and Class B Common Stock. Class A Common Stock represents the Asset-based Purchase Requirement and Class B Common Stock represents the Activity-based Purchase requirement. The portion of our capital stock subject to mandatory redemption (i.e., Mandatorily Redeemable Capital Stock (MRCS)) is treated as a liability and not as capital, including the capital stock of former members.

We may redeem either class of capital stock at par value, upon either six months (Class A Common Stock) or five years (Class B Common Stock) written notice by a member to FHLBank, subject to certain statutory and regulatory requirements and to the satisfaction of any ongoing stock investment requirements applying to the member under our capital plan. We may repurchase shares held by members in excess of the members' required stock holdings at our discretion at any time at par value. Our shares of capital stock are "exempt securities" under the Securities Act, exempting purchases and sales of our capital stock by our members from registration under the Securities Act. Pursuant to FHFA regulation, our Class A Common Stock is with the SEC under Section 12(g)(1) of the Exchange Act and, as a result, we are subject to certain disclosure and reporting requirements of the Exchange Act and to file periodic and current reports with the SEC, among other SEC reporting requirements.

As of February 27, 2026, we had 655 stockholders of record and 3,066,551 shares of Class A Common Stock and 22,343,926 shares of Class B Common Stock outstanding, including 12,142 shares of Class A Common Stock and 44,407 shares of Class B Common Stock subject to mandatory redemption by members or former members.

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Dividends may be paid in cash or shares of Class B Common Stock as authorized under our capital plan and approved by our board of directors. FHFA regulation prohibits any FHLBank from paying a stock dividend if excess stock outstanding will exceed one percent of its total assets after payment of the stock dividend. Excess stock is defined as the aggregate of the capital stock held by each shareholder in excess of its minimum capital stock requirement, as established by our capital plan. While we manage our excess stock position to be able to regularly pay stock dividends, there is no requirement that we declare and pay any dividend. The decision to declare any dividend and the dividend rate is at the discretion of our board of directors.

Base stock dividends on Class A Common Stock and Class B Common Stock are anticipated to remain at or near current levels in 2026 relative to what was paid in 2025. Dividend rates are influenced by capital levels balanced with the rates we offer members on advances and the dividend rates we pay on activity-based stock. Historically, dividend rates have moved directionally with short-term interest rates; however, market conditions and movements in short-term interest rates can be unpredictable. Adverse changes in FHLBank's financial results may result in lower dividend rates in future periods. However, our historical dividend rates and dividend practices are not indicative of future dividend declarations.

See Item 1 – "Business – Capital, Capital Rules and Dividends" for more information regarding our retained earnings policy, and see Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources - Capital" for a discussion of restrictions on dividend payments in the form of capital stock.

**Item 6: [Reserved]**

**Item 7: 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) highlights selected information intended to assist readers in understanding our business and assessing our operations both historically and prospectively. This overview of MD&A may not contain all of the information that is important to readers. For a more complete understanding of events, trends and uncertainties, as well as the liquidity, capital, credit and market risks, and critical accounting estimates, affecting FHLBank, this discussion should be read in conjunction with our audited financial statements and related notes presented under Item 8 of this report. Our MD&A includes the following sections:

▪ Executive Level Overview - tabular presentation of selected financial data and 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; and

▪ Recently Issued Accounting Standards.

Additionally, refer to Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our <u>[Annual Report on Form 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001325878/000132587823000063/fhlbt-20221231.htm)</u> for the year ended December 31, 2024 for our MD&A comparing fiscal year 2024 to fiscal year 2023.

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**<u>Executive Level Overview</u>**

Table 3 presents selected financial data for the periods indicated (dollar amounts in thousands):

**<u>Table 3</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** | **12/31/2023** | **12/31/2022** | **12/31/2021** |
| **Statement of Condition (as of period end):** | | | | | |
| Total assets | $77505029 | $75900980 | $74946985 | $71992842 | $48021238 |
| Advances | 43667540 | 41652081 | 45444769 | 44262750 | 23484288 |
| Mortgage loans, net | 9351305 | 8949433 | 8352713 | 7905135 | 8135046 |
| Short-term liquidity investments<sup>1</sup> | 8910137 | 10867423 | 7559989 | 8139852 | 5553249 |
| Investment securities | 14834298 | 13717408 | 12926857 | 11121299 | 10505325 |
| Total liabilities | 73317391 | 71801251 | 71056333 | 68316298 | 45306972 |
| Deposits | 909553 | 989021 | 752200 | 711061 | 946207 |
| Consolidated obligations, net<sup>2</sup> | 71857035 | 70281553 | 69790738 | 67281244 | 44199598 |
| Total capital | 4187638 | 4099729 | 3890652 | 3676544 | 2714266 |
| Capital stock | 2510362 | 2631605 | 2607683 | 2507709 | 1499301 |
| Retained earnings | 1763624 | 1608086 | 1401940 | 1253105 | 1142650 |
| **Statement of Income (for the year ended):** |  |  |  |  |  |
| Net interest income | 540274 | 560219 | 460051 | 362991 | 296648 |
| Other income (loss) | 14408 | 37140 | 47947 | (13942) | (41434) |
| Voluntary housing and community investment program contributions<sup>3</sup> | 29104 | 16498 | 3000 |  |  |
| Other expenses | 103876 | 101674 | 94008 | 80854 | 77529 |
| Income before assessments | 421730 | 480823 | 411631 | 267485 | 178435 |
| AHP assessments | 42210 | 48101 | 41164 | 26749 | 17845 |
| Net income | 379520 | 432722 | 370467 | 240736 | 160590 |
| **Selected Financial Ratios and Other Financial Data (for the year ended):** |  |  |  |  |  |
| Total average interest-earning assets | 79882716 | 77206881 | 75666540 | 60789093 | 48928015 |
| Average advances | 45442029 | 44460023 | 46166703 | 34290538 | 23178487 |
| Total average interest-bearing liabilities | 75185840 | 72587250 | 70961352 | 57050721 | 45968013 |
| Dividends paid | 223982 | 226576 | 221632 | 130281 | 69395 |
| Weighted average dividend rate<sup>4</sup> | 8.65% | 8.82% | 8.47% | 6.47% | 4.49% |
| Dividend payout ratio<sup>5</sup> | 59.02% | 52.36% | 59.83% | 54.12% | 43.21% |
| Return on average equity | 9.12% | 10.84% | 9.56% | 7.47% | 5.88% |
| Return on average assets | 0.47% | 0.56% | 0.49% | 0.39% | 0.33% |
| Average equity to average assets | 5.19% | 5.15% | 5.10% | 5.28% | 5.54% |
| Net interest margin<sup>6</sup> | 0.68% | 0.73% | 0.61% | 0.60% | 0.61% |
| Total capital ratio<sup>7</sup> | 5.40% | 5.40% | 5.19% | 5.11% | 5.65% |
| Regulatory capital ratio<sup>8</sup> | 5.52% | 5.59% | 5.35% | 5.22% | 5.50% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes interest-bearing deposits, securities purchased under agreements to resell, and Federal funds sold.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Consolidated obligations are bonds and discount notes that we are primarily liable to repay. See Note 14 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.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Voluntary housing and community investment program contributions are expensed in the period they are approved by the board of directors and/or awarded.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid in cash and stock on both classes of stock as a percentage of average capital stock eligible for dividends.

<sup>5</sup>&nbsp;&nbsp;&nbsp;&nbsp;Ratio disclosed represents dividends declared and paid during the year 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.

<sup>6</sup>&nbsp;&nbsp;&nbsp;&nbsp;Net interest income as a percentage of average earning assets.

<sup>7</sup>&nbsp;&nbsp;&nbsp;&nbsp;GAAP capital stock, which excludes mandatorily redeemable capital stock, plus retained earnings and accumulated other comprehensive income as a percentage of total assets.

<sup>8</sup>&nbsp;&nbsp;&nbsp;&nbsp;Regulatory capital (i.e., permanent capital and Class A Common Stock) as a percentage of total assets.

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We are an independent regional wholesale bank structured as a member-owned cooperative serving eligible financial institutions in Colorado, Kansas, Nebraska and Oklahoma. Our primary business is making collateralized loans, known as advances, to member institutions and certain qualifying non-members and acquiring residential mortgage loans from members. Financial institutions eligible for membership in FHLBank include commercial banks, savings institutions, insurance companies and credit unions. CDFIs certified under the Community Development Banking and Financial Institutions Act of 1994 are also eligible for membership. While not eligible for membership, housing associates, including state and local housing authorities, that meet certain statutory criteria may also borrow from FHLBank. Our mission is to be a reliable provider of funding, liquidity, and services to promote housing, jobs and general prosperity through products and services that assist our members in supporting their communities. We seek to maintain a balance between our public purpose and our ability to provide adequate returns on the capital supplied by our members. Our structure as a financial cooperative allows our business to be scalable and self-capitalizing without taking undue risks, diminishing capital adequacy, or jeopardizing profitability. Therefore, FHLBank is generally structured to expand and contract its asset size in response to changes in the needs of our members and their communities.

*2025 Performance Highlights:*

***•* Total Assets:** Total assets increased to $77.5 billion driven by a $2.0 billion increase in advances and a $1.1 billion increase in long-term investments compared to the prior year end.

**• Primary Mission Assets:** The Primary Mission Asset ratio measures year-to-date average advances and mortgage loans relative to consolidated obligations (excluding certain U.S. Treasury securities). The ratio held relatively steady at 77 percent, compared to 78 percent in the prior year.

**• Advances**: Advances increased to $43.7 billion driven by increased utilization among large depository and insurance company members, with the majority of the growth in adjustable rate products. Advances represented 56.3 percent of total assets, compared to 54.9 percent at prior year end.

**• Mortgage loans:** Mortgage loans increased to $9.4 billion, representing 12.1 percent of total assets, compared to 11.8 percent at prior year end. Originations at interest rates higher than the weighted average rate of the existing portfolio continue to have a positive impact on interest income.

• **Investment securities:** Investment securities increased to $14.8 billion, driven by purchases of multifamily agency commercial MBS. Investment securities represented 19.1 percent of total assets compared to 18.1 percent at prior year end.

***•* Net Income**: Net income decreased $53.2 million to $379.5 million for the year ended December 31, 2025 compared to $432.7 million for the prior year, primarily attributed to fluctuations in the fair value of derivatives and trading securities, a decrease in net interest income, and an increase in other expenses primarily related to an increase in voluntary contributions.

• **Net interest income/margin:** Net interest income was $540.3 million for the year ended December 31, 2025, $19.9 million lower than the prior year. The decline in net interest income was driven by the impact of lower short-term interest rates on fair value hedges, partially offset by higher average balances of interest-earning assets. Net interest margin decreased five basis points to 0.68 percent for the current year while net interest spread decreased one basis point to 0.43 percent between years. The margin decline reflects lower net interest income and changes in balance sheet composition and spreads.

**• Performance ratios:** Return on average equity decreased to 9.12 percent for the current year compared to 10.8 percent for the prior year. The decrease reflects lower net income and higher average balance of capital stock resulting from increased advance utilization.

**<u>Financial Market Trends</u>**

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.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*General discussion of the level of market interest rates:*

Table 4 presents selected market interest rates as of the dates or for the periods shown.

**<u>Table 4</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Market Instrument** | **2025** | **2024** | **2025** | **2024** |
| **Market Instrument** | **Average Rate** | **Average Rate** | **Ending Rate** | **Ending Rate** |
| SOFR<sup>1</sup> | 4.24% | 5.15% | 3.87% | 4.49% |
| Federal funds effective rate<sup>1</sup> | 4.21 | 5.15 | 3.64 | 4.33 |
| Federal Reserve interest rate on reserve balances<sup>1</sup> | 4.27 | 5.21 | 3.65 | 4.40 |
| 3-month U.S. Treasury bill<sup>1</sup> | 4.15 | 5.10 | 3.63 | 4.32 |
| 2-year U.S. Treasury note<sup>1</sup> | 3.82 | 4.38 | 3.47 | 4.24 |
| 5-year U.S. Treasury note<sup>1</sup> | 3.92 | 4.13 | 3.73 | 4.38 |
| 10-year U.S. Treasury note<sup>1</sup> | 4.29 | 4.21 | 4.17 | 4.57 |
| 30-year residential mortgage note rate<sup>1,2</sup> | 6.68 | 6.80 | 6.32 | 6.97 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Source is Bloomberg.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Mortgage Bankers Association weekly 30-year fixed-rate mortgage contract rate.

At the January 2026 meeting, the FOMC of the Federal Reserve held steady the target range for the federal funds rate at the range of 3.50 percent to 3.75 percent, in line with market expectations, noting elevated inflation and uncertainty about the economic outlook. Future adjustments to the target range for the Federal funds rate will depend on incoming data, the evolving outlook, and the balance of risks associated with adjustments to interest rates. The FOMC announced the December 1, 2025 conclusion of its securities reduction program and indicated the intention to reinvest Agency principal repayments into Treasury bills. In January 2026, the Trump administration directed Fannie Mae and Freddie Mac to purchase $200 billion of Agency MBS to help lower mortgage rates. These MBS purchases could affect our yields and spreads on mortgage loans and MBS.

We issue debt at a spread relative to U.S. Treasury security yields. As a result, the costs of issuing consolidated obligations and making advances are sensitive to interest rates. The cost of issuing short-term debt has declined with the decrease in market rates, and the continued high demand for short-term Agency debt has kept this spread to the comparable U.S. Treasury security relatively narrow. In May 2025, Moody's downgraded the long-term credit rating of the U.S. The downgrade was primarily due to concerns about the growing U.S. national debt and the increasing cost of servicing it. In turn, FHLBank's rating was also downgraded from Aaa to Aa1, with outlook changing from negative to stable.The downgrade by Moody's did not impact any current obligations of FHLBank or our members, nor did it have a material impact on our cost of funding, access to liquidity, financial condition or results of operations. Rating agency actions could result in disruptions in the capital markets, which could have an adverse impact on our cost of funds.

For further discussion of FHLBank debt, see this Item 7 – "Financial Condition – Consolidated Obligations."

**<u>Critical Accounting Policies and Estimates</u>**

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. Several of our accounting policies are inherently subject to valuation assumptions and other subjective assessments and are more critical than others in terms of their importance to results. Given the assumptions and judgment used, we have identified the accounting for derivatives and hedging activities as a critical accounting estimate. Our financial condition and results of operations could be materially affected under different conditions or different assumptions related to this accounting estimate.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Accounting for Derivatives and Hedging Activities, including Valuation of Derivatives and Hedged Items:* Derivative instruments are carried at fair value on the Statements of Condition. Any change in the fair value of a derivative is recorded each period in current period earnings or other comprehensive income (OCI), depending upon whether the derivative is designated as part of a hedging relationship and, if it is, the type of hedging relationship. Therefore, the assumptions and judgment most critical to the application of this accounting policy are those affecting the estimation of fair values of derivative instruments and the related hedged items, which may have a significant impact on the results reported. A majority of our derivatives are structured to offset some or all of the risk exposure inherent in our lending, mortgage purchase, investment, and funding activities. We seek to utilize hedging techniques that are effective under the hedge accounting requirements; however, in some cases, we have elected to enter into derivatives that are economically effective at reducing risk but do not meet hedge accounting requirements. The accounting framework introduces the potential for considerable income variability from period to period. Specifically, a mismatch can exist between the timing of income and expense recognition from assets or liabilities and the income effects of derivative instruments positioned to mitigate market risk and cash flow variability. Therefore, during periods of significant changes in interest rates and other market factors, reported earnings may exhibit considerable variability. At December 31, 2025, our derivatives portfolio included notional amounts of $41.3 billion accounted for as fair value hedges and $14.3 billion accounted for as economic hedges, the gross fair value of derivative assets and liabilities was $75.5 million and $98.0 million, respectively, and the net fair value of derivative assets and liabilities as of December 31, 2025 was $392.2 million and $0.6 million, respectively.

FHLBank bases the fair values of derivatives on market prices, when available. However, active markets do not exist for many of FHLBank's derivatives. Consequently, fair values for these instruments are generally estimated using standard valuation techniques such as discounted cash flow analysis, which uses observable market inputs, such as discount rates, forward interest rates, and volatility assumptions. Observable market inputs are actively quoted and can be validated to external sources. See Note <u>13</u> of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data" for discussion of the valuation methodologies and primary inputs used to develop the fair value measurement for these instruments.

A hedging relationship is created from the designation of a derivative financial instrument as hedging our exposure to changes in the fair value of a financial instrument. Fair value hedge accounting allows for the offsetting fair value of the hedged risk in the hedged item to also be recorded in current period earnings. Perfectly effective hedges that use interest rate swaps as the hedging instrument and that meet certain stringent criteria can qualify for "shortcut" fair value hedge accounting. Shortcut hedge accounting allows for the assumption of no ineffectiveness, which means that the change in fair value of the hedged item can be assumed to be equal to the change in fair value of the derivative.

For derivative transactions that potentially qualify for long haul fair value hedge accounting treatment, management must assess how effective the derivatives have been, and are expected to be, in hedging offsetting changes in the estimated fair values attributable to the risks being hedged in the hedged items. Quantitative hedge effectiveness testing is performed at the inception of the hedging relationship and on an ongoing basis for long haul fair value hedges. We perform testing at hedge inception based on regression analysis of the hypothetical performance of the hedging relationship using historical market data. We then perform regression testing on an ongoing basis using accumulated actual values in conjunction with hypothetical values. For the hedging relationship to be considered effective, results must fall within established tolerances. If the hedge fails effectiveness testing, the hedge no longer qualifies for hedge accounting and the derivative is marked to estimated fair value through current period earnings without any offsetting change in estimated fair value related to the hedged item.

For derivative instruments and hedged items that meet the requirements as described above and are designated as fair value hedges, we do not anticipate any significant impact on our financial condition or operating performance. For derivative instruments not qualifying for hedge accounting or with no identified hedged item (economic derivatives or economic hedges), changes in the market value of the derivative are reflected in income without any offset. This portfolio of economic derivatives consisted primarily of: (1) interest rate swaps hedging fixed-rate MBS and non-MBS trading investments; (2) interest rate caps hedging duration risk; (3) interest rate swaps hedging consolidated obligation discount notes with tenors less than six months; and (4) interest rate basis swaps hedging cost of funds. While the fair value of derivative instruments with no offsetting qualifying hedged item will fluctuate with changes in interest rates and the impact on our earnings can be material, the change in fair value of trading securities associated with economic hedges is expected to partially offset that impact. The estimated fair values of the derivatives and hedged items do not have any cumulative economic effect if the derivative and the hedged item are held to maturity, or contain mutual optional termination provisions at par. Since these fair values fluctuate throughout the hedge period and eventually return to zero (derivative) or par value (hedged item) on the maturity or option exercise date, the earnings impact of fair value changes is only a timing issue for hedging relationships that remain outstanding to maturity or the call termination date. See Tables 41 and 42 under Item 7A – "Quantitative and Qualitative Disclosures About Market Risk," which present the notional amount and fair value amount for derivative instruments by hedged item, hedging instrument, hedging objective, and accounting designation. See Tables 10 through 12 under this Item 7, which show the relationship of gains/losses on economic hedges and gains/losses on the trading securities being hedged by economic derivatives. Our projections of changes in fair value of the derivatives have been consistent with actual results.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

See Note 1 and Note 6 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data" for additional discussion of accounting for derivatives and types of hedging transactions.

**<u>Results of Operations</u>**

Table 5 presents changes in the major components of our net income (dollar amounts in thousands):

**<u>Table 5</u>**

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| | | |
|:---|:---|:---|
| | **Increase (Decrease) in Earnings Components** | **Increase (Decrease) in Earnings Components** |
| | **2025 vs. 2024** | **2025 vs. 2024** |
| | **Dollar Change** | **Percentage Change** |
| Total interest income | $(471819) | (11.5)% |
| Total interest expense | (451874) | (12.7) |
| Net interest income | (19945) | (3.6) |
| Provision (reversal) for credit losses on mortgage loans | 1608 | 98.3 |
| Net interest income after mortgage loan loss provision | (21553) | (3.8) |
| Net gains (losses) on trading securities | (11332) | (66.8) |
| Net gains (losses) on derivatives | (10185) | (181.7) |
| Other non-interest income | (1215) | (8.3) |
| Total other income (loss) | (22732) | (61.2) |
| Operating expenses | 410 | 0.5 |
| Voluntary housing and community investment program contributions | 12606 | 76.4 |
| Other non-interest expenses | 1792 | 9.4 |
| Total other expenses | 14808 | 12.5 |
| AHP assessments | (5891) | (12.2) |
| *NET INCOME* | $(53202) | (12.3)% |

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Net income decreased $53.2 million to $379.5 million for the year ended December 31, 2025 compared to $432.7 million for the year ended December 31, 2024 primarily attributed to fluctuations in the fair value of derivatives and trading securities, a decrease in net interest income, and an increase in other expenses, as discussed in greater detail below.

*Net Interest Income*: Net interest income decreased $19.9 million, or 3.6 percent, to $540.3 million for the year ended December 31, 2025 compared to $560.2 million for the year ended December 31, 2024. Net interest income and net interest margin are impacted by balance sheet composition, market interest rates and trends, and net interest spread.

The decline in net interest income from 2024 to 2025 was driven primarily by lower short-term interest rates and hedging adjustments on fair value hedges, partially offset by an increase in the average balance of interest-earning assets. The average balance of advances increased, although spreads declined as members shifted to short-term and adjustable rate products, which are generally lower-spread than regular fixed rate advances. The average balance of long-term investments also increased, but yields and spreads declined due to lower short-term interest rates, hedging adjustments, and increased premium amortization. The average balance of mortgage loans increased between periods, and the average yield and spread improved due to purchases of loans at rates higher than the existing portfolio and lower premium amortization compared to the prior year.

Net interest margin decreased five basis points during 2025 compared to 2024, from 0.73 percent for the year ended December 31, 2024 to 0.68 percent for the year ended December 31, 2025 (see Table 6). Net interest spread, which represents the difference between the yield on interest-earning assets and the average cost of funding, was relatively unchanged between periods, declining one basis point from 0.44 percent to 0.43 percent. This decrease reflects the decline in short-term interest rates, largely offset by changes in debt composition between periods. For further discussion of investments, advances and mortgage loans, see "Financial Condition" under this Item 7.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 6 presents average balances and yields of major earning asset categories and the sources funding those earning assets (dollar amounts in thousands):

**<u>Table 6</u>**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** | **2023** | **2023** | **2023** |
| | **Average<br>Balance** | **Interest<br>Income/Expense** | **Yield** | **Average<br>Balance** | **Interest<br>Income/Expense** | **Yield** | **Average<br>Balance** | **Interest<br>Income/Expense** | **Yield** |
| Interest-earning assets: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits | $2746415 | $116811 | 4.25% | $2774672 | $144639 | 5.21% | $2817399 | $143330 | 5.09% |
| &nbsp;&nbsp;Securities purchased under agreements to resell | 3392575 | 146126 | 4.31 | 2909262 | 153604 | 5.28 | 2391466 | 121367 | 5.08 |
| &nbsp;&nbsp;&nbsp;Federal funds sold | 4492370 | 192614 | 4.29 | 4637672 | 241903 | 5.22 | 4321685 | 221114 | 5.12 |
| &nbsp;&nbsp;Investment securities<sup>1,2</sup> | 14602860 | 734708 | 5.03 | 13695304 | 820796 | 5.99 | 11838703 | 644726 | 5.45 |
| &nbsp;&nbsp;Advances<sup>1,2</sup> | 45442029 | 2085756 | 4.59 | 44460023 | 2434890 | 5.48 | 46166703 | 2409840 | 5.22 |
| &nbsp;&nbsp;Mortgage loans<sup>3,4</sup> | 9169139 | 369976 | 4.03 | 8694716 | 322061 | 3.70 | 8080282 | 261352 | 3.23 |
| &nbsp;&nbsp;Other interest-earning assets | 37328 | 795 | 2.13 | 35232 | 712 | 2.02 | 50302 | 1430 | 2.84 |
| Total earning assets | 79882716 | 3646786 | 4.56 | 77206881 | 4118605 | 5.34 | 75666540 | 3803159 | 5.03 |
| Other non-interest-earning assets | 249153 |  |  | 280207 |  |  | 240099 |  |  |
| Total assets | $80131869 |  |  | $77487088 |  |  | $75906639 |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | $913792 | 36282 | 3.97 | $819721 | 40415 | 4.93 | $685032 | 32921 | 4.81 |
| &nbsp;&nbsp;Consolidated obligations<sup>1</sup>: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount Notes | 13653658 | 571976 | 4.19 | 17122493 | 888622 | 5.19 | 22070185 | 1102702 | 5.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds | 60571718 | 2496594 | 4.12 | 54600307 | 2627916 | 4.81 | 48159776 | 2206160 | 4.58 |
| &nbsp;&nbsp;&nbsp;Other borrowings | 46672 | 1660 | 3.55 | 44729 | 1433 | 3.20 | 46359 | 1325 | 2.86 |
| Total interest-bearing liabilities | 75185840 | 3106512 | 4.13 | 72587250 | 3558386 | 4.90 | 70961352 | 3343108 | 4.71 |
| Capital and other non-interest-bearing funds | 4946029 |  |  | 4899838 |  |  | 4945287 |  |  |
| Total funding | $80131869 |  |  | $77487088 |  |  | $75906639 |  |  |
| Net interest income and net interest spread<sup>5</sup> |  | $540274 | 0.43% |  | $560219 | 0.44% |  | $460051 | 0.32% |
| Net interest margin<sup>6</sup> |  |  | 0.68% |  |  | 0.73% |  |  | 0.61% |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Interest income includes prepayment/yield maintenance fees.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Credit enhancement income payments made to PFIs are netted against interest earnings on the mortgage loans. The expense related to these payments was $7.8 million, $7.2 million and $6.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans average balance includes outstanding principal for non-performing conventional loans. However, these loans no longer accrue interest.

<sup>5</sup>&nbsp;&nbsp;&nbsp;&nbsp;Net interest spread is the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

<sup>6</sup>&nbsp;&nbsp;&nbsp;&nbsp;Net interest margin is defined as net interest income as a percentage of average interest-earning assets.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

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 7 summarizes changes in interest income and interest expense (in thousands):

**<u>Table 7</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025 vs. 2024** | **2025 vs. 2024** | **2025 vs. 2024** | **2024 vs. 2023** | **2024 vs. 2023** | **2024 vs. 2023** |
| | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** |
| | **Volume**<sup>1,2</sup> | **Rate**<sup>1,2</sup> | **Total** | **Volume**<sup>1,2</sup> | **Rate**<sup>1,2</sup> | **Total** |
| Interest Income<sup>3</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits | $(1459) | $(26369) | $(27828) | $(2194) | $3503 | $1309 |
| &nbsp;&nbsp;Securities purchased under agreements to resell | 23290 | (30768) | (7478) | 27173 | 5064 | 32237 |
| &nbsp;&nbsp;&nbsp;Federal funds sold | (7377) | (41912) | (49289) | 16415 | 4374 | 20789 |
| &nbsp;&nbsp;&nbsp;Investment securities | 51841 | (137929) | (86088) | 107408 | 68662 | 176070 |
| &nbsp;&nbsp;&nbsp;Advances | 52734 | (401868) | (349134) | (90967) | 116017 | 25050 |
| &nbsp;&nbsp;&nbsp;Mortgage loans | 18168 | 29747 | 47915 | 20865 | 39844 | 60709 |
| &nbsp;&nbsp;&nbsp;Other assets | 44 | 39 | 83 | (366) | (352) | (718) |
| Total earning assets | 137241 | (609060) | (471819) | 78334 | 237112 | 315446 |
| Interest Expense<sup>3</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | 4303 | (8436) | (4133) | 6621 | 873 | 7494 |
| &nbsp;&nbsp;&nbsp;Consolidated obligations: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount notes | (162241) | (154405) | (316646) | (255367) | 41287 | (214080) |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds | 269560 | (400882) | (131322) | 305870 | 115886 | 421756 |
| &nbsp;&nbsp;&nbsp;Other borrowings | 64 | 163 | 227 | (48) | 156 | 108 |
| Total interest-bearing liabilities | 111686 | (563560) | (451874) | 57076 | 158202 | 215278 |
| Change in net interest income | $25555 | $(45500) | $(19945) | $21258 | $78910 | $100168 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;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.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;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.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Interest income/expense and average rates include the effect of associated derivatives that qualify for fair value hedge accounting treatment.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

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. For 2025, net interest income decreased $62.4 million due to the impact of fair value hedges compared to the prior year primarily due to decreases in short-term interest rates between periods. We expect reductions in net interest income in future periods due to hedging adjustments on maturing swapped Treasury securities. Tables 8 and 9 present the impact of derivatives and hedging activities recorded in net interest income (in thousands):

**<u>Table 8</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
| | **Advances** | **Investments** | **Mortgage Loans** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** | **Total** |
| Unrealized gains (losses) due to fair value changes | $(1853) | $22657 | $— | $(229) | $(388) | $20187 |
| Net amortization/accretion of hedging activities | 3452 | **—** | 650 |  | 404 | 4506 |
| Net interest received (paid) | 154474 | 131323 | **—** | (2613) | (114647) | 168537 |
| Price alignment amount<sup>1</sup> | (4022) | (6152) |  | 44 | (123) | (10253) |
| *TOTAL* | $152051 | $147828 | $650 | $(2798) | $(114754) | $182977 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.

**<u>Table 9</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2024** | **2024** | **2024** | **2024** | **2024** | **2024** |
| | **Advances** | **Investments** | **Mortgage Loans** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** | **Total** |
| Unrealized gains (losses) due to fair value changes | $4607 | $47706 | $— | $(1203) | $(1581) | $49529 |
| Net amortization/accretion of hedging activities | 3413 | **—** | 785 |  | 392 | 4590 |
| Net interest received (paid) | 296828 | 199032 | **—** | (6464) | (269467) | 219929 |
| Price alignment amount<sup>1</sup> | (13485) | (15425) |  | 248 | 23 | (28639) |
| *TOTAL* | $291363 | $231313 | $785 | $(7419) | $(270633) | $245409 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.

*Other Income:* The volatility in other income (loss) is driven by net gains (losses) on economic derivatives, which generally include interest rate swaps, caps and floors (see Tables 10 and 11). Net gains (losses) from derivatives are sensitive to: (1) the general level of interest rates; (2) interest rates across term structures; (3) swap spreads relative to the underlying index rate; and (4) implied volatilities of interest rates. The fair value of options - particularly interest rate caps and floors - are also impacted by the time value decay as the options approach maturity. This reflects the normal amortization of the option cost and occurs regardless of other factors influencing the option's fair value.

Net interest payments or receipts on economic derivatives flow through net gains (losses) on derivatives instead of net interest income, which does not reflect the economic impact of the swaps on yields. We generally record net unrealized gains on derivatives when the overall level of interest rates rises over the period and record net unrealized losses when the overall level of interest rates falls over the period.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Net Gains (Losses) on Derivatives:* Tables 10 and 11 present the earnings impact of derivatives by financial instrument as recorded in other non-interest income (in thousands):

**<u>Table 10</u>**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
| | **Advances** | **Investments** | **Mortgage Loans** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** | **Balance Sheet** | **Total** |
| Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Economic hedges – unrealized gains (losses) due to fair value changes | $(3283) | $(5203) | $— | $413 | $339 | $(3741) | $(11475) |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments |  |  | 2127 |  |  |  | 2127 |
| &nbsp;&nbsp;Economic hedges – net interest received (paid) | 2134 | 4809 |  | (1163) | (1005) | 63 | 4838 |
| &nbsp;&nbsp;Price alignment amount<sup>1</sup> | (50) | (2) |  | 15 | (32) |  | (69) |
| *Net gains (losses) on derivatives* | (1199) | (396) | 2127 | (735) | (698) | (3678) | (4579) |
| Net gains (losses) on trading securities hedged on an economic basis with derivatives |  | 5595 |  |  |  |  | 5595 |
| *TOTAL* | $(1199) | $5199 | $2127 | $(735) | $(698) | $(3678) | $1016 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.

**<u>Table 11</u>**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2024** | **2024** | **2024** | **2024** | **2024** | **2024** | **2024** |
| | **Advances** | **Investments** | **Mortgage Loans** | **Consolidated<br>Obligation Discount Notes** | **Consolidated<br>Obligation Bonds** | **Balance Sheet** | **Total** |
| Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Economic hedges – unrealized gains (losses) due to fair value changes | $591 | $(16667) | $— | $811 | $(571) | $(4030) | $(19866) |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments |  |  | (468) |  |  |  | (468) |
| &nbsp;&nbsp;&nbsp;Economic hedges – net interest received (paid) | 4283 | 23903 |  | (1027) | (2501) | 1620 | 26278 |
| &nbsp;&nbsp;Price alignment amount<sup>1</sup> | (207) | (123) |  | (1) | (7) |  | (338) |
| *Net gains (losses) on derivatives* | 4667 | 7113 | (468) | (217) | (3079) | (2410) | 5606 |
| Net gains (losses) on trading securities hedged on an economic basis with derivatives |  | 16871 |  |  |  |  | 16871 |
| *TOTAL* | $4667 | $23984 | $(468) | $(217) | $(3079) | $(2410) | $22477 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the interest amount on derivative collateral for which variation margin is characterized as a daily settled contract.

.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

For the years ended December 31, 2025 and 2024, net gains (losses) on derivatives resulted in other income of $(4.6) million and $5.6 million, respectively. The decrease between periods was attributed primarily to declines in net interest settlements resulting from changes in swap index rates for the years ended December 31, 2025 and 2024, respectively.

The fair value gains and losses on the economic interest rate swaps hedging the multifamily GSE MBS and GSE debentures were largely offset by the fair value gains and losses attributable to the associated securities for the years ended December 31, 2025 and 2024, which are recorded in net gains (losses) on trading securities as reflected in Table 12. Unrealized gains and losses on trading securities are generally driven by movements in intermediate interest rates between periods and are discussed in greater detail below.

**<u>Table 12</u>**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| | **Gains (Losses) on Derivatives** | **Gains (Losses) on Trading Securities** | **Net** | **Gains (Losses) on Derivatives** | **Gains (Losses) on Trading Securities** | **Net** |
| GSE debentures | $(179) | $116 | $(63) | $(5313) | $4446 | $(867) |
| GSE MBS | (5024) | 5479 | 455 | (11354) | 12425 | 1071 |
| *TOTAL* | $(5203) | $5595 | $392 | $(16667) | $16871 | $204 |

---

For additional detail regarding gains and losses on trading securities, see Table 13 and related discussion below.

See Tables 41 and 42 under Part I, Item 7A – "Quantitative and Qualitative Disclosures About Market Risk" for additional detail regarding notional and fair value amounts of derivative instruments.

*Net Gains (Losses) on Trading Securities:* Our trading portfolio is comprised primarily of fixed-rate multifamily GSE MBS, with a small percentage of variable-rate single-family GSE MBS. In general, the fixed-rate securities are related to economic hedges in the form of interest rate swaps that convert fixed rates to variable rates on the fixed-rate securities and the related economic hedges. The fair values of the fixed-rate multifamily GSE MBS are affected by changes in mortgage rates and credit spreads and are swapped on an economic basis to SOFR.

All unrealized gains and losses related to trading securities are recorded in other income (loss) as net gains (losses) on trading securities; however, only gains and losses relating to trading securities that are related to economic hedges are included in Table 12. Unrealized gains (losses) fluctuate as the fair value of our trading portfolio fluctuates. There are a number of factors that can impact the fair value of a trading security including the movement in interest rates, changes in credit spreads, the passage of time, and changes in price volatility. Table 13 presents the major components of the net gains (losses) on trading securities (in thousands):

**<u>Table 13</u>**

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
| Trading securities not hedged: |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS and GSE MBS | $35 | $91 |
| *Total trading securities not hedged* | 35 | 91 |
| Trading securities hedged on an economic basis with derivatives: |  |  |
| &nbsp;&nbsp;&nbsp;GSE debentures | 116 | 4446 |
| &nbsp;&nbsp;&nbsp;GSE MBS | 5479 | 12425 |
| *Total trading securities hedged on an economic basis with derivatives* | 5595 | 16871 |
| *TOTAL* | $5630 | $16962 |

---

The fair value fluctuations on the securities in the trading portfolio for the current periods reflect the changes in term Treasury and mortgage rates relative to the prevailing yields at the end of the prior year periods. In addition to interest rates and credit spreads, the value of these securities is affected by price convergence to par which results in a decrease in their current premium price (i.e., time decay).

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Other Expenses:* Other expenses, which includes compensation and benefits, other operating expenses and voluntary housing and community investment program contributions, increased $14.8 million for the year ended December 31, 2025. The increase is due primarily to increases in voluntary contributions in accordance with the planned increase in the annual amount committed to voluntary programs. In 2025, FHLBank committed at least $26.5 million, or five percent of its 2024 net income before assessments, to voluntary programs compared to $16.5 million contributed for the prior year. These voluntary contributions are in addition to the statutory AHP assessments under the Bank Act required to fund affordable housing initiatives. Voluntary housing and community investment program contributions are expensed in the period they are approved by the board of directors and/or awarded, which does not occur ratably throughout the year.

Table 14 provides the basis for the calculations of the statutory assessment and voluntary program contributions (dollar amounts in thousands):

**<u>Table 14</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **For Year Ended December 31,** | **For Year Ended December 31,** | **For Year Ended December 31,** |
| | **2024** | **2023** | **2022** |
| Net earnings base for calculation of voluntary program contribution commitment: |  |  |  |
| Net income | $432722 | $370467 | $240736 |
| 10 percent statutory assessment | 48101 | 41164 | 26749 |
| Mandatorily redeemable capital stock interest expense | 190 | 14 | 7 |
| Voluntary contribution expense | 16498 | 3000 |  |
| Net earnings | $497511 | $414645 | $267492 |
|  | **2025** | **2024** | **2023** |
| Statutory and voluntary calculated amounts: |  |  |  |
| Statutory AHP assessment (prior year expense) | $48101 | $41164 | $26749 |
| Voluntary contribution expense (current year expense) | 26194 | 14848 | 3000 |
| Voluntary AHP "make-whole" contribution<sup>1</sup> | 1650 |  |  |
| Total statutory assessments and voluntary contributions | $75945 | $56012 | $29749 |
| Statutory assessments and voluntary contributions as a percentage of net earnings | 15.3% | 13.5% | 11.1% |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Amount calculated as 11.1 percent of current year voluntary contribution expense beginning in 2024.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

The AHP competitive program provides direct grants or below-market interest rates on advances to members that provide the funds to assist in the purchase, construction, or rehabilitation of housing for very low-, low-, and moderate-income households. In addition to the competitive AHP program funds, our assessments also finance the HSP, which is part of our TurnKey suite of products. The programs offered under TurnKey are HSP, HSP+, and HOPE. These programs provide down payment, closing cost, and purchase-related repair assistance to very low-, low-, and moderate-income first-time households, including first-time households in High-Cost Areas and non-metropolitan Difficult Development Areas in our district and households in our district that traditionally do not receive assistance but require a subsidy to make homeownership accessible and affordable. The NAHI grant program provides Native American tribes and tribally designated housing entities in our district with access to grant funds intended to support housing for tribal members in our district. LEAP and MRRP are subsidized loan programs. For additional information on FHLBank's affordable housing and community development initiatives, refer to Item 1 - "Other Mission-Related Activities."

Table 15 provides fulfillment details of the voluntary contribution commitment by program (in thousands):

**<u>Table 15</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **For Year Ended December 31,** | **For Year Ended December 31,** | **For Year Ended December 31,** |
| | **2025** | **2024** | **2023** |
| Commitment fulfillment by program: |  |  |  |
| AHP statutory assessment: |  |  |  |
| &nbsp;&nbsp;AHP competitive funds | $30689 | $26756 | $17387 |
| &nbsp;&nbsp;HSP/HSP+ | 17412 | 14408 | 9362 |
| Total AHP | 48101 | 41164 | 26749 |
| Voluntary AHP "make-whole" contribution<sup>1</sup> | 1650 |  |  |
| Voluntary contribution programs: |  |  |  |
| &nbsp;&nbsp;&nbsp;MRRP | 8377 |  |  |
| &nbsp;&nbsp;&nbsp;HOPE | 5643 | 4266 |  |
| &nbsp;&nbsp;&nbsp;NAHI | 5000 | 5314 | 3000 |
| &nbsp;&nbsp;&nbsp;LEAP | 4908 |  |  |
| &nbsp;&nbsp;&nbsp;AHP Extra | 1918 | 4232 |  |
| &nbsp;&nbsp;Other | 348 | 1036 |  |
| Total voluntary contribution programs | $26194 | $14848 | $3000 |
| Total | $75945 | $56012 | $29749 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Amount calculated as 11.1 percent of current year voluntary contribution expense beginning in 2024.

Table 16 reconciles the voluntary contribution program amounts to the Statements of Income (dollar amounts in thousands):

**<u>Table 16</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **For Year Ended December 31,** | **For Year Ended December 31,** | **For Year Ended December 31,** |
| | **2025** | **2024** | **2023** |
| Voluntary housing and community investment program contribution expense: |  |  |  |
| Voluntary contribution expense | $26194 | $14848 | $3000 |
| Voluntary AHP "make-whole" contribution<sup>1</sup> | 2910 | 1650 |  |
| Total voluntary contribution expense on Statements of Income | $29104 | $16498 | $3000 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Amount calculated as 11.1 percent of current year voluntary contribution expense beginning in 2024.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**<u>Financial Condition</u>**

*Overall:* Table 17 presents the percentage concentration of the major components of our Statements of Condition:

**<u>Table 17</u>**

---

| | | |
|:---|:---|:---|
| | **Component Concentration** | **Component Concentration** |
| | **12/31/2025** | **12/31/2024** |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and due from banks | —% | —% |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold | 11.6 | 14.3 |
| &nbsp;&nbsp;&nbsp;Investment securities | 19.1 | 18.1 |
| &nbsp;&nbsp;&nbsp;Advances | 56.3 | 54.9 |
| &nbsp;&nbsp;&nbsp;Mortgage loans, net | 12.1 | 11.8 |
| &nbsp;&nbsp;&nbsp;Other assets | 0.9 | 0.9 |
| Total assets | 100.0% | 100.0% |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | 1.3% | 1.4% |
| &nbsp;&nbsp;&nbsp;Consolidated obligation discount notes, net | 27.5 | 19.0 |
| &nbsp;&nbsp;&nbsp;Consolidated obligation bonds, net | 65.2 | 73.6 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 0.6 | 0.6 |
| Total liabilities | 94.6 | 94.6 |
| Capital: |  |  |
| &nbsp;&nbsp;&nbsp;Capital stock outstanding | 3.2 | 3.5 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 2.3 | 2.1 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | (0.1) | (0.2) |
| Total capital | 5.4 | 5.4 |
| Total liabilities and capital | 100.0% | 100.0% |

---

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 18 presents changes in the major components of our Statements of Condition (dollar amounts in thousands):

**<u>Table 18</u>**

---

| | | |
|:---|:---|:---|
| | **Increase (Decrease)<br>in Components** | **Increase (Decrease)<br>in Components** |
| | **12/31/2025 vs. 12/31/2024** | **12/31/2025 vs. 12/31/2024** |
| | **Dollar<br>Change** | **Percent<br>Change** |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and due from banks | $(3846) | (15.0)% |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold | (1957286) | (18.0) |
| &nbsp;&nbsp;&nbsp;Investment securities | 1116890 | 8.1 |
| &nbsp;&nbsp;&nbsp;Advances | 2015459 | 4.8 |
| &nbsp;&nbsp;&nbsp;Mortgage loans, net | 401872 | 4.5 |
| &nbsp;&nbsp;&nbsp;Other assets | 30960 | 4.5 |
| Total assets | $1604049 | 2.1% |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | $(79468) | (8.0)% |
| &nbsp;&nbsp;&nbsp;Consolidated obligation discount notes, net | 6892254 | 47.8 |
| &nbsp;&nbsp;&nbsp;Consolidated obligation bonds, net | (5316772) | (9.5) |
| &nbsp;&nbsp;&nbsp;Other liabilities | 20126 | 3.8 |
| Total liabilities | 1516140 | 2.1 |
| Capital: |  |  |
| &nbsp;&nbsp;&nbsp;Capital stock outstanding | (121243) | (4.6) |
| &nbsp;&nbsp;&nbsp;Retained earnings | 155538 | 9.7 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | 53614 | (38.3) |
| Total capital | 87909 | 2.1 |
| Total liabilities and capital | $1604049 | 2.1% |

---

Total assets increased $1.6 billion between periods, from $75.9 billion at December 31, 2024 to $77.5 billion at December 31, 2025. The increase was driven by a $2.0 billion increase in advances and a $1.1 billion increase in long-term investments, offset by a $2.0 billion decrease in short-term liquidity investments. Asset composition remained relatively consistent between years, with advances continuing to comprise the largest asset on the balance sheet, increasing from 54.9 percent of total assets at December 31, 2024 to 56.3 percent at December 31, 2025.

Total liabilities increased $1.5 billion over the same period, consistent with the growth in assets, but the composition of debt shifted. Consolidated obligation bonds and discount notes represented 79.5 percent and 20.5 percent of total consolidated obligations, respectively, at December 31, 2024 compared to 70.3 percent and 29.7 percent at December 31, 2025. This shift reflects an increase in swapped fixed-rate non-callable discount notes and a decline in bonds.

Total capital increased $87.9 million, or 2.1 percent, from December 31, 2024 to December 31, 2025 primarily due to growth in retained earnings in excess of dividends paid, partially offset by a decrease in capital stock resulting from a decline in excess capital stock (see Table 36).

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Advances:* Advances are one of the primary ways we fulfill our mission of providing liquidity to our members and constituted the largest asset on our balance sheet at December 31, 2025 and 2024. Advance par value increased by $1.8 billion, or 4.3 percent, from $41.9 billion at December 31, 2024 to $43.7 billion at December 31, 2025 (see Table 19). Advance demand has remained strong among FHLBank membership, especially among large depository institutions and insurance companies. Increasing deposit balances and/or declining loan demand at depository members could soften advance demand in future periods. The composition of the advance portfolio remains concentrated in advances that either reprice or mature on a relatively short-term basis; overnight line of credit, adjustable-rate advances, and short-term fixed-rate advances were 61.2 percent of the portfolio at December 31, 2025 compared to 58.4 percent as of December 31, 2024. This increase is attributed primarily to growth of $2.5 billion, or 20.6 percent, in regular adjustable-rate advances and $1.5 billion, or 55.4 percent, in short-term fixed-rate advances, partially offset by a decline of $1.6 billion in overnight line of credit.

We elect to swap a significant portion of fixed-rate advances with longer maturities to short-term indices to synthetically create adjustable-rate advances to manage interest rate risk. When coupled with the volume of our short-term fixed-rate and adjustable-rate advances, advances that effectively reprice at least every three months represented 97.8 percent and 97.1 percent of our total advance portfolio as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, 59.3 percent and 62.8 percent, respectively, of our members carried outstanding advance balances. This shift in member activity in 2025, where fewer total members borrowed and large members increased borrowing, is typically a countercyclical occurrence seen in periods of economic uncertainty, tightening liquidity, and/or an upward sloping yield curve. Members have access to other wholesale funding sources, which may impact the demand for advances on the basis of relative cost.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 19 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.

**<u>Table 19</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| | **Dollar** | **Percent** | **Dollar** | **Percent** |
| *Line of Credit:* |  |  |  |  |
| &nbsp;&nbsp;Overnight line of credit<sup>1</sup> | $7190659 | 16.5% | $8829398 | 21.1% |
| *Adjustable-rate:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Standard advance products: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Regular adjustable-rate advances | 14391900 | 33.0 | 11931497 | 28.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustable-rate callable advances | 974350 | 2.2 | 983500 | 2.3 |
| &nbsp;&nbsp;&nbsp;Standard housing and community development advances: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustable-rate callable advances | 18535 |  | 20535 | 0.1 |
| Total adjustable-rate term advances | 15384785 | 35.2 | 12935532 | 30.9 |
| *Fixed-rate:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Standard advance products: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term fixed-rate advances<sup>2</sup> | 4130111 | 9.5 | 2658109 | 6.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Regular fixed-rate advances | 12514440 | 28.7 | 12944095 | 30.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate callable advances | 52572 | 0.1 | 48302 | 0.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate putable advances | 3362100 | 7.7 | 3095200 | 7.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate convertible advances |  |  | 20500 | 0.1 |
| &nbsp;&nbsp;&nbsp;Standard housing and community development advances: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Regular fixed-rate advances | 184270 | 0.4 | 234266 | 0.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate callable advances | 458 |  | 458 |  |
| Total fixed-rate term advances | 20243951 | 46.4 | 19000930 | 45.5 |
| *Amortizing:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Standard advance products: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate amortizing advances | 663998 | 1.5 | 900980 | 2.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate callable amortizing advances | 16080 |  | 16585 |  |
| &nbsp;&nbsp;&nbsp;Standard housing and community development advances: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate amortizing advances | 159289 | 0.4 | 179156 | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed-rate callable amortizing advances | 12249 |  | 13111 |  |
| Total amortizing advances | 851616 | 1.9 | 1109832 | 2.5 |
| *TOTAL PAR VALUE* | $43671011 | 100.0% | $41875692 | 100.0% |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents fixed-rate line of credit advances with daily maturities.

<sup>2&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents non-amortizing, non-prepayable loans with terms to maturity from 3 to 93 days.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 20 presents advances outstanding by borrower type (in thousands):

**<u>Table 20</u>**

---

| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Member advances: |  |  |
| &nbsp;&nbsp;&nbsp;Commercial banks | $14210697 | $15941387 |
| &nbsp;&nbsp;&nbsp;Savings institutions | 15584582 | 13119023 |
| &nbsp;&nbsp;&nbsp;Insurance companies | 10950586 | 9428930 |
| &nbsp;&nbsp;&nbsp;Credit unions | 2770672 | 3261314 |
| &nbsp;&nbsp;&nbsp;CDFIs | 20713 | 18404 |
| Total member advances | 43537250 | 41769058 |
| Non-member advances: |  |  |
| &nbsp;&nbsp;&nbsp;Housing associates | 68761 | 104634 |
| &nbsp;&nbsp;Non-member borrowers<sup>1</sup> | 65000 | 2000 |
| Total non-member advances | 133761 | 106634 |
| *TOTAL PAR VALUE* | $43671011 | $41875692 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Includes former members that have merged into or were acquired by non-members.

Table 21 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.

**<u>Table 21</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Borrower Name** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| **Borrower Name** | **Advance<br>Par Value** | **Percent of Total**<br>**Advance Par** | **Advance<br>Par Value** | **Percent of Total**<br>**Advance Par** |
| MidFirst Bank | $12620000 | 28.9% | $10125000 | 24.2% |
| United of Omaha Life Ins. Co. | 3204117 | 7.3 | 2747585 | 6.6 |
| BOKF, NA | 2700000 | 6.2 | 3000000 | 7.2 |
| Pacific Life Insurance Co. | 2289976 | 5.2 |  |  |
| Security Life of Denver Ins. | 1840000 | 4.2 | 2230000 | 5.3 |
| Capitol Federal Savings Bank |  |  | 2164488 | 5.2 |
| *TOTAL* | $22654093 | 51.8% | $20267073 | 48.5% |

---

Interest income from our five largest borrowers represented 54.0 percent and 57.7 percent advance interest income for the years ended December 31, 2025 and 2024, respectively.

*Prepayment Fees -* Advances are priced based on our marginal cost of issuing matched-maturity funding while considering our related administrative and operating costs, pricing on other funding alternatives available to members, and desired profitability targets. Advances with a maturity or repricing period greater than three months that do not include call features that can be exercised at the option of the member generally incorporate a fee sufficient to make us economically indifferent should the borrower decide to prepay the advance.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Letters of Credit -* We also issue letters of credit for members. Members must collateralize letters of credit in accordance with the same requirements as for advances. Letters of credit are generally issued or confirmed on behalf of a member to: (1) collateralize public unit deposits: (2) facilitate residential housing finance; (3) facilitate community lending; (4) manage assets/liabilities; or (5) provide liquidity or other funding. Outstanding letters of credit balances totaled $7.2 billion and $7.5 billion as of December 31, 2025 and 2024, respectively.

*Housing Associates -* We are permitted under the Bank Act to make advances to housing associates, which are non-members that are approved mortgagees under Title II of the National Housing Act. All outstanding advances to housing associates are to state housing finance authorities. Totals as of December 31, 2025 and 2024, which are noted in Table 20, represent less than one percent of total advance par values for each period presented.

*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 $0.5 billion between periods, from $8.9 billion at December 31, 2024 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, repayments and originations typically decline. Acquisition activity continues to outpace prepayments, attributable to the elevated interest rate environment and origination activity at larger average loan amounts. Net mortgage loans as a percentage of total assets increased 0.3 percent, from 11.8 percent as of December 31, 2024 to 12.1 percent as of December 31, 2025. The principal amount of new mortgage loans acquired and held on our balance sheet from our PFIs during the year ended December 31, 2025 was $1.4 billion.

As of December 31, 2025, our top five PFIs, in the aggregate, accounted for 19.7 percent of our mortgage loans held for portfolio, compared to 19.6 percent at December 31, 2024.

Future growth in the MPF portfolio is a function of asset size and composition. Most notably, growth in the balance of advances increases our total assets and capital level, which allows the balance of mortgage loans to increase while maintaining our targeted AMA risk tolerance. Other factors that may influence future growth in our mortgage loans held for portfolio include: (1) the level of interest rates and the shape of the yield curve; (2) the mortgage loan origination volume of current PFIs; (3) refinancing activity; (4) the relative competitiveness of MPF pricing to the prices offered by other buyers of residential mortgage loans; (5) a PFI's level of excess risk-based capital relative to the required risk-based capital charge associated with the PFI's CE obligations on MPF mortgage loans; and (6) the number of new and delivering PFIs.

Table 22 presents the unpaid principal balance of mortgage loans according to the amortization schedule based on the contractual terms of the loan (in thousands). Scheduled repayments are reported in the maturity category in which the payment is due. Prepayments may shorten the amortization period and late payments may extend the principal amortization of the late payments to the maturity date.

**<u>Table 22</u>**

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| | | |
|:---|:---|:---|
| **Redemption Term** | **12/31/2025** | **12/31/2024** |
| Due in one year or less | $322669 | $318200 |
| Due after one year through five years | 1339439 | 1309284 |
| Due after five years through fifteen years | 3505705 | 3375042 |
| Thereafter | 4114425 | 3875401 |
| *TOTAL UNPAID PRINCIPAL BALANCE* | $9282238 | $8877927 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 23 presents mortgage loan portfolio credit ratios and the components of the ratio calculation for the periods presented (dollar amounts in thousands):

**<u>Table 23</u>**

---

| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Average loans outstanding during the period, unpaid principal balance | $9095347 | $8618877 |
| Mortgage loans held for portfolio, unpaid principal balance | 9282238 | 8877927 |
| Nonaccrual loans, unpaid principal balance | 26766 | 24093 |
| Allowance for credit losses | 3566 | 4033 |
| Net (charge-offs) recoveries | (439) | 138 |
| Ratio of net charge-offs (recoveries) to average loans outstanding during the period | —% | —% |
| Ratio of allowance for credit losses to mortgage loans held for portfolio | 0.04% | 0.06 |
| Ratio of nonaccrual loans to mortgage loans held for portfolio | 0.29% | 0.27 |
| Ratio of allowance for credit losses to nonaccrual loans | 13.32% | 21.59 |

---

Two indications of credit quality are FICO scores and LTV ratios. FICO is a widely used credit industry indicator to assess borrower credit quality with scores typically ranging from 300 to 850 with the low end of the scale indicating greater credit risk. In February 2010, the MPF Program instituted a minimum FICO score of 620 for all conventional loans. Table 24 provides the percentage distribution of FICO scores at origination for conventional mortgage loans outstanding in our traditional MPF products:

**<u>Table 24</u>**

---

| | | |
|:---|:---|:---|
| **FICO Score**<sup>1</sup> | **12/31/2025** | **12/31/2024** |
| < 620 | 0.5% | 0.5% |
| 620 to < 660 | 3.8 | 3.9 |
| 660 to < 700 | 11.2 | 11.4 |
| 700 to < 740 | 20.1 | 19.9 |
| >= 740 | 64.4 | 64.3 |
|  | 100.0% | 100.0% |
| Weighted average | 750 | 750 |

---

**<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents the original FICO score of the lowest-scoring borrower for the related loan.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

LTV is a primary variable in credit performance. Generally, a higher LTV ratio means greater risk of loss in the event of a default and higher loss severity. As noted previously, the maximum LTV for conventional MPF loans is 95 percent, though AHP MPF mortgage loans may have LTVs up to 100 percent. Table 25 provides LTV ratios at origination for conventional mortgage loans outstanding in our traditional MPF products:

**<u>Table 25</u>**

---

| | | |
|:---|:---|:---|
| **LTV** | **12/31/2025** | **12/31/2024** |
| <= 60% | 14.1% | 14.8% |
| > 60% to 70% | 13.1 | 13.3 |
| > 70% to 80% | 49.1 | 49.5 |
| > 80% to 90% | 12.9 | 12.4 |
| > 90% to < 100% | 10.8 | 10.0 |
|  | 100.0% | 100.0% |
| Weighted average | 75.4% | 75.1% |

---

Our mortgage loans held in portfolio were dispersed across all 50 states and the District of Columbia as of December 31, 2025 and 2024. Table 26 is a summary of the geographic concentration percentage of our conventional mortgage loan portfolio by state, highlighting the top five states with the highest concentration.

**<u>Table 26</u>**

---

| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Kansas | 35.0% | 35.0% |
| Nebraska | 24.4 | 23.9 |
| Colorado | 10.9 | 11.0 |
| Oklahoma | 10.4 | 10.8 |
| Missouri | 2.4 | 2.3 |
| All other | 16.9 | 17.0 |
| *TOTAL* | 100.0% | 100.0% |

---

The credit risk of conventional mortgage loans sold under the traditional MPF products is managed by structuring potential credit losses into certain layers. Losses beyond the PMI layer are absorbed by a first loss account (FLA) established for each pool of mortgage loans sold by a PFI up to the maximum amount of the remaining FLA net of credit losses. As is customary for conventional mortgage loans, PMI is required for MPF loans with LTVs greater than 80 percent.

*Allowance for Credit Losses on Mortgage Loans Held for Portfolio –* The allowance for credit losses on mortgage loans decreased $467.0 thousand from December 31, 2024 to December 31, 2025. Delinquencies of conventional loans remained at low levels relative to the portfolio, at 1.3 percent and 1.1 percent of the amortized cost of total conventional loans at December 31, 2025 and December 31, 2024, respectively. We believe that policies and procedures are in place to effectively manage the credit risk on mortgage loans held for portfolio. See Note 5 of the Notes to Financial Statements under Item 8 for a summary of the allowance for credit losses on mortgage loans as well as payment status and other delinquency statistics for our mortgage loan portfolio.

*Investments:* Investments are used to manage interest rate and duration risk, enhance income, and provide liquidity and primary and secondary market support for the U.S. housing securities market. Long-term investment securities increased $1.1 billion from December 31, 2024 to December 31, 2025 due to an increase in multifamily agency commercial MBS. The liquidity portfolio decreased $2.0 billion from December 31, 2024 to December 31, 2025 relative to elevated liquidity balances in the prior year.

*Liquidity Portfolio –* Our liquidity portfolio is used to provide funds for our members, maintain liquidity, 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.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Within our portfolio of short-term liquidity investments, counterparty credit risk arises from unsecured exposures. Our short-term unsecured credit investments have maturities generally ranging from overnight to three months, and may include the following types:

*• Interest-bearing deposits.* Unsecured deposits that earn interest.

*• Federal funds sold.* Unsecured loans of reserve balances at the Federal Reserve Banks between financial institutions that are made on either an overnight or term basis, but typically made on an overnight basis.

*• Certificates of deposit.* Unsecured negotiable promissory notes issued by banks and payable to the bearer at maturity.

Table 27 presents the carrying value of our unsecured credit exposure with private counterparties by investment type (in thousands). 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.

**<u>Table 27</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Interest-bearing deposits | $1910110 | $2142391 |
| Federal funds sold | 2850000 | 3575000 |
| *TOTAL UNSECURED INVESTMENT CREDIT EXPOSURE*<sup>1</sup> | $4760110 | $5717391 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>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.

FHFA regulations include limits on the amount of unsecured credit an individual FHLBank may extend to a counterparty or to a group of affiliated counterparties. This limit is based on a percentage of eligible regulatory capital and the counterparty's overall credit rating. Under these regulations, the level of eligible regulatory capital is determined as the lesser of an individual FHLBank's total regulatory capital or the eligible amount of regulatory capital of the counterparty. The eligible amount of regulatory capital is then multiplied by a stated percentage. The percentage that an FHLBank may offer for term extensions of unsecured credit ranges from 1 percent to 15 percent based on the counterparty's internal credit rating. The calculation of term extensions of unsecured credit includes on-balance sheet transactions, off-balance sheet commitments and derivative transactions (derivative transactions cleared through a clearinghouse are excluded from the calculation and unsecured credit is limited with bilateral derivative counterparties due to the receipt of collateral based on zero collateral thresholds although there can be a lag between receipt and the calculation of exposure). See "Risk Management – Credit Risk Management" under this Item 7 for additional information related to derivative exposure.

FHFA regulation also permits us to extend additional unsecured credit for overnight extensions of credit. Our total overnight unsecured exposure to a counterparty may not exceed twice the regulatory limit for term exposures, or a total of 2 percent to 30 percent of the eligible amount of regulatory capital, based on the counterparty's credit rating. We generally limit our unsecured exposure to any private counterparty to no more than the balance of our retained earnings, even if the counterparty limit under the previously discussed calculation would be higher. As of December 31, 2025, we were in compliance with the regulatory limits established for unsecured credit, and our unsecured credit exposure to any individual non-member private counterparty (excluding GSEs) did not exceed the balance of our retained earnings on that date.

We are prohibited by FHFA regulation from investing in financial instruments issued by non-U.S. entities other than those issued by U.S. branches and agency offices of foreign commercial banks. Our unsecured credit exposures to U.S. branches and agency offices of foreign commercial banks include the risk that, as a result of political or economic conditions in a country, the counterparty may be unable to meet its contractual repayment obligations. Our unsecured credit exposures to domestic counterparties and U.S. subsidiaries of foreign commercial banks include the risk that these counterparties have extended credit to foreign counterparties. Throughout 2025, we were in compliance with the regulation and did not own any financial instruments issued by foreign sovereign governments.

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 December 31, 2025, all unsecured investments were rated as investment grade based on NRSROs (see Table 30).

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 28 presents the amount of our unsecured investment credit exposure by remaining contractual maturity and by the domicile of the counterparty or the domicile of the counterparty's parent for U.S. branches and agency offices of foreign commercial banks as of December 31, 2025 (in thousands). We also mitigate the credit risk on investments by purchasing instruments that have short-term maturities.

**<u>Table 28</u>**

---

| | |
|:---|:---|
| **Domicile of Counterparty** | **Overnight** |
| Domestic | $1910110 |
| U.S. Branches and agency offices of foreign commercial banks: |  |
| Australia | 1150000 |
| Austria | 500000 |
| &nbsp;&nbsp;Germany | 400000 |
| &nbsp;&nbsp;United Kingdom | 300000 |
| &nbsp;&nbsp;Canada | 250000 |
| &nbsp;&nbsp;Netherlands | 250000 |
| Total U.S. Branches and agency offices of foreign commercial banks | 2850000 |
| *TOTAL UNSECURED INVESTMENT CREDIT EXPOSURE*<sup>1</sup> | $4760110 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>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.

Unsecured credit exposure continues to be conservatively placed. In addition, we anticipate continued future investment in reverse repurchase agreements, which are secured investments. To enhance our liquidity position, we classify our unsecured short-term investment securities in our trading portfolio, which allows us to sell these securities if necessary.

*Long-term investments* – Our long-term investment portfolio consists primarily of GSE MBS and U.S. Treasury obligations. Our RMP restricts the acquisition of investments to highly rated long-term securities. Generally, fixed-rate U.S. Treasury obligations are classified as either trading securities and economically swapped to variable rates or classified as available-for-sale securities and swapped to variable rates in qualifying fair value hedging relationships. In addition to serving as excellent collateral, U.S. Treasury obligations also help satisfy regulatory liquidity requirements. We also purchase fixed-rate securities for interest rate risk management.

According to FHFA regulation, no additional MBS purchases may be made if the aggregate value of our MBS exceeds 300 percent of our regulatory capital. Further, quarterly increases in holdings of MBS are restricted to no more than 50 percent of regulatory capital. As of December 31, 2025, the aggregate value of our MBS portfolio represented 273 percent of our regulatory capital. We are below our regulatory threshold primarily due to an increase in regulatory capital despite increased MBS purchases in recent periods. We expect to be below our regulatory limit in the near-term but continue to remain opportunistic about future MBS purchases.

We provide stand by bond purchase agreements (SBPA) to two state HFAs within our district. For a predetermined fee, we accept an obligation to purchase the authorities' bonds if the remarketing agent is unable to resell the bonds to suitable investors, and to hold the bonds until: (1) the designated remarketing agent can find a suitable investor; (2) we successfully exercise our right to sell the bonds; or (3) the HFA repurchases the bonds according to a schedule established by the SBPA. The standby bond purchase commitments executed and outstanding as of December 31, 2025 expire no later than 2031 though they are renewable upon request of the HFA and at our option. Total principal commitments for bond purchases under the SBPAs were $1.2 billion and $1.0 billion as of December 31, 2025 and 2024, respectively. We were not required to purchase any bonds under these agreements during 2024 or 2025. We plan to continue supporting the state HFAs in our district by executing SBPAs where appropriate and when allowed by our RMP. In the future, we may acquire participation interests in SBPAs with other FHLBanks and/or directly enter into SBPAs with out-of-district HFAs with the permission of the in-district FHLBank.

*Major Security Types –* We classify investment securities as trading, held-to-maturity (HTM), or available-for-sale (AFS) at the date of acquisition. Trading securities are carried at fair value, generally for liquidity and/or asset/liability management purposes. Liquidity or other asset/liability management strategies may require periodic sale of these securities but they are not actively traded; most often, they are held until maturity or call date. Securities for which we have the ability and intent to hold to maturity are classified as held-to-maturity securities and recorded at carrying value, which is the net total of par, premiums, and discounts. Securities that are not classified as trading or HTM are classified as AFS and carried at fair value.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

See Note 3 of the Notes to Financial Statements under Item 8 of this annual 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 December 31, 2025 are summarized by security type in Table 29 (dollar amounts in thousands) with certain weighted average yield metrics along with carrying values as of December 31, 2024. 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.

**<u>Table 29</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2024** |
| | **Due in<br>one year<br>or less** | **Due after**<br>**one year**<br>**through five years** | **Due after**<br>**five years**<br>**through 10 years** | **Due after<br>10 years** | **Carrying<br>Value** | **Carrying<br>Value** |
| Trading securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;GSE debentures | $— | $— | $— | $— | $— | $17884 |
| &nbsp;&nbsp;&nbsp;GSE MBS |  | 73362 | 4241 | 3138 | 80741 | 422079 |
| *Total trading securities* |  | 73362 | 4241 | 3138 | 80741 | 439963 |
| Available-for-sale securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury obligations | 1578879 | 1571107 |  |  | 3149986 | 3237223 |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS |  |  |  | 60428 | 60428 | 77263 |
| &nbsp;&nbsp;&nbsp;GSE MBS | 58210 | 2837840 | 5605231 | 2801100 | 11302381 | 9718954 |
| &nbsp;&nbsp;&nbsp;State or local housing agency obligations |  |  | 34296 | 23660 | 57956 | 24179 |
| *Total available-for-sale securities* | 1637089 | 4408947 | 5639527 | 2885188 | 14570751 | 13057619 |
| Held-to-maturity securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;State or local housing agency obligations |  | 25615 |  |  | 25615 | 30895 |
| &nbsp;&nbsp;&nbsp;GSE MBS |  | 18971 | 4321 | 133899 | 157191 | 188931 |
| *Total held-to-maturity securities* |  | 44586 | 4321 | 133899 | 182806 | 219826 |
| *Total securities* | 1637089 | 4526895 | 5648089 | 3022225 | 14834298 | 13717408 |
| Interest-bearing deposits | 1910137 |  |  |  | 1910137 | 2142423 |
| Federal funds sold | 2850000 |  |  |  | 2850000 | 3575000 |
| Securities purchased under agreements to resell | 4150000 |  |  |  | 4150000 | 5150000 |
| *TOTAL INVESTMENTS* | $10547226 | $4526895 | $5648089 | $3022225 | $23744435 | $24584831 |
| Weighted average yields<sup>1</sup>: |  |  |  |  |  |  |
| Available-for-sale securities | 2.31% | 3.29% | 4.43% | 4.70% |  |  |
| Held-to-maturity securities | —% | 2.86% | 2.24% | 1.70% |  |  |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>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.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Securities Ratings –* Tables 30 and 31 present the carrying value of our investments by rating as of December 31, 2025 and 2024 (in thousands). The ratings presented are the lowest ratings available for the security, issuer, or counterparty based on NRSROs, where available. Some counterparties for collateralized overnight borrowing are not rated by an NRSRO because they are not issuers of debt or are otherwise not required to be rated by an NRSRO. We also utilize other credit quality factors when analyzing potential investments including, but not limited to, collateral performance, marketability, asset class or sector considerations, local and regional economic conditions, and/or the financial health of the underlying issuer.

**<u>Table 30</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> |
| | **Investment Grade** | **Investment Grade** | **Investment Grade** | **Unrated** | **Total** |
| | **Triple-A** | **Double-A** | **Single-A** | **Unrated** | **Total** |
| Interest-bearing deposits<sup>2</sup> | $— | $359628 | $1550509 | $— | $1910137 |
| Federal funds sold<sup>2</sup> |  | 1150000 | 1700000 |  | 2850000 |
| Securities purchased under agreements to resell<sup>3</sup> |  | 500000 | 1050000 | 2600000 | 4150000 |
| Investment securities: |  |  |  |  |  |
| Non-mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury obligations |  | 3149986 |  |  | 3149986 |
| &nbsp;&nbsp;State or local housing agency obligations | 83571 |  |  |  | 83571 |
| &nbsp;&nbsp;*Total non-mortgage-backed securities* | 83571 | 3149986 |  |  | 3233557 |
| Mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS |  | 60428 |  |  | 60428 |
| &nbsp;&nbsp;&nbsp;GSE MBS |  | 11540313 |  |  | 11540313 |
| &nbsp;&nbsp;&nbsp;*Total mortgage-backed securities* |  | 11600741 |  |  | 11600741 |
| *TOTAL INVESTMENTS* | $83571 | $16760355 | $4300509 | $2600000 | $23744435 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Investment amounts represent the carrying value and do not include related accrued interest receivable of $49.9 million at December 31, 2025.

<sup>2&nbsp;&nbsp;&nbsp;&nbsp;</sup>Amounts include unsecured credit exposure with overnight maturities.

<sup>3&nbsp;&nbsp;&nbsp;&nbsp;</sup>Amounts represent collateralized overnight borrowings.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**<u>Table 31</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> | **Carrying Value**<sup>1</sup> |
| | **Investment Grade** | **Investment Grade** | **Investment Grade** | **Unrated** | **Total** |
| | **Triple-A** | **Double-A** | **Single-A** | **Unrated** | **Total** |
| Interest-bearing deposits<sup>2</sup> | $— | $437032 | $1705391 | $— | $2142423 |
| Federal funds sold<sup>2</sup> |  | 1675000 | 1900000 |  | 3575000 |
| Securities purchased under agreements to resell<sup>3</sup> |  | 2500000 | 250000 | 2400000 | 5150000 |
| Investment securities: |  |  |  |  |  |
| Non-mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury obligations |  | 3237223 |  |  | 3237223 |
| &nbsp;&nbsp;&nbsp;GSE debentures |  | 17884 |  |  | 17884 |
| &nbsp;&nbsp;State or local housing agency obligations | 55074 |  |  |  | 55074 |
| &nbsp;&nbsp;*Total non-mortgage-backed securities* | 55074 | 3255107 |  |  | 3310181 |
| Mortgage-backed securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS |  | 77263 |  |  | 77263 |
| &nbsp;&nbsp;&nbsp;GSE MBS |  | 10329964 |  |  | 10329964 |
| &nbsp;&nbsp;&nbsp;*Total mortgage-backed securities* |  | 10407227 |  |  | 10407227 |
| *TOTAL INVESTMENTS* | $55074 | $18274366 | $3855391 | $2400000 | $24584831 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Investment amounts represent the carrying value and do not include related accrued interest receivable of $43.3 million at December 31, 2024.

<sup>2&nbsp;&nbsp;&nbsp;&nbsp;</sup>Amounts include unsecured credit exposure with overnight maturities.

<sup>3&nbsp;&nbsp;&nbsp;&nbsp;</sup>Amounts represent collateralized overnight borrowings.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 32 details interest rate payment terms for the carrying value of our investment securities as of December 31, 2025 and 2024 (in thousands). We generally manage the interest rate risk associated with our fixed-rate trading and available-for-sale securities by entering into interest rate swaps that convert the investment's fixed rate to a variable-rate index. For more information on our interest rate swaps, see Tables 41 and 42 under Part I, Item 7A – "Quantitative and Qualitative Disclosures About Market Risk."

**<u>Table 32</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Trading securities: |  |  |
| Non-mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed-rate | $— | $17884 |
| *Non-mortgage-backed securities* |  | 17884 |
| Mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed-rate | 73363 | 412977 |
| &nbsp;&nbsp;&nbsp;Variable-rate | 7378 | 9102 |
| *Mortgage-backed securities* | 80741 | 422079 |
| *Total trading securities* | 80741 | 439963 |
| Available-for-sale securities: |  |  |
| Non-mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed-rate | 3207942 | 3261402 |
| *Non-mortgage-backed securities* | 3207942 | 3261402 |
| Mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed-rate | 7200079 | 4996621 |
| &nbsp;&nbsp;&nbsp;Variable-rate | 4162730 | 4799596 |
| *Mortgage-backed securities* | 11362809 | 9796217 |
| *Total available-for-sale securities* | 14570751 | 13057619 |
| Held-to-maturity securities: |  |  |
| Non-mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Variable-rate | 25615 | 30895 |
| *Non-mortgage-backed securities* | 25615 | 30895 |
| Mortgage-backed securities: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed-rate | 10158 | 15915 |
| &nbsp;&nbsp;&nbsp;Variable-rate | 147033 | 173016 |
| *Mortgage-backed securities* | 157191 | 188931 |
| *Total held-to-maturity securities* | 182806 | 219826 |
| *TOTAL* | $14834298 | $13717408 |

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*Deposits:* Total deposits decreased 8.0 percent, from $1.0 billion at December 31, 2024 to $0.9 billion at December 31, 2025. Deposit programs are offered primarily to facilitate customer transactions with us, and all deposits are uninsured. Deposit products offered include demand and overnight deposits and short-term certificates of deposit. Deposits are typically in overnight or demand accounts that generally re-price daily based upon a market index such as the overnight Federal funds rate. The level of deposits is driven by member demand for deposit products, which in turn is a function of the liquidity position of members. Factors that influence deposit levels include turnover in member investment and loan portfolios, changes in members' customer deposit balances, changes in members' demand for liquidity, and our deposit pricing as compared to other short-term market rates. Declines in the level of deposits could occur during future periods if the level of member liquidity should decrease due to loan demand outpacing deposit funding growth at members, or if depositor investment options improve as interest rates change. Fluctuations in deposits have little impact on our ability to obtain liquidity. We historically have had stable and ready access to the capital markets through consolidated obligations and have been able to replace any reduction in deposits with similarly or even lower priced borrowings.

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Table 33 presents the average amount of and the annual rate paid on deposit types that exceed 10 percent of average deposits (dollar amounts in thousands).

**<u>Table 33</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
| | **Amount** | **Rate** | **Amount** | **Rate** | **Amount** | **Rate** |
| Overnight deposits | $450972 | 4.12% | $431285 | 5.06% | $332442 | 4.94% |
| Demand deposits | 411785 | 3.77 | 337443 | 4.71 | 306434 | 4.62 |

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*Consolidated Obligations:* Consolidated obligations are the joint and several debt obligations of the FHLBanks and consist of bonds and discount notes. Consolidated obligations represent the primary source of liabilities we use to fund advances, mortgage loans and investments. We use debt with a variety of maturities and option characteristics to manage our interest rate risk profile. For further discussion, see Item 7A – "Quantitative and Qualitative Disclosures About Market Risk." We make extensive use of derivative transactions, executed in conjunction with specific consolidated obligation debt issues, to synthetically structure funding terms and costs.

Fixed-rate bonds are generally used to fund fixed-rate advances, mortgage loans and investments. To the extent that bonds are funding variable-rate assets, we typically either issue bonds that have variable rates matching the variable-rate asset index or utilize an interest rate swap to alter the fixed-rate bonds' characteristics to match the assets' index. Additionally, we often use variable-rate, fixed-rate, or complex consolidated obligation bonds that are swapped or indexed to SOFR or Federal funds effective rate to fund short-term advances and money market investments and/or as a liquidity risk and interest-rate risk management tool.

Discount notes are primarily used to fund: (1) shorter-term advances or adjustable-rate advances with indices and resets based on our short-term cost of funds; and (2) investments with maturities of three months or less. However, we sometimes use discount notes to fund longer-term assets, including fixed-rate assets, variable-rate assets, assets swapped to synthetically create variable-rate assets and short-term anticipated cash flows generated by longer-term fixed-rate assets.

Table 34 presents the carrying value of consolidated obligation bonds and discounts notes as of December 31, 2025 and 2024 (in thousands).

**<u>Table 34</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Bonds: |  |  |
| &nbsp;&nbsp;Par value | $50607725 | $56060550 |
| &nbsp;&nbsp;Premiums | 9679 | 12044 |
| &nbsp;&nbsp;Discounts | (3530) | (3054) |
| &nbsp;&nbsp;Concession fees | (12540) | (12085) |
| &nbsp;&nbsp;Hedging adjustments | (53600) | (192949) |
| *Total bonds* | 50547734 | 55864506 |
| Discount Notes: |  |  |
| &nbsp;&nbsp;Par value | 21450283 | 14518446 |
| &nbsp;&nbsp;Discounts | (142095) | (101891) |
| &nbsp;&nbsp;Concession fees | (342) | (345) |
| &nbsp;&nbsp;Hedging adjustments | 1455 | 837 |
| *Total discount notes* | 21309301 | 14417047 |
| *TOTAL* | $71857035 | $70281553 |

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Total consolidated obligations increased $1.6 billion, or 2.2 percent, from December 31, 2024 to December 31, 2025, consistent with the growth in total assets. The distribution between consolidated obligation bonds and discount notes shifted between periods, from 79.5 percent and 20.5 percent, respectively, at December 31, 2024 to 70.3 percent and 29.7 percent at December 31, 2025, respectively. The shift was driven primarily by an increase in discount notes and a decrease in short-term variable-rate and swapped callable bonds.

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Callable bonds outstanding declined from $17.0 billion at December 31, 2024 to $15.6 billion at December 31, 2025 primarily due to calls or maturities of swapped callable bonds. Callable bonds are typically fixed or structured rate debt that pay higher coupons because of the optionality held by the issuer. When a swap is called by the counterparty in a swapped callable bond transaction, we typically call the hedged bond. Callable bonds provide flexibility to replace the bonds at lower costs if interest rates decline.

Our funding mix generally is driven by asset composition; however, we may also adjust our debt composition in response to market conditions that impact the cost of unswapped consolidated obligations and the cost of consolidated obligations swapped or indexed to SOFR or Federal funds effective rate. For additional information on market trends impacting the cost of issuing debt, see "Financial Market Trends", "Liquidity and Capital Resources – Liquidity – Sources of Liquidity" and "Risk Management – Interest Rate Risk Management" under this Item 7. For a discussion on yields and spreads, see Table 6 under this Item 7. For further discussion of how our portfolio of unswapped callable bonds impacted interest rate risk, see Item 7A – "Quantitative and Qualitative Disclosures About Market Risk."

We often execute derivatives concurrently with the issuance of consolidated obligations to create synthetic variable-rate debt at a cost that is lower than alternative funding sources and comparable variable-rate instruments issued directly by us. This approach modifies the characteristics of our liabilities to more closely align with the term and repricing profiles of our assets. Issuing consolidated obligations while simultaneously entering into derivatives enables us to more effectively fund our variable-rate and short-term fixed-rate assets and, in some cases, to offer a broader range of advances at more competitive terms than would otherwise be available.

Swapped consolidated obligation transactions rely on price relationships in both the FHLBank consolidated obligation market and the derivatives market, primarily the interest rate swap market. If conditions in these markets change, we may adjust the types or terms of the consolidated obligations issued and derivatives utilized to better align with asset characteristics, meet member needs, and improve funding costs.

Several recent developments have the potential to impact the demand for FHLBank consolidated obligations in 2026 and perhaps beyond. For a discussion of the impact of these recent developments, U.S. government programs, governmental regulation of commercial banks, and the financial markets on the cost of FHLBank consolidated obligations, see "Financial Market Trends" under this Item 7.

*Derivatives:* We use derivatives to reduce the interest-rate sensitivity of our assets and as part of our broader interest rate risk management strategy. Derivatives are used to adjust the interest rate sensitivity of consolidated obligations so that it more closely aligns with that of our assets, including advances, investments and mortgage loans. We also use derivatives to manage embedded options in assets and liabilities; to hedge the market value of existing assets, liabilities, and anticipated transactions; to hedge the duration risk of prepayable instruments; to mitigate earnings volatility arising from contractions or extensions of certain assets (such as advances and mortgage assets) and liabilities, and to reduce funding costs, as discussed below.

We generally designate derivatives as fair value hedges of underlying financial instruments or firm commitments. We also utilize economic hedges - derivatives that hedge specific or non-specific underlying assets, liabilities, or firm commitments but do not qualify for hedge accounting - when permitted under our RMP as part of our asset/liability management strategy.

All derivatives are marked to fair value with any associated accrued interest, and netted by clearing agent by clearinghouse or by counterparty and offset by the fair value of any swap cash collateral received or delivered where the legal right of offset has been determined, and included on the Statements of Condition as an asset when there is a net fair value gain or as a liability when there is a net fair value loss. Fair values of our derivatives primarily fluctuate as the swap interest rate curves fluctuate. Other factors such as implied price/interest rate volatility, the shape of the above interest rate curves and time decay can also drive the market price for derivatives.

The notional amount of total derivatives outstanding increased $3.7 billion between periods, at $52.0 billion at December 31, 2024 and $55.7 billion at December 31, 2025 primarily due to increases in interest rate swaps hedging discount notes and available-for-sale MBS, partially offset by decreases in interest rate caps hedging duration and convexity and interest rate swaps hedging bonds. These changes correspond with the changes in balance sheet composition as previously discussed. For additional information regarding the types of derivative instruments and risks hedged, see Tables 41 and 42 under Item 7A – "Quantitative and Qualitative Disclosures About Market Risk."

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**<u>Liquidity and Capital Resources</u>**

We maintain high levels of liquidity to support our mission of serving as a reliable and cost-effective funding source for our members and housing associates. In doing so, we also comply with minimum liquidity requirements established by FHFA regulations and guidance, as well as policies established by management and our board of directors. Our structure as a member-owned cooperative allows us to manage the levels of our assets, liabilities, and capital 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.

*Sources and Uses of Liquidity* – A primary source of our liquidity is the issuance of consolidated obligations. Capital markets have traditionally treated FHLBank obligations as U.S. government agency debt, and as a result - even though the U.S. government does not guarantee FHLBank debt - we generally have stable access to funding at relatively favorable spreads to U.S. Treasury rates. 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 the payment of principal and interest on all consolidated obligations.

Our uses of liquidity include repaying called and maturing consolidated obligations for which we are the primary obligor, funding advances, and purchasing investments and mortgage loans. We also use liquidity to repay member deposits, pledge collateral to derivative counterparties, and redeem or repurchase capital stock.

Our other sources of liquidity include 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 year ended December 31, 2025, proceeds from the issuance of bonds and discount notes (net of premiums and discounts) were $77.7 billion and $608.9 billion, respectively, compared to $70.2 billion and $610.5 billion for the year ended December 31, 2024. 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 volatility in the capital markets can impact the demand for and cost of debt issued by the FHLBanks.

Our liquidity portfolio consists of cash, certificates of deposit, short-term liquidity investments, and long-term investments with remaining maturities of one year or less. Short-term liquidity investments include Federal funds sold, interest-bearing demand deposits, and reverse repurchase agreements. The maturities of our short-term liquidity investments are structured to provide periodic cash flows to support our ongoing liquidity needs. Our liquidity portfolio decreased between periods, from $11.9 billion as of December 31, 2024 to $10.6 billion as of December 31, 2025.

Investment securities on our balance sheet are also a source of potential liquidity. U.S. Treasury obligations, GSE debentures, 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. We expect to maintain a sufficient level of liquidity for the foreseeable future.

During the year ended December 31, 2025, advance disbursements totaled $249.0 billion compared to $252.8 billion for the prior year period which reflects members transitioning from overnight line of credit to term adjustable rate advances. Periods with high short-term advance utilization typically have more frequent maturity and renewal activity, which results in higher cumulative disbursement and maturity amounts. Investment purchases (excluding overnight investments) totaled $2.9 billion in the year ended December 31, 2025 compared to $2.5 billion for the same period in 2024. Payments on maturing and retired consolidated obligation bonds and discount notes were $83.1 billion and $602.0 billion, respectively, for the year ended December 31, 2025 compared to $63.6 billion and $616.8 billion for the prior year period.

*Capital:* Total capital increased $87.9 million, or 2.1 percent, from December 31, 2024 to December 31, 2025 primarily due to an increase in retained earnings in excess of dividends paid, partially offset by a decrease in excess capital stock (see Table 36). We strive to manage our average capital ratio above our minimum regulatory and RMP requirements in an effort to ensure that we have the ability to issue additional consolidated obligations should the need arise. Excess capital capacity ensures we are able to meet the liquidity needs of our members and/or repurchase excess stock either upon the submission of a redemption request by a member or at our discretion for balance sheet or capital management purposes.

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Each member is required to hold capital stock to become and remain a member of FHLBank and enter into specified activities with FHLBank including, but not limited to, access to FHLBank's credit products and selling AMA to FHLBank. The amount of Class A Common Stock a member must acquire and maintain is the Asset-based Stock Purchase Requirement, which is currently equal to 0.1 percent of a member's total assets as of December 31 of the preceding calendar year, with a minimum requirement of $1,000, and a maximum requirement of $500,000. The amount of Class B Common Stock a member must acquire and maintain is the Activity-based Stock Purchase Requirement, which is currently equal to 4.5 percent of the principal amount of advances outstanding to the member plus 3 percent of the principal amount of AMA outstanding for members, limited to a maximum of 3.0 percent of the member's total assets at the end of the prior calendar year, plus 0.25 percent of letters of credit balances outstanding, less the member's Asset-based Stock Purchase Requirement.

Excess stock represents the amount of stock held by a member in excess of that institution's stock requirement, either due to a change to the capital plan or a change in activity levels. If our excess stock exceeds one percent of our total assets before or after the payment of a dividend in the form of stock, we would be prohibited by FHFA regulation from paying dividends in the form of stock. To manage excess stock balances, we may repurchase excess Class A Common Stock over FHLBank-established limits held by any individual member. Our current practices include periodic mandatory repurchases of excess Class A Common Stock and exchanging all excess Class B Common Stock over $50,000 per member for Class A Common Stock on a daily basis.

Under our cooperatively structured capital plan, our capital stock balances should fluctuate along with any growth or reduction in advance, AMA and letters of credit balances in future periods. Any repurchase of excess capital stock is at our discretion and subject to statutory and regulatory limitations, including remaining in compliance with all of our regulatory and internal capital requirements after any such discretionary repurchase.

The increase in retained earnings from December 31, 2024 to December 31, 2025 is attributed to the net income for the year of $379.5 million, exceeding the $224.0 million payment of dividends in 2025. Dividends decreased $2.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 as a result of lower dividend rates paid on both Class A Common Stock and Class B Common Stock. The JCE Agreement provides that we allocate at least 20 percent of our net income to a separate RRE Account until the balance of that account equals at least one percent of our average balance of outstanding consolidated obligations calculated as of the last day of each calendar quarter. As of December 31, 2025, our level of restricted retained earnings represented approximately 0.79 percent of average outstanding consolidated obligations. These restricted retained earnings are not available to pay dividends (see the discussion of our JCE Agreement and the amendment to our capital plan see Item 1 – "Capital, Capital Rules and Dividends.")

Our capital stock is not publicly traded. Members may request that we redeem any capital stock in excess of the stock purchase requirements, but any repurchase of excess capital stock prior to the end of the redemption period is at our discretion. See Item 1 – "Capital, Capital Rules and Dividends". All redemptions (at member request at the end of the redemption period) or repurchases (at our discretion, prior to the end of any applicable redemption period if made at a member's request) are made at the par value of $100 per share. Stock redemption periods are six months for Class A Common Stock and five years for Class B Common Stock, although we can, at our discretion, repurchase amounts over a member's minimum stock purchase requirements at any time prior to the end of the redemption periods as long as we will remain in compliance with our regulatory capital requirements after such repurchase. Ownership of our capital stock is concentrated within the financial services industry, and is stratified across various institutional entities as reflected in Table 35 as of December 31, 2025 and 2024 (dollar amounts in thousands):

**<u>Table 35</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** |
| | **Count** | **Amount** | **Count** | **Amount** |
| Commercial banks | 506 | $1044948 | 521 | $1273118 |
| Savings institutions | 20 | 728495 | 20 | 646513 |
| Credit unions | 91 | 227114 | 92 | 267123 |
| Insurance companies | 30 | 508272 | 29 | 443491 |
| CDFIs | 4 | 1533 | 4 | 1360 |
| Total GAAP capital stock | 651 | 2510362 | 666 | 2631605 |
| Mandatorily redeemable capital stock | 6 | 5836 | 5 | 3225 |
| *TOTAL REGULATORY CAPITAL STOCK* | 657 | $2516198 | 671 | $2634830 |

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Our activity-based stock purchase requirements are consistent with our cooperative structure; members' stock ownership requirements and the dollar amount of dividends paid to members generally increase as their activities with us increase. To the extent that a member's asset-based stock purchase requirement is insufficient to cover the member's activity-based stock purchase requirement, the member is required to purchase Class B Common Stock. We believe the value of our products and services is enhanced by dividend yields. Factors that affect members' willingness to enter into activity with us and purchase additional required activity-based stock include, but are not limited to, our dividend rates, the risk-based capital weighting of our capital stock, and alternative investment or borrowing opportunities available to our members.

Table 36 provides a summary of member capital requirements under our current capital plan as of December 31, 2025 and 2024 (in thousands):

**<u>Table 36</u>**

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| | | |
|:---|:---|:---|
| **Requirement** | **12/31/2025** | **12/31/2024** |
| Asset-based (Class A Common Stock only) | $188598 | $187495 |
| Activity-based (additional Class B Common Stock)<sup>1</sup> | 2128046 | 2030000 |
| *Total Required Stock*<sup>2</sup> | 2316644 | 2217495 |
| Excess Stock (Class A and B Common Stock) | 199554 | 417335 |
| *Total Regulatory Capital Stock*<sup>2</sup> | $2516198 | $2634830 |
| Activity-based Requirements*:* |  |  |
| Advances<sup>3</sup> | $1962101 | $1879698 |
| Letters of credit | 18050 | 18857 |
| AMA assets (mortgage loans)<sup>4</sup> | 277664 | 265301 |
| *Total Activity-based Requirement* | 2257815 | 2163856 |
| Asset-based Requirement (Class A Common Stock) not supporting member activity<sup>1</sup> | 58829 | 53639 |
| *Total Required Stock*<sup>2</sup> | $2316644 | $2217495 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;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.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes mandatorily redeemable capital stock.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Advances to housing associates have no activity-based requirements because housing associates cannot own FHLBank stock.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;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 Item 1 – "Capital, Capital Rules and Dividends" 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 11 of the Notes to Financial Statements under Item 8 for additional information and compliance as of December 31, 2025 and 2024.

*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 $224.0 million for the year ended December 31, 2025 compared to $226.6 million for the same period in the prior year. The weighted average dividend rate for the year ended December 31, 2025 was 8.65 percent which represented a dividend payout ratio of 59.0 percent compared to a weighted average dividend rate of 8.82 percent and a payout ratio of 52.4 percent for the year ended December 31, 2024. 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 December 2025 were based on income during the three months ended November 30, 2025. (See Part I, Item 1 – "Capital, Capital Rules and Dividends" for other factors that contribute to the level of dividends paid.)

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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 37 presents the dividend rates per annum paid on capital stock under our capital plan for the quarterly periods of 2025:

**<u>Table 37</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Applicable Rate per Annum** | **12/31/2025** | **09/30/2025** | **06/30/2025** | **03/31/2025** |
| Class A Common Stock | 4.00% | 4.25% | 4.25% | 4.50% |
| Class B Common Stock | 9.25 | 9.25 | 9.25 | 9.50 |
| Weighted Average<sup>1</sup> | 8.55 | 8.65 | 8.59 | 8.81 |
| *Dividend Parity Threshold:* |  |  |  |  |
| Average effective overnight Federal funds rate | 3.90% | 4.30% | 4.33% | 4.33% |
| Spread to index | (2.00) | (2.00) | (2.00) | (2.00) |
| *TOTAL (floored at zero percent)* | 1.90% | 2.30% | 2.33% | 2.33% |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;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.

Table 38 presents the dividend rates per annum paid on capital stock under our capital plan for the quarterly periods of 2024:

**<u>Table 38</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Applicable Rate per Annum** | **12/31/2024** | **09/30/2024** | **06/30/2024** | **03/31/2024** |
| Class A Common Stock | 4.75% | 4.75% | 4.75% | 4.75% |
| Class B Common Stock | 9.50 | 9.50 | 9.50 | 9.50 |
| Weighted Average<sup>1</sup> | 8.84 | 8.90 | 8.79 | 8.76 |
| *Dividend Parity Threshold:* |  |  |  |  |
| Average effective overnight Federal funds rate | 4.66% | 5.27% | 5.33% | 5.33% |
| Spread to index | (2.00) | (2.00) | (2.00) | (2.00) |
| *TOTAL (floored at zero percent)* | 2.66% | 3.27% | 3.33% | 3.33% |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;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.

*Off-Balance Sheet Arrangements:* In the ordinary course of business, we engage in financial transactions that, in accordance with GAAP, are not recorded on the Statements of Condition or may be recorded on the Statements of Condition in amounts that are different from the full contract or notional amount of the transactions. For more information on our off-balance sheet arrangements, see Note 14 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data."

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**<u>Risk Management</u>**

Active risk management continues to be an essential part of our operations and a key determinant of our ability to: (1) provide liquidity to our members at reasonable costs to them; (2) maintain the par value of members' capital stock; (3) repurchase or redeem members' capital stock; and (4) maintain earnings to return an acceptable dividend to our members and meet retained earnings thresholds. Proper identification, assessment and management of risks, complemented by adequate internal controls, enable our stakeholders to have confidence in our ability to meet our housing finance mission, serve our stockholders, earn a profit, compete in the industry, and sustain and prosper over the long term. We maintain comprehensive risk management processes to facilitate, control and monitor risk taking. Periodic reviews by internal and external auditors, FHFA examiners and independent consultants subject our practices to additional scrutiny, further strengthening the process.

We maintain an ERM program in an effort to enable the identification of all inherent significant risks to the organization and institute the prompt and effective management of any major risk exposures. Under this program, we perform annual risk assessments designed to identify and evaluate all material risks that could adversely affect the achievement of our performance objectives and compliance requirements. ERM is a process, effected by our board of directors, management and other personnel, applied in strategy setting and across FHLBank. It is designed to: (1) identify and evaluate potential risks or events that may affect FHLBank; (2) manage these risks to desired residual risk levels consistent with our Risk Appetite Statement; and (3) provide reasonable assurance regarding the achievement of FHLBank's strategic, operations, reporting and compliance objectives. Our ERM program is a structured and disciplined approach that aligns strategy, processes, people, technology and knowledge with the purpose of identifying, evaluating and managing the uncertainties we face as we create value. It is a continuous process of identifying, prioritizing, assessing and managing inherent enterprise risks (i.e., business, compliance, credit, liquidity, market and operations) before they become realized risk events.

Our Risk Philosophy Statement, approved by our board of directors, establishes the broad parameters we consider in executing our business strategy and represents a set of shared attitudes and beliefs that characterize how we consider risk in everything we do. Our Risk Appetite Statement, also approved by our board of directors, defines the level of risk exposure we are willing to accept or retain in pursuit of stakeholder value. We accept a measured and managed amount of market risk while seeking to manage our risk exposure to business, compliance, credit, liquidity and operations risk to a low residual risk level. While we consider our risk appetite first in evaluating strategic alternatives, defining and managing to a specific risk appetite does not ensure we will not incur greater than expected losses or be faced with an unexpected, catastrophic loss. By defining and managing to a specific risk appetite, our board of directors and senior management strive to ensure that there is a common understanding of our desired risk profile, which enhances the ability of both to make improved strategic and tactical decisions. Our monthly Risk Dashboard provides a holistic view of our risk profile and the means for reporting our key risk metrics as defined within our Risk Appetite Metrics document, which is also approved by our board of directors. The Risk Dashboard is intended to demonstrate, at an entity level, whether our enterprise risks are well controlled and normal operations are expected with standard board of directors' involvement.

As part of our ERM program, risk assessments are conducted with business units. We utilize a customized business unit risk assessment approach to ensure that: (1) risk assessments are completed annually for all of our business units; (2) effective internal controls and strategies are in place for managing the identified risks within the key processes throughout FHLBank; and (3) risk management or internal control weaknesses are properly identified with necessary corrective actions taken. The results of all risk assessments are summarized in an annual risk assessment report, which is reviewed by the SRMC, presented to the Risk Oversight Committee of the board of directors, and approved by the full board of directors. The annual risk assessment report keeps our board of directors apprised of any weaknesses in the current risk management process of each business unit and the steps taken by management to address any identified weaknesses.

Effective risk management programs include not only conformance to risk management best practices by management but also incorporate board of director oversight. As previously noted, our board of directors plays an active role in the ERM process by regularly reviewing risk management policies and approving aggregate levels of risk. Involvement by the board of directors in establishing risk tolerance levels, including oversight of the development and maintenance of programs to manage it, is substantial and reflects a high level of director fiduciary responsibility and accountability. In addition to establishing the formal Risk Philosophy Statement, Risk Appetite Statement, Risk Appetite Metrics and reviewing the annual and business unit risk assessment results, our board of directors reviews both the RMP and Member Products Policy at least annually. Various management committees, including the Executive Team, the SRMC, the Asset/Liability Committee, the Credit Underwriting Committee, the Market Risk Analysis Committee, the ORC, the Disclosure Committee, the Technology Committee, and the Model Risk Management Committee, oversee our risk management process. The following discussion highlights our different strategies to diversify and manage risk. For a separate discussion of market risk, see Item 7A – "Quantitative and Qualitative Disclosures About Market Risk".

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*Interest Rate Risk Management:* Interest rate risk is the risk that relative and absolute changes in interest rates may adversely affect an institution's financial condition and performance. The goal of an interest rate risk management strategy is not necessarily to eliminate interest rate risk, but to manage it by setting, and operating within, an appropriate framework and limits. We generally manage interest rate risk by acquiring and maintaining a portfolio of assets and liabilities and entering into related derivative transactions to limit the expected mismatches in duration and market value of equity (MVE) sensitivity. For additional information on interest rate risk measurement, see Part I, Item 7A – "Quantitative and Qualitative Disclosures About Market Risk."

*Credit Risk Management:* Credit risk is defined as the potential that a borrower or counterparty will fail to meet its financial obligations in accordance with agreed terms. We manage credit risk by following established policies, evaluating the creditworthiness of our counterparties, and utilizing collateral agreements and settlement netting for derivative transactions where enforceability of the legal right of offset has been determined. The most important step in the management of credit risk is the initial decision to extend credit. Continuous monitoring of counterparties is completed for all areas where we are exposed to credit risk, whether that is through lending, investing or derivative activities.

*Lending and AMA Activities* – Credit risk with members arises largely as a result of our lending and AMA activities, which includes members' CE obligations on conventional mortgage loans that we acquire through the MPF Program. We manage our exposure to credit risk on advances, letters of credit, and members' CE obligations on conventional mortgage loans through a combined approach that provides ongoing review of the financial condition of our members coupled with credit enhancement sufficiency analysis, investment grade determination, and prudent collateralization.

At the time an advance is originated, we are required to obtain and then to maintain a security interest in sufficient collateral of the borrower, which is eligible in one or more of the following categories:

▪ Fully disbursed, whole first mortgages on 1-4 family residential property or securities representing a whole interest in such mortgages;

▪ Securities issued and guaranteed or insured by the U.S. government, U.S. government agencies and mortgage GSEs including, without limitation, MBS issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae;

▪ Cash or deposits;

▪ Other acceptable real estate-related collateral, which includes privately issued collateralized mortgage obligations (CMO), mortgages on multifamily residential real property, second mortgages on 1-4 family residential property, and mortgages on commercial real estate; or

▪ In the case of any CFI, secured loans to small business, small farm and small agri-business or securities representing a whole interest in such secured loans.

For collateral to be eligible for acceptance, we must be able to determine that the collateral has a readily ascertainable market value, can be reliably discounted to account for liquidation and other risks, and is able to be liquidated in due course.

The Bank Act affords any security interest granted to us by any of our members, or any affiliate of any such member, priority over the claims and rights of any party, including any receiver, conservator, trustee, or similar party that has rights of a lien creditor. The only exceptions are claims and rights held by actual bona fide purchasers for value or by parties that are secured by actual perfected security interests, and provided that such claims and rights would otherwise be entitled to priority under applicable law. In addition, our claims are given certain preferences pursuant to the receivership provisions in the Federal Deposit Insurance Act. Most members provide us a blanket lien covering substantially all of the member's assets and their consent for us to file a financing statement evidencing the blanket lien. Based on the blanket lien, the financing statement and the statutory preferences, we normally do not take control of collateral, other than securities collateral, pledged by blanket lien borrowers. We take control of all securities collateral through delivery of the securities to us or to an approved third-party custodian. With respect to non-blanket lien borrowers (typically insurance companies, CDFIs, and housing associates), and given the interaction with certain state insurance laws with the Bank Act, we take control of all pledged collateral. If the financial condition of a blanket lien member warrants such action because of the deterioration of the member's financial condition, regulatory concerns about the member or other factors, we will take control of sufficient collateral intended to fully collateralize the member's indebtedness to us.

Since the FHLBank System was established in 1932, the U.S. has experienced a wide range of economic conditions, including periods of depression, recession, and expansion, but no degree of economic downturn has ever resulted in a credit loss on an advance. Even during the most recent financial crisis, which resulted in the failure of a number of member financial institutions, there were no credit losses on advances. In addition, the FHLBanks have never accepted collateral in satisfaction of an advance, but rather have been paid in full by an institution that assumes the advance, the FDIC, or some other receiver.

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As also provided in the Bank Act, a member's investment in our capital stock is held as additional collateral for the member's advances and other credit obligations (letters of credit, CE obligations, etc.). In addition, we can call for additional collateral or substitute collateral during the life of an advance or other credit obligation to protect our security interest.

Credit risk arising from AMA activities under our MPF Program falls into three categories: (1) the risk of credit losses on the mortgage loans represented in our FLA and last loss positions; (2) the risk that a PFI will not perform as promised with respect to its loss position provided through its CE obligations on conventional mortgage loan pools, which are covered by the same collateral arrangements as those described for advances; and (3) the risk that a third-party insurer [obligated under PMI or supplemental mortgage insurance (SMI) arrangements] will fail to perform as expected. Should a PMI third-party insurer fail to perform, it would increase our credit risk exposure because our FLA is the next layer to absorb credit losses on conventional mortgage loan pools. Likewise, if an SMI third-party insurer fails to perform, it would increase our credit risk exposure because it would reduce the participating member's CE obligation loss layer since SMI is purchased by PFIs to cover all or a portion of their CE obligation exposure for mortgage pools under certain MPF Program products. Credit risk exposure to third-party insurers to which we have PMI and/or SMI exposure is monitored on an ongoing basis and regularly reported to the board of directors. In addition, we perform a credit analysis of third-party PMI and SMI insurers. On an ongoing basis, we review trends that could identify changing risks within our mortgage loan portfolio for macro- and micro-economic environment-related issues, including adverse changes in credit characteristics (loan purpose, low FICO scores, high debt-to-income ratios, high LTV ratios, etc.) and/or various types of concentrations (geographic, high-balance loans, third-party originated, etc.). Based on the credit underwriting standards under the MPF Program and this ongoing review, we have concluded that the mortgage loans we hold would not be considered subprime.

*Investments* – Our RMP restricts the acquisition of investments to high-quality, short-term money market instruments and highly rated long-term securities. The short-term investment portfolio represents unsecured credit and reverse repurchase agreements. Counterparty ratings are monitored daily while performance and capital adequacy are monitored on a monthly basis in an effort to mitigate unsecured credit risk on our short-term liquidity investments. Collateral eligibility and transaction margin requirements on our reverse repurchase agreements are monitored daily. U.S. Treasury obligations and MBS securitized by Fannie Mae or Freddie Mac represent the majority of our long-term investments. Other long-term investments include MBS issued by Ginnie Mae, unsecured GSE debentures and collateralized state and local HFA securities.

*Derivatives* – We transact most of our derivatives with large banks and major broker-dealers. Over-the-counter derivative transactions may be either executed with a counterparty (uncleared derivatives) or with an executing broker and cleared through a Futures Commission Merchant (i.e., clearing agent) that acts on our behalf to clear and settle derivative transactions through a clearinghouse (cleared derivatives).

We are subject to credit risk due to the risk of nonperformance by counterparties to our derivative transactions. The amount of credit risk on derivatives depends on the extent to which netting procedures and collateral requirements are used and are effective in mitigating the risk. We manage this risk through credit analysis and collateral management. We are also required to follow the requirements set forth by applicable regulation.

*Uncleared Derivatives.* We are subject to non-performance by the counterparties to our uncleared derivative transactions. All bilateral security agreements with our non-member counterparties include bilateral collateral exchange provisions that require all credit exposures be collateralized, subject to a minimum transfer amount. As a result of these risk mitigation practices, we do not anticipate any credit losses on our uncleared derivative transactions as of December 31, 2025.

*Cleared Derivatives.* We are subject to nonperformance by the clearinghouse(s) and clearing agent(s). The requirement that we post initial and variation margin, through the clearing agent, to the clearinghouse, exposes us to institutional credit risk if the clearing agent or the clearinghouse fails to meet its obligations. The use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral or payments are posted daily for changes in the value of cleared derivatives through a clearing agent. We do not anticipate any credit losses on our cleared derivatives as of December 31, 2025.

We regularly monitor the exposures on our derivative transactions by determining the market value of positions using internal pricing models. The market values generated by the pricing model used to value derivatives are compared to dealer model results on a monthly basis to ensure that our derivative pricing model is reasonably calibrated to actual market pricing methodologies utilized by the dealers. In addition, we have our internal pricing model validated regularly by our model risk management team or an independent consultant. As a result of these risk mitigation initiatives, management does not anticipate any credit losses on our derivative transactions. For additional information on managing credit risk on derivatives, see Note 6 of the Notes to Financial Statements under Item 8.

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The contractual or notional amount of derivative transactions reflects our involvement in the various classes of financial instruments. The maximum credit risk with respect to derivative transactions is the estimated cost of replacing the derivative transactions if there are defaults, minus the value of any related collateral posted to satisfy the initial margin (if required). Our derivative transactions are subject to variation margin which is derived from the change in market value of the transaction and must be posted by the net debtor on demand. Cleared transactions are subject to initial margin as well as variation margin. The initial margin is intended to protect the clearinghouse against default of a customer. Initial margin is calculated to cover the potential price volatility of the derivative transaction between the time of the default and the assignment of the transaction to another clearing agent or termination of the transaction. Although the initial margin requirement should decrease over time as the duration and market volatility decrease, it remains outstanding for the life of the transaction; thus, it is possible that we could either have: (1) net credit exposure with a clearinghouse even if our net creditor position has been fully satisfied by the receipt of variation margin; or (2) net credit exposure with a clearinghouse despite being the net debtor (i.e., being in a liability position). In determining maximum credit risk, we consider accrued interest receivables and payables as well as the netting requirements to net assets and liabilities.

*Liquidity Risk Management:* Maintaining the ability to meet our obligations as they come due and to meet the credit needs of our members and housing associates in a timely and cost-efficient manner is the primary objective of managing liquidity risk. We seek to be in a position to meet the credit needs of our members, as well as our debt service and liquidity needs, without maintaining excessive holdings of low-yielding liquid investments or being forced to incur unnecessarily high borrowing costs.

We maintain daily liquidity levels above certain thresholds and consider hypothetical adverse scenarios. These thresholds are outlined in our internal policies and comply with federal statutes, FHFA regulations and other FHFA guidance not issued in the form of regulations. We remained in compliance with liquidity regulatory requirements throughout 2025.

FHFA regulations require us to always have at least an amount equal to our current deposits received from our members invested in obligations of the United States, deposits in eligible banks or trust companies, or advances with remaining maturities not exceeding five years. We were in compliance with these regulations at all times during the year ended December 31, 2025.

We generally maintained stable access to the capital markets throughout 2025. A Contingency Funding Plan allows us to maintain sufficient liquidity in the event of operational disruptions at FHLBank, the Office of Finance, or in the capital markets. For additional discussion of the market for our consolidated obligations and the overall market affecting liquidity see "Financial Market Trends" under this Item 7.

An entity's liquidity position is vulnerable to any rating, event, performance or ratio trigger (collectively called triggers) that would lead to the termination of the entity's credit availability or the acceleration of repayment of credit obligations owed by the entity. We have reviewed documents concerning our vulnerability to transactions that contain triggers to gain an understanding of the manner in which risks can arise from such triggers. Triggers adverse to us currently exist in agreements for uncleared derivative transactions and SBPAs. Our staff monitors triggers to properly manage any type of potential risks from triggers. For additional information regarding our credit exposure relating to derivative contracts, see Note 6 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data."

With respect to advances, letters of credit, and SBPAs, credit practices are impacted by certain triggers based on the member's or housing associate's financial performance (or the ratings of bonds underlying SBPAs) as defined in detail in our policies and/or the appropriate agreements. For collateral requirements designed for our credit products, see Notes 1, 4 and 14 in Item 8 – "Financial Statements and Supplementary Data – Notes to Financial Statements."

We have executed SBPAs with multiple state housing finance authorities. All of the SBPAs contain rating triggers beneficial to us providing that if the housing finance authority bonds covered by the SBPA are rated below investment grade (triple-B), we would not be obligated to purchase the bonds even though we were otherwise required to do so under the terms of the SBPA contract. In addition, some transactions also contain a provision that allows us to terminate our obligation to purchase these bonds under the SBPA upon 30 days prior written notice if the long-term rating on the underlying bonds were to be withdrawn, suspended or reduced below single-A. As of December 31, 2025, we were a party to, or participated in, 40 SBPAs with principal commitments of $1.2 billion. As of December 31, 2024, we were a party to, or participated in, 36 SBPAs with principal commitments of $1.0 billion. We were not required to purchase any bonds under any agreements during the years ended December 31, 2025 or 2024.

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*Business Risk Management:* Business risk is the risk of an adverse impact on our profitability resulting from external factors that may occur in both the short and long run. We manage business risk, in part, through a commitment to strategic planning and by having a strategic business plan in effect at all times that describes how the business activities will achieve our mission and also details the operating goals and strategic objectives for each major business activity. The Strategic Business Plan is intended to make transparent our strategic plans as well as the strategic planning process that helps formulate that plan. The Strategic Business Plan is augmented from time to time, at least annually, with appropriate research and analysis. The Strategic Business Plan provides a mechanism for management and the board of directors to be fully engaged in fulfilling their responsibilities for establishing our long-term strategic direction. Directors' knowledge of the external environment through their positions with member institutions in the financial services industry as well as a variety of other professions provides a strong experience base to complement the capabilities and competencies of management. Full development of the Strategic Business Plan, including tactical strategies and implementation, is delegated to management. We use planning scenarios to develop the Strategic Business Plan and we continue to refine and enhance the scenario planning process each year. We believe this process results in the development of robust and effective future scenarios, thereby enhancing the overall effectiveness of our strategic planning process and the development of risk strategies for each scenario. The board of directors plays a key role in the development of the Strategic Business Plan and regularly monitors progress in the achievement of business objectives. Two board of directors' meetings are set aside each year for strategic planning purposes.

To manage business and strategic risk, earnings simulations are conducted annually with estimated base-, best- and worst-case scenarios. These earnings simulations are based upon a set of assumptions developed for each of the three scenarios that consider factors such as: (1) the effects of changes in interest rates and spreads; (2) the balances of advances, mortgage loans, and investments; (3) operating expenses; and (4) capital management. The worst-case scenario assumptions typically include a pessimistic interest rate assumption, an overall decline in advance balances due to either declining economic factors, the loss of a large borrowing member due to merger or acquisition, or changes in mortgage volumes. We monitor key indicators tied to the various scenario assumptions and provide a monthly report to the Executive Committee and the board of directors. See Table 21 under this Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Advances" for advance concentration to the top five borrowers.

Business risk also includes political, reputation, and regulatory risk. Congress occasionally considers legislation that could have an impact on the housing GSEs, including the FHLBanks. Legislation has the power to impact our cost of funds and our cost of doing business. It could also limit or expand existing authorities or change the competitive balance among the FHLBanks and other housing GSEs. Consequently, we seek to: (1) positively influence legislative outcomes; (2) support, oppose, or comment on regulatory proposals; and (3) continually educate all stakeholders about our positive impact on the communities we serve. To manage these types of business risks, we maintain a Director of Government and Industry Relations position and work with lobbying firms in Washington, D.C. Additionally, we, along with the other 10 FHLBanks, partner with our Washington, D.C.-based trade association, the Council of FHLBanks, to ensure that the FHLBank System's common legislative and regulatory interests are served. More specifically, we promote the enactment of laws and regulations that are beneficial to FHLBank Topeka and our members, and we oppose detrimental laws and regulations. We also work to enhance awareness and understanding of the FHLBanks among Washington leaders, including members of Congress and their staff, Executive departments, regulators, trade associations, and the financial media.

For additional discussions of general business risk, legislative and regulatory business risk and strategic business risk, see Item 1A – "Risk Factors."

*Joint and Several Liability* - Although we are primarily liable for our portion of consolidated obligations (i.e., those issued on our behalf), we are also jointly and severally liable with the other FHLBanks for the payment of principal and interest on consolidated obligations of all the FHLBanks. For additional information regarding FHLBank's joint and several liability, see Item 1 – "Business – Debt Financing – Consolidated Obligations" and Note 8 of the Notes to Financial Statements under Item 8.

*Operations Risk Management:* Operations risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, or systems or from external events. This category of risk is inherent in our daily business activities and involves people, information technology (IT) systems, processes, and external events (including fraud, security incidents, and business disruptions). A number of strategies are used to manage and mitigate operations risk, including systems and procedures to monitor transactions and financial positions, segregation of duties, documentation of transactions, secondary reviews, comprehensive risk assessments conducted at the business unit level, and periodic reviews by our Internal Audit department. The ORC serves as the primary venue for overseeing all of our operations risk management initiatives and activities.

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*Human Error and Circumvention or Failure of Internal Controls and Procedures -* Employees play a vital role in implementing our risk management practices and strategies. We look to recruit, develop, promote, and retain high-quality employees by offering a fair and competitive compensation package and by providing a comfortable, secure and professional work environment in a cost-effective manner. To ensure our employees understand the importance of establishing and maintaining an effective internal control system, we maintain an Internal Control Policy which, in addition to defining internal control and describing the five interrelated components and underlying principles of FHLBank's internal control framework, outlines the objectives for our internal controls, establishes and delineates management's responsibilities for implementing and maintaining internal controls, and establishes the Internal Audit department as the business unit responsible for reviewing the adequacy of our internal controls. We have established and maintain an effective internal control system, guided by the Internal Control Policy, that addresses: (1) the establishment of strategies aligned with our mission and vision; (2) the efficiency and effectiveness of our activities; (3) the safeguarding of our assets: (4) the reliability, completeness and timely reporting of financial and management information (and the transparency of that information) to the board of directors and outside parties, including the Office of Finance, the SEC and the FHFA; and (5) compliance with applicable laws, regulations, policies, supervisory determinations and directives. The annual business unit risk assessment program serves to reinforce our focus on maintaining strong internal controls by identifying significant inherent risks and the internal controls and strategies used to mitigate those risks to acceptable residual risk levels. The business unit risk assessment program provides management and the board of directors with a thorough understanding of our risk management and internal control structure.

*Systems Malfunctions and Security Threats -* We rely heavily on IT systems and other technology to conduct our business. To manage operations risk as it relates to IT systems, we devote significant management attention and resources to technology. Our Technology Committee assists executive management in overseeing the development and implementation of significant technology strategies. The Technology Committee is also charged with providing strategic oversight of all technology-related activities, monitoring the strategic alignment and synchronization of IT services with our Strategic Business Plan (and our immediate and long-term goals and objectives), reviewing the operational health of IT systems, and reviewing new or anticipated projects related to our strategic initiatives. Protection of our information assets is also necessary to establish and maintain trust between us and our members, maintain compliance with applicable laws and regulations, and protect our reputation. Consequently, we maintain an enterprise-wide security program. The goal of our enterprise security program is to maintain a security framework such that: (1) physical and information assets are protected from unauthorized access, modification, disclosure and destruction; (2) integrity and confidentiality of information is maintained; (3) physical and information assets and information systems are available when needed; and (4) cybersecurity threats or other information security risks are identified, monitored, and addressed through our enterprise information security program. For additional information on cybersecurity and cybersecurity threats, see Item 1C – "Cybersecurity."

*Man-made or Natural Disasters -* We manage the risk of business disruption and systems failure due to man-made or natural disasters by having in place at all times a business resiliency plan, the purpose of which is to provide contingency plans for situations where operations cannot be carried out in their normal manner. We maintain an alternate data center that is geographically located far enough from our primary data center to reduce the possibility of both data centers being impacted by the same event. We also maintain an off-site business resumption center which includes computer equipment, office space, supplies, and other resources to allow our business partners to resume operations if our headquarters is inaccessible. Our on-site power generators support both the alternate data center and business resumption center in case of total power failure. Business partners may also resume operations by working remotely in situations where our headquarters is inaccessible. Comprehensive business resiliency exercises utilizing the alternate data center and business resumption center are conducted routinely and vary in scope and duration to simulate various types of disruptions. The disaster recovery plans are reviewed and updated annually. We also have a reciprocal back-up agreement in place with FHLBank Boston to provide short-term advances to our members on our behalf in the event that our facilities are inoperable. In the event that FHLBank Boston's facilities are inoperable, we have agreed to provide short-term liquidity advances to FHLBank Boston's members. We complete an annual test of this agreement with FHLBank Boston to ensure the process and related systems are functioning properly. We also maintain a funds transfer contingency agreement with FHLBank Boston that is tested annually and authorizes either FHLBank Topeka or FHLBank Boston to process wire transfers for the other during a contingency situation.

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*Internal or External Fraud -* Our Anti-Fraud Policy, which includes our Whistleblower Procedures, along with our Anti-Money Laundering Policy, forms the foundation of our Fraud Awareness Program. Our Fraud Awareness Program establishes our methodology or framework for preventing, detecting, deterring, reporting, remediating, and punishing suspicious activities, money laundering activities, dishonest activities, violations of the Code of Ethics and other fraudulent activities that could create risks for us or undermine the public's confidence in the integrity of our activities. Employees may submit good faith complaints or concerns regarding accounting or auditing matters, fraud concerns, potential wrongdoing or violations of applicable securities laws and regulations, or violations of the Commodity Exchange Act and relevant implementing regulations to management or our anonymous reporting service without fear of dismissal or retaliation of any kind. We are committed to achieving compliance with all applicable securities laws and regulations, the Commodity Exchange Act and relevant implementing regulations, accounting standards, accounting controls and audit practices. Decisions to prosecute or refer fraud investigation results to the appropriate law enforcement or regulatory agencies for independent investigation shall be made in conjunction with legal counsel and appropriate senior management, as will final decisions on disposition of the case.

**<u>Recently Issued Accounting Standards</u>**

For a discussion of recently issued accounting standards, see Note 2 of the Notes to Financial Statements under Item 8 – "Financial Statements and Supplementary Data".

**Item 7A: Quantitative and Qualitative Disclosures About Market Risk**

Market risk is the risk that changes in market value may adversely affect our financial condition and performance. Interest rate risk is a component of market risk and represents our most significant market risk exposure. Interest rate risk is the risk that the market value of our asset, liability, and derivative portfolios will be negatively impacted by interest rate volatility or that earnings will be affected significantly by interest rate changes. We manage interest rate risk through the characteristics of our portfolio of assets and liabilities and by using derivative transactions to limit duration mismatches and reduce MVE sensitivity. Matching the duration of assets with the duration of liabilities funding those assets is accomplished through the use of different debt maturities and embedded option characteristics, as well as the use of derivatives, primarily interest rate swaps, interest rate caps, and interest rate floors. Interest rate swaps increase the flexibility of our funding alternatives by providing cash flows or characteristics that might not be as readily available or cost-effective if obtained in the standard GSE debt market.

*Duration of Equity:* Duration of equity (DOE) aggregates the estimated sensitivity of market value for each of our financial assets and liabilities to changes in interest rates. A positive DOE results when the duration of assets and designated derivatives is greater than the duration of liabilities and designated derivatives, indicating a degree of interest rate risk exposure in a rising interest rate environment. A negative DOE results in the opposite scenario, indicating a degree of interest rate risk exposure in a declining interest rate environment. Higher DOE numbers, whether positive or negative, indicate greater volatility of market value in response to changing interest rates. A decline in market value does not necessarily translate directly into a decline in income, especially for entities that do not trade financial instruments. Changes in market value may indicate trends in income over longer periods, and knowing the sensitivity of our market value to changes in interest rates provides a measure of the interest rate risk we take.

Under the RMP, our base case DOE is generally limited to a range of ±5.0 assuming current interest rates. In addition, our DOE is generally limited to a range of ±7.0 assuming an instantaneous parallel increase or decrease in interest rates of 200 basis points. When DOE exceeds the limits established by the RMP, corrective actions taken may include: (1) the purchase of interest rate caps, interest rate floors, or other derivatives; (2) the sale of assets; or (3) the addition to the balance sheet of assets or liabilities having characteristics that are such that they counterbalance the excessive duration observed.

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Table 39 presents our DOE in the base and the up and down 200 basis point interest rate shock scenarios:

**<u>Table 39</u>**

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| | | | |
|:---|:---|:---|:---|
| **Duration of Equity** | **Duration of Equity** | **Duration of Equity** | **Duration of Equity** |
| **Date** | **Up 200 Basis Points** | **Base** | **Down 200 Basis Points** |
| 12/31/2025 | 1.5 | 1.6 | 0.5 |
| 09/30/2025 | 1.4 | 1.6 | 0.4 |
| 06/30/2025 | 1.5 | 1.4 | 0.5 |
| 03/31/2025 | 1.8 | 1.7 | 0.6 |
| 12/31/2024 | 2.0 | 1.9 | 0.7 |
| 09/30/2024 | 2.7 | 2.5 | 1.5 |
| 06/30/2024 | 2.7 | 2.4 | 1.5 |
| 03/31/2024 | 3.3 | 2.3 | 1.3 |

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The primary factors contributing to the net changes in duration from December 31, 2024 to December 31, 2025 were: (1) the relative change in interest rates and the relative level of mortgage rates during the period along with variable-rate CMOs and their effective cap levels; (2) the relative percent of total assets represented by the fixed-rate mortgage loan portfolio during the period; and (3) asset/liability actions taken by management throughout the period. The decrease in interest rates and the relative level of shorter-term interest rates during the period impacted the implied forward rates and the valuation of the variable-rate CMO investments with lower effective interest rate caps. To reduce the impact of the general duration changes from the variable-rate CMO investments with lower effective interest rate caps, stand-alone interest caps were purchased during 2024, leading to the less asset sensitive DOE level in the +200 interest rate shock scenario.

In addition, the relative changes in interest rates and mortgage rates during the period caused the mortgage loan portfolio contribution to duration to change more than the associated liabilities, contributing to the decrease in the asset sensitive DOE profile for all interest rate shock scenarios. The mortgage loan portfolio generally has a longer duration profile in the interest rate shock scenarios contributing to the asset-sensitive DOE. However, the prepayment sensitivity and market value changes in our mortgage portfolio currently align well with our non-swapped callable debt portfolio generating a relatively stable sensitivity profile in all interest rate shock scenarios.

The change in interest rates during the period generally shortens the duration profile for both the fixed-rate mortgage loan portfolio and the associated unswapped callable consolidated obligation bonds funding these assets. The increase in advances during the period generated a marginally greater contribution and an overall modest net duration profile change from the mortgage loan and unswapped callable bond portfolios. This behavior is expected since DOE is a market value weighted measure and as portfolio weightings change in relation to total market value of assets, the respective contributions increase or decrease to overall DOE. With the increase in our mortgage loan portfolio balance, the net impact was a slight increase as a percentage of total assets during this period, so the duration profile changed as expected as prepayments shifted slightly for both new production mortgage loans, as well as the outstanding fixed-rate mortgage loan portfolio.

To effectively manage these changes in the mortgage loan portfolio (including new production and prepaid loans) and related sensitivity to changes in market conditions, unswapped callable consolidated obligation bonds that either matured or were called were generally replaced with reissuance of unswapped callable consolidated obligation bonds with relatively long maturities and lock-out periods (generally six months and greater). Generally, changes in the profile of the liability portfolio correspond with the expected duration profile of the fixed-rate mortgage loans, all else being equal, and positions the balance sheet for future changes in rates, including changes in interest rate increases where the mortgage loan portfolio will likely lengthen in duration as expected prepayments slow. For further discussion of the call and reissuance of consolidated obligation bonds, see Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Consolidated Obligations." The combination of these factors contributed to the net DOE changes in all scenarios during the period.

Duration gap is the difference between the duration of our assets and the duration of our liabilities. Our base duration gap was 1.1 months and 1.2 months as of December 31, 2025 and 2024, respectively.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**<u>Market Value of Equity</u>**

MVE is the net value of our assets and liabilities. Estimating sensitivity of MVE to changes in interest rates is another measure of interest rate risk. The RMP measures our market value risk in terms of the MVE in relation to total regulatory capital stock outstanding (TRCS). TRCS includes all capital stock outstanding, including stock subject to mandatory redemption. As a cooperative, we believe using the TRCS results is an appropriate measure because it reflects our market value relative to the book value of our capital stock. Our RMP stipulates MVE shall not be less than: (1) 100 percent of TRCS under the base case scenario; or (2) 90 percent of TRCS under a ±200 basis point instantaneous parallel shock in interest rates. Table 40 presents MVE as a percent of TRCS. As of December 31, 2025, all scenarios are well above the specified limits and much of the relative level in the ratios during the periods covered by the table can be attributed to the relative level of the fixed-rate mortgage loan and associated funding portfolio market values along with the relative level of outstanding capital.

The MVE to TRCS ratios can be impacted by the market value of equity sensitivity and level of capital outstanding based on our capital management approach. The relative level of advance, mortgage loan, and letters of credit balances, which trigger required stock, and excess stock as of December 31, 2025 (see Table 36) contributed to the MVE levels as of December 31, 2025. These relationships and associated risk sensitivity primarily generate the changes in the MVE/TRCS levels and produce the changes in the ratios in all interest rate scenarios in the table below.

Generally, a positive duration position accompanied by rising interest rates would negatively impact the base market value of equity (numerator). Likewise, as capital increases, the MVE/TRCS ratio declines since the capital level is the denominator in the ratio. While the change in interest rates contributed to the overall impact on base MVE during the period, the changes were limited with the ratio maintaining relatively consistent levels in the base case and interest rate shock scenarios during the period.

**<u>Table 40</u>**

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| | | | |
|:---|:---|:---|:---|
| **Market Value of Equity as a Percent of Total Regulatory Capital Stock** | **Market Value of Equity as a Percent of Total Regulatory Capital Stock** | **Market Value of Equity as a Percent of Total Regulatory Capital Stock** | **Market Value of Equity as a Percent of Total Regulatory Capital Stock** |
| **Date** | **Up 200 Basis Points** | **Base** | **Down 200 Basis Points** |
| 12/31/2025 | 162 | 166 | 170 |
| 09/30/2025 | 155 | 159 | 162 |
| 06/30/2025 | 151 | 155 | 158 |
| 03/31/2025 | 153 | 158 | 161 |
| 12/31/2024 | 148 | 153 | 158 |
| 09/30/2024 | 148 | 156 | 161 |
| 06/30/2024 | 142 | 149 | 155 |
| 03/31/2024 | 147 | 155 | 161 |

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**<u>Detail of Derivative Instruments by Type of Instrument by Type of Risk</u>**

Various types of derivative instruments are utilized to mitigate the interest rate risks described in the preceding sections as well as to better match the terms of assets and liabilities. Tables 41 and 42 present the notional amount and fair value amount (fair value includes net accrued interest receivable or payable on the derivative) for derivative instruments by hedged item, hedging instrument, hedging objective and accounting designation (in thousands):

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**<u>Table 41</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| **Hedged Item** | **Hedging Instrument** | **Hedging Objective** | **Accounting Designation** | **Notional Amount** | **Fair Value Amount** |
| **Advances** | | | | | |
| Fixed-rate non-callable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index | Fair Value Hedge | $12426350 | $7991 |
| Fixed-rate putable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index and offset option risk in the advance | Fair Value Hedge | 3362100 | (23751) |
| Fixed-rate non-callable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index | Economic Hedge | 206658 | 780 |
| Firm commitment to issue a fixed-rate advance | Forward settling interest rate swap | Protect against fair value risk | Fair Value Hedge | 5665 | 16 |
| **Investments** |  |  |  |  |  |
| Fixed-rate non-MBS available-for-sale investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Fair Value Hedge | 3100000 | 1484 |
| Fixed-rate MBS available-for-sale investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Fair Value Hedge | 7145731 | 23437 |
| Fixed-rate MBS trading investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Economic Hedge | 74346 | 1235 |
| **Mortgage Loans Held for Portfolio** |  |  |  |  |  |
| Fixed-rate mortgage purchase commitments | Mortgage purchase commitment | Protect against fair value risk | Economic Hedge | 54782 | 118 |
| **Consolidated Obligation Discount Notes** |  |  |  |  |  |
| Fixed-rate non-callable consolidated obligation discount notes | Receive fixed, pay variable interest rate swap | Convert the discount note's fixed rate to a variable rate | Economic Hedge | 12228449 | (71) |
| Fixed-rate non-callable consolidated obligation discount notes | Receive fixed, pay variable interest rate swap | Convert the discount note's fixed rate to a variable rate | Fair Value Hedge | 5412035 | (53) |
| Firm commitment to issue consolidated obligation discount note | Receive fixed, pay variable interest rate swap | Protect against fair value risk | Fair Value Hedge | 245655 | (7) |
| **Consolidated Obligation Bonds** |  |  |  |  |  |
| Fixed-rate non-callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index | Fair Value Hedge | 1787000 | (12153) |
| Fixed-rate callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index and offset option risk in the bond | Fair Value Hedge | 7197000 | (9440) |
| Callable step-up/step-down consolidated obligation bonds | Receive variable interest rate with embedded features, pay variable interest rate swap | Reduce interest rate sensitivity and repricing gaps by converting the bond's variable rate to a different variable-rate index and/or to offset embedded options risk in the bond | Fair Value Hedge | 608000 | (12055) |
| Firm commitment to issue a consolidated obligation bond | Receive fixed, pay variable interest rate swap | Protect against fair value risk | Fair Value Hedge | 10000 | (14) |
| Fixed-rate callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index | Economic Hedge | 750000 | (532) |
| **Balance Sheet** |  |  |  |  |  |
| Duration of equity | Interest rate cap | Limit duration and convexity risk caused by an increase in interest rates | Economic Hedge | 1085000 | 561 |
| *TOTAL* |  |  |  | $55698771 | $(22454) |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**<u>Table 42</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| **Hedged Item** | **Hedging Instrument** | **Hedging Objective** | **Accounting Designation** | **Notional Amount** | **Fair Value Amount** |
| **Advances** | | | | | |
| Fixed-rate non-callable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index | Fair Value Hedge | $12541236 | $2387 |
| Fixed-rate convertible advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index and offset option risk in the advance | Fair Value Hedge | 20500 | 181 |
| Fixed-rate putable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index and offset option risk in the advance | Fair Value Hedge | 3095200 | (1397) |
| Fixed-rate non-callable advances | Pay fixed, receive variable interest rate swap | Convert the advance's fixed rate to a variable-rate index | Economic Hedge | 581304 | 1107 |
| Firm commitment to issue a fixed-rate advance | Forward settling interest rate swap | Protect against fair value risk | Fair Value Hedge | 8730 | 11 |
| **Investments** |  |  |  |  |  |
| Fixed-rate non-MBS available-for-sale investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Fair Value Hedge | 3300000 | 641 |
| Fixed-rate MBS available-for-sale investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Fair Value Hedge | 5128426 | 37078 |
| Fixed-rate non-MBS trading investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Economic Hedge | 18000 | 2 |
| Fixed-rate MBS trading investments | Pay fixed, receive variable interest rate swap | Convert the investment's fixed rate to a variable-rate index | Economic Hedge | 419438 | 7198 |
| **Mortgage Loans Held for Portfolio** |  |  |  |  |  |
| Fixed-rate mortgage purchase commitments | Mortgage purchase commitment | Protect against fair value risk | Economic Hedge | 34524 | (43) |
| **Consolidated Obligation Discount Notes** |  |  |  |  |  |
| Fixed-rate non-callable consolidated obligation discount notes with tenors less than 6 months | Receive fixed, pay variable interest rate swap | Convert the discount note's fixed rate to a variable rate | Economic Hedge | 7247448 | (7) |
| Fixed-rate non-callable consolidated obligation discount notes with tenors of 6 to 12 months | Receive fixed, pay variable interest rate swap | Convert the discount note's fixed rate to a variable rate | Fair Value Hedge | 2969182 | 9 |
| Firm commitment to issue consolidated obligation discount note | Receive fixed, pay variable interest rate swap | Protect against fair value risk | Economic Hedge | 198705 | (5) |
| **Consolidated Obligation Bonds** |  |  |  |  |  |
| Fixed-rate non-callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index | Fair Value Hedge | 2642000 | (34414) |
| Fixed-rate callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index and offset option risk in the bond | Fair Value Hedge | 7355000 | (125425) |
| Variable-rate consolidated obligation bonds | Receive variable interest rate, pay variable interest rate swap | Reduce basis risk by converting an undesirable variable-rate index in the bond to a more desirable variable-rate index | Economic Hedge | 500000 | (70) |
| Callable step-up/step-down consolidated obligation bonds | Receive variable interest rate with embedded features, pay variable interest rate swap | Reduce interest rate sensitivity and repricing gaps by converting the bond's variable rate to a different variable-rate index and/or to offset embedded options risk in the bond | Fair Value Hedge | 823000 | (39065) |
| Fixed-rate callable consolidated obligation bonds | Receive fixed, pay variable interest rate swap | Convert the bond's fixed rate to a variable-rate index | Economic Hedge | 1750000 | 16941 |
| **Balance Sheet** |  |  |  |  |  |
| Duration of equity | Interest rate cap | Limit duration and convexity risk caused by an increase in interest rates | Economic Hedge | 2604000 | 4181 |
| Cost of funds or asset | Receive variable interest rate, pay variable interest rate swap | Reduce interest rate sensitivity and repricing gaps | Economic Hedge | 750000 | 6 |
| *TOTAL* |  |  |  | $51986693 | $(130684) |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**Item 8: Financial Statements and Supplementary Data**

The following financial statements and accompanying notes, including the Report of Independent Registered Public Accounting Firm, are set forth on pages [F-1](#ic7e87acbb8464bab9ca9a49ac22002a4_622) to F-[59](#ic7e87acbb8464bab9ca9a49ac22002a4_5195) of this Form 10-K.

**Audited Financial Statements** 

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| | |
|:---|:---|
| **Description** | **Page Number** |
| Management's Report on Internal Control over Financial Reporting | F-[1](#ic7e87acbb8464bab9ca9a49ac22002a4_622) |
| Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP (PCAOB ID **238**) | F-[2](#ic7e87acbb8464bab9ca9a49ac22002a4_625) |
| Statements of Condition as of December 31, 2025 and 2024 | [F-4](#ic7e87acbb8464bab9ca9a49ac22002a4_28) |
| Statements of Income for the Years Ended December 31, 2025, 2024, and 2023 | F-[7](#ic7e87acbb8464bab9ca9a49ac22002a4_34) |
| Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024, and 2023 | F-[9](#ic7e87acbb8464bab9ca9a49ac22002a4_37) |
| Statements of Capital for the Years Ended December 31, 2025, 2024, and 2023 | F-[10](#ic7e87acbb8464bab9ca9a49ac22002a4_43) |
| Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023 | F-[11](#ic7e87acbb8464bab9ca9a49ac22002a4_46) |
| Notes to Financial Statements | F-[13](#ic7e87acbb8464bab9ca9a49ac22002a4_55) |
| &nbsp;&nbsp;&nbsp;&nbsp;Background | F-[13](#ic7e87acbb8464bab9ca9a49ac22002a4_58) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 1 - Summary of Significant Accounting Policies | F-[13](#ic7e87acbb8464bab9ca9a49ac22002a4_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 2 - Recently Issued and Adopted Accounting Guidance | F-[21](#ic7e87acbb8464bab9ca9a49ac22002a4_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 3 - Investments | F-[22](#ic7e87acbb8464bab9ca9a49ac22002a4_76) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 4 - Advances | F-[28](#ic7e87acbb8464bab9ca9a49ac22002a4_94) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 5 - Mortgage Loans | F-[30](#ic7e87acbb8464bab9ca9a49ac22002a4_109) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 6 - Derivatives and Hedging Activities | F-[34](#ic7e87acbb8464bab9ca9a49ac22002a4_130) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 7 - Deposits | F-[40](#ic7e87acbb8464bab9ca9a49ac22002a4_160) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 8 - Consolidated Obligations | F-[41](#ic7e87acbb8464bab9ca9a49ac22002a4_163) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 9 - Affordable Housing Program | F-[43](#ic7e87acbb8464bab9ca9a49ac22002a4_181) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 10 - Assets and Liabilities Subject to Offsetting | F-[44](#ic7e87acbb8464bab9ca9a49ac22002a4_187) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 11 - Capital | F-[46](#ic7e87acbb8464bab9ca9a49ac22002a4_190) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 12 - Accumulated Other Comprehensive Income | F-[49](#ic7e87acbb8464bab9ca9a49ac22002a4_205) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 13 - Fair Value | F-[49](#ic7e87acbb8464bab9ca9a49ac22002a4_217) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 14 - Commitments and Contingencies | F-[56](#ic7e87acbb8464bab9ca9a49ac22002a4_229) |
| &nbsp;&nbsp;&nbsp;&nbsp;Note 15 - Transactions with Stockholders | F-[58](#ic7e87acbb8464bab9ca9a49ac22002a4_241) |

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**Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

There were no changes in or disagreements with our accountants on accounting and financial disclosure during the two most recent fiscal years.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**Item 9A: Controls and Procedures**

**<u>Disclosure Controls and Procedures</u>**

Senior management is responsible for establishing and maintaining a system of disclosure controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide a reasonable level of assurance in achieving their desired objectives; however, in designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Management, with the participation of the President and CEO, our principal executive officer, and the Chief Financial Officer (CFO), our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2025. Based upon that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2025.

**<u>Management's Report on Internal Control Over Financial Reporting</u>**

Management's Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm with respect to FHLBank's internal control over financial reporting are included under Item 8 – "Financial Statements and Supplementary Data."

**<u>Changes in Internal Control Over Financial Reporting</u>**

There has been no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of the year for which this annual report on Form 10-K is filed that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**Item 9B: Other Information**

None.

**Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**PART III**

**Item 10: Directors, Executive Officers and Corporate Governance**

**<u>Information About Our Executive Officers</u>**

The following sets forth the executive officers who served during the period from January 1, 2025 through the date of this annual report on Form 10-K.

All executive officers are "at will" employees. All executive officers, other than the Chief Audit Executive (CAE), may be removed from office or discharged by the board of directors or the President and CEO with or without cause. The CAE may be removed from office, with or without cause, only with the approval of the Audit Committee. The CRO may be removed from office, with or without cause, only with the approval of the Risk Oversight Committee.

**<u>Table 43</u>**

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| | | |
|:---|:---|:---|
| **Executive Officer** | **Age** | **Position Held** |
| Jeffrey B. Kuzbel | 59 | President and Chief Executive Officer |
| Carl M. Koupal, III | 42 | Executive Vice President, Chief Mission Officer / Chief Legal Officer and Corporate Secretary |
| Philip D. Bacchus | 45 | Senior Vice President, Chief Financial Officer (Principal Financial Officer) |
| Brian J. Dreher | 55 | Senior Vice President, Chief Information Officer |
| Lance W. Liby | 55 | Senior Vice President, Chief Business Officer |
| Thomas E. Millburn<sup>1</sup> | 55 | Senior Vice President, Chief Audit Executive |
| Sarah A. Morse | 41 | Senior Vice President, Chief People Officer |
| Joshua J. Clark | 50 | First Vice President, Interim Chief Risk Officer |
| Amy J. Crouch | 50 | First Vice President, Chief Accounting Officer |

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<sup>___</sup><sup>_______</sup>

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Although Mr. Millburn is a non-voting member of FHLBank's executive team, he is not considered an "executive officer" as defined in Rule 3b-7 of the Exchange Act because he is not in charge of a principal business unit, division or function, nor does he perform a policy making function.

Except as otherwise indicated below, each officer has been engaged in the principal occupation listed above for at least five years:

**Jeffrey B. Kuzbel** became President and CEO in January 2024, after serving as Executive Vice President (EVP) and CFO starting in January 2022, and Senior Vice President (SVP) and CFO starting in April 2021. Prior to joining FHLBank in 2021, Mr. Kuzbel served as LIBOR Transition Executive at Capital One Financial from 2019 to March 2021; Treasury & Balance Sheet Management CFO at Capital One Financial from 2016 through 2018; Managing Vice President, Balance Sheet Management, at Capital One Financial from 2013 through 2015; Vice President, Balance Sheet Strategy from 2010 through 2012; and Senior Director, Treasury Finance & Analytics during 2009. Prior to his tenure at Capital One Financial, Mr. Kuzbel served as Lead Director – Market Risk Management for Freddie Mac, as Vice President – Fixed Income Portfolio Management and Trading at Advanced Investment Management, Inc., and as Head of Investments at the Federal Home Loan Bank of Pittsburgh.

**Carl M. Koupal, III**, became EVP and Chief Mission Officer/Chief Legal Officer (CMO/CLO), Corporate Secretary in July 2024, after serving as EVP and Chief Legal and Ethics Officer, Corporate Secretary starting in January 2024, and as SVP and Chief Legal and Ethics Officer since October 2022. Mr. Koupal is responsible for overseeing FHLBank's Legal Services, Housing and Community Development, Government and Industry Relations, Corporate Communications, and Corporate Governance activities. Mr. Koupal previously served as Chief Compliance and Ethics Officer & General Counsel, Corporate Secretary starting in October 2021; First Vice President (FVP), Associate General Counsel, Director of Legal Services and Compliance, Corporate Secretary from April 2018 to October 2021; and as Vice President, Assistant General Counsel, Director of Compliance and Corporate Secretary from March 2016 through March 2018. Mr. Koupal joined FHLBank in 2008 as a Law Clerk and was promoted to Staff Attorney in 2009; Legal and Compliance Officer in 2011; Assistant Vice President, Assistant General Counsel, Director of Compliance and Assistant Corporate Secretary in 2014; and Vice President, Assistant General Counsel, Director of Compliance and Corporate Secretary in 2016.

**Philip D. Bacchus** became SVP and CFO in August 2024. Mr. Bacchus is responsible for overseeing FHLBank's Finance, Strategy, and Innovation Division, which includes Capital Markets, Accounting, and Strategy, Innovation, and Planning functions. Prior to joining FHLBank in 2024, Mr. Bacchus served as Senior Vice President and Treasurer at American Savings Bank, Honolulu, Hawaii, from January 2019 to August 2024; and served in various capital markets and balance sheet management roles at Capital One Financial from 2006 to 2017.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**Brian J. Dreher** became SVP and CIO in January 2022, after serving as Vice President and Director of IT Infrastructure & Operations starting in 2014. Mr. Dreher is responsible for FHLBank's Information Technology and Building Services & Security activities, including building management, physical security, corporate services, IT governance, business technology, information security, infrastructure, and operations. He served as Vice President, Assistant Director of Information Technology from 2010 to 2014, and Vice President and Software Development Manager from 2004 to 2010. He joined FHLBank in 1998.

**Lance W. Liby** became SVP and Chief Business Officer in April 2024. Mr. Liby is responsible for overseeing FHLBank's Product Administration and Lending, Product Development and Research, Sales, Member Engagement, and Wire Services activities. Mr. Liby previously served as FVP, Chief Credit Officer from January 2017 to March 2024. He joined FHLBank in 2013. Prior to joining FHLBank, Mr. Liby served as Vice President at Mortgage Liquidity Solutions from 2011 to 2013 and was the Senior Manager of Credit Risk at U.S. Central Federal Credit Union from 2003 to 2011.

**Thomas E. Millburn** became SVP, CAE in March 2016. Mr. Millburn is responsible for overseeing FHLBank's Internal Audit activities. Mr. Millburn previously served as SVP, Chief Internal Audit Officer from March 2011 to March 2016 and Senior Vice President, Director of Internal Audit from December 2010 to March 2011. Mr. Millburn joined FHLBank in 1994 as a staff internal auditor and was promoted to Assistant Vice President, Director of Internal Audit in 1999, Vice President in 2000 and FVP in March 2004.

**Sarah A. Morse** became SVP and Chief People Officer in August 2025. Ms. Morse previously served as FVP Associate General Counsel, Director of Legal Services beginning in July 2024; Associate General Counsel beginning in June 2022; Assistant General Counsel beginning in October 2020; and Corporate Counsel beginning in November 2017.

**Joshua J. Clark** became Interim CRO in January 2025. He became FVP in 2018 and was named Chief Credit Officer in 2024. Mr Clark is responsible for overseeing FHLBank's Credit, Market Risk Analysis, and Operations Risk and Compliance activities. Mr. Clark joined FHLBank in 2004 as Enterprise Risk Analyst and became Associate CRO in 2017.

**Amy J. Crouch** became FVP and Chief Accounting Officer and FHLBank's Principal Accounting Officer in January 2023. She was named Interim Principal Financial Officer from January 2024 through November 2024. Ms. Crouch is responsible for FHLBank's Accounting activities, including financial reporting. Ms. Crouch previously served as Vice President, Director of Financial Reporting since September 2011, and as SEC Reporting and Compliance Manager from April 2008 to September 2011. She joined FHLBank in 2005 as SEC Reporting and Compliance Accountant.

**<u>Directors</u>**

The Bank Act, as amended by the Recovery Act, mandates that an FHLBank's board of directors consists of 13 directors or such other number as the Director of the FHFA deems appropriate. Further, the Bank Act categorizes directorships into two categories: "member" directors and "independent" directors. A majority of directors are required to be member directors and at least two-fifths are required to be independent directors. Each director must be: (1) a citizen of the United States; and (2) either a bona fide resident in our district or serve as an officer or director of a member located in our district. Under the FHFA regulations, new and re-elected directors serve four-year terms; subject to adjustment by the FHFA to establish staggering of the board. Directors cannot be elected to serve more than three consecutive full terms. A director who was term-limited may be re-elected to a directorship for a term that commences no earlier than two years after the expiration of the third full term. Our board of directors currently consists of 14 directors, eight of whom are member directors and six of whom are independent directors.

Additionally, at least two of the independent directors must qualify as public interest directors. To qualify as a public interest director, an individual must have more than four years of experience in representing consumer or community interests in banking services, credit needs, housing, or consumer financial protections.

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Member directorships are designated to each of the four states in our district and each of our members is entitled to nominate and vote for candidates representing the state in which the member's principal place of business is located as of December 31 of the calendar year immediately preceding the election year (Record Date). To qualify as a nominee for a member directorship, a nominee must be an officer or director of a member located in the state to which the director of the FHFA has allocated the directorship, and such member must meet all minimum capital requirements established by its appropriate Federal banking agency or appropriate state regulator. Member directors are nominated by members located in the state to which the member directorship is assigned, based on a determination by the nominating institution that the nominee possesses the applicable experience, qualifications, attributes and skills to qualify the nominee to serve as an FHLBank director, without any participation from our board of directors. Following the nomination process, a member is entitled to cast, for each applicable member directorship, one vote for each share of capital stock that the member is required to hold, subject to a statutory limitation. Under this limitation, the total number of votes that each member may cast is limited to the average number of shares of capital stock that were required to be held by all members in that state as of the Record Date for voting.

Each of our member directors meets the required qualifications and, as such, each is an officer or director of a member in the respective state from which they were nominated and elected.

Independent directors are nominated by the board of directors after consultation with the Affordable Housing Advisory Council and after the nominee has been submitted to the FHFA for review. In nominating independent directors, our board of directors may consider an individual's current and prior experience on the board of directors, the qualifications of the nominee, and the skills and experience most likely to add strength to the board of directors, among other skills, qualifications and attributes. FHFA regulations require us to encourage the consideration of diversity in nominating or soliciting nominees for positions on our board of directors. Pursuant to our Procedures for Identifying and Evaluating Candidates for Independent Directorships and Filling Vacant Directorships, our board of directors will consider diversity in nominating independent directors and in electing member directors when the board of directors is permitted to elect or appoint member directors in the event of a vacancy, and in evaluating potential director candidates, the board of directors may also identify appropriate criteria that will promote appropriate diversity on the board of directors and help meet our strategic needs, including desired skill sets, experience, residence, ability to devote sufficient time to service on the board of directors, and background. If our board of directors nominates only one individual for each independent directorship, then each nominee must receive at least 20 percent of the number of votes eligible to be cast in the election to be elected. If our board of directors nominates more persons for the type of independent directorship to be filled than there are directorships of that type to be filled in the election, then the nominee receiving the highest number of votes will be elected. Each member voting in the independent director election is entitled to cast one vote for each share of capital stock that the member is required to hold, subject to the statutory limitation discussed above. Our board of directors has adopted procedures for the nomination and election of independent directors, consistent with the requirements of the Bank Act and FHFA regulations.

On December 9, 2025, Michael D. Calcote was declared elected as a member director from the state of Colorado, and Jeffrey R. Noordhoek and Paul E. Washington were declared elected as independent directors, from the states of Nebraska and Colorado, respectively. Each of the directors elected in 2025 will serve four-year terms expiring December 31, 2029.

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Table 44 sets forth certain information regarding each of our directors as of the filing date of this annual report on Form 10-K.

**<u>Table 44</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Director** | **Age** | **Type of<br>Directorship** | **Director Since** | **Current Term<br>Expiration** | **Board Committee**<br>**Membership**<sup>1</sup> |
| Milroy A. Alexander | 76 | Independent | January 2015 | December 2028 | (a), (b), (c) Vice Chair, (e) |
| Steven G. Bradshaw | 66 | Member | January 2024 | December 2027 | (b), (f) |
| Michael D. Calcote | 63 | Member | January 2025 | December 2029 | (d), (f) |
| Kyle J. Heckman | 47 | Member | January 2025 | December 2028 | (a), (e) |
| Thomas E. Henning | 72 | Independent | January 2023 | December 2026 | (a), (b) Chair, (c), (d) |
| Lynn Jenkins | 62 | Independent | July 2019 | December 2028 | (a), (b), (e) |
| Holly Johnson | 62 | Independent | January 2016 | December 2027 | (a) Chair, (c), (d) |
| Barry J. Lockard | 60 | Member | January 2019 | December 2026 | (b), (c) Chair |
| Craig A. Meader | 68 | Member | January 2020 | December 2027 | (a), (c), (e), (f) Chair |
| Jeffrey R. Noordhoek | 60 | Independent | July 2020 | December 2029 | (b), (f) |
| Douglas E. Tippens | 71 | Member | January 2015 | December 2026 | (a), (b), (c), (d) Chair |
| Paul E. Washington | 56 | Independent | July 2021 | December 2029 | (c), (d), (e) Chair |
| Christopher D. Wente | 50 | Member | January 2025 | December 2028 | (e), (f) |
| Lance L. White | 51 | Member | January 2023 | December 2026 | (d) Chair Designate, (f) |

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**<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Board of Director committees are as follows: (a) Audit; (b) Compensation and People; (c) Executive; (d) Risk Oversight; (e) Mission and Governance; and (f) Operations.

**Milroy A. Alexander** has been a housing, financial and business consultant since 2010, serving non-profit housing organizations and a residential and commercial redevelopment authority for a former air force base. He has been board Chair of Northeast Denver Housing Center for the last 25 years. He is the former board chair of the Lowry Redevelopment Authority and a former board member of the National Council of State Housing Agencies, the Municipal Securities Rulemaking Board, Rose Community Foundation, and numerous other organizations. Mr. Alexander previously served as Executive Director and CEO of the Colorado Housing and Finance Authority in Denver, Colorado. The board of directors considered Mr. Alexander's qualifications, skills and attributes, including his more than 21 years of service at a state HFA, including nine years as Executive Director and CEO and 12 years as CFO; his certification as a CPA; his more than 11 years as an auditor with Touche Ross & Co. (now Deloitte); his past service on the audit committees of many organizations, his experience in and knowledge of auditing and accounting, financial management, organizational management, project development, and risk management practices when making his nomination.

**Steven G. Bradshaw** has served as President Emeritus of BOKF, N.A., and BOK Financial, Tulsa, Oklahoma, since July 2022. He has also served as President and CEO of both BOKF, N.A., and BOK Financial, both of Tulsa, Oklahoma, from January 2014 to December 2021. Before joining BOKF, N.A., and BOKF Financial in 1991, he operated his wholly owned retail brokerage service. Although the board of directors did not participate in Mr. Bradshaw's nomination since he is a member director, Mr. Bradshaw possesses a B.S. in Business Finance from the University of Central Oklahoma, graduated with distinction from the Southwestern Graduate School of Banking, and has over 30 years of banking experience that assists in his service as a director.

**Michael D. Calcote** serves as President and CEO at Elevations Credit Union since March 2026. He previously served as CFO and Chief Risk Officer of Elevations Credit Union from 2010 to March 2026. Prior to joining Elevations in 2010, Mr. Calcote served as CFO and Treasurer for Guaranty Bank, a publicly held regional bank headquartered in Austin, Texas. Although the board of directors did not participate in Mr. Calcote's nomination since he is a member director, Mr. Calcote served for five years as a regulatory examiner and capital markets specialist for the U.S. Office of Thrift Supervision, holds a bachelor's degree in finance and accounting from Stephen F. Austin State University in Texas and is a Chartered Financial Analyst®, that assists in his service as a director. Mr. Calcote also serves as a board member of Clinica Family Health & Wellness.

**Kyle J. Heckman** has served as chairman of Flatirons Bank since September 2024 where he previously served as chairman and CEO for nearly 15 years. Although the board of directors did not participate in Mr. Heckman's nomination since he is a member director, he earned a Bachelor of Arts in Economics, a Bachelor of Science in Business Administration with an emphasis in finance and an MBA from the University of Colorado at Boulder, Mr. Heckman previously served on the board of directors and audit committee of the Federal Reserve Bank of Kansas City for two three-year terms, and was an appointed council member of the Federal Reserve Bank's regional Community Depository Institutions Advisory Council (CDIAC) for five years, that assists in his service as a director.

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**Thomas E. Henning** has been Manager of Henning LLC Companies since January 2023. Prior to his current role, Mr. Henning was Chairman, President and CEO of the Assurity Group, Inc. (AGI), a mutual holding company of life insurance companies in Lincoln, Nebraska, from 2005 through 2022 and was employed by Security Financial Life Insurance Co., a predecessor to AGI, from 1990 to 2005. Mr. Henning has served on the board of Nelnet, Inc., a public company and provider of education finance and services, headquartered in Lincoln, Nebraska, since 2003. He also served on the board of First Interstate Bank, a public company and provider of financial services headquartered in Billings, Montana, from February 2022 to May 2025, and previously served on the board of Great Western Bank prior to its acquisition by First Interstate Bank from 2015 to 2022. The board of directors considered Mr. Henning's qualifications, skills, and attributes, including his past experience as Chairman, President, and CEO of a life and health insurance company; his past experience as President and CEO of a community bank and President and Chief Operating Officer of a regional banking group; his prior and current service on the board of publicly traded companies; his more than 40 years of financial services experience; his prior service as an FHLBank director; and his experience in and knowledge of auditing and accounting, financial management, organizational management, project development, risk management practices, and the law, when making his nomination. Prior to his current term, Mr. Henning served as an independent director of FHLBank from April 2007 through December 2015.

**Lynn Jenkins** has been a partner at LJ Strategies since January 2019. Ms. Jenkins worked as a CPA for 16 years before launching a career in public service. Ms. Jenkins served as Treasurer of the State of Kansas and was subsequently elected to serve five terms in the U.S. House of Representatives. She currently serves on the boards of directors for American Century Investments Mutual Funds and previously served on the board of directors of MGP Ingredients, Inc. The board of directors considered Ms. Jenkins' qualifications, skills and attributes, including her role as a member of the U.S. House of Representatives, including service in leadership roles and on the House Financial Services Committee and the House Ways and Means Committee; her role as the Treasurer of the State of Kansas; her experience as a CPA and at public accounting firms; her experience in and knowledge of auditing and accounting, financial management, organizational management, project development, and the law, when making her nomination.

**Holly Johnson**, a Chickasaw citizen and CPA, owns a tribal consulting company providing services to the Chickasaw Nation in the area of administrative support and policy development. She served as Secretary of the Department of Treasury for the Chickasaw Nation from October 2012 to December 2019, where she was responsible for all finance and accounting functions. From October 2010 to September 2012, she served as the Administrator of Planning and Organizational Development for the Chickasaw Nation. From August 2003 to October 2010, she served as an Elected Tribal Legislator for the Pontotoc District. Ms. Johnson served as a trustee of the Chickasaw Foundation and is a past trustee of the Ada City Schools Foundation and the Chickasaw Nation's 401(k) plans, a past board member of the Ada Chamber of Commerce, a member of the Oklahoma State University School of Accounting Executive Advisory Board, and a former appointed commissioner of the Oklahoma Ethics Commission. She represented Indian Tribal Governments on the Advisory Committee of the Internal Revenue Service. The board of directors considered Ms. Johnson's qualifications, skills and attributes, including her role as Secretary for the Department of Treasury for the Chickasaw Nation; her experience as a CPA and at public accounting firms; her experience in and knowledge of auditing and accounting, financial management, organizational management, project development and risk management practices, when making her nomination.

**Barry J. Lockard** is Chair of our board of directors. Mr. Lockard has served as President and CEO of Cornhusker Bank, Lincoln, Nebraska, since 2007. Mr. Lockard previously held senior leadership roles at Black and Decker, Cincinnati Bell, and First National Bank of Omaha. He also served eight years in the Nebraska Army National Guard. He has served on the boards of directors of the Nebraska Bankers Association, the American Bankers Association (ABA) Community Bankers Council, and is a trustee for the Graduate School of Banking at Colorado, where he has also served as a member of the faculty. Although the board of directors did not participate in Mr. Lockard's nomination since he is a member director, Mr. Lockard possesses a bachelor's degree in business administration, is a graduate of the Colorado Graduate School of Banking, and has more than 15 years as a bank CEO, that assists in his service as a director.

**Craig A. Meader** has served as Chairman and CEO of First National Bank of Kansas since 1988. Mr. Meader has served as Chairman of the Kansas Bankers Association and the Bankers Bank of Kansas. Mr. Meader is a former member of the ABA Community Bankers Council, Government Relations Council and the ABA board of directors. Although the board of directors did not participate in Mr. Meader's nomination since he is a member director, Mr. Meader possesses a bachelor's degree in business administration and finance, is a graduate of the Madison Wisconsin Graduate School of Banking, served on the board of directors of Bankers' Bank of Kansas, N.A. for seven years, including one year as Chairman, and has more than 40 years as a bank CEO, that assists in his service as a director.

**Jeffrey R. Noordhoek** has served as CEO of Nelnet, Inc., a publicly traded company, since January 2014, and previously served as President of Nelnet, Inc., from January 2006 through December 2013. The board of directors considered Mr. Noordhoek's qualifications, skills and attributes, including his position as CEO of Nelnet, Inc., which is a publicly traded company listed on the

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New York Stock Exchange and is the largest education payment plan provider in the United States; his lending, financial services, capital markets and derivatives experience; his experience overseeing a large team of information technology and IT security professionals; and his experience in and knowledge of auditing and accounting, financial management, organizational management, project development, and risk management practices, when making his nomination.

**Douglas E. Tippens** has served as Executive Vice President of BancFirst, Oklahoma City, Oklahoma, since December 2017. He served as Market President of BancFirst from November 2015 to December 2017. Before his service at BancFirst, Mr. Tippens served as President and CEO of Bank of Commerce, Yukon, Oklahoma, since 2006, and served on the board of directors of Bank of Commerce, Chelsea, Oklahoma, since 2013. Although the board of directors did not participate in Mr. Tippens' nomination since he is a member director, Mr. Tippens possesses a B.S. in agriculture economics and an MBA, is a graduate of the Graduate School of Banking at the University of Wisconsin, has more than 40 years of banking experience, including 10 years as president and CEO, and served on the board of directors of the Federal Reserve Bank of Kansas City, Oklahoma City Branch, that assists in his service as a director.

**Paul E. Washington**, a private investor, previously served as Executive Vice President and Chief Administrative Officer for IMA Financial Group, Denver, Colorado, from April 2021 to May 2025, where he is responsible for mergers and acquisitions, commercial real estate strategy, communications, governance, administration, and investments. Mr. Washington served as market director (a regional president-equivalent position) for JLL, a Fortune 500, SEC registered commercial real estate services company from April 2017 to May 2021. Mr. Washington holds bar licenses in Colorado and California and previously served on the Colorado Housing and Finance Authority board of directors from 2013 to 2021 where he served as both board Chair and Chair of the Finance committee. The board of directors considered Mr. Washington's qualifications, skills, and attributes, including his degree in business and his J.D. and LL.M. in taxation; his prior experience in leading a large real estate services company; his prior service on the board of directors of the Colorado Housing and Finance Authority; his experience in and knowledge of auditing and accounting, financial management, organizational management, project development, risk management practices, and the law, when making his nomination.

**Christopher D. Wente** has served as president and CEO of Golden Belt Bank since 2017. Although the board of directors did not participate in Mr. Wente's nomination since he is a member director, he earned a Bachelor of Science degree in industrial engineering from Kansas State University and is a 2014 graduate of the Graduate School of Banking at Colorado. Mr. Wente has served as a director for Banker's Bank of Kansas since 2022, on the Hays Medical Center board of directors since 2024, and as a board member of the Ellis County Coalition for Economic Development.

**Lance L. White** has served as President and CEO of Bank of the Flint Hills, Wamego, Kansas, since 2007. Although the board of directors did not participate in Mr. White's nomination since he is a member director, Mr. White has a B.S. in Accounting, is a graduate of the Colorado Graduate School of Banking, has served on the Community Depository Institutions Advisory Council of the Federal Reserve Bank of Kansas City, and has over 25 years of banking experience, including more than 15 as CEO, that assists in his service as a director.

**<u>Relationships, Arrangements and Involvement in Certain Legal Proceedings</u>**

There are no family relationships among any of our directors or executive officers. Except as described above, none of our directors holds directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which that director or executive officer was selected. No director or executive officer of FHLBank has been involved in any legal proceeding during the past ten years that would affect the integrity or ability of such director or nominee to serve in such capacity, including any proceedings identified in Item 401(f) of Regulation S-K.

**<u>Code of Ethics</u>**

We have adopted a Code of Ethics that applies to our directors, executive officers (including our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions), employees, and Affordable Housing Advisory Council members. Our Code of Ethics is filed as an exhibit to reports we file with the SEC and has been posted on our website at www.fhlbtopeka.com/board-governance. We will also post on our website any amendments to, or waivers from, a provision of our Code of Ethics that applies to the principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions as required by applicable rules and regulations. The Code of Ethics is available, in print, free of charge, upon request. Written requests may be made to the CMO/CLO of FHLBank at 500 SW Wanamaker, Topeka, Kansas, 66606.

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**<u>Audit Committee Financial Expert</u>**

Our board of directors has a separately designated, standing audit committee, which consists of Holly Johnson (Chair), Milroy A. Alexander, Kyle J. Heckman, Thomas E. Henning, Lynn Jenkins, Craig A. Meader, and Douglas E. Tippens.

The board of directors has determined that Holly Johnson is an "audit committee financial expert" as that term is defined under SEC regulations. Ms. Johnson is "independent" in accordance with the Nasdaq Independence Standards (defined under Item 13 below) for audit committee members, as those standards were applied by our board of directors.

The Compensation and People Committee Report is included following the Compensation Discussion and Analysis in Item 11 - "Executive Compensation."

**<u>Insider Trading Policy</u>**

We have adopted an insider trading policy (the "Insider Trading Policy") that prohibits our directors, officers, employees, and related persons, as well as their respective family members, from purchasing, selling, or otherwise transacting in our securities and in the securities of other issuers while in possession of material nonpublic information related to any member or non-member institution, FHLBank, the FHLBank System or otherwise. FHLBank believes the Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations. The Insider Trading Policy is filed as Exhibit 19.1 to this Form 10-K.

FHLBank is cooperatively owned by its member institutions. By law, our capital stock cannot be held by individuals (including our directors, officers and FHLBank employees.)

Our capital stock can only be acquired, redeemed, or repurchased at par value of $100 per share. Transactions in our capital stock are governed by applicable regulatory requirements and FHLBank's Capital Plan (included as Exhibit 4.1 to this Form 10-K).

**Item 11. Executive Compensation**

**<u>Compensation Discussion and Analysis</u>**

*Overview of Previous Year Performance and Compensation:* Our overall executive compensation philosophy is to attract, retain, and motivate highly-qualified executive officers who will advance: (1) our business objectives to promote our long-term growth and profitability in accordance with achievement of our long-term strategic objectives; and (2) our mission of supporting our members' efforts to build strong communities.

The named executive officers in 2025 were: (1) Jeffrey B. Kuzbel, President and CEO; (2) Carl M. Koupal, III, EVP and CMO/CLO; (3) Philip D. Bacchus, SVP and CFO; (4) Martin L. Schlossman, Jr., SVP and CRO; and (5) Brian J. Dreher, SVP and CIO (each a "Named Executive Officer" or "NEO" and, collectively, the "Named Executive Officers" or "NEOs"). Mr. Schlossman, Jr. retired from FHLBank in February 2026 after 25 years of service.

In determining the appropriate total compensation package for our NEOs for 2025, we considered the principal objectives of our compensation program as: (1) attracting and retaining highly qualified and talented individuals; and (2) motivating these individuals to achieve short- and long-term FHLBank-wide performance goals through incentive compensation.

In 2025, we provided competitive compensation opportunities for our NEOs based in part on adjustments to base salary in line with our Executive Pay Philosophy and on incentive compensation achievable through our Executive Incentive Compensation Plan (EICP). The EICP provides cash-based annual incentives and deferred incentive awards, which promote the achievement of short- and long-term objectives. All NEOs participated in the EICP. The achievement of both short- and long-term goals translated to above target incentive awards earned by our NEOs in recognition of their contribution to our overall performance and success.

*Framework for Compensation Decisions:* The Compensation and People Committee of the board of directors (Compensation Committee) oversees the compensation of the NEOs. The Compensation Committee's responsibilities in 2025 included:

▪ Advising the board of directors on the establishment of appropriate compensation, incentive and benefits programs, including the recommendation of performance goals for the EICP;

▪ Approving the base salaries for NEOs, other than the CEO, as recommended by the CEO;

▪ Approving the annual and deferred cash incentive awards of the NEOs; and

▪ Recommending to the board of directors the base salary, including any salary adjustments, of the CEO.

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*Shareholder Advisory Vote on Executive Compensation:* Directors are elected as described under Item 10 - "Directors, Executive Officers and Corporate Governance." As such, we do not engage in a proxy process and have not otherwise engaged in any activity that would require a consent solicitation of our members. Accordingly, there is no shareholder advisory vote on executive compensation in determining our compensation policies and decisions.

*Elements of Executive Compensation:* To implement our compensation objectives, the elements of our 2025 compensation program for the NEOs included: (1) annual base salary; (2) annual and deferred cash incentive award opportunities under our EICP; (3) retirement and other benefits; (4) limited perquisites; and (5) potential payments upon termination or change in control.

Due to our cooperative structure, we cannot offer equity-based compensation programs, so we may offer cash-incentive opportunities and certain retirement benefits to keep our compensation packages competitive relative to the market and to offset the value of compensation that labor-market competitors might offer through equity-based compensation programs.

As required by Item 402(x) of Regulation S-K, we provide the following discussion of the timing of equity awards in relation to the disclosure of material nonpublic information (MNPI). During the year ended December 31, 2025, none of the NEOs were awarded stock options or similar awards and we did not time the disclosure of MNPI for the purpose of affecting the value of executive compensation.

*Use of Benchmarks:* We believe a key to attracting and retaining highly qualified executive officers is the identification of the appropriate peer groups within which we compete for executive talent. We have historically recruited nationally, both within and outside of the FHLBank System, in our efforts to attract highly qualified candidates for the NEO positions. To ensure that we are offering competitive compensation to retain our NEOs, the board of directors (through the Compensation Committee) periodically retains compensation consultants to assist with comparative analyses of the NEOs' total compensation through a review of survey data reflecting potential comparator benchmarks for total compensation. Our Compensation Committee has used the survey data as guideposts, in conjunction with our pay philosophy, in considering and determining competitive levels of base salary and total compensation for our NEOs among other factors as described above.

For 2025 compensation, the Compensation Committee considered the competitiveness of the total compensation paid to our NEOs by reviewing comparative survey data obtained from the compensation consultant, McLagan Partners, Inc. ("McLagan").

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The following is a list of regional and community banks with $20 billion to $65 billion in assets, which is a component of the market peer group used for the 2025 compensation benchmarks:

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|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Ameris Bank | &nbsp;&nbsp;&nbsp;&nbsp;Frost - Banking, Investments, Insurance |
| &nbsp;&nbsp;&nbsp;&nbsp;Associated Bank | &nbsp;&nbsp;&nbsp;&nbsp;Fulton Financial |
| &nbsp;&nbsp;&nbsp;&nbsp;Atlantic Union Bankshares Corporation | &nbsp;&nbsp;&nbsp;&nbsp;Glacier Bancorp, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;Banc of California, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;Hancock Whitney Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank of Hawaii | &nbsp;&nbsp;&nbsp;&nbsp;MidFirst Bank |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank OZK | &nbsp;&nbsp;&nbsp;&nbsp;Old National Bank |
| &nbsp;&nbsp;&nbsp;&nbsp;BOK Financial Corporation | &nbsp;&nbsp;&nbsp;&nbsp;Pinnacle Financial Partners, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;Cadence Bancorp | &nbsp;&nbsp;&nbsp;&nbsp;Simmons First National Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp;Cathay General Bancorp | &nbsp;&nbsp;&nbsp;&nbsp;South State Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp;City National Bank of Florida | &nbsp;&nbsp;&nbsp;&nbsp;Synovus |
| &nbsp;&nbsp;&nbsp;&nbsp;Commerce Bank | &nbsp;&nbsp;&nbsp;&nbsp;Texas Capital Bank |
| &nbsp;&nbsp;&nbsp;&nbsp;Customers Bancorp, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;UMB Financial Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp;Eastern Bank | &nbsp;&nbsp;&nbsp;&nbsp;Umpqua Holding Corporation |
| &nbsp;&nbsp;&nbsp;&nbsp;First Hawaiian Bank | &nbsp;&nbsp;&nbsp;&nbsp;United Bank - VA |
| &nbsp;&nbsp;&nbsp;&nbsp;First Interstate BancSystem Inc. | &nbsp;&nbsp;&nbsp;&nbsp;United Community Banks, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;FirstBank Holding Company | &nbsp;&nbsp;&nbsp;&nbsp;Valley National Bank |
| &nbsp;&nbsp;&nbsp;&nbsp;FNB Omaha | &nbsp;&nbsp;&nbsp;&nbsp;Wintrust Financial Corp. |

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The intent to remain competitive with other FHLBanks and consider a broader select group of financial services institutions reflects our belief that the knowledge and skills necessary for effective performance of our NEOs' duties may be developed through experience at a variety of other financial services institutions. While we recognize that Topeka's geographic location may be a disadvantage in attracting executives, we generally view it as a positive factor in retaining executives.

The FHLBank-based survey data is considered a primary peer group. For each of the FHLBank-based and market-based peer groups (*i.e.*, the survey data), the Compensation Committee considered the 25<sup>th</sup> percentile, 50<sup>th</sup> percentile (*i.e.,* median) and 75<sup>th</sup> percentile compensation ranges for analyzing executive positions similar to those of our NEOs in assessing the competitiveness of our total compensation for the NEOs. The Compensation Committee generally strives to establish annual base salary and incentive compensation opportunities for our NEOs in the median range of the survey data reviewed assuming target level performance would be achieved. The ultimate compensation determined appropriate in any given year, however, will depend on the scope of a NEO's responsibilities as compared to similar positions within our identified peer group(s), the experience and performance of the individual NEO, and our overall performance. While survey information is one factor in setting compensation for our NEOs, surveys are not the sole governing factor and independent decisions by the Compensation Committee are necessary to make compensation consistent with our financial condition, pay philosophy and future prospects.

*Annual Base Salary:* A significant element of each NEO's total compensation is annual base salary, which is designed to reward our NEOs for past performance and their commitment to future performance and to serve as the foundation for competitive total compensation. Adjustments to annual base salaries for the NEOs are considered annually and made effective January 1st, following an analysis of our total compensation practices, the survey data, and FHLBank's performance.

For 2025, the Compensation Committee determined that appropriate annual base salaries for each NEO should be competitive with the salaries of comparable positions within the peer groups for purposes of providing guideposts for a competitive compensation analysis. Adjustments to annual base salaries of the NEOs for 2025 were based on: (1) each NEO's scope of responsibility and accountability; (2) analysis of our comparator peer groups; (3) performance of FHLBank based on achievement levels of FHLBank-wide goals in the prior year; (4) the perceived performance of each NEO, as a subjective matter; and (5) other factors such as experience, time in position, general economic conditions, and labor supply and demand conditions.

A final factor the Compensation Committee generally considers in determining base salary increases in its effort to retain our NEOs is the relative difference in compensation between the executive officers as well as the pay relationship between executive officers and other employees at FHLBank. The Compensation Committee believes that internal pay equity provides an additional perspective to that of the survey data and helps ensure our executive compensation practices are internally consistent and equitable.

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The Compensation Committee also considered guidance and communications from our regulator, the FHFA, in determining total compensation for the NEOs as more specifically addressed below under "FHFA Oversight."

In 2025, the Compensation Committee and the CEO determined, with respect to competitive pay positioning for purposes of retaining our NEOs, it was appropriate to increase the base salaries of the NEOs to maintain competitive base and total compensation. Consideration was also given to each NEO's scope of responsibility, market comparators, individual and FHLBank performance, and other factors as described above. The CEO salary increase was recommended by the Compensation Committee and approved by the board of directors.

*Annual and Deferred Cash Incentive Awards:* Our EICP is a cash-based annual incentive plan with a long-term deferral component that establishes individual incentive compensation award opportunities related to achievement of performance objectives during the performance periods. The EICP establishes two performance periods: (1) a Base Performance Period aligned with the calendar year; and (2) a Deferral Performance Period (or the long-term performance period), which is a three-year period commencing the calendar year following the Base Performance Period. Participating NEOs may earn an annual cash incentive during a Base Performance Period and a deferred cash incentive during a Deferral Performance Period. For each Base Performance Period, the board of directors will establish a Total Base Opportunity for NEOs. The Total Base Opportunity is equal to a percentage of each NEO's annual base salary at the beginning of the Base Performance Period and is composed of the Cash Incentive and the Deferred Incentive.

We believe that well-designed incentive compensation plans provide important opportunities to motivate our NEOs to accomplish financial, risk, and operational goals that promote our mission. Thus, motivating our NEOs to accomplish business and financial short- and long-term goals that promote a high level of performance for our members is a key objective of our total compensation program. Consequently, our compensation and benefits programs are designed to motivate our NEOs to engage in the behaviors and performance necessary to deliver our desired results.

To effectively motivate the NEOs to accomplish both short- and long-term goals that promote our performance, we believe that incentive awards must represent at-risk pay. In other words, the administration of our incentive compensation plans must be such that awards are distributed only in exchange for accomplishing pre-established goals, recommended by the Compensation Committee and approved by the board of directors, and are distributed only in accordance with such achievement. In 2025, we achieved above target attainment for each of the pre-established goals.

Goal metrics, metric performance ranges and metric weights for cash incentive award opportunities under the EICP for the current year are established towards the end of the prior year. The proposed performance objectives reflected the drivers of our business and mission and were based upon the Compensation Committee's and management's discussions with respect to our primary mission and stockholder perceptions of success. The Compensation Committee and management took steps intended to align the performance objectives to the Strategic Business Plan. The Compensation Committee reviewed and analyzed the proposed 2025 performance objectives, as appropriate, before submitting the objectives to the board of directors for approval.

For the Base Performance Period of January 1, 2025 to December 31, 2025, the board of directors approved a Total Base Opportunity equal to a percentage of each NEO's Earned Base Salary during the Base Performance Period. Certain NEOs have a greater and more direct impact than others on the success of FHLBank; therefore, these differences are recognized by varying the Total Base Opportunity for each NEO. The Total Base Opportunity is the amount that may be earned for achieving performance levels under established Performance Measures and is comprised of the Cash Incentive and the Deferred Incentive. In the event FHLBank's performance during the Base Performance Period results in the achievement of a Total Base Opportunity that exceeds 100 percent of a Participant's base salary at the start of the Base Performance Period, the Target Document provides that the Total Base Opportunity shall be capped at 100 percent of the Participant's base salary in accordance with regulatory restrictions. The Deferred Incentive is 50 percent of the Total Base Opportunity, which shall be deferred for the Deferral Performance Period, which is the three-year period from January 1, 2026 to December 31, 2028, over which FHLBank applies an interest rate credit compounding annually, as further described below, and becomes payable after the end of the Deferral Performance Period, subject to review by the Director of the FHFA. The Cash Incentive is the portion of the Total Base Opportunity that is not the Deferred Incentive and becomes payable after the end of the Base Performance Period upon achievement of established Performance Measures, subject to review by the Director of the FHFA.

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Awards under the EICP may be granted for achievement of Performance Measures corresponding to achievement levels, from threshold, to target, to optimum performance for each goal metric. Threshold represents the minimum achievement level; target represents the expected achievement level; and optimum represents the achievement level that substantially exceeds the target level. Awards may be earned for performance attainment within these achievement levels as a percentage of base salary that corresponds to actual performance. For performance that falls between any two levels of achievement, linear interpolation is used to ensure that the award is consistent with the level of performance achieved. NEOs may earn annual awards expressed as a percent of their base salary at the beginning of the Performance Period. Table 45 presents the Total Base Opportunity for each NEO for each achievement level for the Base Performance Period:

**<u>Table 45</u>**

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| | | | |
|:---|:---|:---|:---|
| **Position** | **Total Base Opportunity** | **Total Base Opportunity** | **Total Base Opportunity** |
| **Position** | **Threshold** | **Target** | **Optimum**<sup>1</sup> |
| President & CEO | 40.0% | 80.0% | 120.0% |
| EVP and SVP/CFO | 30.0 | 60.0 | 90.0 |
| SVP/NEO other than CFO | 27.5 | 55.0 | 82.5 |

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<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Total Base Opportunity is capped at 100 percent of the Participant's Earned Base Salary.

The Total Base Opportunity Goal Metrics for 2025 are described in Table 46:

**<u>Table 46</u>**

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| | |
|:---|:---|
| **Total Base Opportunity Goal Metric** | **Definition** |
| Return on Equity Spread to SOFR<sup>1</sup> | The spread between (a) adjusted net income (as defined in the plan) divided by the daily average total regulatory capital and (b) the daily average of overnight SOFR. |
| Affordable Housing Program ("AHP") General Fund Ratio | The AHP General Fund Ratio refers to the total dollar amount of applications submitted for the AHP General Fund compared to the total dollar amount allocated to the AHP General Fund available to be awarded in the AHP General Fund for the performance year based on the Required Annual AHP Contribution. |
| Native American Housing Initiatives ("NAHI") Grants Ratio | NAHI references FHLBank's voluntary grant program that provides Native American tribes and Tribally Designated Housing Entities with access to grant funds intended to build their communities in support of housing for tribal members in FHLBank's district (Colorado, Kansas, Nebraska and Oklahoma). The ratio refers to the total dollar amount in applications submitted compared to the initial total dollars awarded for the performance year. |
| Member Participation in Housing and Community Development Programs | Housing and Community Development Programs include the following four program categories: (1) the AHP General Fund; (2) TurnKey; (3) Community Housing/Development Programs; (4) NAHI; (5) Mortgage Rate Reduction; and (6) voluntary discounted advances program. Participation in the AHP General Fund means a member submits an AHP General Fund application. Participation in TurnKey means a member submits a reservation for a TurnKey product. Participation in a Community Housing/Development Program means a member has an approved Community Housing Program or Community Development Program application. Participation in NAHI means a member submits a NAHI application. Participation in the Mortgage Rate Reduction product means a member sells to FHLBank a mortgage using the product. Participation in the voluntary discounted advances program means a member receives an advance under the terms of the program. |
| Risk Management – Compliance, Business and Operations Risks | Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are compliance, business and operations risks. |
| Risk Management – Market, Credit and Liquidity Risks | Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are market, credit and liquidity risks. |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;As part of evaluating our financial performance and measuring EICP performance, we begin with the components of "adjusted income", a non-GAAP financial measure." We adjust net income reported in accordance with GAAP for the impact of: (1) AHP assessments (equivalent to an effective minimum income tax rate of 10 percent); (2) fair value changes on trading securities and derivatives and hedging activities (excluding net interest settlements); (3) prepayment and yield maintenance fees; (4) voluntary program contributions; (5) non-routine and/or unpredictable items, such as gains/losses on securities; and (6) non-recurring items, such as gains/losses on retirement of debt and gains/losses on mortgage loans held for sale.

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The profit- and mission-oriented objectives "Return on Equity Spread to SOFR" and "Mission Housing Goals" were based on the belief that profitability and mission focus are critical to the long-term viability of the organization. The "Risk Management – Compliance, Business and Operations Risks" and the "Risk Management – Market, Credit and Liquidity Risks" objectives were included in recognition of the impact that the NEOs have on management of business, compliance, credit, liquidity, market and operations risks, to incent strong risk management practices and to reward positive risk management performance as determined by the board of directors. We divide the risk management objectives to balance risk exposure with the pursuit of stakeholder value.

The Total Base Opportunity available to Participants for the Financial Performance Goals shall be adjusted as reflected in Table 47 below if the daily average Total Regulatory Capital as a percentage of average Total Assets (Daily Average Total Regulatory Capital Ratio) is below 4.75 percent for 2025. The Financial Performance Goals include the Return on Equity Spread to SOFR, which represents 35 percent of the Base Opportunity Metric Weights at Table 49.

**<u>Table 47</u>**

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| | |
|:---|:---|
| **Daily Average Total Regulatory Capital Ratio** | **Financial Performance Goals Adjustment** |
| ≥4.75% | 0% |
| ≥4.70% and <4.75% | (25)% |
| ≥4.65% and <4.70% | (50)% |
| ≥4.60% and <4.65% | (75)% |
| <4.60% | (100)% |

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Award levels were set at Threshold, Target and Optimum percentages of annual base salary. Table 48 sets forth the specific annual goal performance ranges, the actual achievement levels, and the incentive payout for each of our Total Base Opportunity Goal Metrics in 2025:

**<u>Table 48</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Total Base Opportunity Goal Metrics** | **Annual Performance Range** | **Annual Performance Range** | **Annual Performance Range** | **Actual Achievement** | **Incentive Payout**<sup>1</sup> |
| **Total Base Opportunity Goal Metrics** | **Threshold** | **Target** | **Optimum** | **Actual Achievement** | **Incentive Payout**<sup>1</sup> |
| Financial Performance – Return on Equity Spread to SOFR | 3.50% | 4.75% | 5.75% | 5.85% | 150.00% |
| Housing and Community Development Mission Alignment – AHP General Fund Ratio | 100% | 150% | 250% | 428.42% | 150.00% |
| Housing and Community Development Mission Alignment – NAHI Grants Ratio | 100% | 200% | 300% | 379.87% | 150.00% |
| Housing and Community Development Mission Alignment – Member Participation in Housing and Community Development Programs | 200 | 230 | 260 | 320 | 150.00% |
| Risk Management – Compliance, Business and Operations Risks | 3.00 | 4.00 | 5.00 | 4.91 | 145.50% |
| Risk Management – Market, Credit and Liquidity Risks | 4.00 | 4.50 | 5.00 | 4.85 | 135.00% |
| TOTAL WEIGHTED AVERAGE INCENTIVE PAYOUT |  |  |  |  | 146.59% |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;If the actual achievement is Optimum or higher, the incentive payout is capped at 150.00 percent.

We believe the goals incorporated into the EICP are indicative of our balanced approach to profitability, mission and member-focus, and risk management. As reflected in Table 48, we achieved in excess of Optimum for the Return on Equity Spread to SOFR and for all Housing and Community Development Mission Alignment goals. We exceeded Target performance for all Risk Management goals.

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Table 49 provides the metric weight for each Total Base Opportunity Goal Metric as a percent of the Total Base Opportunity for each NEO in 2025:

**<u>Table 49</u>**

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| | |
|:---|:---|
| **Performance Objective** | **Metric Weight** |
| Financial Performance – Return on Equity Spread to Secured Overnight Financing Rate (SOFR) | 35% |
| Housing and Community Development Mission Alignment – Affordable Housing Program (AHP) General Fund Ratio | 10 |
| Housing and Community Development Mission Alignment – Native American Housing Initiatives (NAHI) Grants Ratio | 10 |
| Housing and Community Development Mission Alignment – Member Participation in Housing and Community Development Programs | 10 |
| Risk Management – Compliance, Business and Operations Risks | 17.5 |
| Risk Management – Market, Credit and Liquidity Risks | 17.5 |
| *TOTAL* | 100% |

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Table 50 presents the eligible salary, aggregate goal achievement, Total Base Opportunity, Cash Incentive and Deferred Incentive for each NEO as calculated under the EICP for the Base Performance Period of January 1, 2025 to December 31, 2025 and the Deferral Performance Period, which is the three-year period from January 1, 2026 to December 31, 2028:

**<u>Table 50</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Named Executive Officer** | **Eligible Salary** | **Aggregate Goal Achievement** | **Total Base Opportunity** | **Cash**<br>**Incentive**<sup>1</sup> | **Deferred Incentive** |
| Jeffrey B. Kuzbel, President & CEO | $930000 | 100.00% | $930000 | $465000 | $465000 |
| Carl M. Koupal, III, EVP & CMO/CLO | 430000 | 87.95 | 378196 | 189098 | 189098 |
| Philip D. Bacchus, SVP & CFO | 465000 | 87.95 | 408980 | 204490 | 204490 |
| Martin L. Schlossman, Jr., SVP & CRO | 405000 | 80.62 | 326524 | 163262 | 163262 |
| Brian J. Dreher, SVP & CIO | 380000 | 80.62 | 306368 | 153184 | 153184 |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Cash Incentive is included as non-equity incentive plan compensation in Table 55 for all NEOs.

The final value of the Deferred Incentive portion of the Total Base Opportunity for the calendar year 2026 to calendar year 2028 is measured by applying an interest rate credit equal to FHLBank's Pre-ASC 815 annual return on equity, compounded annually, to the Deferred Incentive presented in Table 50, as long as FHLBank has an MVE of not less than 100 percent of TRCS outstanding, as of the last day of the Deferral Performance Period.

For any Performance Period, an award will not be payable if we fail to achieve performance at or above the Performance Measure(s) set by the Compensation Committee. The Compensation Committee may, in its discretion, reduce or eliminate an award payable under the EICP under any of the following circumstances: (1) we receive a composite "4" or "5" rating in our FHFA examination in any single year in any single Base Performance Period or Deferral Performance Period; (2) the board of directors finds a serious, material safety or soundness problem or a serious, material risk management deficiency exists, or if: (a) operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or to data used to determine incentive payouts; (b) submission of material information to the SEC, Office of Finance, or FHFA is significantly past due; or (c) we fail to make sufficient progress, as determined by the board of directors, in the timely remediation of significant examination, monitoring or other supervisory findings; (3) during the most recent FHFA examination, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of FHLBank within a NEO's area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved in favor of FHLBank by the last day of the Base Performance Period or Deferral Performance Period; or (4) a given participant does not achieve satisfactory individual achievement levels (as determined in the sole discretion of the Compensation Committee) during the Deferral Performance Period. Additionally, Deferred Incentive awards shall be reduced by one-third for each year during the Deferral Performance Period in which we have negative net income, as defined and in accordance with GAAP. The Compensation Committee did not reduce or eliminate an award.

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The EICP for the 2023-2025 Deferral Performance Period is subject to the following performance goal: (1) FHLBank must have an MVE of not less than 100 percent of TRCS outstanding as of the last day of the Deferral Performance Period; and (2) the calculation of the Final Deferred Incentive Award shall be calculated by applying an interest rate credit of six percent, compounded annually, to the Deferred Incentive.

Based on the performance results, Table 51 presents the Final Deferred Incentive Award for the 2023-2025 Deferral Performance Period for each NEO:

**<u>Table 51</u>**

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| | | |
|:---|:---|:---|
| **Named Executive Officer** | **Deferred Incentive** | **Final Deferred Incentive Award**<sup>1</sup> |
| Jeffrey B. Kuzbel, President & CEO | $175101 | $208549 |
| Carl M. Koupal, III, EVP & CMO/CLO | 110594 | 131720 |
| Philip D. Bacchus, SVP & CFO |  |  |
| Martin L. Schlossman, Jr., SVP & CRO | 111254 | 132506 |
| Brian J. Dreher, SVP & CIO | 95738 | 114026 |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;The amount is included as non-equity incentive plan compensation in Table 55 for all NEOs.

An NEO, in the discretion of the Compensation Committee, shall be required to forfeit an award earned under the EICP if the NEO is: (1) terminated from employment with FHLBank for Cause as defined under the EICP; (2) engages in competition with FHLBank or interferes with the business relationships of FHLBank during their employment or for a period of one year following their termination; or (3) discloses confidential information of FHLBank.

*Bonuses and Other Compensation:* On occasion, the Compensation Committee may elect to award a NEO additional compensation. In August 2024, Mr. Bacchus joined FHLBank as SVP and CFO and received a hiring bonus in the amount of $175,000, as well as a $25,000 stipend to assist with relocation expense. In 2024, Mr. Bacchus received a net payment of $69,000 to assist with his relocation and is no longer subject to the clawback period as of December 28, 2025.

*Retirement and Other Benefits -* All of the NEOs participate in the Federal Home Loan Bank of Topeka 401(k) Plan, a defined contribution retirement savings plan qualified under the Internal Revenue Code (IRC) for employees of FHLBank (DC Plan). In response to federal legislation, which imposed restrictions on the retirement benefits payable to our executives, we subsequently established the Benefit Equalization Plan (BEP) to support the competitive level of our total compensation for executive officers, including certain NEOs. The Executive Defined Contribution Retirement Plan (EDCRP), which became effective on January 1, 2025, is an unfunded, nonqualified defined contribution plan, covering employees at SVP and above (or otherwise designated by the Board), with employer nonelective contributions based on a percentage of "Compensation" and the Committee-determined "Achievement Level."

*DC Plan:* The DC Plan is a tax-qualified, defined contribution plan. Substantially all officers and employees of FHLBank are covered by the plan. FHLBank contributes a matching amount equal to a percentage of voluntary employee contributions, subject to certain limitations (see "BEP" below).

All employees who have met the eligibility requirements can choose to participate in the DC Plan. We match employee contributions based on the length of service and the amount of an employee's contribution. These employer contributions are immediately 100 percent vested. During 2025, matching ratios for all employees, including the NEOs (with the exception of Messrs. Kuzbel and Bacchus), under the DC Plan were as follows:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Year 1 | No match |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Years 2 through 3 | 100 percent match up to 4 percent of employee's eligible compensation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Years 4 through 5 | 150 percent match up to 4 percent of employee's eligible compensation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After 5 years | 200 percent match up to 4 percent of employee's eligible compensation |

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We also make a monthly basic contribution in an amount equal to two percent of all employees', including the NEOs', monthly eligible compensation after one year of service.

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*BEP:* The BEP is an unfunded, nonqualified supplemental executive retirement plan that permits Participating NEOs and certain other executives to defer compensation and to receive matching contributions that would otherwise have been made or accrued under FHLBank's DC Plan, as appropriate, but for the limitations imposed by the IRC. As part of Messrs. Kuzbel's and Bacchus' offer letters, they are eligible to receive an employer contribution of 10 percent as though they are a five-year, tenured employees of FHLBank.

The BEP allows the NEOs to receive a rate of return based on our return on equity calculated for EICP purposes for the previous year. For 2025, the rate of return earned on the defined contribution portion of the BEP was 9.80 percent, which was our 2024 Pre-ASC 815 annual return on equity.

Participating NEOs are at all times 100 percent vested in their defined contribution account balances of the BEP. In the event of unforeseen emergencies, they may request withdrawals equal to the lesser of the amounts necessary to meet their financial hardships or the amount of their account balances. As of December 31, 2025, each of the Participating NEOs would be entitled to receive their respective balance of compensation deferred through participation under the BEP within ninety days of any such Participating NEO's termination of employment due to death, disability or retirement and upon a change in control as defined in the BEP and in accordance with IRC Section 409A and applicable regulations. For each Participating NEO, these amounts are listed in Table 59 under the column titled "Aggregate Balance at Last FYE."

Messrs. Schlossman, Koupal, and Dreher participate in the defined benefit BEP, which ceased accrual of further pension benefits as of December 31, 2019.

*Executive Defined Contribution Retirement Plan*: Effective January 1, 2025, the Board of Directors adopted the Federal Home Loan Bank of Topeka EDCRP, an unfunded nonqualified defined contribution retirement plan intended to comply with Section 409A of the IRC. The purpose of the EDCRP is to attract and retain senior executive level talent by providing a competitive total rewards package that supplements the DC Plan and the defined contribution component of the BEP. The EDCRP is designed to offset a portion of the value of compensation that labor-market competitors might otherwise provide through equity-based programs we are precluded from offering due to our cooperative structure.

Eligible employees include employees classified at the level of SVP or higher, or employees otherwise designated by the Board. Under the EDCRP, FHLBank credits a nonelective contribution to each participant's account equal to a percentage of the participant's Compensation for the Plan Year, with the applicable percentage determined by reference to the Committee-determined Achievement Level attained for the year and the participant's officer level. Table 52 presents the EDCRP contribution percentage for each NEO for each achievement level:

**<u>Table 52</u>**

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| | | | |
|:---|:---|:---|:---|
| **Officer Level** | **Threshold** | **Target** | **Optimum** |
| President & CEO | 7.5% | 15% | 22.5% |
| EVP/SVP | 5% | 10% | 15% |

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*Vesting*. A participant vests in the balance of the participant's EDCRP account based on attained age as follows: 50 percent at age 60; 75 percent at age 63; and 100 percent at age 65. Notwithstanding the foregoing, a participant becomes 100 percent vested if the sum of the participant's years of service and age equals or exceeds 70 (i.e., the Rule of 70) or upon a Change in Control (discussed below). Any unvested portion of a participant's account is forfeited upon termination of employment, except that the Compensation Committee of the Board of Directors may, in its discretion, provide for vesting of all or a portion of the account if the participant's employment is terminated without Cause.

Distribution of a participant's vested EDCRP account commences no later than 90 days after a Distribution Event, which is defined as the earlier of death, Disability, or Separation from Service. Within 30 days after first becoming an eligible employee, a participant must irrevocably elect to receive distributions in a single lump sum or in equal annual installments over a period of up to seven years. If no election is made, the account is paid in a lump sum. For purposes of Section 409A, each installment is treated as a separate payment.

Participants may direct the investment of their EDCRP accounts among investment funds made available by the Compensation Committee, with gains or losses credited as of each Valuation Date. The EDCRP is unfunded. Consequently, benefits are payable solely from the general assets of FHLBank, and participants have the status of unsecured general creditors.

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*Other benefits:* We are also committed to providing competitive benefits designed to promote health and welfare for all employees (including their families), including the NEOs. We offer all employees a variety of benefits including insurance (medical, dental, vision, prescription drug, life, long-term disability and travel accident), short-term disability salary continuation, flexible spending accounts, health savings account, an employee assistance program and education benefits. The NEOs participate in these benefit programs on the same basis as all other eligible employees.

*Perquisites:* The board of directors views limited perquisites afforded to the NEOs as an element of the total compensation program. Any perquisites provided, however, are not intended to materially add to any NEO's compensation package and, as such, are provided to them primarily as a convenience associated with their respective duties and responsibilities. Examples of ongoing perquisites that were provided to the NEO in 2025 include cell phone reimbursement, limited spousal travel and limited club dues. Perquisites of more than $10,000 in aggregate for an individual NEO are presented in Table 56.

*Potential payments upon termination or change in control*

*Severance Benefits:* We provide severance benefits to the NEOs pursuant to our Executive Officer Severance Policy. The policy's primary objective is to provide a level of protection to officers from loss of income during a period of unemployment. These officers are eligible to receive severance pay under the policy if we terminate the officer's employment with or without cause, subject to certain limitations. These limitations include: (1) the officer voluntarily terminates employment, including as a result of disability or death; or (2) the officer's employment is terminated by us for misconduct.

Provided the requirements of the policy are met and the NEO provides us an enforceable release, Table 53 presents the term and amounts that would have been payable to the NEO under the Executive Officer Severance Policy as of December 31, 2025, or other effective policy, absent a qualifying event that would result in payments under the Change in Control Plan (see "Change in Control Plan" below):

**<u>Table 53</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Officer** | **Months** | **Severance Amount**<sup>1</sup> | **COBRA**<sup>2</sup> | **Severance Total** |
| Jeffrey B. Kuzbel, President & CEO | 12 | $930000 | $23596 | $953596 |
| Carl M. Koupal, III, EVP & CMO/CLO | 9 | 322500 | 25876 | 348376 |
| Philip D. Bacchus, SVP & CFO | 6 | 232500 | 11797 | 244297 |
| Martin L. Schlossman, Jr., SVP & CRO<sup>3</sup> | 6 | 202500 | 9253 | 211753 |
| Brian J. Dreher, SVP & CIO | 6 | 190000 | 8011 | 198011 |

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<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Severance Amount equals the number of months of base salary as described under the Executive Officer Severance Policy.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;COBRA equals the number of months of medical, dental and vision coverage cost as described under the Executive Officer Severance Policy.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Mr. Schlossman ceased to serve as CRO effective December 31, 2025; consequently, the Severance Policy was no longer applicable to Mr. Schlossman as of January 1, 2026.

The amounts above do not include accrued incentive plan payments as presented in the Summary Compensation Table; the aggregate balance of the DC Plan as presented in the Nonqualified Deferred Compensation Table; or the present value of accumulated benefits of the BEP as presented in the Pension Benefits Table.

*Change in Control Plan:* The Change in Control Plan provides that, upon both a change in control and the termination of a participant that qualifies as a Change in Control Termination, a participant will be entitled to a cash lump sum payment. A Change in Control means the occurrence of any of the following events, provided it shall not include any reorganization that is mandated by any Federal statute, rule, regulations or directive: (1) the merger, reorganization, or consolidation of FHLBank Topeka with or into another FHLBank or other entity; (2) the sale or transfer of all or substantially all of the business or assets of FHLBank Topeka to another FHLBank or other entity; (3) the purchase by FHLBank Topeka or transfer to FHLBank Topeka of substantially all of the business or assets of another FHLBank; (4) a change in the composition of the board of directors, as a result of one or a series of related transactions, that causes the combined number of member directors from the states of Colorado, Kansas, Nebraska and Oklahoma to cease to constitute a majority of the directors of FHLBank Topeka; or (5) the liquidation or dissolution of FHLBank Topeka. We provide for payments under a Change in Control to: (1) promote key employee loyalty and to assure continued dedication to FHLBank Topeka, notwithstanding the possibility, threat or occurrence of a Change in Control; and (2) to reduce the personal uncertainties to key employees who are vital to FHLBank Topeka's future success associated with a pending or possible Change in Control, and to encourage those key employees' continued dedication to FHLBank Topeka.

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A Participant in the Change in Control Plan will receive in a cash lump sum, an amount that, when combined with any amount payable under an FHLBank severance policy, equals a compensation multiplier times the sum of: (1) the Participant's then annualized base salary; (2) an amount equal to the target Total Base Opportunity as reflected in FHLBank's EICP Targets document for the year in which the change in control occurs; and (3) the unvested balance of the participant's EDCRP. Participants at Tier 1 are subject to a compensation multiplier of 2.99, participants at Tier 2 are subject to a compensation multiplier of 2.0, and participants at Tier 3 are subject to a compensation multiplier of 1.0. A Participant is also eligible to receive the continuation of certain group health care benefits for a period of years equal to their compensation multiplier. The Compensation Committee approved the following Participants in the Change in Control Plan and their effective Tiers: Mr. Kuzbel, CEO at Tier 1; Messrs. Koupal, CMO/CLO and Bacchus, CFO at Tier 2; and Messrs. Schlossman, CRO and Dreher, CIO at Tier 3.

*EDCRP Potential Payments upon Change in Control*: Upon a Change in Control (as defined in the Change in Control Plan), participants become 100 percent vested in their EDCRP account balances. Distribution of vested balances occurs in accordance with the participant's prior distribution election and timing rules under Section 409A, commencing no later than 90 days after a Distribution Event. As of December 31, 2025, no EDCRP contributions had been credited because contributions for the 2025 Plan Year are made after year-end. Therefore, the amounts reflected in the Potential Payments table as of December 31, 2025 do not include any EDCRP balance. EDCRP balances credited in future years will vest in full upon a Change in Control and will be included in subsequent Potential Payments disclosures to the extent applicable.

Table 54 represents the elements of potential payments upon a Change in Control and the total amount that would be payable to the participating NEOs as of December 31, 2025 subject to FHLBank's Change in Control Plan, as currently in effect:

**<u>Table 54</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Officer** | **Severance Amount**<sup>1</sup> | **Incentive**<sup>2</sup> | **COBRA**<sup>3</sup> | **Change in Control Total**<sup>4</sup> |
| Jeffrey B. Kuzbel, President & CEO | $2780700 | $2224560 | $70788 | $5076048 |
| Carl M. Koupal, III, EVP & CMO/CLO | 860000 | 516000 | 69003 | 1445003 |
| Philip D. Bacchus, SVP & CFO | 930000 | 558000 | 47190 | 1535190 |
| Martin L. Schlossman, Jr., SVP & CRO<sup>5</sup> | 405000 | 222750 | 18506 | 646256 |
| Brian J. Dreher, SVP & CIO | 380000 | 209000 | 16022 | 605022 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Compensation multiplier times the annual base salary at year end as described under the Change in Control Plan.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Compensation multiplier times target Total Base Opportunity reflected in the 2025 EICP Targets as described in the Change in Control Plan.

<sup>3&nbsp;&nbsp;&nbsp;&nbsp;</sup>COBRA equals the number of months of medical, dental and vision coverage cost as described under the Change in Control Plan.

<sup>4&nbsp;&nbsp;&nbsp;&nbsp;</sup>No EDCRP balance is included as of December 31, 2025 because EDCRP contributions for the 2025 Plan Year will be credited after year-end. Upon a Change in Control, EDCRP account balances will vest in full and become distributable in accordance with participants' elections and Section 409A.

<sup>5&nbsp;&nbsp;&nbsp;&nbsp;</sup>Mr. Schlossman ceased to serve as CRO effective December 31, 2025 consequently, the Change in Control Plan was no longer applicable to Mr. Schlossman as of January 1, 2026.

The amounts above do not include accrued incentive plan payments as presented in the Summary Compensation Table; the aggregate balance of the DC Plan as presented in the Nonqualified Deferred Compensation Table; or the present value of accumulated benefits of the BEP as presented in the Pension Benefits Table.

*Why We Choose to Pay These Elements:* We believe the Compensation Committee's analyses described above provided an appropriate process to determine 2025 compensation levels for each NEO that reasonably positions us to competitively manage our operations for success and to accomplish our mission.

The mix of compensation elements that comprised the total compensation of our NEOs in 2025 particularly allowed us to provide total compensation that we believe appropriately balanced reasonable guaranteed pay through carefully considered base salary determinations with additional at-risk cash compensation opportunities for the NEOs. This means that while we strived to match an appropriate level of compensation comparable to that reflected by our perceived peer groups and internal pay analysis through annual base salary and retirement benefits components, we also strived to provide a component of compensation that is at-risk in both the shorter- and longer-term. These at-risk awards represent an opportunity to reward our NEOs based on the achievement of both our annual and long-term performance goals and the discretion vested in our Compensation Committee.

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*FHFA Oversight:* Section 1113 of the Recovery Act requires that the Director of the FHFA prevent an FHLBank from paying compensation to its executive officers that is not reasonable and comparable to that paid for employment in similar businesses involving similar duties and responsibilities. FHFA guidance establishes certain principles for executive compensation at the FHLBanks and the Office of Finance that include: (1) such compensation must be reasonable and comparable to that offered to executives in similar positions at comparable financial institutions; (2) such compensation should be consistent with sound risk management and preservation of the par value of FHLBank capital stock; (3) a significant percentage of an executive's incentive based compensation should be tied to longer-term performance and outcome-indicators and be deferred and made contingent upon performance over several years; and (4) the board of directors should promote accountability and transparency in the process of setting compensation. FHFA guidance also defines "reasonable" and "comparable" compensation and establishes the review and approval process for certain compensation payments and agreements. FHLBank is subject to additional supervisory guidance and oversight from the FHFA, from time to time.

The FHLBanks have been directed to provide all compensation actions affecting their NEOs to the FHFA for review.

*Compensation and People Committee Interlocks and Insider Participation:* No member of the Compensation and People Committee has at any time been an officer or employee with us. No executive officer has served or is serving on our board of directors or the compensation committee of any entity whose executive officers serve on the Compensation Committee of our board of directors.

*Compensation and People Committee Report:* The Compensation and People Committee of our board of directors has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Compensation and People Committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in our annual report on Form 10-K.

The Compensation and People Committee

Thomas E. Henning, Chair

Milroy A. Alexander

Steve G. Bradshaw

Lynn Jenkins

Barry J. Lockard

Jeffrey R. Noordhoek

Douglas E. Tippens

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 55 presents the Summary Compensation Table for the NEOs for the years for which they represented NEO of FHLBank.

**<u>Table 55</u>**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary** | **Bonus** | **Non-Equity Incentive Plan Compensation**<sup>1</sup> | **Change in Pension Value and Nonqualified Deferred Compensation Earnings**<sup>2</sup> | **All Other Compensation**<sup>3,4</sup> | **Total** |
| Jeffrey B. Kuzbel<sup>5</sup> | 2025 | $930000 | $— | $673549 | $24461 | $162045 | $1790055 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President & CEO | 2024 | 850000 |  | 583337 | 11711 | 116937 | 1561985 |
|  | 2023 | 470000 |  | 191056 | 3993 | 70544 | 735593 |
| Carl M. Koupal, III<sup>6</sup> | 2025 | 430000 |  | 320818 | 11616 | 63313 | 825747 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EVP & CMO/CLO | 2024 | 392596 |  | 190442 | 2678 | 52771 | 638487 |
|  | 2023 | 360000 |  | 121950 | 24868 | 48014 | 554832 |
| Philip D. Bacchus<sup>7</sup> | 2025 | 465000 |  | 204490 | 1809 | 56454 | 727753 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SVP & CFO | 2024 | 157377 | 200000 | 66040 | 3 | 113433 | 536853 |
| Martin L. Schlossman, Jr<sup>.8</sup> | 2025 | 405000 |  | 295768 | 93777 | 59894 | 854439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SVP & CRO | 2024 | 383000 |  | 248125 | 21954 | 54460 | 707539 |
|  | 2023 | 365000 |  | 237831 | 107417 | 49431 | 759679 |
| Brian J. Dreher<sup>9</sup><br>&nbsp;&nbsp;&nbsp;&nbsp; SVP & CIO | 2025 | 380000 |  | 267210 | 23544 | 53005 | 723759 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;All compensation reported under "non-equity incentive plan compensation" represents performance awards earned pursuant to achievement of performance objectives under FHLBank's EICP and the STIP, subject to the approval of the Compensation Committee and not disapproved by the FHFA. The deferred compensation earned and the accrued component of the EICP for 2020 was reduced when paid in 2021. In 2023, the amount of these reductions, which was $30,107 for Mr. Schlossman, was paid at the discretion of the board of directors. The amounts in the table reflect the actual amounts paid in the respective years.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The change in pension value will fluctuate with changes in discount rates used to calculate the present value of accumulated benefits and can result in decreases. However, per SEC rules, any net actuarial decreases in pension plan values have been excluded from this column. Nonqualified deferred compensation earnings include above market earnings attributable to the BEP, which are calculated by multiplying the nonqualified deferred compensation average balance of the applicable year by the average rate of return in excess of the long-term applicable Federal rate (120 percent compounded quarterly) published by the IRS.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;EDCRP contributions relating to the 2025 Plan Year will be credited in 2026 following the Committee's determination of Achievement Levels and, therefore, are not included in "All Other Compensation" for fiscal year 2025. Beginning with fiscal year 2026, EDCRP employer credits will be included as a separate line item in the "All Other Compensation" detail table.

<sup>4&nbsp;&nbsp;&nbsp;&nbsp;</sup>The 2025 components of All Other Compensation are provided in Table 56.

<sup>5</sup>&nbsp;&nbsp;&nbsp;&nbsp;Above market earnings attributable to the BEP were $24,461, $11,711, and $3,993 for 2025, 2024, and 2023, respectively.

<sup>6&nbsp;&nbsp;&nbsp;&nbsp;</sup>Above market earnings attributable to the BEP were $5,616, $2,678, and $868 for 2025, 2024 and 2023, respectively. The aggregate change in the value of the accumulated benefit under FHLBank's DB Plan was $6,000, $(40,000) and $24,000 for 2024, and 2023, respectively.

<sup>7&nbsp;&nbsp;&nbsp;&nbsp;</sup>Above market earnings attributable to the BEP were $1,809 and $3 for 2025 and 2024, respectively.

<sup>8&nbsp;&nbsp;&nbsp;&nbsp;</sup>Above market earnings attributable to the BEP were $37,777, $21,954 and $8,417 for 2025, 2024, and 2023, respectively. The aggregate change in the value of the accumulated benefit under FHLBank's DB Plan was $35,000, $(70,000)and $69,000 for 2025, 2024, and 2023, respectively. The aggregate change in the value of the accumulated benefit under the defined benefit portion of the BEP was $21,000, $(29,000)and $30,000 for 2025, 2024, and 2023, respectively.

<sup>9&nbsp;&nbsp;&nbsp;&nbsp;</sup>Above market earnings attributable to the BEP was $7,544 for 2025. The aggregate change in the value of the accumulated benefit under the DB Plan was $16,000 for 2025.

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Table 56 presents the components of "All Other Compensation" for 2025 as summarized in Table 55.

**<u>Table 56</u>**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Named Executive Officer** | **Perquisites and Personal Benefits**<sup>1</sup> | **Life Insurance Premiums** | **Long Term and Individual Disability Premiums** | **FHLBank Contribution to DC Plan** | **FHLBank Contribution to Defined Contribution Portion of BEP** | **Other Miscellaneous** | **Total All Other Compensation** |
| Jeffrey B. Kuzbel, President & CEO | $10676 | $855 | $15229 | $28000 | $107285 | $— | $162045 |
| Carl M. Koupal, III, EVP & CMO/CLO |  | 735 | 3157 | 25893 | 33528 |  | 63313 |
| Philip D. Bacchus, SVP & CFO |  | 796 | 4311 | 7511 | 43764 | 72 | 56454 |
| Martin L. Schlossman, Jr., SVP & CRO |  | 693 | 3600 | 22477 | 32696 | 428 | 59894 |
| Brian J. Dreher, SVP & CIO |  | 650 | 2679 | 23483 | 26193 |  | 53005 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Perquisites and personal benefits are only included if more than $10,000 in aggregate for an individual. Perquisites and personal benefits for Mr. Kuzbel consist of spousal travel and cell phone expense.

Table 57 presents the Grants of Plan Based Awards Table for the NEOs.

**<u>Table 57</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Plan** | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards**<sup>1</sup> | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards**<sup>1</sup> | **Estimated Future Payouts Under Non-Equity Incentive Plan Awards**<sup>1</sup> |
| **Name** | **Plan** | **Threshold** | **Target** | **Optimum** |
| Jeffrey B. Kuzbel | EICP-Cash Incentive | $186000 | $372000 | $558000 |
| &nbsp;&nbsp;&nbsp;&nbsp;President & CEO | EICP-Deferred Incentive Opportunity | 186000 | 372000 | 558000 |
| Carl M. Koupal, III | EICP-Cash Incentive | 64500 | 129000 | 193500 |
| &nbsp;&nbsp;&nbsp;&nbsp;EVP & CMO/CLO | EICP-Deferred Incentive Opportunity | 64500 | 129000 | 193500 |
| Philip D. Bacchus | EICP-Cash Incentive | 69750 | 139500 | 209250 |
| &nbsp;&nbsp;&nbsp;&nbsp;SVP & CFO | EICP-Deferred Incentive Opportunity | 69750 | 139500 | 209250 |
| Martin L. Schlossman, Jr. | EICP-Cash Incentive | 55688 | 111375 | 167063 |
| &nbsp;&nbsp;&nbsp;&nbsp;SVP & CRO | EICP-Deferred Incentive Opportunity | 55688 | 111375 | 167063 |
| Brian J. Dreher | EICP-Cash Incentive | 52250 | 104500 | 156750 |
| &nbsp;&nbsp;&nbsp;&nbsp;SVP & CIO | EICP-Deferred Incentive Opportunity | 52250 | 104500 | 156750 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Amounts reflected for the EICP represent the applicable range of estimated future payouts and do not represent amounts actually earned or awarded for the fiscal year ended December 31, 2025. Award amounts are calculated using the base salaries in effect on January 1 at the beginning of the performance period. The EICP-Cash Incentive, if any, are earned and vested at year end. Awards, if any, under the EICP-Deferred Incentive Opportunity are payable in the year following the end of the three-year performance period. See discussion under Annual and Deferred Cash Incentive Awards under this Item 11 for a description of the terms of the EICP and potential future payouts.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

*Pension Benefits:* We previously participated in the DB Plan, a tax-qualified defined benefit plan. The DB plan was frozen in 2019 and in 2024, FHLBank entered an agreement to transfer the future benefit obligations and annuity administration to Midland National Life Insurance Company, effective February 1, 2025. As such, FHLBank is no longer a party to the plan. The defined benefit portion of the BEP remains unchanged. In Table 58 presents the 2025 Pension Benefits Table for the participating NEOs.

**<u>Table 58</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Plan Name** | **Number of Years of Credited Services** | **Present Value of Accumulated Benefit** | **Payments During Last Fiscal Year** |
| Carl M. Koupal, III <br> EVP & CMO/CLO | Pentegra Defined Benefit Plan for Financial Institutions | 10.5 | $192000 | $— |
| Martin L. Schlossman, Jr. | Pentegra Defined Benefit Plan for Financial Institutions | 18.1 | 821000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; SVP & CRO | FHLBank Benefit Equalization Plan | 19.1 | 316000 |  |
| Brian J. Dreher<br>&nbsp;&nbsp;&nbsp;&nbsp; SVP & CIO | Pentegra Defined Benefit Plan for Financial Institutions | 20.5 | 402000 |  |

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*Deferred Compensation:* Table 59 presents the 2025 Nonqualified Deferred Compensation Table for the participating NEOs. Our fiscal year (FY) is 2025, with a fiscal year end (FYE) of December 31, 2025.

**<u>Table 59</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name** | **Executive Contributions in Last FY**<sup>1</sup> | **Registrant Contributions in Last FY** | **Aggregate Earnings in Last FY** | **Aggregate Withdrawals / Distributions** | **Aggregate Balance at Last FYE**<sup>2,3</sup> |
| Jeffrey B. Kuzbel, President & CEO | $104285 | $107285 | $52005 | $— | $687526 |
| Carl M. Koupal, III, EVP & CMO/CLO | 25005 | 33528 | 11940 |  | 170494 |
| Philip D. Bacchus, SVP & CFO |  | 43764 | 3845 |  | 61462 |
| Martin L. Schlossman, Jr., SVP & CRO | 167741 | 32696 | 80316 |  | 978488 |
| Brian J. Dreher, SVP & CIO | 87566 | 26193 | 16039 |  | 253663 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;All amounts are also included in the salary column of Table 55.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;The total amount reported as preferential (above market) earnings in the aggregate balance at last FYE reported as compensation to each NEO in the Executive Group in our Summary Compensation Tables for previous years (2006-2024) was $19,856 for Mr. Kuzbel, $3,994 for Mr. Koupal, III, $3 for Mr. Bacchus, and $43,188 for Mr. Schlossman, Jr. The amounts reported as preferential (above market) earnings for the current year are presented in Table 55.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Amounts in the above table reflect the defined contribution component of the BEP. Effective January 1, 2025, FHLBank adopted the EDCRP. Because EDCRP contributions for the 2025 Plan Year are credited after year-end and following the Compensation Committee's determination of Achievement Levels, no EDCRP executive contributions, registrant contributions, aggregate earnings or aggregate balance are included for fiscal year 2025. EDCRP balances will be reported in this table commencing with fiscal year 2026. See "Retirement and Other Benefits – Executive Defined Contribution Retirement Plan" for a description of the EDCRP.

*CEO Pay Ratio:* For the year ended December 31, 2025, the ratio of the total compensation of our CEO to the annual total compensation of our Median Employee (as identified in the manner described below) was approximately 10:1. For the year ended December 31, 2025, the total compensation of the CEO, as reported in the Summary Compensation Table (Table 55), was $1,790,055, and the total compensation of the Median Employee was $175,676.

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*Methodology used to determine the Median Employee*

Every three years, we identify the Median Employee by comparing the calculation year's compensation (i.e., base salary on December 31, 2024, combined with actual incentive compensation earned in 2024 but paid in 2025) for each of the employees who were employed by FHLBank on December 31 and ranking all employees by that consistently applied compensation measure from lowest to highest, excluding the CEO. In the most recent calculation, which was performed for the year ended December 31, 2024, there was an even amount of employees in the total count, so we identified the two middle employees and selected the one with lower compensation to represent the initial median employee. Next, we identified the five employees with compensation higher than that initial median employee and the five employees with compensation lower than that initial median employee, constituting a total pool of 11 employees (the "Identified Pool"). We then calculated Total Compensation for each employee in the Identified Pool in the same manner as "Total Compensation" in the Summary Compensation Table. We ranked the Total Compensation for each employee in the Identified Pool from lowest to highest, and the employee from the Identified Pool in the middle is our Median Employee. The employees in the calculation included only full-time employees as all part-time and temporary employees were excluded.

As a result of our methodology for determining the pay ratio, the estimated pay ratio reported above may not be comparable to the pay ratio of other companies in our industry or in other industries because other companies may rely on different methodologies or assumptions to determine an estimate of their pay ratio, or may make adjustments that we do not make. In addition, no two companies have identical employee populations or compensation programs. As such, our pay ratio should not be used as a basis for comparison between companies.

*Director Compensation:* We provide our directors with compensation for the performance of their duties as members of the Board for time spent on FHLBank's business. We are a cooperative and our capital stock may only be held by current and former members, so we do not provide compensation to our directors in the form of stock or stock options. Table 60 presents the Director Compensation Table for the persons who served on our board of directors during 2025.

**<u>Table 60</u>**

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid in Cash** | **Nonqualified Deferred Compensation Earnings**<sup>1</sup> | **Total** |
| &nbsp;&nbsp;Milroy A. Alexander | $140000 | $10740 | $150740 |
| &nbsp;&nbsp;Steve Bradshaw | 123000 |  | 123000 |
| &nbsp;&nbsp;Kyle Heckman | 123000 |  | 123000 |
| &nbsp;&nbsp;Thomas E. Henning | 130000 |  | 130000 |
| &nbsp;&nbsp;Michael B. Jacobson | 123000 | 7564 | 130564 |
| &nbsp;&nbsp;Lynn Jenkins | 123000 |  | 123000 |
| &nbsp;&nbsp;Holly Johnson | 130000 | 7995 | 137995 |
| &nbsp;&nbsp;Barry J. Lockard | 160000 |  | 160000 |
| &nbsp;&nbsp;Craig A. Meader | 123000 | 3733 | 126733 |
| &nbsp;&nbsp;Jeffrey R. Noordhoek | 123000 |  | 123000 |
| &nbsp;&nbsp;Mark J. O'Connor | 130000 |  | 130000 |
| &nbsp;&nbsp;Carla D. Pratt | 123000 | 1887 | 124887 |
| &nbsp;&nbsp;Douglas E. Tippens | 130000 | 47322 | 177322 |
| &nbsp;&nbsp;Gregg Vandaveer | 123000 | 12488 | 135488 |
| &nbsp;&nbsp;Paul E. Washington | 130000 |  | 130000 |
| &nbsp;&nbsp;Christopher Wente | 123000 | 943 | 123943 |
| &nbsp;&nbsp;Lance L. White | 123000 | 9027 | 132027 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Nonqualified deferred compensation earnings represents above market earnings attributable to the BEP, which are calculated by multiplying the nonqualified deferred compensation average balance of the applicable year by the average rate of return in excess of the long-term applicable Federal rate (120 percent compounded quarterly) published by the IRS.

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*Director Fees:* The board of directors establishes on an annual basis a Board of Directors Compensation Policy governing compensation for board of director meeting attendance. On December 20, 2024, the board of directors adopted our 2025 Board of Directors Compensation Policy (2025 Policy), which became effective January 1, 2025. The applicable statutes and regulations allow each FHLBank to pay its directors reasonable compensation and expenses, subject to the authority of the Director of the FHFA to object to, and to prohibit prospectively, compensation or expenses that the Director of the FHFA determines are not reasonable. To compensate them for their time while serving as directors, our 2025 Policy provided that each director shall be paid one-fourth of their maximum annual compensation provided for in the policy following the end of each calendar quarter. The quarterly payment can be reduced for reasons specified in the policy.

The maximum annual compensation amounts are based on an evaluation of McLagan market research data, including the appropriate peer group and peer positioning, a fee comparison among the FHLBanks and the board's assessment of appropriate and comparable pay to recruit and retain highly qualified directors. The 2025 Policy established annual compensation limits of $160,000 for the Chair, $140,000 for the Vice Chair, $130,000 for Committee Chairs and $123,000 for all other directors. Additionally, an individual serving as a Vice Chair of the Board was also entitled to an increase of $5,000 in their maximum annual compensation in the event the individual served as both Vice Chair of the Board and a Committee Chair.

The board of directors adopted a 2026 Board of Directors Compensation Policy (2026 Policy) governing compensation for board of director meeting attendance on December 19, 2025. The 2026 Policy is similar to the 2025 Policy, except the 2026 policy reflects increases in the established annual compensation limits to $165,000 for the Chair and $142,000 for the Vice Chair. In addition to the maximum annual compensation reflected in the policy, a director may also realize the benefit of reasonable spousal or guest travel expenses that qualify as perquisites as set forth in the Directors and Executive Officers Travel Policy, for one meeting per calendar year, as designated by the Chair of the board of directors. Directors are also entitled to participate in FHLBank's BEP, discussed above, which allows directors the opportunity to defer director compensation, up to 100 percent.

*Director Expenses:* Directors are also reimbursed for all necessary and reasonable travel, subsistence and other related expenses incurred in connection with the performance of their duties. For expense reimbursement purposes, directors' official duties can include:

▪ Meetings of the Board and Board Committees;

▪ Meetings requested by the FHFA;

▪ Meetings of FHLBank System committees;

▪ FHLBank System director meetings;

▪ Meetings of the Council of Federal Home Loan Banks and Council committees; and

▪ Attendance at other events on behalf of FHLBank.

**Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

We are a cooperative. Our members or former members own all of our outstanding capital stock. Our directors are elected by and a majority are from our membership. Each member is eligible to vote for the open member directorships in the state in which its principal place of business is located and for each open independent directorship. For additional information, see Item 10 - "*Directors, Executive Officers and Corporate Governance*." Membership is voluntary, and members must give notice of their intent to withdraw from membership. A member that withdraws from membership may not be readmitted to membership for five years after the date upon which its required membership stock (Class A Common Stock) is redeemed by us.

Management cannot legally and, therefore, does not own our capital stock. We do not offer any compensation plan to our employees under which equity securities of FHLBank are authorized for issuance.

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Members, former members, and successors to former members, including affiliated institutions under common control of a single holding company, holding five percent or more of our outstanding capital stock as of February 27, 2026, are presented in Table 61.

**<u>Table 61</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Member Institutions Holding 5 Percent or More Capital Stock** | **Member Institutions Holding 5 Percent or More Capital Stock** | **Member Institutions Holding 5 Percent or More Capital Stock** | **Member Institutions Holding 5 Percent or More Capital Stock** | **Member Institutions Holding 5 Percent or More Capital Stock** | **Member Institutions Holding 5 Percent or More Capital Stock** |
| **Borrower Name** | **Address** | **City** | **State** | **Number of Shares** | **Percent of Total** |
| MidFirst Bank | 501 NW Grand Blvd | Oklahoma City | OK | 6181160 | 24.3% |
| BOKF, N.A. | 1 Williams Center-BOK Tower 16 SW | Tulsa | OK | 2159987 | 8.5 |
| United of Omaha Life Ins. Co. | Mutual of Omaha Plaza | Omaha | NE | 1449135 | 5.7 |
| *TOTAL* |  |  |  | 9790282 | 38.5% |

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Additionally, because a majority of our board of directors are member directors nominated and elected from our membership, our member directors are officers or directors of members financial institutions that own our capital stock. Table 62 presents total outstanding capital stock, which includes mandatorily redeemable capital stock, held as of February 27, 2026, for members whose affiliated officers or directors currently serve on our board of directors:

**<u>Table 62</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** | **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** | **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** | **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** | **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** | **Total Capital Stock Outstanding to Member Institutions whose Officers or Directors Serve as a Director** |
| **Borrower Name** | **Address** | **City** | **State** | **Number of Shares** | **Percent of Total** |
| BOKF, N.A. | 1 Williams Center-BOK Tower 16 SW | Tulsa | OK | 2159987 | 8.5% |
| Elevations Credit Union | 2960 Diagonal Highway | Boulder | CO | 157067 | 0.6 |
| NebraskaLand Bank | 1400 S Dewey Street | North Platte | NE | 52939 | 0.2 |
| Golden Belt Bank, FSA | 1101 East 27th Street | Hays | KS | 42193 | 0.2 |
| Cornhusker Bank | 8310 O Street | Lincoln | NE | 41044 | 0.2 |
| Bank of the Flint Hills | 806 5th Street | Wamego | KS | 40256 | 0.2 |
| Midwest Housing Development Fund | 515 N. 162nd Avenue, Suite 202 | Omaha | NE | 9194 |  |
| BancFirst | 100 N Broadway Ave | Oklahoma City | OK | 6500 |  |
| First National Bank of Kansas | 600 N 4th Street | Burlington | KS | 5094 |  |
| Flatirons Bank | 1095 Canyon Blvd. Suite 100 | Boulder | CO | 4901 |  |
| Bankers' Bank of Kansas, NA | 555 N Woodlawn Blvd, Bldg 5 | Wichita | KS | 4500 |  |
| Sooner State Bank | 2 SE 4th Street | Tuttle | OK | 3833 |  |
| Impact Development Fund | 200 E. 7th Street, Suite 412 | Loveland | CO | 1609 |  |
| *TOTAL* |  |  |  | 2529117 | 9.9% |

---

**Item 13: Certain Relationships and Related Transactions, and Director Independence**

**<u>Certain Relationships and Related Transactions</u>**

Due to our structure as a cooperative, capital stock ownership is a prerequisite for our members to transact business with us. In recognition of this organizational structure, the SEC granted us an accommodation pursuant to a "no action letter," dated May 23, 2006, which relieves us from the requirement to make disclosures under Item 404(a) of Regulation S-K for transactions with related persons, such as our members and directors, which occur in the ordinary course of business. Further, the Recovery Act codified this accommodation.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Members with beneficial ownership of more than five percent of our total outstanding capital stock and all our directors are classified as related persons under SEC regulations. Our members and certain former members or their successors own all our stock, the majority of our directors are elected by and from the membership, and we conduct our advances and mortgage loan business almost exclusively with members. AHP, Voluntary Program, and Community Investment Program funds are also disbursed in partnership or in connection with our members. Therefore, in the normal course of business, we extend credit and offer services and AHP benefits to members whose officers and directors may serve as our directors, as well as to entities that hold five percent or more of our capital stock. It is our policy that extensions of credit, all other FHLBank products and services, and the AHP benefits are offered on terms and conditions that are no more favorable to such members than the terms and conditions of comparable transactions with other members.

Information with respect to the directors who are officers or directors of our members is set forth under Item 10 - "Directors, Executive Officers and Corporate Governance - Directors." Additional information regarding members that are beneficial owners of more than five percent of our total outstanding capital stock is provided in Item 12 - "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

For a discussion of the compensation of our NEOs and directors, see Item 11 - "Executive Compensation."

We have a written "Related Person Transactions Policy" (Policy) that provides for the review and approval or ratification by our Audit Committee of any transaction with a related person that is outside the ordinary course of business. Under the Policy, transactions with related persons that are in the ordinary course of business are deemed pre-approved.

A "Related Person" under the Policy is:

▪ Any person who is, or at any time since the beginning of our last fiscal year was, a director or an executive officer of FHLBank;

▪ Any immediate family member of any of the foregoing persons and any person (other than a tenant or employee) sharing the household of such director or executive officer;

▪ Any firm, corporation, or other entity in which any of the foregoing persons is an executive officer, a general partner or principal or in a similar position; or

▪ Any member institution (or successor) of FHLBank that is known to be the beneficial owner of more than five percent of our voting securities.

"Ordinary course of business" is defined in the Policy as activities conducted with members, including but not limited to providing our products and services to the extent such product and service transactions are conducted on terms no more favorable than the terms of comparable transactions with similarly situated members or housing associates, as applicable, or transactions between FHLBank and a Related Person where the rates and charges involved in the transactions are subject to competitive bidding. Our products and services include: (1) credit products (*e.g.*, overnight line of credit, advances, forward settling advance commitments, and letters of credit); (2) MPF Program mortgage loan products; (3) housing and CDP products; and (4) other services (*e.g.*, deposit accounts, wire transfer services, safekeeping services and unsecured credit transactions permissible under the RMP).

Transactions outside the ordinary course of business, with Related Persons that have a direct or indirect material interest, and exceed $120,000 are subject to Audit Committee review and approval under the Policy and include situations in which: (1) we obtain products or services from a Related Person of a nature, quantity or quality, or on terms that are not readily available from alternative sources; (2) we provide products or services to a Related Person on terms not comparable to those provided to unrelated parties; or (3) the rates or charges involved in the transactions are not subject to competitive bidding.

**<u>Director Independence</u>**

*Board Operating Guidelines and Nasdaq Standards:* The Board Operating Guidelines of FHLBank (Guidelines), available at <u>www.fhlbtopeka.com/board-governance</u>, require that the board of directors make an annual affirmative determination as to the independence of each director, as that term is defined by Rule 5605(a)(2) of the Nasdaq Marketplace Rules (the "Nasdaq Independence Standards").

The board of directors has affirmatively determined that each one of its directors, both independent and member directors (each of whom is listed in Item 10 of this Form 10-K), is independent in accordance with the Nasdaq Independence Standards.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

To assist the board of directors in making an affirmative determination of each director's independence under the Nasdaq Independence Standards, the board of directors: (1) applied categorical standards for independence contained in the Guidelines and under the Nasdaq Independence Standards; (2) determined subjectively the independence of each director; and (3) considered the recommendation of the Audit Committee following its assessment of the independence of each director. The board of directors' determination of independence under the Nasdaq Independence Standards rested upon a finding that each director has no relationship which, in the opinion of the board of directors, would interfere with that director's exercise of independent judgment in carrying out the responsibilities of the director. Since under FHFA regulations, each independent director must be a bona fide resident of our district, and each member director must be an officer or director of one of our members, the board of directors included in its consideration whether any of these relationships would interfere with the exercise of independent judgment of a particular director.

**<u>Committee Independence</u>**

*Audit Committee:* In addition to the Nasdaq Independence Standards for committee members, our Audit Committee members are subject to the independence standards of the FHFA. FHFA regulations state that a director will be considered sufficiently independent to serve as an Audit Committee member if that director does not have a disqualifying relationship with FHLBank or its management that would interfere with the exercise of that director's independent judgment. Disqualifying relationships include but are not limited to:

▪ Being employed by FHLBank in the current year or any of the past five years;

▪ Accepting compensation from FHLBank other than compensation for service as a director;

▪ Serving or having served in any of the past five years as a consultant, advisor, promoter, underwriter, or legal counsel of FHLBank; or

▪ Being an immediate family member of an individual who is, or has been in any of the past five years, employed by FHLBank as an executive officer.

In addition to the independence standards for Audit Committee members required under the FHFA regulations, Section 10A(m) of the Exchange Act sets forth the independence requirements of directors serving on the Audit Committee of a listed company under the Exchange Act. Under Section 10A(m), to be considered independent, a member of the Audit Committee may not, other than in their capacity as a member of the board of directors or any other board committee: (1) accept any consulting, advisory, or other compensation from FHLBank; or (2) be an affiliated person of FHLBank.

All members of our Audit Committee were independent under the FHFA's audit committee independence criteria and under the independence criteria of Section 10A(m) of the Exchange Act throughout the period covered by this annual report.

The FHFA's criteria for audit committee independence are posted on the corporate governance page of our website at <u>www.fhlbtopeka.com</u>. Except for the documents specifically incorporated by reference into this Annual Report on Form 10-K, information contained on our website or that can be accessed through our website is not incorporated by reference into this Annual Report on Form 10-K. Reference to our website is made as an inactive textual reference.

*Compensation and People Committee:* FHLBank's board of directors has established a Compensation Committee. Under Nasdaq rules, to be considered an independent compensation committee member, the board of directors must affirmatively determine the independence of each director on the Compensation Committee and must consider all factors specifically relevant to determine whether a director has a relationship to FHLBank which is material to that director's ability to be independent from management in connection with the duties of a Compensation Committee member, including the source of the compensation of the director and whether the director is affiliated with FHLBank. The board of directors has affirmatively determined that each member of the Compensation Committee is independent in accordance with the Nasdaq Independence Standards for compensation committee members.

**Item 14: Principal Accountant Fees and Services**

Prior to approving PricewaterhouseCoopers LLP as our independent accountants for 2025, the Audit Committee considered whether PricewaterhouseCoopers LLP's provision of services other than audit services is compatible with maintaining the accountants' independence. The Audit Committee's policy is to pre-approve all audit, audit-related, and permissible non-audit services provided by our independent accountants. The Audit Committee pre-approved all such services provided by the independent accountants during 2025 and 2024. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent accountants and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent accountants in accordance with pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

Table 63 sets forth our aggregate fees incurred for the years ended December 31, 2025 and 2024 by our external accounting firm, PricewaterhouseCoopers LLP (in thousands):

**<u>Table 63</u>**

---

| | | |
|:---|:---|:---|
| | **2025** | **2024** |
| Audit fees | $1207 | $1254 |
| Audit-related fees | 75 | 77 |
| Tax fees |  |  |
| All other fees | 6 | 2 |
| *TOTAL* | $1288 | $1333 |

---

Audit fees during the years ended December 31, 2025 and 2024 were for professional services rendered for the audits of our annual financial statements and review of financial statements included in our annual reports on Form 10-K and quarterly reports on Form 10-Q.

Audit-related and all other fees during the years ended December 31, 2025 and 2024 were for discussions regarding miscellaneous accounting-related matters and a license fee for an electronic disclosure checklist application.

We are assessed our proportionate share of the costs of operating the Office of Finance, which includes the expenses associated with the annual audits of the combined financial statements of the 11 FHLBanks. The audit fees for the combined financial statements are billed directly by PricewaterhouseCoopers LLP to the Office of Finance, and we are assessed our proportionate share of these expenses. In 2025 and 2024, we were assessed $56,000 and $33,000 each year for the costs associated with PricewaterhouseCoopers LLP's audits of the combined financial statements for those years. These assessments are not included in the table above.

Section 1433 of the Bank Act provides that we and the other FHLBanks are exempt from all federal, state and local taxation, with the exception of real property tax. Therefore, no tax consultation fees were paid to our external accounting firm during the years ended December 31, 2025 and 2024.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**PART IV**

**Item 15: Exhibit and Financial Statement Schedules**

a)&nbsp;&nbsp;&nbsp;&nbsp;The financial statements included as part of this Form 10-K are identified in the index to Audited Financial Statements appearing in Item 8 of this Form 10-K and which index is incorporated in this Item 15 by reference.

b)&nbsp;&nbsp;&nbsp;&nbsp;Exhibits.

We have incorporated by reference certain exhibits as specified below pursuant to Rule 12b-32 under the Exchange Act.

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| [3.1](https://www.sec.gov/Archives/edgar/data/1325878/000095015206004473/j1943901exv3w1.htm) | Exhibit 3.1 to FHLBank's registration statement on Form 10, filed May 15, 2006, and made effective on July 14, 2006 (File No. 000-52004) (the "Form 10 Registration Statement"), Federal Home Loan Bank of Topeka Articles and Organization Certificate, is incorporated herein by reference as Exhibit 3.1. |
| [3.2](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000239/exhibit32bylaws10252024.htm) | Exhibit 3.2 to the Current Report on Form 8-K, filed October 31, 2024, Federal Home Loan Bank of Topeka Amended and Restated Bylaws, is incorporated herein by reference as Exhibit 3.2. |
| [4.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587820000006/ex1231201941.htm) | Exhibit 4.1 to the 2019 Annual Report on Form 10-K, filed March 20, 2020, Federal Home Loan Bank of Topeka Capital Plan, is incorporated herein by reference as Exhibit 4.1. |
| [4.2](https://www.sec.gov/Archives/edgar/data/1325878/000132587820000006/ex1231201942.htm) | Exhibit 4.2 to the 2019 Annual Report on Form 10-K, filed March 20, 2020, Description of Securities - Supplement to the Federal Home Loan Bank of Topeka Capital Plan, is incorporated herein by reference as Exhibit 4.2. |
| [10.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587817000010/ex123116103.htm) | Exhibit 10.3 to the 2016 Annual Report on Form 10-K, filed March 9, 2017, Federal Home Loan Bank of Topeka Form of Advance, Pledge and Security Agreement (Specific Pledge), is incorporated herein by reference as Exhibit 10.1. |
| [10.2](https://www.sec.gov/Archives/edgar/data/1325878/000132587817000010/ex123116104.htm) | Exhibit 10.4 to the 2016 Annual Report on Form 10-K, filed March 9, 2017, Federal Home Loan Bank of Topeka Form of Advance, Pledge and Security Agreement (Blanket Pledge), is incorporated herein by reference as Exhibit 10.2. |
| [10.3](https://www.sec.gov/Archives/edgar/data/1325878/000132587814000006/c878-20131231ex1067ffd57.htm) | Exhibit 10.6 to the 2013 Annual Report on Form 10-K, filed March 14, 2014, Federal Home Loan Bank of Topeka Form of Confirmation of Advance, is incorporated herein by reference as Exhibit 10.3. |
| [10.4](https://www.sec.gov/Archives/edgar/data/1325878/000129993317000650/exhibit1.htm) | Exhibit 10.1 to the Current Report on Form 8-K, filed June 23, 2017, Bond Trust Indenture dated as of June 1, 2017, between Shawnee County, Kansas and BOKF, N.A., is incorporated herein by reference as Exhibit 10.4. |
| [10.5](https://www.sec.gov/Archives/edgar/data/1325878/000129993317000650/exhibit2.htm) | Exhibit 10.2 to the Current Report on Form 8-K, filed June 23, 2017, Lease Agreement dated as of June 1, 2017, between Shawnee County, Kansas and Federal Home Loan Bank of Topeka, is incorporated herein by reference as Exhibit 10.5. |
| [10.6](https://www.sec.gov/Archives/edgar/data/1325878/000129993317000650/exhibit3.htm) | Exhibit 10.3 to the Current Report on Form 8-K, filed June 23, 2017, Base Lease Agreement dated as of June 1, 2017, between Shawnee County, Kansas and Federal Home Loan Bank of Topeka, is incorporated herein by reference as Exhibit 10.6 |
| [10.7](https://www.sec.gov/Archives/edgar/data/1325878/000132587817000010/ex1231161026.htm) | Exhibit 10.26 to the 2016 Annual Report on Form 10-K, filed March 9, 2017, Amended and Restated Federal Home Loan Banks P&I Funding and Contingency Plan Agreement, is incorporated herein by reference as Exhibit 10.7. |
| [10.8](https://www.sec.gov/Archives/edgar/data/1325878/000156459020056394/ck0001325878-ex101_7.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed December 18, 2020, Federal Home Loan Bank of Topeka Benefit Equalization Plan, is incorporated herein by reference as Exhibit 10.8. |
| [10.9](https://www.sec.gov/ix?doc=/Archives/edgar/data/1325878/000132587824000286/fhlbt-20241213.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed December 19, 2024, Federal Home Loan Bank of Topeka Executive Defined Contribution Retirement Plan, is incorporated herein by reference as Exhibit 10.9. |
| [10.10](https://www.sec.gov/Archives/edgar/data/1325878/000132587822000030/aex101executiveincentiveco.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed February 16, 2022, Executive Incentive Compensation Plan dated December 17, 2021, is incorporated herein by reference as Exhibit 10.10. |
| [10.11](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000074/exhibit101eicpdated20231215.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed March 20, 2024, Executive Incentive Compensation Plan dated December 15, 2023, is incorporated herein by reference as Exhibit 10.11. |
| [10.12](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000160/exhibit101eicpdated20240613.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed July 18, 2024, Executive Incentive Compensation Plan dated June 13, 2024, is incorporated herein by reference as Exhibit 10.12. |
| [10.13](https://www.sec.gov/Archives/edgar/data/1325878/000132587825000054/ex1013eicpdated20241220.htm)<sup>\*</sup> | Exhibit 10.13 to the 2024 Annual Report on Form 10-K, filed March 13, 2025, Executive Incentive Compensation Plan dated December 20, 2024, is incorporated herein by reference as Exhibit 10.13. |
| [10.1](https://www.sec.gov/Archives/edgar/data/1325878/000156459021003797/ck0001325878-ex101_6.htm)[4](https://www.sec.gov/Archives/edgar/data/1325878/000156459021003797/ck0001325878-ex101_6.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed February 2, 2021, Federal Home Loan Bank of Topeka 2021 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.14. |
| [10.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587822000030/a8-kexhibit1022022trgts.htm)[5](https://www.sec.gov/Archives/edgar/data/1325878/000132587822000030/a8-kexhibit1022022trgts.htm)<sup>\*</sup> | Exhibit 10.2 to the Current Report on Form 8-K, filed February 16, 2022, Federal Home Loan Bank of Topeka 2022 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.15. |
| [10.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587823000056/exhibit101incentiveplantrg.htm)[6](https://www.sec.gov/Archives/edgar/data/1325878/000132587823000056/exhibit101incentiveplantrg.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed March 7, 2023, Federal Home Loan Bank of Topeka 2023 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.16. |
| [10.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000125/exhibit101.htm)[7](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000125/exhibit101.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed May 23, 2024, Federal Home Loan Bank of Topeka 2024 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.17. |
| [10.18](https://www.sec.gov/Archives/edgar/data/1325878/000132587825000085/exhibit1012025executiveinc.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-KA, filed April 24, 2025, Federal Home Loan Bank of Topeka 2025 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.18. |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| [10.19](https://www.sec.gov/Archives/edgar/data/1325878/000132587826000049/exhibit101eicptrgts.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed March 11, 2026, Federal Home Loan Bank of Topeka 2026 Executive Incentive Compensation Plan Targets, is incorporated herein by reference as Exhibit 10.19. |
| [10.](https://www.sec.gov/Archives/edgar/data/1325878/000132587815000018/cicplan.htm)[20](https://www.sec.gov/Archives/edgar/data/1325878/000132587815000018/cicplan.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed July 20, 2015, Federal Home Loan Bank of Topeka Change in Control Plan, is incorporated herein by reference as Exhibit 10.20. |
| [10.](https://www.sec.gov/Archives/edgar/data/1325878/000156459018018355/ck0001325878-ex101_6.htm)[21](https://www.sec.gov/Archives/edgar/data/1325878/000156459018018355/ck0001325878-ex101_6.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed August 1, 2018, Federal Home Loan Bank of Topeka Executive Officer Severance Policy, is incorporated herein by reference as Exhibit 10.21. |
| [10](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000295/exhibit101boardofdirectors.htm)[.22](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000295/exhibit101boardofdirectors.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed December 26, 2024, Federal Home Loan Bank of Topeka 2025 Board of Directors Compensation Policy, is incorporated herein by reference as Exhibit 10.22. |
| [10](https://www.sec.gov/Archives/edgar/data/1325878/000132587826000010/exhibit101boardofdirectors.htm)[.23](https://www.sec.gov/Archives/edgar/data/1325878/000132587826000010/exhibit101boardofdirectors.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed January 15, 2026, Federal Home Loan Bank of Topeka 2026 Board of Directors Compensation Policy, is incorporated herein by reference as Exhibit 10.23. |
| [10.24](https://www.sec.gov/Archives/edgar/data/1325878/000129993316002689/exhibit1.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed June 30, 2016, Form of Director Indemnification Agreement, is incorporated herein by reference as Exhibit 10.24. |
| [10.25](https://www.sec.gov/Archives/edgar/data/1325878/000129993316002689/exhibit2.htm)<sup>\*</sup> | Exhibit 10.2 to the Current Report on Form 8-K, filed June 30, 2016, Form of Officer Indemnification Agreement, is incorporated herein by reference as Exhibit 10.25. |
| [10.26](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000271/exhibit101acceptanceagreem.htm)<sup>\*</sup> | Exhibit 10.1 to the Current Report on Form 8-K, filed November 26, 2024, Acceptance Agreement with Midland National Life Insurance Company, is incorporated herein by reference as Exhibit 10.26. |
| [14.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000063/ex14112312023.htm) | Exhibit 14.1 to the 2023 Annual Report on Form 10-K, filed March 11, 2024, Federal Home Loan Bank of Topeka Code of Ethics, is incorporated herein by reference as Exhibit 14.1. |
| [19.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587825000054/ex19112312024.htm) | Exhibit 19.1 to the 2024 Annual Report on Form 10-K, filed March 13, 2025, Federal Home Loan Bank of Topeka Insider Trading Policy, is incorporated herein by reference as Exhibit 19.1. |
| [24.1](ex24112312025.htm) | Power of Attorney. |
| [31.1](ex31112312025.htm) | Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| [31.2](ex31212312025.htm) | Certification of Senior Vice President and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| [32](ex3212312025.htm) | Certification of President and Principal Executive Officer and Senior Vice President and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| [99.1](https://www.sec.gov/Archives/edgar/data/1325878/000132587824000063/ex99112312023.htm) | Exhibit 99.1 2023 Annual Report on Form 10-K, filed March 11, 2024, Federal Home Loan Bank of Topeka Audit Committee Charter, is incorporated herein by reference as Exhibit 99.1. |
| [99.2](ex99212312025.htm) | Federal Home Loan Bank of Topeka Audit Committee Report. |
| 101.INS<sup>\*\*</sup> | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH<sup>\*\*</sup> | XBRL Taxonomy Extension Schema Document |
| 101.CAL<sup>\*\*</sup> | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.LAB<sup>\*\*</sup> | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE<sup>\*\*</sup> | XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.DEF<sup>\*\*</sup> | XBRL Taxonomy Extension Definition Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |

---

**<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

<sup>\*&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents a management contract or a compensatory plan or arrangement.

<sup>\*\*&nbsp;&nbsp;&nbsp;&nbsp;</sup>The financial information contained in these XBRL documents is unaudited.

**Item 16: Form 10-K Summary**

None.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| | Federal Home Loan Bank of Topeka |
| <u>March 12, 2026</u> | By: /s/ Jeffrey B. Kuzbel |
| Date | Jeffrey B. Kuzbel |
|  | President and Chief Executive Officer |
| <u>March 12, 2026</u> | By: /s/ Philip D. Bacchus |
| Date | Philip D. Bacchus |
|  | Senior Vice President and Chief Financial Officer |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | &nbsp;&nbsp;&nbsp;**Title** | **Date** |
| /s/ Jeffrey B. Kuzbel | &nbsp;&nbsp;&nbsp;President and Chief Executive Officer | March 12, 2026 |
| Jeffrey B. Kuzbel | &nbsp;&nbsp;&nbsp;(principal executive officer) |  |
| /s/ Philip D. Bacchus | &nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer | March 12, 2026 |
| Philip D. Bacchus | &nbsp;&nbsp;&nbsp;(principal financial officer) |  |
| /s/ Amy J. Crouch | &nbsp;&nbsp;First Vice President and Chief Accounting Officer | March 12, 2026 |
| Amy J. Crouch | &nbsp;&nbsp;&nbsp;(principal accounting officer) |  |
| /s/ Barry Lockard<sup>1</sup> | &nbsp;&nbsp;&nbsp;Chair of the Board of Directors | March 12, 2026 |
| Barry Lockard |  |  |
| /s/ Milroy A. Alexander<sup>1</sup> | &nbsp;&nbsp;&nbsp;Vice Chair of the Board of Directors | March 12, 2026 |
| Milroy A. Alexander |  |  |
| /s/ Steven G. Bradshaw<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Steven G. Bradshaw |  |  |
| /s/ Michael D. Calcote<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Michael Calcote |  |  |
| /s/ Kyle J. Heckman<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Kyle J. Heckman |  |  |
| /s/ Thomas E. Henning<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Thomas E. Henning |  |  |
| /s/ Holly Johnson<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |

---

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_10)</u>**

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| | | |
|:---|:---|:---|
| Holly Johnson |  |  |
| /s/ Lynn Jenkins<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Lynn Jenkins |  |  |
| /s/ Craig A. Meader<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Craig A. Meader |  |  |
| /s/ Jeffrey R. Noordhoek<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Jeffrey R. Noordhoek |  |  |
| /s/ Douglas E. Tippens<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Douglas E. Tippens |  |  |
| /s/ Paul E. Washington<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Paul E. Washington |  |  |
| /s/ Christopher Wente<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Christopher Wente |  |  |
| /s/ Lance L. White<sup>1</sup> | &nbsp;&nbsp;&nbsp;Director | March 12, 2026 |
| Lance L. White |  |  |

---

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Pursuant to Power of Attorney

------

**Management's Report on Internal Control over Financial Reporting**

Management of the Federal Home Loan Bank of Topeka (FHLBank) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. FHLBank's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of FHLBank's assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of FHLBank are being made only in accordance with authorizations of FHLBank's management and board of directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of FHLBank's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of FHLBank assessed the effectiveness of FHLBank's internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control - Integrated Framework (2013)*. Based on this evaluation under the COSO framework, management has concluded that FHLBank's internal control over financial reporting was effective as of December 31, 2025.

The effectiveness of FHLBank's internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, FHLBank's independent registered public accounting firm, as stated in their accompanying report.

---

| |
|:---|
| By: /s/ Jeffrey B. Kuzbel |
| Jeffrey B. Kuzbel |
| President and Chief Executive Officer |
| By: /s/ Philip D. Bacchus |
| Philip D. Bacchus |
| Senior Vice President and Chief Financial Officer |

---

------

![pwc_logo_2026.jpg](fhlbt-20251231_g1.jpg)

**Report of Independent Registered Public Accounting Firm** 

To the Board of Directors and Stockholders of the

Federal Home Loan Bank of Topeka

***Opinions on the Financial Statements and Internal Control over Financial Reporting***

We have audited the accompanying statements of condition of the Federal Home Loan Bank of Topeka (the "FHLBank") as of December 31, 2025 and 2024, and the related statements of income, of comprehensive income, of capital and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "financial statements"). We also have audited the FHLBank's internal control over financial reporting as of December 31, 2025, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the FHLBank as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the FHLBank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

***Basis for Opinions***

The FHLBank's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the FHLBank's financial statements and on the FHLBank's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the FHLBank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

www.pwc.com&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers LLP, 1100 Walnut Street, Suite 1300, Kansas City, Missouri 64106

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+1 816 472 7921

------

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

***Definition and Limitations of Internal Control over Financial Reporting***

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

***Critical Audit Matters***

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on

------

the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Valuation of Interest-Rate Related Derivatives*

As described in Notes 6 and 13 to the financial statements, as of December 31, 2025, the fair value of FHLBank's derivative assets and liabilities was $392.2 million and $0.6 million, respectively, the majority of which related to interest-rate related derivatives. The fair value of derivatives is generally estimated using standard valuation techniques such as a discounted cash flow model. For interest-rate related derivatives, the discounted cash flow model uses market observable inputs, including the discount rate, forward interest rate for rate resets, and volatility assumptions.

The principal considerations for our determination that performing procedures relating to the valuation of interest-rate related derivatives is a critical audit matter are (i) the high degree of audit effort in performing procedures related to the valuation of interest-rate related derivatives; and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to the valuation of interest-rate related derivatives. These procedures also included, among others, (i) testing the completeness and accuracy of certain data provided by management and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management's estimate by (a) developing an independent estimate of fair value for a sample of interest-rate related derivatives using independent market observable inputs, including the discount rate, forward interest rate for rate resets, and volatility assumptions and (b) comparing the independently developed estimate of fair value to management's estimate.

![pwc_signature_2026.jpg](fhlbt-20251231_g2.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;

Kansas City, Missouri

March 12, 2026

We have served as the FHLBank's auditor since 1990.

------

**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

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| | | |
|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | |
| **STATEMENTS OF CONDITION** | | |
| (In thousands, except par value) |  |  |
|  | **12/31/2025** | **12/31/2024** |
| **ASSETS** |  |  |
| Cash and due from banks | $21729 | $25575 |
| Interest-bearing deposits | 1910137 | 2142423 |
| Securities purchased under agreements to resell (Note 10) | 4150000 | 5150000 |
| Federal funds sold | 2850000 | 3575000 |
| Investment securities: |  |  |
| &nbsp;&nbsp;Trading securities (Note 3) | 80741 | 439963 |
| &nbsp;&nbsp;Available-for-sale securities, amortized cost of $14,657,195 and $13,197,724 (Note 3) | 14570751 | 13057619 |
| &nbsp;&nbsp;Held-to-maturity securities, fair value of $182,504 and $217,476 (Note 3) | 182806 | 219826 |
| Total investment securities | 14834298 | 13717408 |
| Advances (Note 4) | 43667540 | 41652081 |
| Mortgage loans held for portfolio, net of allowance for credit losses of $3,566 and $4,033 (Note 5) | 9351305 | 8949433 |
| Accrued interest receivable | 245759 | 249199 |
| Derivative assets, net (Notes 6, 10) | 392242 | 357314 |
| Other assets | 82019 | 82547 |
| *TOTAL ASSETS* | $77505029 | $75900980 |
| **LIABILITIES** |  |  |
| Deposits (Note 7) | $909553 | $989021 |
| Consolidated obligations, net: |  |  |
| &nbsp;&nbsp;Discount notes (Note 8) | 21309301 | 14417047 |
| &nbsp;&nbsp;Bonds (Note 8) | 50547734 | 55864506 |
| Total consolidated obligations, net | 71857035 | 70281553 |
| Mandatorily redeemable capital stock (Note 11) | 5836 | 3225 |
| Accrued interest payable | 301720 | 347843 |
| Affordable Housing Program payable  | 113098 | 102494 |
| Derivative liabilities, net (Notes 6, 10) | 592 | 6131 |
| Other liabilities | 129557 | 70984 |
| *TOTAL LIABILITIES* | 73317391 | 71801251 |
| Commitments and contingencies (Note 14) |  |  |

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*The accompanying notes are an integral part of these financial statements.*

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

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| | | |
|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | |
| **STATEMENTS OF CONDITION** | | |
| (In thousands, except par value) |  |  |
|  | **12/31/2025** | **12/31/2024** |
| **CAPITAL** |  |  |
| Capital stock outstanding - putable: |  |  |
| &nbsp;&nbsp;Class A ($100 par value; 2,597 and 4,649 shares issued and outstanding) (Note 11) | $259684 | $464904 |
| &nbsp;&nbsp;Class B ($100 par value; 22,507 and 21,667 shares issued and outstanding) (Note 11) | 2250678 | 2166701 |
| Total capital stock | 2510362 | 2631605 |
| Retained earnings: |  |  |
| &nbsp;&nbsp;&nbsp;Unrestricted | 1188693 | 1109059 |
| &nbsp;&nbsp;Restricted | 574931 | 499027 |
| Total retained earnings | 1763624 | 1608086 |
| Accumulated other comprehensive income (loss) (Note 12) | (86348) | (139962) |
| *TOTAL CAPITAL* | 4187638 | 4099729 |
| *TOTAL LIABILITIES AND CAPITAL* | $77505029 | $75900980 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

---

| | | | |
|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | | |
| **STATEMENTS OF INCOME** | | | |
| (In thousands) |  |  |  |
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **INTEREST INCOME:** |  |  |  |
| Advances | $2085756 | $2434890 | $2409840 |
| Interest-bearing deposits | 116811 | 144639 | 143330 |
| Securities purchased under agreements to resell | 146126 | 153604 | 121367 |
| Federal funds sold | 192614 | 241903 | 221114 |
| Trading securities | 6557 | 22072 | 34196 |
| Available-for-sale securities | 718033 | 784787 | 594548 |
| Held-to-maturity securities | 10118 | 13937 | 15982 |
| Mortgage loans held for portfolio | 369976 | 322061 | 261352 |
| Other | 795 | 712 | 1430 |
| Total interest income | 3646786 | 4118605 | 3803159 |
| **INTEREST EXPENSE:** |  |  |  |
| Deposits | 36282 | 40415 | 32921 |
| Consolidated obligations: |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount notes | 571976 | 888622 | 1102702 |
| &nbsp;&nbsp;&nbsp;Bonds | 2496594 | 2627916 | 2206160 |
| Mandatorily redeemable capital stock | 368 | 190 | 14 |
| Other | 1292 | 1243 | 1311 |
| Total interest expense | 3106512 | 3558386 | 3343108 |
| *NET INTEREST INCOME* | 540274 | 560219 | 460051 |
| Provision (reversal) for credit losses on mortgage loans | (28) | (1636) | (641) |
| *NET INTEREST INCOME AFTER LOAN LOSS PROVISION (REVERSAL)* | 540302 | 561855 | 460692 |
| **OTHER INCOME (LOSS):** |  |  |  |
| Net gains (losses) on trading securities | 5630 | 16962 | 19554 |
| Net gains (losses) on sale of available-for-sale securities | (890) |  |  |
| Net gains (losses) on derivatives | (4579) | 5606 | 14923 |
| Standby bond purchase agreement commitment fees | 3267 | 2968 | 2815 |
| Letters of credit fees | 8249 | 9212 | 8218 |
| Other | 2731 | 2392 | 2437 |
| Total other income (loss) | 14408 | 37140 | 47947 |

---

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

---

| | | | |
|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | | |
| **STATEMENTS OF INCOME** | | | |
| (In thousands) |  |  |  |
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **OTHER EXPENSES:** |  |  |  |
| Compensation and benefits | $53915 | $52506 | $49870 |
| Other operating | 29018 | 30017 | 25422 |
| Voluntary housing and community investment program contributions | 29104 | 16498 | 3000 |
| Federal Housing Finance Agency | 6757 | 5912 | 5963 |
| Office of Finance | 5512 | 5104 | 4441 |
| Mortgage loans transaction service fees | 7182 | 6904 | 6413 |
| Other | 1492 | 1231 | 1899 |
| Total other expenses | 132980 | 118172 | 97008 |
| *INCOME BEFORE ASSESSMENTS* | 421730 | 480823 | 411631 |
| Affordable Housing Program | 42210 | 48101 | 41164 |
| *NET INCOME* | $379520 | $432722 | $370467 |

---

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

---

| | | | |
|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | | |
| **STATEMENTS OF COMPREHENSIVE INCOME** | | | |
| (In thousands) |  |  |  |
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Net income | $379520 | $432722 | $370467 |
| Other comprehensive income (loss): |  |  |  |
| &nbsp;&nbsp;&nbsp;Net change in fair value of available-for-sale securities | 53661 | (21161) | (34501) |
| &nbsp;&nbsp;Defined benefit pension plan | (47) | 170 | (200) |
| Total other comprehensive income (loss) | 53614 | (20991) | (34701) |
| *TOTAL COMPREHENSIVE INCOME (LOSS)* | $433134 | $411731 | $335766 |

---

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | **FEDERAL HOME LOAN BANK OF TOPEKA** | **FEDERAL HOME LOAN BANK OF TOPEKA** | **FEDERAL HOME LOAN BANK OF TOPEKA** | **FEDERAL HOME LOAN BANK OF TOPEKA** | | | | | | | |
| **STATEMENTS OF CAPITAL** | **STATEMENTS OF CAPITAL** | **STATEMENTS OF CAPITAL** | **STATEMENTS OF CAPITAL** | **STATEMENTS OF CAPITAL** | | | | | | | |
| (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |  |  |  |  |  |  |  |
|  | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Accumulated** | **Total Capital** |
|  | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Capital Stock**<sup>1</sup> | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Other** | **Total Capital** |
|  | **Class A** | **Class A** | **Class B** | **Class B** | **Total** | **Total** | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Comprehensive** | **Total Capital** |
|  | **Shares** | **Par Value** | **Shares** | **Par Value** | **Shares** | **Par Value** | **Unrestricted** | **Restricted** | **Total** | **Income (Loss)** | **Total Capital** |
| **Balance at December 31, 2022** | 2388 | $238777 | 22689 | $2268932 | 25077 | $2507709 | $914716 | $338389 | $1253105 | $(84270) | $3676544 |
| Comprehensive income |  |  |  |  |  |  | 296373 | 74094 | 370467 | (34701) | 335766 |
| Proceeds from issuance of capital stock | 41 | 4069 | 31186 | 3118587 | 31227 | 3122656 |  |  |  |  | 3122656 |
| Repurchase/redemption of capital stock | (23058) | (2305768) | (2117) | (211704) | (25175) | (2517472) |  |  |  |  | (2517472) |
| Net reclassification of shares to mandatorily redeemable capital stock | (4341) | (434167) | (2925) | (292406) | (7266) | (726573) |  |  |  |  | (726573) |
| Net transfer of shares between Class A and Class B | 27759 | 2775976 | (27759) | (2775976) |  |  |  |  |  |  |  |
| Dividends on capital stock (Class A - 4.3%, Class B - 9.1%): |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash payment |  |  |  |  |  |  | (269) |  | (269) |  | (269) |
| &nbsp;&nbsp;&nbsp;Stock issued |  |  | 2214 | 221363 | 2214 | 221363 | (221363) |  | (221363) |  |  |
| **Balance at December 31, 2023** | 2789 | $278887 | 23288 | $2328796 | 26077 | $2607683 | $989457 | $412483 | $1401940 | $(118971) | $3890652 |
| Comprehensive income |  |  |  |  |  |  | 346178 | 86544 | 432722 | (20991) | 411731 |
| Proceeds from issuance of capital stock | 13 | 1278 | 21535 | 2153575 | 21548 | 2154853 |  |  |  |  | 2154853 |
| Repurchase/redemption of capital stock | (18238) | (1823840) | (1644) | (164413) | (19882) | (1988253) |  |  |  |  | (1988253) |
| Net reclassification of shares to mandatorily redeemable capital stock | (3403) | (340268) | (287) | (28683) | (3690) | (368951) |  |  |  |  | (368951) |
| Net transfer of shares between Class A and Class B | 23488 | 2348847 | (23488) | (2348847) |  |  |  |  |  |  |  |
| Dividends on capital stock (Class A - 4.7%, Class B - 9.5%): |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash payment |  |  |  |  |  |  | (303) |  | (303) |  | (303) |
| &nbsp;&nbsp;&nbsp;Stock issued |  |  | 2263 | 226273 | 2263 | 226273 | (226273) |  | (226273) |  |  |
| **Balance at December 31, 2024** | 4649 | $464904 | 21667 | $2166701 | 26316 | $2631605 | $1109059 | $499027 | $1608086 | $(139962) | $4099729 |
| Comprehensive income |  |  |  |  |  |  | 303616 | 75904 | 379520 | 53614 | 433134 |
| Proceeds from issuance of capital stock | 6 | 576 | 27751 | 2775093 | 27757 | 2775669 |  |  |  |  | 2775669 |
| Repurchase/redemption of capital stock | (23481) | (2348057) | (1741) | (174118) | (25222) | (2522175) |  |  |  |  | (2522175) |
| Net reclassification of shares to mandatorily redeemable capital stock | (4971) | (497101) | (1013) | (101341) | (5984) | (598442) |  |  |  |  | (598442) |
| Net transfer of shares between Class A and Class B | 26394 | 2639362 | (26394) | (2639362) |  |  |  |  |  |  |  |
| Dividends on capital stock (Class A - 4.3%, Class B - 9.3%): |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash payment |  |  |  |  |  |  | (277) |  | (277) |  | (277) |
| &nbsp;&nbsp;&nbsp;Stock issued |  |  | 2237 | 223705 | 2237 | 223705 | (223705) |  | (223705) |  |  |
| **Balance at December 31, 2025** | 2597 | $259684 | 22507 | $2250678 | 25104 | $2510362 | $1188693 | $574931 | $1763624 | $(86348) | $4187638 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Putable

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

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| | | | |
|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | | |
| **STATEMENTS OF CASH FLOWS** | | | |
| (In thousands) |  |  |  |
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |  |
| Net income | $379520 | $432722 | $370467 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | (52840) | (126417) | 73493 |
| &nbsp;&nbsp;Net change in derivatives and hedging activities | (484961) | 4284 | (198493) |
| &nbsp;&nbsp;&nbsp;Net (gains) losses on trading securities | (5630) | (16962) | (19554) |
| &nbsp;&nbsp;Net (gains) losses on sale of available-for-sale securities | 890 |  |  |
| &nbsp;&nbsp;&nbsp;Other adjustments, net | 5821 | (1313) | (650) |
| Net change in: |  |  |  |
| &nbsp;&nbsp;&nbsp;Accrued interest receivable | 3460 | (43244) | (18096) |
| &nbsp;&nbsp;&nbsp;Net accrued interest included in derivative assets | 12938 | 4887 | (23379) |
| &nbsp;&nbsp;&nbsp;Other assets | 370 | (3140) | (640) |
| &nbsp;&nbsp;&nbsp;Accrued interest payable | (45526) | (14664) | 164670 |
| &nbsp;&nbsp;&nbsp;Net accrued interest included in derivative liabilities | 2996 | 3479 | (19945) |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in Affordable Housing Program liability | 10604 | 24699 | 24159 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 4054 | (1476) | 1935 |
| Total adjustments | (547824) | (169867) | (16500) |
| *NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES* | (168304) | 262855 | 353967 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |  |
| Net (increase) decrease in interest-bearing deposits | 324655 | (410220) | $547558 |
| Net (increase) decrease in securities purchased under resale agreements | 1000000 | (1275000) | (1525000) |
| Net (increase) decrease in Federal funds sold | 725000 | (1495000) | 1670000 |
| Trading securities: |  |  |  |
| &nbsp;&nbsp;Proceeds from maturities and principal repayments | 364851 | 485607 | 532399 |
| Available-for-sale securities: |  |  |  |
| &nbsp;&nbsp;Proceeds from sales | 54003 |  |  |
| &nbsp;&nbsp;Proceeds from maturities and principal repayments | 1759090 | 1186868 | 1765339 |
| &nbsp;&nbsp;Purchases | (2901300) | (2467853) | (4008018) |
| Held-to-maturity securities: |  |  |  |
| &nbsp;&nbsp;Proceeds from maturities and principal repayments | 36999 | 44952 | 80597 |
| Advances: |  |  |  |
| &nbsp;&nbsp;Advances repaid | 247249471 | 256562580 | 906019610 |
| &nbsp;&nbsp;Advances originated | (249044791) | (252767970) | (907035196) |
| Mortgage loans held for portfolio: |  |  |  |
| &nbsp;&nbsp;Principal collected | 1019734 | 877368 | 758442 |
| &nbsp;&nbsp;Purchases | (1433148) | (1485427) | (1219320) |
| Net proceeds from sale of foreclosed assets | 377 | 641 | 280 |
| Purchases of premises, software and equipment | (3471) | (1486) | (4759) |
| *NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES* | (848530) | (744940) | (2418068) |

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| | | | |
|:---|:---|:---|:---|
| **FEDERAL HOME LOAN BANK OF TOPEKA** | | | |
| **STATEMENTS OF CASH FLOWS** | | | |
| (In thousands) |  |  |  |
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |  |
| Net increase (decrease) in deposits | (104618) | 247700 | $18345 |
| Net proceeds from issuance of consolidated obligations: |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount notes | 608905009 | 610532007 | 481241221 |
| &nbsp;&nbsp;&nbsp;Discount notes transferred from other FHLBanks |  | 610000 |  |
| &nbsp;&nbsp;&nbsp;Bonds | 77673579 | 70219922 | 52165645 |
| Payments for maturing, retired and transferred consolidated obligations: |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount notes | (601999799) | (616771258) | (485397335) |
| &nbsp;&nbsp;&nbsp;Discount notes transferred to other FHLBanks |  | (610000) |  |
| &nbsp;&nbsp;&nbsp;Bonds | (83131835) | (63570605) | (44865213) |
| &nbsp;&nbsp;&nbsp;Bonds transferred to other FHLBanks |  |  | (999987) |
| Net interest payments received (paid) for financing derivatives | 13630 | 23694 | 23226 |
| Proceeds from issuance of capital stock | 2775669 | 2154853 | 3122656 |
| Payments for repurchase/redemption of capital stock | (2522175) | (1988253) | (2517472) |
| Payments for repurchase of mandatorily redeemable capital stock | (596195) | (366159) | (726618) |
| Cash dividends paid | (277) | (303) | (269) |
| *NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES* | 1012988 | 481598 | 2064199 |
| *NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS* | (3846) | (487) | 98 |
| *CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD* | 25575 | 26062 | 25964 |
| *CASH AND CASH EQUIVALENTS AT END OF PERIOD* | $21729 | $25575 | $26062 |
| **Supplemental disclosures:** |  |  |  |
| Interest paid | $2019794 | $1698539 | $1166760 |

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**FEDERAL HOME LOAN BANK OF TOPEKA**

**Notes to Financial Statements**

**For the years ended December 31, 2025, 2024 and 2023** 

**<u>BACKGROUND</u>**

Federal Home Loan Bank of Topeka (FHLBank or FHLBank Topeka) is one of 11 district Federal Home Loan Banks (FHLBanks), federally chartered under the Federal Home Loan Bank Act of 1932, as amended (Bank Act). The FHLBanks are government-sponsored enterprises (GSE) created to enhance the availability of credit for residential mortgages and targeted community development and to provide competitively-priced funding to their members.

FHLBank operates as a cooperative whose member institutions own substantially all of its capital stock and generally receive dividends on those investments. Regulated financial depositories, insurance companies, and community development financial institutions engaged in residential housing finance whose principal place of business is located in Colorado, Kansas, Nebraska, or Oklahoma are eligible for membership. Community Development Financial Institutions (CDFIs) meeting certain membership regulation standards are also eligible to become members. State and local housing associates that meet certain statutory and regulatory criteria may borrow from FHLBank, but they are not members and are neither permitted nor required to hold capital stock.

Members are required to purchase stock in their district FHLBank in accordance with that FHLBank's capital plan. Under FHLBank Topeka's capital plan, members must hold capital stock based on their total assets and must also purchase activity-based capital stock as they engage in certain business activities with FHLBank, including advances, Acquired Member Assets (AMA), and letters of credit. Former members with outstanding transactions must maintain their stock balance until the transactions mature or are repaid. Because of these requirements, FHLBank conducts business with members in the ordinary course of its business. For financial reporting purposes, FHLBank defines related parties as those members: (1) with investments in excess of 10 percent of FHLBank's total regulatory capital stock outstanding, which includes mandatorily redeemable capital stock; or (2) with an officer or director serving on FHLBank's board of directors. See Note 15 – Transactions with Stockholders for more information on related party transactions.

The FHLBanks are supervised and regulated by the Federal Housing Finance Agency (FHFA), an independent agency in the executive branch of the U.S. federal government. The FHFA's stated mission is to ensure the housing GSEs fulfill their mission by operating in a safe and sound manner to serve as a reliable source for liquidity and funding for housing finance and community investment. Each FHLBank operates as a separate entity with its own management, employees, and board of directors. The FHLBanks do not sponsor any special purpose entities or other off-balance sheet conduits.

The FHLBanks jointly established the Office of Finance to facilitate the issuance and servicing of the debt instruments of the FHLBanks, known as consolidated obligation bonds and consolidated obligation discount notes (collectively referred to as consolidated obligations) and to prepare the combined quarterly and annual financial reports of the FHLBanks. Under the Bank Act and applicable regulations, consolidated obligations are backed solely by the financial resources of the FHLBanks. Consolidated obligations are FHLBank's primary funding source, supplemented by deposits, other borrowings, and member capital stock. These funds are used primarily to provide advances, purchase mortgage loans from members through the Mortgage Partnership Finance<sup>®</sup> (MPF<sup>®</sup>) Program, and purchase certain investments. "Mortgage Partnership Finance" and "MPF" are registered trademarks of FHLBank of Chicago. FHLBank also offers correspondent services to members and other financial institutions such as wire transfer, security safekeeping, and cash management.

**<u>NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</u>**

*Basis of Presentation:* The financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP).

*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 derivatives. Many of the estimates and assumptions, including those used in financial models, are based on financial market conditions as of the date of the financial statements. Because of the volatility of the financial markets, as well as other factors that affect management estimates, actual results may vary from these estimates.

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*Fair Values:* The fair value amounts, recorded on the Statements of Condition and presented in the note disclosures for the periods presented, have been determined by FHLBank using available market and other pertinent information and reflect FHLBank's best judgment of appropriate valuation methods. Although FHLBank uses its best judgment to estimate the fair value of these financial instruments, there are inherent limitations in any valuation technique. Therefore, these fair values may not be indicative of the amounts that would have been realized in market transactions at the reporting dates. See Note 13 – Fair Values for more information.

*Financial Instruments Meeting Netting Requirements:* FHLBank presents certain financial instruments, including derivatives, repurchase agreements and securities purchased under agreements to resell, on a net basis when it has a legal right of offset and all other requirements for netting are met (collectively referred to as the netting requirements). For these financial instruments, FHLBank has elected to offset its asset and liability positions, as well as cash collateral received or pledged, when it has met the netting requirements. The net exposure for these financial instruments can change on a daily basis; therefore, there may be a delay between the time this exposure change is identified and additional collateral is requested and the time when this collateral is received or pledged. Likewise, there may be a delay for excess collateral to be returned. For derivative instruments that meet the netting requirements, any excess cash collateral received or pledged is recognized as a derivative liability or derivative asset. See Note 6 – Derivatives and Hedging Activity and Note 10 – Assets and Liabilities Subject to Offsetting for additional information.

*Cash and Due from Banks:* For purposes of the Statements of Condition and Statements of Cash Flows, FHLBank considers cash on hand and non-interest-bearing deposits in banks as cash and cash equivalents.

*Interest-bearing Deposits, Securities Purchased Under Agreements to Resell, and Federal Funds Sold:* FHLBank invests in interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold. FHLBank treats securities purchased under agreements to resell as short-term collateralized loans. Federal funds sold consist of short-term unsecured loans generally transacted with counterparties that FHLBank considers to be of investment quality. Interest-bearing deposits, securities purchased under agreements to resell and Federal funds sold provide short-term liquidity and are carried at cost. Accrued interest receivable is recorded separately on the Statements of Condition. Interest-bearing deposits and Federal funds sold are evaluated for credit losses on a quarterly basis. If applicable, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses.

FHLBank uses the collateral maintenance provision practical expedient, which allows expected credit losses to be measured based on the difference between the fair value of the collateral and the investment's amortized cost, for securities purchased under agreements to resell. Consequently, a credit loss would be recognized if there is a collateral shortfall that FHLBank does not believe the counterparty will replenish in accordance with its contractual terms. The credit loss would be limited to the difference between the fair value of the collateral and the investment's amortized cost.

*Investment Securities:* FHLBank classifies investments as trading, available-for-sale, and held-to-maturity at the date of acquisition. Purchases and sales of securities are recorded on a trade date basis.

<u>Trading:</u> Securities classified as trading are either: (1) held for liquidity purposes; (2) economically swapped and classified as trading to provide a fair value offset to the gains (losses) on the interest rate swaps tied to the securities; or (3) acquired as asset/liability management tools and carried at fair value. FHLBank records changes in the fair value of these securities through other income (loss) as net gains (losses) on trading securities.

FHLBank's Risk Management Policy (RMP) prohibits active trading of these securities with the intent of realizing gains. FHFA regulation limits credit risk arising from these instruments by prohibiting certain instruments identified as not investment quality. While FHLBank classifies certain securities as trading for financial reporting purposes, it does not actively trade any of these securities, reflecting management's intent that these securities be available as a source of liquidity if needed but are otherwise held until maturity. Short-term money market investments with maturities of three months or less are acquired and classified as trading securities primarily for liquidity purposes. These short-term money market investments are periodically sold to meet FHLBank's cash flow needs.

<u>Available-for-Sale:</u> Securities that are not classified as trading or held-to-maturity are classified as available-for-sale and are carried at fair value. The change in fair value of available-for-sale securities is recorded in other comprehensive income (loss) (OCI). Accrued interest receivable is recorded separately on the Statements of Condition.

For available-for-sale securities in hedging relationships that qualify as fair value hedges, FHLBank records both the changes in the fair value of the designated derivative as well as the changes in the fair value of the investment attributable to the risk being hedged in interest income on available-for-sale securities, and records the remainder of the change in the fair value of the investment in OCI as net unrealized gains (losses) on available-for-sale securities.

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For securities classified as available-for-sale, FHLBank evaluates individual securities for impairment on a quarterly basis by comparing the security's fair value to its amortized cost. Impairment exists when the fair value of the investment is less than its amortized cost (i.e., in an unrealized loss position). In assessing whether a credit loss exists on an impaired security, FHLBank considers whether there would be a shortfall in receiving all cash flows contractually due. When a shortfall is considered possible, FHLBank compares the present value of cash flows to be collected from the security with the amortized cost basis of the security. If the present value of cash flows is less than amortized cost, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The allowance is limited by the amount of the unrealized loss. The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately.

If management intends to sell an impaired security classified as available-for-sale, or more likely than not will be required to sell the security before expected recovery of its amortized cost basis, any allowance for credit losses is written off and the amortized cost basis is written down to the security's fair value at the reporting date with any incremental impairment reported in earnings as net gains (losses) on investment securities. For those securities that management does not intend to sell or it is more likely than not that management will not be required to sell prior to recovery of the amortized cost basis, the credit portion of the impairment is recognized as an allowance for credit losses while the non-credit portion is recognized as net unrealized gains (losses) on available-for-sale securities in OCI.

<u>Held-to-Maturity:</u> Securities that FHLBank has both the ability and intent to hold to maturity are classified as held-to-maturity and are carried at amortized cost, which is original cost adjusted for periodic principal repayments, amortization of premiums, and accretion of discounts. Accrued interest receivable is recorded separately on the Statements of Condition.

Certain changes in circumstances may cause FHLBank to change its intent to hold a security to maturity without calling into question its intent to hold other debt securities to maturity in the future, including: (1) evidence of a significant deterioration in the issuer's creditworthiness; (2) a change in statutory or regulatory requirements significantly modifying either what constitutes a permissible investment or the maximum level of investments in certain kinds of investments, thereby causing FHLBank to dispose of a held-to-maturity investment; (3) a significant increase by a regulator in FHLBank's capital requirements that causes FHLBank to downsize by selling held-to-maturity investments; or (4) a significant increase in the risk weights of debt securities used for regulatory risk-based capital purposes. FHLBank considers the following situations to be a maturity for purposes of assessing ability and intent to hold to maturity:

▪ The sale of the security is near enough to maturity (e.g., within three months of maturity), or call date if exercise of the call is probable that interest rate risk is substantially eliminated as a pricing factor and the changes in market interest rates would not have a significant effect on the security's fair value; or

▪ The sale of a security occurs after FHLBank has already collected a substantial portion (at least 85 percent) of the principal outstanding at acquisition either due to prepayments on the debt security or to scheduled payments on a debt security payable in equal installments (both principal and interest) over its term.

Held-to-maturity securities are evaluated quarterly for expected credit losses on a pool basis unless an individual assessment is deemed necessary because the securities do not possess similar risk characteristics. An allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately.

<u>Premiums and Discounts:</u> FHLBank computes the amortization or accretion of purchased premiums and discounts on mortgage-backed securities (MBS) using the level-yield method over the estimated cash flows of the securities. This method requires a retrospective adjustment of the effective yield each time FHLBank receives a principal repayment or changes the estimated remaining cash flows as if the actual principal repayments and new estimated cash flows had been known since the original acquisition dates of the securities. FHLBank computes the amortization of premiums and accretion of discounts on other investments using the level-yield method to the contractual maturities of the securities.

<u>Gains and Losses on Sales:</u> Gains and losses on the sales of investment securities are computed using the specific identification method and are included in other income (loss).

*Advances:* FHLBank records advances at amortized cost, which is net of premiums, discounts, and fair value basis adjustments. FHLBank amortizes the premiums and accretes the discounts on advances to interest income using the level-yield method. FHLBank records interest on advances to interest income as earned. Accrued interest receivable is recorded separately on the Statements of Condition. Advances are evaluated quarterly for expected credit losses. If deemed necessary, an allowance for credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses.

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<u>Advance Modifications:</u> When FHLBank funds a new advance concurrently with or within a short period of time before or after the prepayment of an existing advance, FHLBank evaluates whether the new advance meets the accounting criteria to qualify as a modification of an existing advance or whether it constitutes a new advance. FHLBank compares the present value of cash flows on the new advance to the present value of cash flows remaining on the existing advance. If there is at least a 10 percent difference in the cash flows or if FHLBank concludes the differences between the advances are more than minor based on qualitative factors, the advance is accounted for as a new advance. Otherwise, the new advance is accounted for as a modification.

<u>Prepayment Fees:</u> FHLBank charges a borrower a prepayment fee when the borrower prepays certain advances before the original maturity. FHLBank records prepayment fees net of basis adjustments related to hedging activities included in the carrying value of the advance as advance interest income in the Statements of Income.

If a new advance does not qualify as a modification of an existing advance, the existing advance is treated as an advance termination and any prepayment fee, net of hedging adjustments, is recorded to advance interest income in the Statements of Income.

If a new advance qualifies as a modification of an existing advance, any prepayment fee, net of hedging adjustments, is deferred, recorded in the basis of the modified advance as a discount, and amortized using a level-yield methodology over the life of the modified advance to advance interest income. If the modified advance is hedged and meets hedge accounting requirements, the modified advance is marked to a benchmark fair value and subsequent fair value changes attributable to the hedged risk are recorded in advance interest income.

*Mortgage Loans Held for Portfolio:* FHLBank classifies mortgage loans that it has the intent and ability to hold for the foreseeable future, or until maturity or payoff, as held for portfolio. These mortgage loans are recorded at amortized cost, which is the principal amount outstanding, net of premiums, discounts, deferred loan fees, hedging adjustments, charge-offs, and other fees. Accrued interest receivable is recorded separately on the Statements of Condition. An allowance for expected credit losses is recorded with a corresponding adjustment to the provision (reversal) for credit losses. FHLBank does not purchase mortgage loans with credit deterioration at the time of purchase.

Quarterly, FHLBank measures expected credit losses on mortgage loans on a collective basis, pooling loans with similar risk characteristics. When a mortgage loan no longer shares risk characteristics with other loans, it is removed from the pool and evaluated for expected credit losses on an individual basis. In determining the allowance for credit losses, FHLBank measures the expected loss over the estimated remaining life of a mortgage loan, which also considers how FHLBank's credit enhancements mitigate credit losses. If a loan is purchased at a discount, the discount does not offset the allowance for credit losses. FHLBank includes estimates of expected recoveries within the allowance for credit losses.

The allowance excludes uncollectible accrued interest receivable, as FHLBank writes off accrued interest receivable by reversing interest income if a mortgage loan is placed on nonaccrual status.

<u>Premiums and Discounts:</u> FHLBank defers and amortizes/accretes mortgage loan origination fees (agent fees) and premiums and discounts paid to and received from participating financial institutions (PFI) as interest income using the level-yield method over the contractual lives of the loans. This method uses the cash flows required by the loan contracts, as adjusted for actual prepayments, to apply the interest method. The contractual method does not utilize estimates of future prepayments of principal.

<u>Credit Enhancement Fees:</u> The credit enhancement obligation (CE obligation) is an obligation on the part of the PFI that ensures the retention of credit risk on loans it originates on behalf of or sells to FHLBank. The amount of the CE obligation is determined at the time of purchase so that any losses in excess of the CE obligation for each pool of mortgage loans purchased approximate those experienced by an investor in an investment-grade MBS. As a part of the methodology used to determine the amount of credit enhancement necessary, FHLBank analyzes the risk characteristics of each mortgage loan using a model licensed from a Nationally Recognized Statistical Rating Organization (NRSRO). FHLBank uses the model to evaluate loan data provided by the PFI as well as other relevant information.

FHLBank pays the PFI a credit enhancement fee (CE fee) for managing this portion of the credit risk in the pool of loans. CE fees are paid monthly based on the remaining unpaid principal balance of the loans in a master commitment. The required CE obligation amount may vary depending on the various product alternatives selected by the PFI. CE fees paid to PFIs are recorded as an offset to mortgage loan interest income. To the extent FHLBank experiences a loss in a master commitment, FHLBank may be able to recapture future performance-based CE fees paid to the PFIs to offset these losses.

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<u>Other Fees:</u> FHLBank may receive other non-origination fees, such as delivery commitment extension fees and pair-off fees as part of the mark-to-market on derivatives to which they are related or as part of the loan basis, as applicable. Delivery commitment extension fees are received when a PFI requires an extension of the delivery commitment period beyond the original stated expiration. These fees compensate FHLBank for lost interest as a result of late funding and represent the member purchasing a derivative from FHLBank. Pair-off fees are received from the PFI when the amount funded is more than or less than a specific percentage range of the delivery commitment amount. These fees compensate FHLBank for hedge costs associated with under-delivery or over-delivery. To the extent that pair-off fees relate to under-deliveries of loans, they are included in the mark-to-market of the related delivery commitment derivative. If they relate to over-deliveries, they represent purchase price adjustments to the related loans acquired and are recorded as a part of the carrying value of the loan.

<u>Nonaccrual Loans:</u> A past due loan is one where the borrower has failed to make a full payment of principal and interest within 30 days of its due date. FHLBank places a conventional mortgage loan on nonaccrual status if it is determined that either: (1) the collection of interest or principal is doubtful; or (2) interest or principal is past its due date for 90 days or more, except when the loan is well-secured (e.g., through credit enhancements) and in the process of collection. FHLBank does not place government-guaranteed or government-insured mortgage loans on nonaccrual status because of the U.S. government guarantee or insurance on these loans and the contractual obligation of the loan servicer to repurchase the loans when certain criteria are met. For mortgage loans placed on nonaccrual status, accrued but uncollected interest is reversed against interest income. FHLBank records cash payments received on nonaccrual loans first as interest income and then as a reduction of principal as specified in the contractual agreement unless the collection of the remaining principal amount due is considered doubtful. If the collection of the remaining principal amount due is considered doubtful, then cash payments received will be applied first solely to principal until the remaining principal amount due is expected to be collected and then as a recovery of any charge-off, if applicable, followed by recording interest income. A loan on nonaccrual status may be restored to accrual status when: (1) none of its contractual principal and interest is due and unpaid, and FHLBank expects repayment of the remaining contractual principal and interest; or (2) it otherwise becomes well-secured and in the process of collection.

<u>Mortgage Loan Modifications:</u> Generally, FHLBank only grants mortgage loan modifications to borrowers experiencing financial difficulty. If the terms of the modified loan are at least as favorable to the lender as the terms offered to borrowers with similar collection risks for comparable loans and the modification to the terms of the loan is more than minor, the loan meets the accounting criteria for a new loan. Generally, a modification would not result in a new loan because the modified terms are not as favorable to the lender as terms for comparable loans that would be offered to similar borrowers.

<u>Collateral-dependent Loans:</u> A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be substantially provided through the sale of the underlying collateral. A loan considered collateral-dependent is measured for credit loss based on the fair value of the underlying property less estimated selling costs, with any shortfall recognized as an allowance for loan loss or charged off.

<u>Charge-off Policy:</u> A charge-off is recorded if it is deemed probable that the amortized cost and any applicable accrued interest in a loan will not be recovered. FHLBank evaluates whether to record a charge-off on a conventional mortgage loan upon the occurrence of a confirming event. Confirming events include, but are not limited to, the occurrence of foreclosure or notification of a claim against any of the credit enhancements. FHLBank charges off the portion of outstanding conventional mortgage loan balances in excess of fair value of the underlying property, less estimated cost to sell, for loans that are 180 days or more delinquent and for certain loans for which the borrower has filed for bankruptcy.

*Real Estate Owned:* Real estate owned (REO) includes assets that have been received in satisfaction of debt through foreclosures. REO is initially recorded at fair value less estimated selling costs and is subsequently carried at the lower of that amount or current fair value less estimated selling costs. FHLBank recognizes a charge-off to the allowance for credit losses if the fair value of the REO less estimated selling costs is less than the amortized cost in the loan at the date of transfer from loans to REO. Any subsequent gains, losses and carrying costs are included in other expense in the Statements of Income. REO is recorded in other assets on the Statements of Condition.

*Derivatives and Hedging Activities:* Generally, FHLBank enters into derivatives primarily to manage exposure to changes in interest rates. The accounting guidance related to derivatives and hedging activities is complex and contains prescriptive documentation requirements. All derivatives are recognized on the Statements of Condition at their fair values and are reported as either derivative assets or derivative liabilities, net of cash collateral, and accrued interest receivable from or pledged by clearing agents and/or counterparties. The fair values of derivatives are netted by clearing agent or counterparty when the netting requirements have been met. If these netted amounts are positive, they are classified as an asset and, if negative, they are classified as a liability. Cash flows associated with a derivative are reflected as cash flows from operating activities in the Statements of Cash Flows unless the derivative meets the criteria to be a financing derivative.

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FHLBank utilizes two Derivative Clearing Organizations (Clearinghouses) for all cleared derivative transactions, LCH Ltd and CME Clearing. At both Clearinghouses, variation margin is characterized as daily settlement payments and initial margin is considered cash collateral.

<u>Derivative Designations:</u> Each derivative is designated as one of the following:

▪ a qualifying fair value hedge of the change in fair value of: (1) a recognized asset or liability, or (2) an unrecognized firm commitment; or

▪ a non-qualifying hedge (an economic hedge) for asset/liability management purposes.

In compliance with accounting standards, primarily Accounting Standards Codification (ASC) 815, the accounting for derivatives requires FHLBank to make the following assumptions and estimates: (1) assessing whether the hedging relationship qualifies for hedge accounting; (2) assessing whether an embedded derivative should be bifurcated; (3) calculating the effectiveness of the hedging relationship; (4) evaluating exposure associated with counterparty credit risk; and (5) estimating the fair value of the derivatives.

<u>Accounting for Qualifying Hedges:</u> Hedging relationships that meet certain criteria, including, but not limited to, formal documentation of the hedging relationship and an expectation to be highly effective, qualify for hedge accounting. Two approaches to hedge accounting include:

▪ Long haul hedge accounting - The application of long haul hedge accounting requires FHLBank to assess, retrospectively and prospectively, on at least a quarterly basis, whether the derivative and hedged item have been and are expected to be highly effective in offsetting changes in fair value attributable to the hedged risk; and

▪ Shortcut hedge accounting - Under the shortcut method of hedge accounting, the entire change in fair value of the interest rate swap is deemed perfectly effective at achieving offsetting changes in the fair value of the hedged asset or liability, implying that the hedge between the hedged item and hedging instrument is perfectly correlated. An interest rate swap transaction is subject to more stringent criteria to qualify for shortcut hedge accounting. FHLBank has elected to document at hedge inception a quantitative method to assess hedge effectiveness for its shortcut hedging relationships for use in the event that the use of the shortcut method is no longer appropriate.

Typically, derivatives and hedged items are executed simultaneously, and, as applicable, FHLBank designates the hedged item in a qualifying hedging relationship at the trade date. In many hedging relationships, FHLBank may designate the hedging relationship upon its commitment to disburse an advance or trade a consolidated obligation in which settlement occurs within the shortest period of time possible for the type of instrument based on market settlement conventions. FHLBank defines market settlement conventions for advances and consolidated obligation discount notes to be five business days or less and for consolidated obligation bonds to be 30 calendar days or less, using a next business day convention. FHLBank then records the changes in fair value of the derivative and the hedged item beginning on the trade date.

Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded in net interest income in the same line as the earnings effect of the hedged item. Net gains (losses) on derivatives and hedging activities for qualifying hedges recorded in net interest income include unrealized and realized gains (losses), which include net interest settlements.

<u>Accounting for Non-Qualifying Hedges:</u> FHLBank defines an economic hedge as a derivative hedging specific or non-specific underlying assets, liabilities or firm commitments that do not qualify or was not designated for hedge accounting but is an acceptable hedging strategy under FHLBank's RMP. These economic hedging strategies also comply with FHFA regulatory requirements prohibiting speculative derivative transactions. An economic hedge introduces the potential for earnings volatility because FHLBank recognizes the net interest settlement and the change in fair value of these derivatives in other income (loss) as net gains (losses) on derivatives, with no offsetting fair value adjustments for the assets, liabilities or firm commitments.

<u>Accrued Interest Receivables and Payables:</u> The net settlements of interest receivables and payables related to derivatives designated in fair value hedging relationships are recognized as adjustments to the interest income or expense of the designated underlying investment securities, advances, consolidated obligations or other financial instruments, thereby affecting the reported amount of net interest income on the Statements of Income. The net settlements of interest receivables and payables on economic hedges are recognized in other income (loss) as net gains (losses) on derivatives.

<u>Discontinuance of Hedge Accounting:</u> FHLBank discontinues hedge accounting prospectively when: (1) it determines that the derivative is no longer highly effective in offsetting changes in the fair value of a hedged item attributable to the hedged risk (including hedged items such as firm commitments); (2) the derivative and/or the hedged item expires or is sold, terminated or exercised; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

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If the derivative fails the effectiveness test any time during its life, the hedge relationship no longer qualifies for hedge accounting and FHLBank marks the derivative to fair value through current period earnings without any offsetting changes in fair value related to the underlying hedged item and begins amortizing the cumulative basis adjustment on the hedged item into earnings over the remaining life of the hedged item using the level-yield method. When hedge accounting is discontinued and the derivative remains outstanding, FHLBank carries the derivative at fair value on its Statements of Condition, recognizing changes in the fair value of the derivative in other income (loss) as net gains (losses) on derivatives. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, FHLBank continues to carry the derivative on its Statements of Condition at fair value, removing any asset or liability that was recorded to recognize the firm commitment and recording it as a gain or loss in current period earnings.

Embedded Derivatives: FHLBank may issue debt, make advances, or purchase financial instruments in which a derivative instrument is embedded. Upon execution of these transactions, FHLBank assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the advance, debt or purchased financial instrument (the host contract) and whether a separate, non-embedded instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When FHLBank determines that: (1) the embedded derivative has economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (2) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract, carried at fair value, and designated as a stand-alone derivative instrument pursuant to an economic hedge. However, if the entire contract (the host contract and the embedded derivative) is to be measured at fair value, with changes in fair value reported in current period earnings (such as an investment security classified as trading), or if FHLBank cannot reliably identify and measure the embedded derivative for purposes of separating that derivative from its host contract, the entire contract is carried on the Statements of Condition at fair value and no portion of the contract is designated as a hedging instrument.

*Premises, Software and Equipment:* Premises, software, and equipment are included in other assets on the Statements of Condition. FHLBank records premises, software, and equipment at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from 3 to 40 years. Leasehold improvements are amortized on the straight-line basis over the shorter of the estimated useful life of the improvement or the remaining term of the lease. Improvements and major renewals are capitalized, and ordinary maintenance and repairs are expensed as incurred. The cost of purchased software and certain software development costs for internal use are capitalized and amortized over future periods. Gains and losses on disposals are included in other income (loss) on the Statements of Income.

As of December 31, 2025 and 2024, premises, software, and equipment were $37,002,000 and $36,714,000, which was net of the accumulated depreciation and amortization of $39,044,000 and $35,871,000, respectively. For the years ended December 31, 2025, 2024, and 2023, the depreciation and amortization expense for premises, software and equipment was $3,181,000, $3,243,000 and $3,121,000, respectively.

*Consolidated Obligations:* Consolidated obligations are recorded at amortized cost, which represents the funded amount, adjusted for premiums, discounts, concessions, and fair value hedging adjustments.

<u>Discounts and Premiums:</u> Consolidated obligation discounts are accreted and premiums are amortized to interest expense using the level-yield method over the contractual maturities of the corresponding debt.

<u>Concessions:</u> Amounts paid to dealers in connection with sales of consolidated obligations are deferred and amortized using the level-yield method over the contractual terms of the consolidated obligations. The Office of Finance prorates concession amounts to FHLBank based on the percentage of each consolidated obligation issued by the Office of Finance on behalf of FHLBank. FHLBank records concessions paid on consolidated obligations as a direct deduction from their carrying amounts, consistent with the presentation of discounts on consolidated obligations. The amortization of those concessions is included in consolidated obligation interest expense.

*Off-Balance Sheet Credit Exposures:* On a quarterly basis, FHLBank evaluates off-balance sheet credit exposures for expected credit losses. If deemed necessary, an allowance for expected credit losses on off-balance sheet exposures is recorded in other liabilities with a corresponding adjustment to the provision (reversal) for credit losses.

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*Mandatorily Redeemable Capital Stock:* FHLBank reclassifies all stock subject to redemption from capital to liability once a member submits a written redemption request, gives notice of intent to withdraw from membership, or attains non-member status by merger or acquisition, charter termination or involuntary termination from membership, since the member shares will then meet the definition of a mandatorily redeemable financial instrument. There is no distinction as to treatment for reclassification from capital to liability between in-district redemption requests and those redemption requests triggered by out-of-district acquisitions. FHLBank does not take into consideration its members' right to cancel a redemption request in determining when shares of capital stock should be classified as a liability because the cancellation would be subject to a substantial cancellation fee. Member and non-member shares of capital stock meeting the definition of mandatorily redeemable capital stock are reclassified to a liability at fair value, which has been determined to be par value plus any estimated accrued but unpaid dividends. FHLBank's dividends are declared and paid at each quarter-end; therefore, the fair value reclassified equals par value. Dividends declared on a member's shares of capital stock for the time after classification as a liability are accrued at the expected dividend rate and reflected as interest expense in the Statements of Income. The repurchase of these mandatorily redeemable financial instruments by FHLBank are reflected as financing cash outflows in the Statements of Cash Flows once settled.

If a member submits a written request to cancel a previously submitted written redemption request, the capital stock covered by the written cancellation request is reclassified from a liability to capital at fair value. After the reclassification, dividends on the capital stock are no longer classified as interest expense.

*Restricted Retained Earnings:* The Joint Capital Enhancement Agreement, as amended, provides that FHLBank, on a quarterly basis, allocate 20 percent of its 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 1 percent of FHLBank's average balance of outstanding consolidated obligations for the calendar quarter. These restricted retained earnings are not available to pay dividends and are presented separately on the Statements of Condition.

*FHFA Expenses:* A portion of the FHFA's expenses and working capital fund are allocated among the FHLBanks based on the pro rata share of the annual assessments, which are based on the ratio between each FHLBank's minimum required regulatory capital and the aggregate minimum required regulatory capital of every FHLBank.

*Office of Finance Expenses:* Each FHLBank's proportionate share of Office of Finance operating and capital expenditures is calculated using a formula that is based upon the following components: (1) two-thirds based upon each FHLBank's share of total consolidated obligations outstanding; and (2) one-third based upon an equal pro rata allocation.

*Voluntary Housing and Community Investment Expenses:* FHLBank records voluntary contributions to affordable housing and community investment initiatives to non-interest expense in the Statements of Income. Voluntary housing and community investment program contributions are expensed in the period they are approved by the board of directors and/or awarded.

*Affordable Housing Program (AHP) Assessments:* FHLBank is required to establish, fund and administer an AHP. The AHP funds provide subsidies to members to assist in the purchase, construction or rehabilitation of housing for very low-, low- and moderate-income households. The required annual AHP funding is charged to earnings, and an offsetting liability is established.

*Segment Reporting*: FHLBank operates one reportable segment that makes advances (loans) to, purchases mortgage loans from, and provides limited other financial services to members to meet the housing, business, and economic development needs of the communities FHLBank's members serve, in accordance with FHLBank's housing finance and community development mission. FHLBank also administers and funds grant programs that fulfill its mission of supporting and sustaining affordable housing and strong communities. FHLBank is funded by the issuance of consolidated obligation bonds, discount notes, and capital supplied by its members. As a member-owned cooperative, FHLBank's segment presentation reflects a management approach that seeks to maintain a balance between FHLBank's mission, public purpose, and FHLBank's ability to provide adequate returns on the capital supplied by its members, which requires the chief operating decision maker (CODM), FHLBank's President and Chief Executive Officer, to have a consolidated view of FHLBank's results and asset allocation. For additional information regarding other items reported to the CODM, including significant expenses, refer to FHLBank's Statements of Income, Statements of Condition, and the Notes to Financial Statements. Further, FHLBank is required to be in compliance with regulatory metrics based upon consolidated asset, liability, and capital balances, including FHFA's core mission achievement (CMA) guidance, which requires FHLBank to be strategically mission-oriented at a consolidated level. As such, FHLBank does not manage assets by operating segments.

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Income before assessments is the primary performance metric used by the CODM in that it determines the annual commitment to our Affordable Housing and Community Investment programs, is a measure of product utilization, and is a consideration in the return of capital to members in the form of dividends. All financial segment information required by the authoritative guidance can be found in the financial statements and related footnotes.

**<u>NOTE 2 – RECENTLY ISSUED AND ADOPTED ACCOUNTING GUIDANCE</u>**

The following table provides a summary of recently issued accounting standards which may have an effect on FHLBank's financial statements:

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| | | | |
|:---|:---|:---|:---|
| **Accounting Standards Update (ASU)** | **Description** | **Effective Date** | **Effect on Financial Statements** |
| Interim Reporting - Narrow Scope Improvements (ASU 2025-11) | This update clarifies and improves the interim reporting guidance by providing a comprehensive list of required interim disclosures and clarifying when interim reporting guidance is applicable, without expanding or reducing current interim disclosure requirements. The amendments add a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material effect on the entity. | The guidance is effective for interim and annual periods beginning after December 15, 2027, which is January 1, 2028 for FHLBank. Early adoption is permitted. | FHLBank is in the process of evaluating this guidance and its effect on its disclosures. The adoption of this guidance will not have any effect on FHLBank's financial condition, results of operations, or cash flows. |
| Hedge Accounting Improvements (ASU 2025-09) | This update expands the hedged risks permitted in cash flow hedges, introducing a model for hedging forecasted interest payments on choose-your-rate debt instruments, and expands cash flow hedge accounting for nonfinancial forecasted transactions. It also eliminates the net written option test in certain instances and addresses mismatches in dual hedge strategies involving foreign-currency-denominated debt instruments. | The guidance is effective for interim and annual periods beginning after December 15, 2026, which is January 1, 2027 for FHLBank. Early adoption is permitted. | While FHLBank is currently evaluating the impact of adopting this pronouncement, the adoption is not expected to have a material impact on FHLBank's financial condition, results of operations, or cash flows. |
| Purchased Loans (ASU 2025-08) | This update expands the use of the gross-up approach for acquired financial assets by requiring that purchased seasoned loans be accounted for using this method. | The guidance is effective for interim and annual periods beginning after December 15, 2026, which is January 1, 2027 for FHLBank. Early adoption is permitted. | While FHLBank is currently evaluating the impact of adopting this pronouncement, the adoption is not expected to have a material impact on FHLBank's financial condition, results of operations, or cash flows. |
| Intangibles - Goodwill and Other - Internal-Use Software (ASU 2025-06) | This update removes all references to prescriptive and sequential software development stages throughout Subtopic 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed, and the software will be used for its intended function. | The guidance is effective for interim and annual periods beginning after December 15, 2027, which is January 1, 2028 for FHLBank. Early adoption is permitted. | While FHLBank is currently evaluating the impact of adopting this pronouncement, the adoption is not expected to have a material impact on FHLBank's financial condition, results of operations, or cash flows. |
| Disaggregation of Income Statement Expenses (ASU 2024-03) | This update amends guidance to require disclosure, in the notes to financial statements, of specified information about certain costs and expenses on an interim and annual basis. | The guidance is effective for interim and annual periods beginning after December 15, 2027, which is January 1, 2028 for FHLBank. Early adoption is permitted. | The adoption of this guidance may result in additional disclosures but will not impact FHLBank's financial condition, results of operations, or cash flows. |

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**<u>NOTE 3 – INVESTMENTS</u>**

FHLBank's investment portfolio consists of interest-bearing deposits, securities purchased under agreements to resell, Federal funds sold, and debt securities.

*Interest-Bearing Deposits, Securities Purchased under Agreements to Resell, and Federal Funds Sold:* FHLBank invests in interest-bearing deposits, securities purchased under agreements to resell, and Federal funds sold to provide short-term liquidity. These investments are generally transacted with counterparties that have received a credit rating of triple-B or greater (investment grade) by an NRSRO. As of December 31, 2025, approximately 29 percent of these overnight investments were with counterparties not rated by an NRSRO. All transactions with unrated counterparties are secured transactions.

Federal funds sold are unsecured loans that are generally transacted on an overnight term. FHFA regulations include a limit on the amount of unsecured credit FHLBank may extend to a counterparty. As of December 31, 2025 and 2024, all investments in interest-bearing deposits and Federal funds sold were repaid or expected to be repaid according to the contractual terms. No allowance for credit losses was recorded for these assets as of December 31, 2025 and 2024. Carrying values of interest-bearing deposits and Federal funds sold exclude accrued interest receivable of $2,435,000 and $289,000, respectively, as of December 31, 2025, and $2,938,000 and $431,000, respectively, as of December 31, 2024.

Securities purchased under agreements to resell are short-term and are structured such that they are evaluated regularly to determine if the market value of the underlying securities decreases below the market value required as collateral (i.e., subject to collateral maintenance provisions requiring the counterparty pledge additional securities as collateral or remit an equivalent amount of cash sufficient to comply with the required collateral value). Based upon the collateral held as security and collateral maintenance provisions with its counterparties, FHLBank determined that no allowance for credit losses was needed for its securities purchased under agreements to resell as of December 31, 2025 and 2024. The carrying value of securities purchased under agreements to resell excludes accrued interest receivable of $444,000 and $638,000 as of December 31, 2025 and 2024, respectively.

*Debt Securities:* FHLBank invests in debt securities, which are classified as either trading, available-for-sale, or held-to-maturity. FHLBank is prohibited by FHFA regulations from purchasing certain higher-risk securities, such as equity securities and debt instruments that are not investment quality, other than certain investments targeted at low-income persons or communities, but FHLBank is not required to divest instruments that experience credit deterioration after their purchase.

FHLBank's debt securities include the following major security types, which are based on the issuer and the risk characteristics of the security:

▪ U.S. Treasury obligations - sovereign debt of the United States;

▪ GSE debentures - debentures issued by Federal National Mortgage Association (Fannie Mae), Federal Farm Credit Bank and Federal Agricultural Mortgage Corporation. GSE securities are not guaranteed by the U.S. government;

▪ State or local housing agency obligations - municipal bonds issued by housing finance agencies;

▪ U.S. obligation MBS - single-family MBS issued by Government National Mortgage Association (Ginnie Mae), which are guaranteed by the U.S. government; and

▪ GSE MBS - single-family and multifamily MBS issued by Fannie Mae and Federal Home Loan Mortgage Corporation (Freddie Mac).

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<u>Trading Securities:</u> Trading securities by major security type as of December 31, 2025 and 2024 are summarized in Table 3.1 (in thousands):

**<u>Table 3.1</u>**

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| | | |
|:---|:---|:---|
| | **Fair Value** | **Fair Value** |
| | **12/31/2025** | **12/31/2024** |
| Non-mortgage-backed securities: |  |  |
| &nbsp;&nbsp;GSE debentures | $— | $17884 |
| *Non-mortgage-backed securities* |  | 17884 |
| Mortgage-backed securities: |  |  |
| &nbsp;&nbsp;GSE MBS | 80741 | 422079 |
| *Mortgage-backed securities* | 80741 | 422079 |
| *TOTAL* | $80741 | $439963 |

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Net gains (losses) on trading securities during the years ended December 31, 2025, 2024, and 2023 are shown in Table 3.2 (in thousands):

**<u>Table 3.2</u>**

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| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| Net gains (losses) on trading securities held as of December 31, 2025 | $1938 | $899 | $1124 |
| Net gains (losses) on trading securities sold or matured prior to December 31, 2025 | 3692 | 16063 | 18430 |
| *NET GAINS (LOSSES) ON TRADING SECURITIES* | $5630 | $16962 | $19554 |

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<u>Available-for-sale Securities:</u> Available-for-sale securities by major security type as of December 31, 2025 are summarized in Table 3.3 (in thousands). Amortized cost includes adjustments made to the cost basis of an investment for accretion, amortization, and fair value hedge accounting adjustments, and excludes accrued interest receivable of $44,898,000 as of December 31, 2025.

**<u>Table 3.3</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Amortized<br>Cost** | **Gross<br>Unrecognized<br>Gains** | **Gross<br>Unrecognized<br>Losses** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;U.S. Treasury obligations | $3233547 | $1125 | $(84686) | $3149986 |
| &nbsp;&nbsp;State or local housing agency obligations  | 57350 | 606 |  | 57956 |
| *Non-mortgage-backed securities* | 3290897 | 1731 | (84686) | 3207942 |
| Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS | 60842 | 45 | (459) | 60428 |
| &nbsp;&nbsp;GSE MBS | 11305456 | 51285 | (54360) | 11302381 |
| *Mortgage-backed securities* | 11366298 | 51330 | (54819) | 11362809 |
| *TOTAL* | $14657195 | $53061 | $(139505) | $14570751 |

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Available-for-sale securities by major security type as of December 31, 2024 are summarized in Table 3.4 (in thousands). Amortized cost includes adjustments made to the cost basis of an investment for accretion, amortization, and fair value hedge accounting adjustments, and excludes accrued interest receivable of $35,778,000 as of December 31, 2024.

**<u>Table 3.4</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Amortized<br>Cost** | **Gross<br>Unrecognized<br>Gains** | **Gross<br>Unrecognized<br>Losses** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;U.S. Treasury obligations | $3313012 | $6 | $(75795) | $3237223 |
| &nbsp;&nbsp;State or local housing agency obligations  | 24465 |  | (286) | 24179 |
| *Non-mortgage-backed securities* | 3337477 | 6 | (76081) | 3261402 |
| Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS | 78046 |  | (783) | 77263 |
| &nbsp;&nbsp;GSE MBS | 9782201 | 31461 | (94708) | 9718954 |
| *Mortgage-backed securities* | 9860247 | 31461 | (95491) | 9796217 |
| *TOTAL* | $13197724 | $31467 | $(171572) | $13057619 |

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Table 3.5 summarizes the available-for-sale securities with gross unrealized losses as of December 31, 2025 (in thousands). The gross unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

**<u>Table 3.5</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Less Than 12 Months** | **Less Than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
| | **Fair<br>Value** | **Gross Unrealized Losses** | **Fair<br>Value** | **Gross Unrealized Losses** | **Fair<br>Value** | **Gross Unrealized Losses** |
| Non-mortgage-backed securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;U.S. Treasury obligations | $— | $— | $2166554 | $(84686) | $2166554 | $(84686) |
| *Non-mortgage-backed securities* |  |  | 2166554 | (84686) | 2166554 | (84686) |
| Mortgage-backed securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS |  |  | 29199 | (459) | 29199 | (459) |
| &nbsp;&nbsp;GSE MBS | 1221540 | (2547) | 2937598 | (51813) | 4159138 | (54360) |
| *Mortgage-backed securities* | 1221540 | (2547) | 2966797 | (52272) | 4188337 | (54819) |
| *TOTAL* | $1221540 | $(2547) | $5133351 | $(136958) | $6354891 | $(139505) |

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Table 3.6 summarizes the available-for-sale securities with gross unrealized losses as of December 31, 2024 (in thousands). The gross unrealized losses are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position.

**<u>Table 3.6</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Less Than 12 Months** | **Less Than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
| | **Fair<br>Value** | **Gross Unrealized Losses** | **Fair<br>Value** | **Gross Unrealized Losses** | **Fair<br>Value** | **Gross Unrealized Losses** |
| Non-mortgage-backed securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;U.S. Treasury obligations | $244268 | $(1144) | $2754861 | $(74652) | $2999129 | $(75796) |
| &nbsp;&nbsp;State or local housing agency obligations | 24179 | (286) |  |  | 24179 | (286) |
| *Non-mortgage-backed securities* | 268447 | (1430) | 2754861 | (74652) | 3023308 | (76082) |
| Mortgage-backed securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS |  |  | 77263 | (783) | 77263 | (783) |
| &nbsp;&nbsp;GSE MBS | 2880112 | (14624) | 3638445 | (80083) | 6518557 | (94707) |
| *Mortgage-backed securities* | 2880112 | (14624) | 3715708 | (80866) | 6595820 | (95490) |
| *TOTAL* | $3148559 | $(16054) | $6470569 | $(155518) | $9619128 | $(171572) |

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The amortized cost and fair values of available-for-sale securities by contractual maturity as of December 31, 2025 and 2024 are shown in Table 3.7 (in thousands). 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 prepayment fees.

**<u>Table 3.7</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| | **Amortized<br>Cost** | **Fair<br>Value** | **Amortized<br>Cost** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| Due in one year or less | $1631562 | $1578878 | $457610 | $440483 |
| Due after one year through five years | 1601985 | 1571107 | 2855402 | 2796740 |
| Due after five years through ten years | 33955 | 34296 |  |  |
| Due after ten years | 23395 | 23661 | 24465 | 24179 |
| *Non-mortgage-backed securities* | 3290897 | 3207942 | 3337477 | 3261402 |
| *Mortgage-backed securities* | 11366298 | 11362809 | 9860247 | 9796217 |
| *TOTAL* | $14657195 | $14570751 | $13197724 | $13057619 |

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Table 3.8 presents details of the sales of available-for-sale securities for the year ended December 31, 2025 (in thousands). There were no sales of available-for-sale securities during the years ended December 31, 2024 and 2023.

**<u>Table 3.8</u>**

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| | |
|:---|:---|
| | **12/31/2025** |
| Proceeds from sale of available-for-sale securities | $54003 |
| Gross realized losses on sale of available-for-sale securities | $(890) |

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<u>Held-to-maturity Securities:</u> Held-to-maturity securities by major security type as of December 31, 2025 are summarized in Table 3.9 (in thousands). Carrying value equals amortized cost, which includes adjustments made to the cost basis of an investment for accretion and amortization, and excludes accrued interest receivable of $356,000 as of December 31, 2025.

**<u>Table 3.9</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Amortized<br>Cost** | **Gross<br>Unrecognized<br>Gains** | **Gross<br>Unrecognized<br>Losses** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;State or local housing agency obligations | $25615 | $— | $(256) | $25359 |
| *Non-mortgage-backed securities* | 25615 |  | (256) | 25359 |
| Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;GSE MBS | 157191 | 1023 | (1069) | 157145 |
| *Mortgage-backed securities* | 157191 | 1023 | (1069) | 157145 |
| *TOTAL* | $182806 | $1023 | $(1325) | $182504 |

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Held-to-maturity securities by major security type as of December 31, 2024 are summarized in Table 3.10 (in thousands). Carrying value equals amortized cost, which includes adjustments made to the cost basis of an investment for accretion and amortization, and excludes accrued interest receivable of $476,000 as of December 31, 2024.

**<u>Table 3.10</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Amortized<br>Cost** | **Gross<br>Unrecognized<br>Gains** | **Gross<br>Unrecognized<br>Losses** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;State or local housing agency obligations | $30895 | $— | $(445) | $30450 |
| *Non-mortgage-backed securities* | 30895 |  | (445) | 30450 |
| Mortgage-backed securities: |  |  |  |  |
| &nbsp;&nbsp;GSE MBS | 188931 | 359 | (2264) | 187026 |
| *Mortgage-backed securities* | 188931 | 359 | (2264) | 187026 |
| *TOTAL* | $219826 | $359 | $(2709) | $217476 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

The amortized cost and fair values of held-to-maturity securities by contractual maturity as of December 31, 2025 and 2024 are shown in Table 3.11 (in thousands). 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 prepayment fees.

**<u>Table 3.11</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| | **Amortized<br>Cost** | **Fair<br>Value** | **Amortized<br>Cost** | **Fair<br>Value** |
| Non-mortgage-backed securities: |  |  |  |  |
| Due in one year or less | $— | $— | $— | $— |
| Due after one year through five years | 25615 | 25359 |  |  |
| Due after five years through ten years |  |  | 30895 | 30450 |
| Due after ten years |  |  |  |  |
| *Non-mortgage-backed securities* | 25615 | 25359 | 30895 | 30450 |
| *Mortgage-backed securities* | 157191 | 157145 | 188931 | 187026 |
| *TOTAL* | $182806 | $182504 | $219826 | $217476 |

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<u>Allowance for Credit Losses on Available-for-Sale and Held-to-Maturity Securities:</u> FHLBank evaluates available-for-sale and held-to-maturity investment securities for credit losses on a quarterly basis. During the years ended December 31, 2025 and 2024, FHLBank did not recognize a provision for credit losses associated with available-for-sale investments or held-to-maturity investments.

FHLBank considers the unrealized losses on certain available-for-sale securities in unrealized loss positions to be temporary as FHLBank expects to recover the entire amortized cost basis on these available-for-sale investment securities. FHLBank neither intends to sell these securities nor considers it more likely than not that it will be required to sell these securities before its anticipated recovery of each security's remaining amortized cost basis.

As of December 31, 2025, FHLBank's held-to-maturity and available-for-sale securities were all highly rated and/or had short remaining terms to maturity. In the case of U.S. obligations, each obligation carries an explicit government guarantee. In the case of GSE debentures and MBS, FHLBank purchases each security under an assumption that the issuers' obligation to pay principal and interest on those securities will be honored. As a result, FHLBank expects to receive all cash flows contractually due, and no allowance for credit losses were recorded on any U.S. obligation, GSE debenture, or MBS as of December 31, 2025 and 2024.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>NOTE 4 – ADVANCES</u>**

*General Terms:* FHLBank offers fixed-rate and adjustable-rate advance products with different maturities, interest rates, payment characteristics and optionality. As of December 31, 2025 and 2024, FHLBank had advances outstanding at interest rates ranging from 0.58 percent to 7.20 percent and 0.44 percent to 7.20 percent, respectively. Table 4.1 presents advances summarized by redemption term as of December 31, 2025 and 2024 (dollar amounts in thousands). The redemption term represents the period in which principal amounts are contractually due. Carrying amounts exclude accrued interest receivable of $134,769,000 and $152,111,000 as of December 31, 2025 and 2024, respectively.

**<u>Table 4.1</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
|<br>**Redemption Term** | **Amount** | **Weighted Average Interest Rate** | **Amount** | **Weighted Average Interest Rate** |
| Due in one year or less | $27024925 | 3.87% | $25160148 | 4.43% |
| Due after one year through two years | 6338353 | 3.91 | 4724245 | 4.05 |
| Due after two years through three years | 3601557 | 4.09 | 4530096 | 4.07 |
| Due after three years through four years | 2867422 | 3.84 | 3037483 | 4.12 |
| Due after four years through five years | 2409825 | 3.56 | 2663624 | 3.87 |
| Thereafter | 1428929 | 3.50 | 1760096 | 3.25 |
| *Total par value* | 43671011 | 3.86% | 41875692 | 4.24% |
| Discounts | (8863) |  | (7557) |  |
| Hedging adjustments | 5392 |  | (216054) |  |
| *TOTAL* | $43667540 |  | $41652081 |  |

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FHLBank offers callable advances that may be prepaid without fees on predetermined call dates before maturity. In exchange for the call option, borrowers typically pay a higher rate than on a comparable non-callable advance. Borrowers generally exercise call options when interest rates decline for fixed-rate advances, or when spreads change for adjustable-rate advances. FHLBank also offers fixed-rate putable advances, which include a put option held by FHLBank. When FHLBank exercises its put option, the borrower has the option to prepay the advance without a fee or refinance into another advance product. Putable advances generally carry a lower interest rate than comparable fixed-rate advances without a put feature. FHLBank would generally exercise the put option when interest rates increase. Other advances may be prepaid with a fee that makes FHLBank economically indifferent to the prepayment.

Table 4.2 presents advances summarized by redemption term or next call date and by redemption term or next put date as of December 31, 2025 and 2024 (in thousands):

**<u>Table 4.2</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Redemption Term<br>or Next Call Date** | **Redemption Term<br>or Next Call Date** | **Redemption Term**<br>**or Next Put Date** | **Redemption Term**<br>**or Next Put Date** |
|<br>**Redemption Term** | **12/31/2025** | **12/31/2024** | **12/31/2025** | **12/31/2024** |
| Due in one year or less | $27733397 | $26134800 | $29691525 | $27391348 |
| Due after one year through two years | 6039575 | 4375566 | 6540153 | 4901745 |
| Due after two years through three years | 3297014 | 4126318 | 3027857 | 4626596 |
| Due after three years through four years | 2844434 | 2919014 | 2213422 | 2204483 |
| Due after four years through five years | 2380761 | 2642197 | 1800825 | 1945624 |
| Thereafter | 1375830 | 1677797 | 397229 | 805896 |
| *TOTAL PAR VALUE* | $43671011 | $41875692 | $43671011 | $41875692 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

*Interest Rate Payment Terms*: Table 4.3 details additional interest rate payment and redemption terms for advances as of December 31, 2025 and 2024 (in thousands):

**<u>Table 4.3</u>**

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| | | |
|:---|:---|:---|
| **Redemption Term** | **12/31/2025** | **12/31/2024** |
| Fixed-rate: |  |  |
| Due in one year or less | $14960311 | $15388152 |
| Due after one year through three years | 6812315 | 6714381 |
| Due after three years through five years | 5097147 | 5123107 |
| Due after five years through fifteen years | 1398956 | 1695725 |
| Due after fifteen years | 17497 | 18795 |
| *Total fixed-rate* | 28286226 | 28940160 |
| Adjustable-rate: |  |  |
| Due in one year or less | 12064615 | 9771997 |
| Due after one year through three years | 3127595 | 2539960 |
| Due after three years through five years | 180100 | 578000 |
| Due after five years through fifteen years | 12475 | 44075 |
| Due after fifteen years |  | 1500 |
| *Total adjustable-rate* | 15384785 | 12935532 |
| *TOTAL PAR VALUE* | $43671011 | $41875692 |

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*Credit Risk Exposure and Security Terms:* FHLBank makes advances primarily to member financial institutions, including commercial banks and insurance companies. Credit exposure is managed in accordance with FHLBank's collateral and lending policies, which apply a risk-based approach to assess borrower strength, establish credit limits, define eligible collateral, establish required collateral levels, and require ongoing monitoring of each borrower's financial condition. FHLBank views the type and amount of collateral pledged to be the primary credit quality indicator on advances. As of December 31, 2025 and 2024, FHLBank had rights to collateral on a borrower-by-borrower basis with estimated values exceeding outstanding advance balances.

FHLBank lends to eligible borrowers in accordance with federal law and FHFA regulations. Lending decisions are based on the borrower's financial condition and available collateral. FHLBank must obtain sufficient collateral to fully secure credit products up to each borrower's credit limit. Collateral eligible to secure new or renewed advances includes:

▪ One-to-four family and multifamily mortgage loans (delinquent for no more than 90 days) and securities representing such mortgages;

▪ Loans and securities issued, insured, or guaranteed by the U.S. government or any U.S. government agency (for example, MBS issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae);

▪ Cash or deposits in FHLBank;

▪ Certain other real estate collateral with an ascertainable value and a perfected security interest; and

▪ Qualifying securities.

Residential mortgage loans are the principal form of collateral for advances. Required collateral values are determined by applying discounts, or haircuts, to the market value or unpaid principal balance, as applicable. Community financial institutions may also pledge small business, agricultural, and community development loans under expanded statutory provisions. Borrowers' FHLBank capital stock is also pledged as collateral. Collateral arrangements vary based upon borrower credit quality, financial condition, performance, borrowing capacity, and overall credit exposure. FHLBank may require additional or substitute collateral to protect its security interest. FHLBank maintains policies and procedures to validate collateral valuations and conducts collateral verifications and on-site reviews based on borrower risk profiles. FHLBank management believes these practices effectively manage credit risk associated with advances.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Depending on a borrower's financial condition, FHLBank may allow the borrower to retain physical possession of pledged collateral if the borrower executes a written security agreement, provides periodic collateral listings, and agrees to hold such collateral for FHLBank's benefit. Alternatively, FHLBank may require the borrower to assign the collateral or place it in FHLBank's or its safekeeping agent's possession. Securities and cash collateral are always held in FHLBank's or a custodian's control. FHLBank perfects its security interest in all pledged collateral. Under Section 10(e) of the Bank Act, any security interest granted to an FHLBank by a borrower will have priority over the claims or rights of any other party, except: (1) a bona fide purchaser for value whose claim would otherwise have priority under applicable law, or (2) by a secured party with a prior perfected security interest.

FHLBank continues to evaluate and adjust its collateral guidelines in response to current market conditions. As of December 31, 2025 and 2024, no advances were past due, on nonaccrual status, or considered impaired.

Based on the collateral securing advances, FHLBank's credit extension and collateral policies, and repayment experience, no allowance for credit losses on advances was recorded as of December 31, 2025 and 2024.

FHLBank's potential credit risk from advances is concentrated in commercial banks, insurance companies, and savings institutions. As of December 31, 2025, FHLBank had outstanding advances of $12,620,000,000 to one member that individually held 10 percent or more of FHLBank's advances, which represents 28.9 percent of total outstanding advances. As of December 31, 2024, FHLBank had outstanding advances of $10,125,000,000 to one member that individually held 10 percent or more of FHLBank's advances, which represented 24.2 percent of total outstanding advances. The member was the same in both years.

See Note 13 – Fair Values for information about the fair value of advances.

See Note 15 – Transactions with Stockholders for detailed information on transactions with related parties.

**<u>NOTE 5 – MORTGAGE LOANS</u>**

Mortgage loans held for portfolio consist of loans obtained through the MPF Program and are either conventional mortgage loans or government-guaranteed or government-insured mortgage loans. Under the MPF Program, FHLBank purchases single-family mortgage loans that are originated or acquired by PFIs. These mortgage loans are credit-enhanced by PFIs or are guaranteed or insured by federal agencies.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

*Mortgage Loans Held for Portfolio:* Table 5.1 presents information as of December 31, 2025 and 2024 on mortgage loans held for portfolio (in thousands). Carrying amounts exclude accrued interest receivable of $62,311,000 and $54,997,000 as of December 31, 2025 and 2024, respectively.

**<u>Table 5.1</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| *Real estate:* |  |  |
| Fixed-rate, medium-term<sup>1</sup>, single-family mortgages | $842275 | $928996 |
| Fixed-rate, long-term, single-family mortgages | 8439963 | 7948931 |
| *Total unpaid principal balance* | 9282238 | 8877927 |
| Premiums | 96264 | 95760 |
| Discounts | (12924) | (6904) |
| Deferred loan costs, net | 28 | 34 |
| Hedging adjustments | (10735) | (13351) |
| *Total before allowance for credit losses on mortgage loans* | 9354871 | 8953466 |
| Allowance for credit losses on mortgage loans | (3566) | (4033) |
| *MORTGAGE LOANS HELD FOR PORTFOLIO, NET* | $9351305 | $8949433 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Medium-term defined as a term of 15 years or less at origination.

 

Table 5.2 presents information as of December 31, 2025 and 2024 on the outstanding unpaid principal balance of mortgage loans held for portfolio (in thousands):

**<u>Table 5.2</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Conventional loans | $8957603 | $8553518 |
| Government-guaranteed or government-insured loans | 324635 | 324409 |
| *TOTAL UNPAID PRINCIPAL BALANCE* | $9282238 | $8877927 |

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*Credit Enhancements:* FHLBank's allowance for credit losses incorporates the credit enhancements associated with conventional mortgage loans under the MPF Program. Credit enhancements may include primary mortgage insurance (PMI), supplemental mortgage insurance (SMI), and the CE obligation plus any recoverable performance-based CE fees for applicable MPF products. Potential recoveries are evaluated at the individual master commitment level to determine the credit enhancement available to cover losses on loans within each master commitment.

Conventional MPF loans held for portfolio are required to be credit enhanced using a validated model to ensure potential losses remain within FHLBank's risk tolerance. FHLBank and its PFIs share credit risk by allocating losses into layers in each master commitment. After considering the borrower's equity and any PMI, losses are first absorbed by FHLBank's First Loss Account (FLA). When applicable, FHLBank will withhold a PFI's performance-based CE fee to reimburse losses allocated to the FLA. If the FLA is depleted, losses are absorbed by the PFI up to its CE obligation, which may take the form of a direct liability, a contractual SMI obligation, or a combination of both. Any remaining losses are absorbed by FHLBank.

FHLBank records CE fees paid to PFIs as a reduction to mortgage interest income. Table 5.3 presents net CE fees paid to PFIs for the years ended December 31, 2025, 2024, and 2023 (in thousands):

**<u>Table 5.3</u>**

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| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| CE fees paid to PFIs | $7842 | $7258 | $6580 |
| Performance-based CE fees recovered from PFIs | (28) | (30) | (42) |
| *NET CE FEES PAID* | $7814 | $7228 | $6538 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

*Payment Status of Mortgage Loans:* Payment status is the primary credit quality indicator for conventional mortgage loans and is used by FHLBank to monitor borrower performance. A loan is considered past due when the borrower has not made a full principal and interest payment within 30 days of its due date. Additional delinquency measures include nonaccrual loans and loans in the process of foreclosure.

Table 5.4 presents the payment status based on amortized cost as well as other delinquency statistics for FHLBank's conventional mortgage loans as of December 31, 2025 (dollar amounts in thousands):

**<u>Table 5.4</u>**

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| | | | |
|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Conventional Mortgage Loans** | **Conventional Mortgage Loans** | **Conventional Mortgage Loans** |
| | **Origination Year** | **Origination Year** | **Total** |
| | **Prior to 2021** | **2021 to 2025** | **Total** |
| Payment Status at Amortized Cost:<sup>1</sup> |  |  |  |
| &nbsp;&nbsp;Past due 30-59 days delinquent | $35524 | $39999 | $75523 |
| &nbsp;&nbsp;Past due 60-89 days delinquent | 9502 | 8543 | 18045 |
| &nbsp;&nbsp;Past due 90 days or more delinquent | 10376 | 13464 | 23840 |
| Total past due | 55402 | 62006 | 117408 |
| Total current loans | 3379596 | 5530086 | 8909682 |
| Total mortgage loans | $3434998 | $5592092 | $9027090 |
| Other delinquency statistics: |  |  |  |
| In process of foreclosure<sup>2</sup> |  |  | $2041 |
| Serious delinquency rate<sup>3</sup> |  |  | 0.3% |
| Loans on nonaccrual status<sup>4</sup> |  |  | $27097 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Excludes accrued interest receivable.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes loans where the decision of foreclosure or similar alternative such as pursuit of deed-in-lieu has been reported. Loans in process of foreclosure are included in past due or current loans depending on their delinquency status.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total amortized cost for the portfolio class.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes $13,280,000 of conventional mortgage loans on nonaccrual status that did not have an associated allowance for credit losses because these loans were either previously charged off to the expected recoverable value or the fair value of the underlying collateral was greater than the amortized cost of the loans.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Table 5.5 presents the payment status based on amortized cost as well as other delinquency statistics for FHLBank's conventional mortgage loans as of December 31, 2024 (dollar amounts in thousands):

**<u>Table 5.5</u>**

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| | | | |
|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Conventional Mortgage Loans** | **Conventional Mortgage Loans** | **Conventional Mortgage Loans** |
| | **Origination Year** | **Origination Year** | **Total** |
| | **Prior to 2020** | **2020 to 2024** | **Total** |
| Payment Status at Amortized Cost:<sup>1</sup> |  |  |  |
| &nbsp;&nbsp;Past due 30-59 days delinquent | $30714 | $32593 | $63307 |
| &nbsp;&nbsp;Past due 60-89 days delinquent | 8402 | 6714 | 15116 |
| &nbsp;&nbsp;Past due 90 days or more delinquent | 10006 | 9301 | 19307 |
| Total past due | 49122 | 48608 | 97730 |
| Total current loans | 2425528 | 6102059 | 8527587 |
| Total mortgage loans | $2474650 | $6150667 | $8625317 |
| Other delinquency statistics: |  |  |  |
| In process of foreclosure<sup>2</sup> |  |  | $3124 |
| Serious delinquency rate<sup>3</sup> |  |  | 0.2% |
| Loans on nonaccrual status<sup>4</sup> |  |  | $24402 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Excludes accrued interest receivable.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes loans where the decision of foreclosure or similar alternative such as pursuit of deed-in-lieu has been reported. Loans in process of foreclosure are included in past due or current loans depending on their delinquency status.

<sup>3</sup>&nbsp;&nbsp;&nbsp;&nbsp;Loans that are 90 days or more past due or in the process of foreclosure expressed as a percentage of the total amortized cost for the portfolio class.

<sup>4</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes $11,301,000 of conventional mortgage loans on nonaccrual status that did not have an associated allowance for credit losses because these loans were either previously charged off to the expected recoverable value or the fair value of the underlying collateral was greater than the amortized cost of the loans.

*Allowance for Credit Losses:*

<u>Conventional Mortgage Loans:</u> Conventional loans with similar risk characteristics are pooled and evaluated collectively, while conventional loans that do not share those characteristics are assessed individually. FHLBank determines its allowance for credit losses on conventional loans by analyzing loan- and collateral-related factors, including past performance, current economic conditions, and reasonable and supportable forecasts. Expected credit losses are estimated over the life of the loan using a third-party projected cash flow model that incorporates inputs such as current and forecasted property values, interest rates, and historical borrower behavior. Forecasts are projected over the contractual terms of the loans rather than a reversion to historical trends after a forecasted period. FHLBank also incorporates available credit enhancements when estimating expected credit losses.

Certain conventional loans may be evaluated for credit losses using the practical expedient for collateral-dependent assets. A mortgage loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to come primarily from the sale of the underlying collateral. FHLBank estimates the fair value of this collateral by applying an appropriate loss severity rate or by using third party estimates or property valuation models. The expected credit loss of a collateral dependent mortgage loan is measured as the difference between the amortized cost of the loan and the estimated fair value of the collateral, less estimated selling costs. FHLBank records a direct charge-off of the loan balance when specified triggering criteria are met, and any expected recoveries of prior charge-offs are included in the allowance for credit losses.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

FHLBank established an allowance for credit losses on its conventional mortgage loans held for portfolio. Table 5.6 presents a roll-forward of the allowance for credit losses on mortgage loans for the years ended December 31, 2025, 2024, and 2023.

**<u>Table 5.6</u>**

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| | | | |
|:---|:---|:---|:---|
| **Conventional Mortgage Loans** | **2025** | **2024** | **2023** |
| Balance, beginning of the period | $4033 | $5531 | $6378 |
| Net (charge-offs) recoveries | (439) | 138 | (206) |
| Provision (reversal) for credit losses | (28) | (1636) | (641) |
| Balance, end of the period | $3566 | $4033 | $5531 |

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<u>Government-Guaranteed or Government-Insured Mortgage Loans:</u> FHLBank invests in fixed-rate mortgage loans insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, the Rural Housing Service of the Department of Agriculture, or the Department of Housing and Urban Development. Servicers are responsible for maintaining the applicable government guarantee or insurance, complying with all agency requirements, and securing the benefit of that protection for defaulted loans. Based on FHLBank's assessment of its servicers and the collateral supporting these loans, the risk of loss was immaterial. As a result, no allowance for credit losses for government-guaranteed or government-insured mortgage loans was recorded as of December 31, 2025 and 2024. These mortgage loans have not been placed on nonaccrual status due to the U.S. government guarantee or insurance on these loans and the servicer's contractual obligation to repurchase the loans when certain criteria are met.

See Note 13 – Fair Values for information about the fair value of mortgage loans held for portfolio.

See Note 15 – Transactions with Stockholders for additional information on transactions with related parties.

**<u>NOTE 6 – DERIVATIVES AND HEDGING ACTIVITIES</u>**

*Nature of Business Activity:* FHLBank is exposed to interest rate risk arising from changes in interest rates affecting its interest-earning assets and the interest-bearing liabilities that fund them. The objective of FHLBank's interest-rate risk management strategy is not to eliminate the risk, but to manage it within acceptable limits. To mitigate the risk of loss, FHLBank has established policies and procedures that define acceptable exposure levels and management strategies. In addition, FHLBank monitors the impact of interest rate changes on interest income, net interest margin, and the maturity profile of interest-earning assets and interest-bearing liabilities.

Consistent with FHFA regulation, FHLBank enters into derivatives to: (1) reduce the interest rate risk exposures inherent in otherwise unhedged assets and funding positions; and (2) support broader risk management objectives. FHFA regulation and FHLBank's RMP prohibit trading in or the speculative use of these derivative instruments and limit credit risk arising from these instruments. The use of derivatives is an integral part of FHLBank's financial and risk-management strategy.

FHLBank reevaluates its hedging strategies periodically and may change the hedging techniques it uses or may adopt new strategies. The most common ways in which FHLBank uses derivatives are to:

▪ Reduce funding costs by combining an interest rate swap with a consolidated obligation when the cost of the combined structure is lower than the cost of a comparable consolidated obligation;

▪ Reduce interest rate sensitivity and repricing gaps between assets and liabilities;

▪ Preserve interest rate spreads between asset yields and related funding costs;

▪ Mitigate adverse earnings effects of the shortening or extension of certain assets (e.g., advances or mortgage assets) and liabilities;

▪ Manage embedded options within assets and liabilities; and

▪ Manage the overall asset/liability portfolio to maintain targeted risk positions.

*Application of Derivatives:* At hedge inception, FHLBank documents the relationship between derivatives designated as hedging instruments and the hedged items, risk management objectives and strategies for undertaking various hedging transactions, and the method of assessing hedge effectiveness. This process includes linking all derivatives that are designated as fair value hedges to assets and/or liabilities on the Statements of Condition or firm commitments.

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Derivative instruments are designated by FHLBank as:

▪ A qualifying fair value hedge of an associated financial instrument or a firm commitment; or

▪ A non-qualifying economic hedge to manage certain defined risks in the Statements of Condition. These hedges are primarily used to: (1) manage mismatches between the coupon features of assets and liabilities; (2) offset prepayment risks in certain assets; (3) mitigate the income statement volatility that occurs when financial instruments are recorded at fair value and hedge accounting is not permitted; or (4) reduce exposure to reset risk.

FHLBank transacts most of its derivatives with counterparties that are large banks and major broker/dealers. Some of these banks and broker/dealers or their affiliates buy, sell and distribute consolidated obligations. Over-the-counter derivative transactions may be either executed through a bilateral agreement with a counterparty (uncleared derivatives) or cleared through a Futures Commission Merchant (i.e., clearing agent) with a Clearinghouse (cleared derivatives). FHLBank is not a derivatives dealer and does not trade derivatives for short-term profit.

*Types of Derivatives:* FHLBank primarily uses the following derivative instruments:

<u>Interest Rate Swaps</u> - An interest rate swap is an agreement between two entities to exchange cash flows in the future. The agreement sets the dates on which the cash flows will be exchanged and the manner in which the cash flows will be calculated. One of the simplest forms of an interest rate swap involves one party committing to pay cash flows equivalent to the interest on a notional principal amount at a predetermined fixed rate for a given period of time. In return for this commitment, this party receives cash flows equivalent to the interest on the same notional principal amount at a variable interest rate index for the same period of time. Interest rate swaps and their associated hedged item must qualify for hedge accounting under GAAP; interest rate swaps that do not qualify for hedge accounting are considered economic derivatives and are marked-to-market through other income.

<u>Interest Rate Caps and Floors</u> - In an interest rate cap agreement, a cash flow is generated if the price or interest rate of an underlying variable rises above a certain threshold (or cap) price or interest rate. In an interest rate floor agreement, a cash flow is generated if the price or interest rate of an underlying variable falls below a certain threshold (or floor) price or interest rate. Interest rate caps and floors are designed as protection against the interest rate on a variable-rate asset or liability rising or falling below a certain level. FHLBank purchases interest rate caps and floors to hedge duration risk caused by changes in interest rates. These derivatives are not specifically linked to individual assets or liabilities and, therefore, do not receive hedge accounting treatment. These derivatives are marked-to-market through other income.

*Types of Hedged Items:* FHLBank may have the following types of hedged items:

<u>Investments</u> - FHLBank invests in U.S. Treasury securities, U.S. Agency MBS, GSE MBS or debt securities, and state or local housing finance agency securities. The interest rate and prepayment risk associated with these investment securities is managed through a combination of funding and derivatives. FHLBank may manage the prepayment, duration, and interest rate risk by funding investment securities with callable consolidated obligations, or by hedging the prepayment risk with interest rate caps or floors or callable swaps. FHLBank may also manage the risk arising from changing market prices and volatility of investment securities by entering into derivatives that generally offset the changes in fair value of the securities.

<u>Advances</u> *-* For fixed-rate advances, FHLBank can either fund the advances with fixed-rate consolidated obligations with the same tenor or simultaneously enter into an interest rate swap in which the clearing agent or derivative counterparty receives fixed cash flows from FHLBank designed to mirror in timing and amount the cash inflows FHLBank receives on the advance. In this type of transaction, FHLBank typically receives from the clearing agent or derivative counterparty a variable cash flow that closely matches the interest payments on short-term discount notes or swapped consolidated obligation bonds.

The repricing characteristics and optionality embedded in certain financial instruments held by FHLBank can create interest rate risk. For example, when a member prepays an advance, future income could decline if the principal portion of the prepaid advance is invested in lower-yielding assets that continue to be funded by higher-cost debt. To protect against this risk, FHLBank generally charges a prepayment fee on an advance that makes it financially indifferent to a member's decision to prepay the advance. When FHLBank offers advances (other than short-term advances) that a member may prepay without a prepayment fee, it usually finances these advances with callable debt or otherwise hedges the option being sold to the member.

<u>Mortgage Loans</u> *-* FHLBank invests in fixed-rate mortgage loans through the MPF Program. The prepayment options embedded in mortgage loans can result in extensions or contractions in the expected lives of these investments, which usually occur as a result of changes in interest rates. FHLBank may manage the interest rate and prepayment risk associated with mortgage loans by issuing both callable and non-callable debt and using derivatives to achieve cash flow patterns and liability durations similar to those expected on the mortgage loans.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

<u>Consolidated Obligations</u> *-* FHLBank may enter into derivatives to hedge the interest rate risk associated with debt issuance. FHLBank manages the risk arising from changing market prices and volatility of a consolidated obligation by matching the cash inflow on the derivative with the cash outflow on the consolidated obligation.

For example, FHLBank may issue a fixed-rate consolidated obligation and simultaneously enter into a matching derivative in which FHLBank receives a fixed cash flow designed to mirror in timing and amount the cash outflows FHLBank pays on the consolidated obligation. In this type of transaction, FHLBank typically pays a variable cash flow that closely matches the interest payments it receives on short-term or adjustable-rate advances. These transactions are designated as fair value hedges. FHLBank may issue variable-rate consolidated obligations indexed to the Secured Overnight Financing Rate (SOFR), Federal funds effective rate, or other rates and simultaneously execute interest rate swaps to hedge the basis risk of the variable-rate debt. This type of hedge is treated as an economic hedge and the derivative is marked-to-market through earnings.

<u>Firm Commitments</u> *-* Commitments that obligate FHLBank to purchase closed fixed-rate mortgage loans from its members are considered derivatives. Accordingly, each mortgage loan purchase commitment is recorded as a derivative asset or derivative liability at fair value, with changes in fair value recognized in current period earnings. When a mortgage loan purchase commitment derivative settles, the current market value of the commitment is included with the basis of the mortgage loan and amortized accordingly.

Commitments that obligate FHLBank to issue consolidated obligations that settle outside of normal market settlement conventions are considered derivatives. Accordingly, each consolidated obligation commitment is recorded as a derivative asset or derivative liability at fair value, with changes in fair value recognized in current period earnings. When the consolidated obligation commitment derivative settles, the current market value of the commitment is included with the basis of the consolidated obligation and amortized accordingly.

FHLBank may also hedge a firm commitment for a forward-starting advance or consolidated obligation bond through the use of an interest rate swap. In this case, the swap functions as the hedging instrument for both the hedging relationship involving the firm commitment and the subsequent hedging relationship involving the advance or bond. If the hedge relationship is de-designated when the commitment is terminated and the advance or bond is issued, the fair value change associated with the firm commitment is recorded as a basis adjustment of the advance or bond at the time of de-designation. The basis adjustment is then amortized into interest income or expense over the life of the advance or bond. In addition, if a hedged firm commitment no longer qualifies as a fair value hedge, the hedge would be terminated and net gains and losses would be recognized in current period earnings. There were no gains or losses recognized due to disqualification of firm commitment hedges during the years ended December 31, 2025, 2024, and 2023.

*Financial Statement Impact and Additional Financial Information:* Derivative instruments are recorded at fair value and reported in derivative assets or derivative liabilities on the Statements of Condition. Premiums paid at acquisition are accounted for as the basis of the derivative at inception of the hedge. The notional amount in derivative contracts serves as a factor in determining periodic interest payments or cash flows received and paid. However, the notional amount of derivatives reflects FHLBank's involvement in the various classes of financial instruments and represents neither the actual amounts exchanged nor the overall exposure of FHLBank to credit and market risk; the overall risk is much smaller. The risks of derivatives can be measured meaningfully on a portfolio basis that takes into account the clearing agents, counterparties, the types of derivatives, the items being hedged, and any offsets between the derivatives and the items being hedged.

FHLBank considers accrued interest receivables and payables and the legal right to offset derivative assets and liabilities by clearing agent or derivative counterparty. Consequently, derivative assets and liabilities reported on the Statements of Condition generally include the net cash collateral, including initial margin, and accrued interest received or pledged by clearing agents and/or derivative counterparties. Therefore, an individual derivative may be in an asset position (i.e., the clearing agent or derivative counterparty would owe FHLBank the current fair value, including net accrued interest) yet be recorded as a derivative liability on the Statements of Condition after netting the derivative fair value with the fair value of cash collateral, including accrued interest on the collateral. Conversely, a derivative in a liability position (i.e.,where FHLBank would owe the fair value if the contract were settled) may be recorded as a derivative asset after netting.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Table 6.1 presents outstanding notional amounts and fair values of the derivatives outstanding by type of derivative and by hedge designation as of December 31, 2025 and 2024 (in thousands). Total derivative assets and liabilities include the effect of netting adjustments and cash collateral.

**<u>Table 6.1</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Notional<br>Amount** | **Derivative<br>Assets** | **Derivative<br>Liabilities** | **Notional<br>Amount** | **Derivative<br>Assets** | **Derivative<br>Liabilities** |
| Derivatives designated as hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest rate swaps | $41299536 | $72817 | $97362 | $37883273 | $66190 | $226184 |
| *Total derivatives designated as hedging relationships* | 41299536 | 72817 | 97362 | 37883273 | 66190 | 226184 |
| Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest rate swaps | 13259453 | 2020 | 608 | 11464896 | 25282 | 110 |
| &nbsp;&nbsp;&nbsp;Interest rate caps/floors | 1085000 | 561 |  | 2604000 | 4181 |  |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments | 54782 | 119 | 1 | 34524 | 30 | 73 |
| *Total derivatives not designated as hedging instruments* | 14399235 | 2700 | 609 | 14103420 | 29493 | 183 |
| *TOTAL* | $55698771 | 75517 | 97971 | $51986693 | 95683 | 226367 |
| Netting adjustments and cash collateral<sup>1</sup> |  | 316725 | (97379) |  | 261631 | (220236) |
| *DERIVATIVE ASSETS AND LIABILITIES* |  | $392242 | $592 |  | $357314 | $6131 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Amounts represent the application of the netting requirements that allow FHLBank to settle positive and negative positions and cash collateral, including accrued interest, held or placed with the same clearing agent and/or derivative counterparty. Cash collateral posted was $428,215,000 and $521,222,000 as of December 31, 2025 and 2024, respectively. Cash collateral received was $14,111,000 and $39,354,000 as of December 31, 2025 and 2024, respectively.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

For the years ended December 31, 2025, 2024, and 2023, FHLBank recorded net gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on FHLBank's net interest income as presented in Table 6.2 (in thousands):

**<u>Table 6.2</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2025** |
| | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** |
| | **Advances** | **Available-for-sale Securities** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** |
| Total amounts presented in the Statements of Income | $2085756 | $718033 | $571976 | $2496594 |
| Gains (losses) on fair value hedging relationships: |  |  |  |  |
| Interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;Derivatives<sup>1</sup> | $(69243) | $(119751) | $(2180) | $24596 |
| &nbsp;&nbsp;Hedged items<sup>2</sup> | 221294 | 267579 | (618) | (139350) |
| *NET GAINS (LOSSES) ON FAIR VALUE HEDGING RELATIONSHIPS* | $152051 | $147828 | $(2798) | $(114754) |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2024** | **2024** | **2024** | **2024** |
| | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** |
| | **Advances** | **Available-for-sale Securities** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** |
| Total amounts presented in the Statements of Income | $2434890 | $784787 | $888622 | $2627916 |
| Gains (losses) on fair value hedging relationships: |  |  |  |  |
| Interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;Derivatives<sup>1</sup> | $292128 | $233127 | $(4270) | $(103339) |
| &nbsp;&nbsp;Hedged items<sup>2</sup> | (765) | (1814) | (3149) | (167294) |
| *NET GAINS (LOSSES) ON FAIR VALUE HEDGING RELATIONSHIPS* | $291363 | $231313 | $(7419) | $(270633) |

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.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2023** | **2023** | **2023** | **2023** |
| | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** | **Interest Income/Expense** |
| | **Advances** | **Available-for-sale Securities** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** |
| Total amounts presented in the Statements of Income | $2409840 | $594548 | $1102702 | $2206160 |
| Gains (losses) on fair value hedging relationships: |  |  |  |  |
| Interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;Derivatives<sup>1</sup> | $85927 | $31991 | $(6312) | $(78556) |
| &nbsp;&nbsp;Hedged items<sup>2</sup> | 163568 | 162227 | (28552) | (244352) |
| *NET GAINS (LOSSES) ON FAIR VALUE HEDGING RELATIONSHIPS* | $249495 | $194218 | $(34864) | $(322908) |
| <sup>1</sup> Includes net interest settlements in interest income/expense. | <sup>1</sup> Includes net interest settlements in interest income/expense. | <sup>1</sup> Includes net interest settlements in interest income/expense. | <sup>1</sup> Includes net interest settlements in interest income/expense. | <sup>1</sup> Includes net interest settlements in interest income/expense. |
| <sup>2</sup> Includes amortization/accretion on closed fair value relationships in interest income. | <sup>2</sup> Includes amortization/accretion on closed fair value relationships in interest income. | <sup>2</sup> Includes amortization/accretion on closed fair value relationships in interest income. | <sup>2</sup> Includes amortization/accretion on closed fair value relationships in interest income. | <sup>2</sup> Includes amortization/accretion on closed fair value relationships in interest income. |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Table 6.3 presents the cumulative basis adjustments on hedged items designated as fair value hedges and the related amortized cost of the hedged items as of December 31, 2025 and 2024 (in thousands):

**<u>Table 6.3</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Advances** | **Available-for-Sale Securities** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** |
| Carrying value of hedged asset/(liability)<sup>1</sup> | $16008104 | 10076518 | (5464653) | (9564060) |
| Basis adjustments for active hedging relationships | $7677 | $9008 | $(1455) | $58742 |
| Basis adjustments for discontinued hedging relationships | (2285) |  |  | (5142) |
| Cumulative amount of fair value hedging basis adjustments<sup>2</sup> | $5392 | $9008 | $(1455) | $53600 |
| **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
|  | **Advances** | **Available-for-Sale Securities** | **Consolidated Obligation Discount Notes** | **Consolidated Obligation Bonds** |
| Carrying value of hedged asset/(liability)<sup>1</sup> | $15700289 | 7984796 | (3043704) | (10653310) |
| Basis adjustments for active hedging relationships | $(210116) | $(258571) | $(837) | $198495 |
| Basis adjustments for discontinued hedging relationships | (5937) |  |  | (5545) |
| Cumulative amount of fair value hedging basis adjustments<sup>2</sup> | $(216053) | $(258571) | $(837) | $192950 |

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<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes only the portion of carrying value representing the hedged items in fair value hedging relationships. For available-for-sale securities, amortized cost is considered to be carrying value (i.e., the fair value adjustment recorded in accumulated other comprehensive income (AOCI) is excluded).

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Included in amortized cost of the hedged asset/liability.

Table 6.4 provides information regarding net gains (losses) on derivatives recorded in non-interest income (in thousands).

**<u>Table 6.4</u>**

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| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| Derivatives not designated as hedging instruments: |  |  |  |
| Economic hedges: |  |  |  |
| &nbsp;&nbsp;Interest rate swaps | $(7644) | $(15925) | $(17414) |
| &nbsp;&nbsp;Interest rate caps/floors | (3831) | (3941) | (1088) |
| &nbsp;&nbsp;Net interest settlements | 4838 | 26278 | 35033 |
| &nbsp;&nbsp;Price alignment amount<sup>1</sup> | (69) | (338) | (799) |
| Mortgage delivery commitments | 2127 | (468) | (809) |
| *NET GAINS (LOSSES) ON DERIVATIVES* | $(4579) | $5606 | $14923 |
| <sup>1</sup> This amount is for derivatives for which variation margin is characterized as a daily settled contract. | <sup>1</sup> This amount is for derivatives for which variation margin is characterized as a daily settled contract. | <sup>1</sup> This amount is for derivatives for which variation margin is characterized as a daily settled contract. | <sup>1</sup> This amount is for derivatives for which variation margin is characterized as a daily settled contract. |

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*Managing Credit Risk on Derivatives:* FHLBank is subject to credit risk due to the risk of nonperformance by counterparties to its derivative transactions and manages credit risk through credit analyses, collateral requirements, and adherence to the requirements set forth in its RMP, U.S. Commodity Futures Trading Commission regulations, and FHFA regulations.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

<u>Uncleared derivatives</u>. For uncleared derivatives, the degree of credit risk depends on the extent to which master netting arrangements are included in these contracts to mitigate the risk. FHLBank requires collateral agreements with collateral delivery thresholds on all uncleared derivatives. All bilateral security agreements include bilateral-collateral-exchange provisions that require all credit exposures be collateralized, subject to minimum transfer amounts. Additionally, collateral related to derivatives with member institutions includes collateral assigned to FHLBank, as evidenced by a written security agreement. Based on credit analyses and collateral requirements, FHLBank management does not anticipate any credit losses on its derivative agreements.

Bilateral derivative transactions executed on or after September 1, 2022, are subject to two-way initial margin requirements if aggregate uncleared derivative exposure to a counterparty exceeds a specified threshold. The initial margin is required to be held at a third-party custodian, and the secured party can only take ownership upon the occurrence of certain events, including an event of default due to bankruptcy, insolvency, or similar proceeding. As of December 31, 2025, FHLBank was not required to pledge to or receive initial margin from bilateral derivative counterparties.

<u>Cleared derivatives.</u> For cleared derivatives, a Clearinghouse is FHLBank's counterparty. The applicable Clearinghouse notifies the clearing agent of the required initial and variation margin, and the clearing agent in turn notifies FHLBank. FHLBank utilizes two Clearinghouses for all cleared derivative transactions, LCH Ltd and CME Clearing. At both Clearinghouses, variation margin is characterized as daily settlement payments and initial margin is considered cash collateral. The requirement that FHLBank post initial and variation margin to the Clearinghouse through the clearing agent exposes FHLBank to institutional credit risk if the clearing agent or the Clearinghouse fails to meet its obligations. The use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral/payment for changes in the value of cleared derivatives is posted daily through a clearing agent.

The Clearinghouse determines initial margin requirements, and credit ratings generally are not factored into the initial margin. However, clearing agents may require additional initial margin to be posted based on credit considerations, including, but not limited to, credit rating downgrades. FHLBank was not required to post additional initial margin by its clearing agents as of December 31, 2025 and 2024.

FHLBank's net exposure on derivative agreements is presented in Note 10 – Assets and Liabilities Subject to Offsetting.

**<u>NOTE 7 – DEPOSITS</u>**

FHLBank offers demand, overnight and short-term deposit programs to its members and to other qualifying non-members. A member that services mortgage loans may also deposit funds collected in connection with the mortgage loans, pending disbursement of these funds to the owners of the mortgage loans. FHLBank classifies these funds as other deposits. Deposits classified as demand and overnight pay interest based on a daily interest rate. Term deposits pay interest based on a fixed rate determined at the issuance of the deposit.

Table 7.1 details the types of deposits held by FHLBank as of December 31, 2025 and 2024 (in thousands):

**<u>Table 7.1</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Interest-bearing: |  |  |
| &nbsp;&nbsp;&nbsp;Demand | $355169 | $389071 |
| &nbsp;&nbsp;&nbsp;Overnight | 450500 | 531300 |
| &nbsp;&nbsp;&nbsp;Term | 15342 | 1000 |
| *Total interest-bearing* | 821011 | 921371 |
| Non-interest-bearing: |  |  |
| &nbsp;&nbsp;&nbsp;Other | 88542 | 67650 |
| *Total non-interest-bearing* | 88542 | 67650 |
| *TOTAL DEPOSITS* | $909553 | $989021 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>NOTE 8 – CONSOLIDATED OBLIGATIONS</u>**

Consolidated obligations are the joint and several obligations of the FHLBanks and consist of consolidated bonds and discount notes and, as provided by the Bank Act or FHFA regulation, are backed only by the financial resources of the FHLBanks. The FHLBanks jointly issue consolidated obligations with the Office of Finance acting as their agent. The Office of Finance tracks the amounts of debt issued on behalf of each FHLBank. In addition, FHLBank records as a liability its specific portion of consolidated obligations for which it is the primary obligor. The FHFA and the U.S. Secretary of the Treasury oversee the issuance of FHLBank debt through the Office of Finance. Consolidated obligation bonds may be issued to raise short-term, intermediate-term, and long-term funds for the FHLBanks and are not subject to any statutory or regulatory limits as to maturities. Consolidated obligation discount notes, which are issued to raise short-term funds, are generally issued at less than their face amounts and redeemed at par upon maturity.

Although FHLBank Topeka is primarily liable for its portion of consolidated obligations, FHLBank Topeka is also jointly and severally liable with the other 10 FHLBanks for the payment of principal and interest on all consolidated obligations of each of the FHLBanks. The FHFA, at its discretion, may require any FHLBank to make principal or interest payments due on any consolidated obligations for which FHLBank is not the primary obligor. Although it has never occurred, to the extent that an FHLBank would be required to make a payment on a consolidated obligation on behalf of another FHLBank, the paying FHLBank would be entitled to reimbursement from the non-complying FHLBank. However, if the FHFA determines that the non-complying FHLBank is unable to satisfy its obligations, then the FHFA may allocate the non-complying FHLBank's outstanding consolidated obligation debt among the remaining FHLBanks on a pro rata basis in proportion to each FHLBank's participation in all consolidated obligations outstanding, or on any other basis the FHFA may determine to ensure that the FHLBanks operate in a safe and sound manner.

The par value of outstanding consolidated obligations of all FHLBanks, including outstanding consolidated obligations issued on behalf of FHLBank Topeka, was $1,151,783,980,000 and $1,192,968,394,000 as of December 31, 2025 and 2024, respectively. FHFA regulations require that each FHLBank maintain unpledged qualifying assets equal to its participation in the total consolidated obligations outstanding. Qualifying assets are defined as cash; secured advances; obligations of or fully guaranteed by the United States; obligations, participations or other instruments of or issued by Fannie Mae or Ginnie Mae; mortgages, obligations or other securities, which are or have ever been sold by Freddie Mac; and such securities as fiduciary and trust funds may invest in under the laws of the state in which FHLBank is located.

*Consolidated Obligation Bonds:* Table 8.1 presents FHLBank's participation in consolidated obligation bonds outstanding as of December 31, 2025 and 2024 (dollar amounts in thousands):

**<u>Table 8.1</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
|<br>**Year of Contractual Maturity** | **Amount** | **Weighted<br>Average<br>Interest<br>Rate** | **Amount** | **Weighted<br>Average<br>Interest<br>Rate** |
| Due in one year or less | $29814425 | 3.56% | $37517835 | 4.35% |
| Due after one year through two years | 10239855 | 3.63 | 7828625 | 3.14 |
| Due after two years through three years | 2199740 | 3.15 | 2225545 | 2.68 |
| Due after three years through four years | 1403455 | 3.34 | 1634440 | 2.97 |
| Due after four years through five years | 1384350 | 3.36 | 1573155 | 3.62 |
| Thereafter | 5565900 | 3.73 | 5280950 | 3.43 |
| *Total par value* | 50607725 | 3.57% | 56060550 | 3.97% |
| Premiums | 9679 |  | 12044 |  |
| Discounts | (3530) |  | (3054) |  |
| Concession fees | (12540) |  | (12085) |  |
| Hedging adjustments | (53600) |  | (192949) |  |
| *TOTAL* | $50547734 |  | $55864506 |  |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

FHLBank issues optional principal redemption bonds (callable bonds) that may be redeemed in whole or in part at the discretion of FHLBank on predetermined call dates in accordance with terms of bond offerings. FHLBank's consolidated obligation bonds outstanding as of December 31, 2025 and 2024 includes callable bonds totaling $15,633,500,000 and $17,048,000,000, respectively. Table 8.2 summarizes FHLBank's consolidated obligation bonds outstanding by year of maturity, or by the next call date for callable bonds as of December 31, 2025 and 2024 (in thousands):

**<u>Table 8.2</u>**

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| | | |
|:---|:---|:---|
| **Year of Maturity or Next Call Date** | **12/31/2025** | **12/31/2024** |
| Due in one year or less | $39445425 | $47888835 |
| Due after one year through two years | 8642355 | 5093625 |
| Due after two years through three years | 1204240 | 1342545 |
| Due after three years through four years | 472955 | 696940 |
| Due after four years through five years | 112850 | 378155 |
| Thereafter | 729900 | 660450 |
| *TOTAL PAR VALUE* | $50607725 | $56060550 |

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In addition to having fixed-rate or simple variable-rate coupon payment terms, FHLBank also issues step bonds that have coupon rates at fixed or variable rates for specified intervals over the lives of the bonds. At the end of each specified interval, the coupon rate or variable rate spread increases (decreases) or steps up (steps down). These bond issues generally contain call provisions enabling the bonds to be called at FHLBank's discretion on the step dates.

Table 8.3 summarizes interest rate payment terms for consolidated obligation bonds as of December 31, 2025 and 2024 (in thousands):

**<u>Table 8.3</u>**

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| | | |
|:---|:---|:---|
| | **12/31/2025** | **12/31/2024** |
| Fixed-rate | $18328225 | $21107550 |
| Simple variable-rate | 30951500 | 33475000 |
| Step | 1328000 | 1478000 |
| *TOTAL PAR VALUE* | $50607725 | $56060550 |

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*Consolidated Obligation Discount Notes:* Table 8.4 summarizes FHLBank's participation in consolidated obligation discount notes, all of which are due within one year (dollar amounts in thousands):

**<u>Table 8.4</u>**

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| | | | |
|:---|:---|:---|:---|
| | **Carrying Value** | **Par Value** | **Weighted**<br>**Average**<br>**Interest**<br>**Rate**<sup>1</sup> |
| December 31, 2025 | $21309301 | $21450283 | 3.70% |
| December 31, 2024 | $14417047 | $14518446 | 4.40% |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents yield to maturity excluding concession fees.

Information about the fair value of the consolidated obligations is included in Note 13.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>NOTE 9 – AFFORDABLE HOUSING PROGRAM AND VOLUNTARY CONTRIBUTIONS</u>**

The Bank Act requires each FHLBank to establish an AHP. As a part of its AHP, FHLBank provides subsidies in the form of direct grants or below-market interest rates on advances to members that provide the funds to assist in the purchase, construction or rehabilitation of housing for very low-, low- and moderate-income households. Each FHLBank recognizes AHP assessment expense equal to the greater of: (a) 10 percent of its previous year's income subject to assessment; or (b) the prorated sum required to ensure the aggregate contribution by all FHLBanks is no less than $100,000,000 each year, except that the required annual AHP contribution shall not exceed an FHLBank's net earnings in the previous year. For purposes of the AHP calculation, the term "income subject to assessment" is defined as income before interest expense related to mandatorily redeemable capital stock and the assessment for AHP. FHLBank accrues this expense monthly based on its income subject to assessment.

The amount set aside for AHP is charged to expense and recognized as a liability. As subsidies are provided through the disbursement of grants or issuance of subsidized advances, the AHP liability is reduced accordingly. If FHLBank's income subject to assessment would ever be zero or less, the amount of AHP liability would generally be equal to zero. However, if the result of the aggregate 10 percent calculation described above is less than the $100,000,000 minimum for all FHLBanks as a group, then the Bank Act requires the shortfall to be allocated among FHLBanks based on the ratio of each FHLBank's income for the previous year. If an FHLBank determines that its required AHP contributions are exacerbating any financial instability of that FHLBank, it may apply to the FHFA for a temporary suspension of its AHP contributions under the Bank Act. FHLBank has never applied to the FHFA for a temporary suspension of its AHP contributions.

In addition to the statutory AHP assessment, FHLBank may make voluntary contributions to the AHP or other housing and community investment initiatives. The income statement effects of voluntary contributions reduce net income before assessments which, in turn, reduces the statutory AHP assessment each year. As such, FHLBank has committed to make supplemental voluntary contributions to AHP by an amount that equals what the statutory AHP assessment would be in the absence of these effects. Statutory AHP assessments and all voluntary contributions to AHP are recorded in the AHP liability on the Statements of Condition. Statutory AHP assessments accrued in the current year are primarily awarded in the subsequent year and may be disbursed over several years.

Table 9.1 details the change in the AHP liability for the years ended December 31, 2025, 2024, and 2023 (in thousands):

**<u>Table 9.1</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| *Appropriated and reserved AHP funds as of the beginning of the period* | $102494 | $77794 | $53635 |
| AHP set aside based on current year income | 42210 | 48101 | 41164 |
| Current year non-statutory contributions<sup>1</sup> | 4906 | 5882 |  |
| Direct grants disbursed | (36595) | (29346) | (17286) |
| Recaptured funds<sup>2</sup> | 83 | 63 | 281 |
| *Appropriated and reserved AHP funds as of the end of the period* | $113098 | $102494 | $77794 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Current year non-statutory contributions are included in "Voluntary housing and community investment program contributions" on the Statements of Income.

<sup>2&nbsp;&nbsp;&nbsp;&nbsp;</sup>Recaptured funds are direct grants returned to FHLBank in those instances where the commitments associated with the approved use of funds are not met and repayment to FHLBank is required by regulation. Recaptured funds are returned as a result of: (1) AHP-assisted homeowner's transfer or sale of property within the five-year retention period that the assisted homeowner is required to occupy the property; (2) homeowner's failure to acquire sufficient loan funding (funds previously approved and disbursed cannot be used); (3) over-subsidized projects; or (4) previously disbursed but unused grants.

As of December 31, 2025, FHLBank's AHP accrual on its Statements of Condition consisted of $46,152,000 for the current year AHP (uncommitted, including amounts recaptured and reallocated from prior years) and $66,946,000 for prior years' AHP (committed but undisbursed). Disbursements occur from project approval to physical completion, which is typically between one and four years.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Other voluntary and community investment initiatives primarily consist of voluntary grants and contributions. Table 9.2 presents a rollforward of the voluntary contribution liability balance (non-AHP) for the years ended December 31, 2025, 2024, and 2023 (in thousands):

**<u>Table 9.2</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| *Voluntary contribution liability as of the beginning of the period* | $3230 | $— | $— |
| Voluntary housing and community investment expense (non-AHP) | 24198 | 10616 | 3000 |
| Voluntary grants and donation payments made | (10343) | (7350) | (3000) |
| Loan subsidies | (13285) | (36) |  |
| *Voluntary contribution liability as of the end of the period* | $3800 | $3230 | $— |

---

**<u>NOTE 10 – ASSETS AND LIABILITIES SUBJECT TO OFFSETTING</u>**

FHLBank presents certain financial instruments, including derivatives, repurchase agreements and securities purchased under agreements to resell, on a net basis by clearing agent by clearinghouse, or by counterparty, when it has met the netting requirements. For these financial instruments, FHLBank has elected to offset its asset and liability positions, as well as cash collateral received or pledged, including associated accrued interest.

FHLBank has analyzed the enforceability of offsetting rights incorporated in its cleared derivative transactions and determined that the exercise of those offsetting rights by a non-defaulting party under these transactions should be upheld under applicable law upon an event of default including bankruptcy, insolvency, or similar proceeding involving the clearinghouse or clearing agent, or both. Based on this analysis, FHLBank presents a net derivative receivable or payable for all of its transactions through a particular clearing agent with a particular clearinghouse.

Tables 10.1 and 10.2 present the fair value of financial assets, including the related collateral received from or pledged to clearing agents or counterparties, based on the terms of FHLBank's master netting arrangements or similar agreements as of December 31, 2025 and 2024 (in thousands):

**<u>Table 10.1</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| **Description** | **Gross Amounts<br>of Recognized<br>Assets** | **Gross Amounts<br>Offset<br>in the<br>Statements of<br>Condition** | **Net Amounts<br>of Assets<br>Presented<br>in the<br>Statements of<br>Condition** | **Gross Amounts**<br>**Not Offset**<br>**in the**<br>**Statement of**<br>**Condition**<sup>1</sup> | **Net<br>Amount** |
| Derivative assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Uncleared derivatives | $53175 | $(49101) | $4074 | $(1588) | $2486 |
| &nbsp;&nbsp;&nbsp;Cleared derivatives | 22342 | 365826 | 388168 |  | 388168 |
| *Total derivative assets* | 75517 | 316725 | 392242 | (1588) | 390654 |
| Securities purchased under agreements to resell | 4150000 |  | 4150000 | (4150000) |  |
| *TOTAL* | $4225517 | $316725 | $4542242 | $(4151588) | $390654 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents noncash collateral received on financial instruments that: (1) do not qualify for netting on the Statements of Condition; or (2) are not subject to an enforceable netting agreement (e.g., mortgage delivery commitments).

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**<u>Table 10.2</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| **Description** | **Gross Amounts<br>of Recognized<br>Assets** | **Gross Amounts<br>Offset<br>in the<br>Statements of<br>Condition** | **Net Amounts<br>of Assets<br>Presented<br>in the<br>Statements of<br>Condition** | **Gross Amounts**<br>**Not Offset**<br>**in the**<br>**Statement of**<br>**Condition**<sup>1</sup> | **Net<br>Amount** |
| Derivative assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Uncleared derivatives | $90722 | $(86061) | $4661 | $(30) | $4631 |
| &nbsp;&nbsp;&nbsp;Cleared derivatives | 4961 | 347692 | 352653 |  | 352653 |
| *Total derivative assets* | 95683 | 261631 | 357314 | (30) | 357284 |
| Securities purchased under agreements to resell | 5150000 |  | 5150000 | (5150000) |  |
| *TOTAL* | $5245683 | $261631 | $5507314 | $(5150030) | $357284 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents noncash collateral received on financial instruments that: (1) do not qualify for netting on the Statements of Condition; or (2) are not subject to an enforceable netting agreement (e.g., mortgage delivery commitments).

Tables 10.3 and 10.4 present the fair value of financial liabilities, including the related collateral received from or pledged to counterparties, based on the terms of FHLBank's master netting arrangements or similar agreements as of December 31, 2025 and 2024 (in thousands):

**<u>Table 10.3</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| **Description** | **Gross Amounts<br>of Recognized<br>Liabilities** | **Gross Amounts<br>Offset<br>in the<br>Statements of<br>Condition** | **Net Amounts<br>of Liabilities<br>Presented<br>in the<br>Statements of<br>Condition** | **Gross Amounts**<br>**Not Offset**<br>**in the**<br>**Statement of**<br>**Condition**<sup>1</sup> | **Net<br>Amount** |
| Derivative liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Uncleared derivatives | $97746 | $(97154) | $592 | $(1) | $591 |
| &nbsp;&nbsp;&nbsp;Cleared derivatives | 225 | (225) |  |  |  |
| *Total derivative liabilities* | 97971 | (97379) | 592 | (1) | 591 |
| *TOTAL* | $97971 | $(97379) | $592 | $(1) | $591 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents noncash collateral received on financial instruments that: (1) do not qualify for netting on the Statements of Condition; or (2) are not subject to an enforceable netting agreement (e.g., mortgage delivery commitments).

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**<u>Table 10.4</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| **Description** | **Gross Amounts<br>of Recognized<br>Liabilities** | **Gross Amounts<br>Offset<br>in the<br>Statements of<br>Condition** | **Net Amounts<br>of Liabilities<br>Presented<br>in the<br>Statements of<br>Condition** | **Gross Amounts**<br>**Not Offset**<br>**in the**<br>**Statement of**<br>**Condition**<sup>1</sup> | **Net<br>Amount** |
| Derivative liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Uncleared derivatives | $225991 | $(219860) | $6131 | $(73) | $6058 |
| &nbsp;&nbsp;&nbsp;Cleared derivatives | 376 | (376) |  |  |  |
| *Total derivative liabilities* | 226367 | (220236) | 6131 | (73) | 6058 |
| *TOTAL* | $226367 | $(220236) | $6131 | $(73) | $6058 |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents noncash collateral received on financial instruments that: (1) do not qualify for netting on the Statements of Condition; or (2) are not subject to an enforceable netting agreement (e.g., mortgage delivery commitments).

**<u>NOTE 11 – CAPITAL</u>**

*Capital Requirements:* FHLBank is subject to three capital requirements under the provisions of the Gramm-Leach-Bliley Act (GLB Act) and the FHFA's capital structure regulation. Regulatory capital does not include AOCI but does include mandatorily redeemable capital stock.

• *Risk-based capital.* FHLBank must maintain at all times permanent capital in an amount at least equal to the sum of its credit risk, market risk and operational risk capital requirements. The risk-based capital requirements are all calculated in accordance with the rules and regulations of the FHFA. Only permanent capital, defined as the amounts paid-in for Class B Common Stock and retained earnings, can be used by FHLBank to satisfy its risk-based capital requirement. The FHFA may require FHLBank to maintain a greater amount of permanent capital than is required by the risk-based capital requirement as defined, but the FHFA has not placed any such requirement on FHLBank to date.

• *Total regulatory capital.* The GLB Act requires FHLBank to maintain at all times at least a 4.0 percent total capital-to-asset ratio. Total regulatory capital is defined as the sum of permanent capital, Class A Common Stock, any general loss allowance, if consistent with GAAP and not established for specific assets, and other amounts from sources determined by the FHFA as available to absorb losses.

• *Leverage capital.* FHLBank is required to maintain at all times a leverage capital-to-assets ratio of at least 5.0 percent, with the leverage capital ratio defined as the sum of permanent capital weighted 1.5 times and non-permanent capital (currently only Class A Common Stock) weighted 1.0 times, divided by total assets.

Table 11.1 illustrates that FHLBank was in compliance with its regulatory capital requirements as of December 31, 2025 and 2024 (dollar amounts in thousands):

**<u>Table 11.1</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| | **Required** | **Actual** | **Required** | **Actual** |
| *Regulatory capital requirements:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Risk-based capital | $832553 | $4018918 | $835212 | $3777209 |
| &nbsp;&nbsp;&nbsp;Total regulatory capital-to-asset ratio | 4.0% | 5.5% | 4.0% | 5.6% |
| &nbsp;&nbsp;&nbsp;Total regulatory capital | $3100201 | $4279822 | $3036039 | $4242916 |
| &nbsp;&nbsp;&nbsp;Leverage capital ratio | 5.0% | 8.1% | 5.0% | 8.1% |
| &nbsp;&nbsp;&nbsp;Leverage capital | $3875251 | $6289282 | $3795049 | $6131521 |

---

*Capital Stock:* FHLBank offers two classes of stock - Class A Common Stock and Class B Common Stock - each issued, redeemed, and repurchased at a par value of $100 per share. Members are required to hold capital stock to become and remain members of FHLBank and enter into specified activities with FHLBank including access to FHLBank's credit products and sale of AMA.

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The required amount of Class A Common Stock represents the Asset-based Stock Purchase Requirement, which is currently equal to 0.1 percent of a member's total assets as of December 31 of the preceding calendar year, with a minimum requirement of $1,000, and a maximum requirement of $500,000. The required amount of Class B Common Stock represents the Activity-based Stock Purchase Requirement, which is currently equal to:

▪ 4.5 percent of the principal amount of advances outstanding, plus

▪ 3.0 percent of the principal amount of AMA outstanding for the member, limited to a maximum of 3.0 percent of the member's total assets at the end of the prior calendar year, plus

▪ 0.25 percent of the principal amount of letters of credit outstanding less the member's Asset-based Stock Purchase Requirement.

The percentages listed above are subject to change by FHLBank within ranges established in its capital plan. Changes to the percentages outside of the capital plan percentages require FHLBank to request FHFA approval of an amended capital plan. See Note 15 – Transactions with Stockholders for detailed information on transactions with related parties.

Any member may make a written request - unrelated to a notice of withdrawal or non-member status - to redeem a portion of its Class A Common Stock or all or part of its Class B Common Stock (i.e., an excess stock redemption request). Within five business days of receiving the request, FHLBank may notify the member that it declines to repurchase the excess stock before the end of that five business day period, at which time the applicable redemption period shall commence. Otherwise, FHLBank will repurchase any excess stock within the five business day period. The redemption periods are six months for Class A Common Stock and five years for Class B Common Stock. Subject to certain limitations, FHLBank may choose to repurchase a member's excess stock on or before the end of the applicable redemption period. A member may cancel or revoke its written redemption request prior to the end of the redemption period or its written notice of withdrawal from membership. FHLBank's capital plan provides that FHLBank will charge the member a cancellation fee in accordance with a schedule where the amount of the fee increases with the passage of time.

Under FHFA regulations, any member that withdraws from membership, or otherwise has its membership terminated, may not be readmitted to membership, or acquire any capital stock of any FHLBank, for a period of five years from the date on which the institution's membership terminated and it divested all of its shares of FHLBank stock.

*Stock Dividends:* FHLBank's board of directors may declare and pay non-cumulative dividends, expressed as a percentage rate per annum based upon the par value of capital stock on shares of Class A Common Stock outstanding and on shares of Class B Common Stock outstanding, out of previously unrestricted retained earnings and current earnings in either cash or Class B Common Stock. There is no dividend preference between Class A Common Stockholders and Class B Common Stockholders up to the Dividend Parity Threshold (DPT). 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. Dividend rates in excess of the DPT may be paid on Class A Common Stock or Class B Common Stock at the discretion of the board of directors, provided, however, that the dividend rate paid per annum on the Class B Common Stock equals or exceeds the dividend rate per annum paid on the Class A Common Stock for any dividend period. The DPT can be changed at any time by the board of directors but will only be effective for dividends paid at least 90 days after the date members are notified by FHLBank. The DPT was equal to the average overnight Federal funds effective rate minus 200 basis points. This DPT will continue to be effective until such time as it may be changed by FHLBank's board of directors. When the overnight Federal funds effective rate is below 2.00 percent, the DPT is zero for that dividend period (DPT is floored at zero).

The board of directors cannot declare a dividend if: (1) FHLBank's capital position is below its minimum regulatory capital requirements; (2) FHLBank's capital position will be below its minimum regulatory capital requirements after paying the dividend; (3) the principal or interest due on any consolidated obligation of FHLBank has not been paid in full; (4) FHLBank fails to provide the FHFA the quarterly certification prior to declaring or paying dividends for a quarter; or (5) FHLBank fails to provide notification upon its inability to provide such certification or upon a projection that it will fail to comply with statutory or regulatory liquidity requirements or will be unable to timely and fully meet all of its current obligations.

*Mandatorily Redeemable Capital Stock:* FHLBank is a cooperative whose members own most of FHLBank's capital stock. Former members (including certain non-members that own FHLBank capital stock as a result of merger or acquisition, relocation, charter termination, or involuntary termination of an FHLBank member) own the remaining capital stock to support business transactions still carried on FHLBank's Statements of Condition. Shares cannot be purchased or sold except between FHLBank and its members at a price equal to the $100 per share par value.

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Table 11.2 presents a roll-forward of mandatorily redeemable capital stock for the years ended December 31, 2025, 2024, and 2023 (in thousands):

**<u>Table 11.2</u>**

---

| | | | |
|:---|:---|:---|:---|
| | **2025** | **2024** | **2023** |
| *Balance, beginning of period* | $3225 | $247 | $280 |
| Capital stock subject to mandatory redemption reclassified from equity during the period | 598442 | 368951 | 727472 |
| Capital stock redemption cancellations reclassified to equity during the period |  |  | (900) |
| Redemption or repurchase of mandatorily redeemable capital stock during the period | (596195) | (366159) | (726618) |
| Stock dividend classified as mandatorily redeemable capital stock during the period | 364 | 186 | 13 |
| *Balance, end of period* | $5836 | $3225 | $247 |

---

*Excess Capital Stock:* Excess capital stock is defined as the amount of stock held by a member (or former member) in excess of that institution's minimum stock purchase requirement. FHFA rules limit the ability of FHLBank to create excess member stock under certain circumstances. For example, FHLBank may not pay dividends in the form of capital stock or issue new excess stock to members if FHLBank's excess stock exceeds one percent of its total assets or if the issuance of excess stock would cause FHLBank's excess stock to exceed one percent of its total assets. As of December 31, 2025, FHLBank's excess stock was less than one percent of total assets.

*Capital Classification Determination:* The FHFA determines each FHLBank's capital classification on at least a quarterly basis. If an FHLBank is determined to be other than adequately capitalized, that FHLBank becomes subject to additional supervisory authority by the FHFA. Before implementing a reclassification, the Director of the FHFA is required to provide an FHLBank with written notice of the proposed action and an opportunity to submit a response. As of the most recent review by the FHFA, FHLBank Topeka was classified as adequately capitalized.

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**<u>NOTE 12 – ACCUMULATED OTHER COMPREHENSIVE INCOME</u>**

Table 12.1 summarizes the changes in AOCI for the years ended December 31, 2025, 2024, and 2023 (in thousands):

**<u>Table 12.1</u>**

---

| | |
|:---|:---|
| | **Total AOCI** |
| ***Balance at December 31, 2022*** | $(84270) |
| Other comprehensive income (loss) before reclassification: |  |
| &nbsp;&nbsp;&nbsp;Change in unrealized gains (losses) - available-for-sale securities | (34501) |
| &nbsp;&nbsp;&nbsp;Change in unrealized gains (losses) - defined benefit pension plan | (200) |
| *Net current period other comprehensive income (loss)* | (34701) |
| ***Balance at December 31, 2023*** | $(118971) |
| Other comprehensive income (loss) before reclassification: |  |
| &nbsp;&nbsp;&nbsp;Change in unrealized gains (losses) - available-for-sale securities | (21161) |
| &nbsp;&nbsp;Impact of settlements - defined benefit pension plan | 170 |
| *Net current period other comprehensive income (loss)* | (20991) |
| ***Balance at December 31, 2024*** | $(139962) |
| Other comprehensive income (loss) before reclassification: |  |
| &nbsp;&nbsp;&nbsp;Change in unrealized gains (losses) - available-for-sale securities | 52771 |
| &nbsp;&nbsp;Impact of settlements - defined benefit pension plan | (47) |
| Reclassification adjustment for net (gains) losses on sale of available-for-sale securities included in net income | 890 |
| *Net current period other comprehensive income (loss)* | 53614 |
| ***Balance at December 31, 2025*** | $(86348) |

---

 

**<u>NOTE 13 – FAIR VALUES</u>**

The fair value amounts recorded on the Statements of Condition and presented in the note disclosures have been determined by FHLBank using available market and other pertinent information and reflect FHLBank's best judgment of appropriate valuation methods. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). Although FHLBank uses its best judgment in estimating the fair value of its financial instruments, there are inherent limitations in any valuation technique. Therefore, the fair values may not be indicative of the amounts that would have been realized in market transactions as of December 31, 2025 and 2024. Additionally, these values do not represent an estimate of the overall market value of FHLBank as a going concern, which would take into account future business opportunities and the net profitability of assets and liabilities.

*Subjectivity of Estimates:* Estimates of the fair value of advances with options, mortgage instruments, and derivatives with embedded options are subjective and require judgments regarding significant matters such as the amount and timing of future cash flows, prepayment speed assumptions, expected interest rate volatility, methods to determine possible distributions of future interest rates used to value options, and the selection of discount rates that appropriately reflect market and credit risks. The use of different assumptions could have a material effect on fair value estimates.

*Fair Value Hierarchy:* The fair value hierarchy requires FHLBank to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The inputs are evaluated and an overall level for the fair value measurement is determined. This overall level is an indication of the market observability of the fair value measurement for the asset or liability. FHLBank must disclose the level within the fair value hierarchy in which the measurements are classified for all assets and liabilities.

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The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels:

• Level 1 Inputs – Quoted prices (unadjusted) for identical assets or liabilities in active markets that FHLBank can access on the measurement date. An active market for the asset or liability is a market in which the transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 Inputs – Inputs other than quoted prices within Level 1 that are observable inputs for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following: (1) quoted prices for similar assets and liabilities in active markets; (2) quoted prices for similar assets and liabilities in markets that are not active; (3) inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves that are observable at commonly quoted intervals and implied volatilities); and (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3 Inputs – Unobservable inputs for the asset or liability. Valuations are derived from techniques that use significant assumptions not observable in the market, which include pricing models, discounted cash flow models using an unobservable discount rate, or similar techniques.

FHLBank reviews its fair value hierarchy classifications on a quarterly basis. Changes in the observability of the valuation inputs may result in a reclassification of certain assets or liabilities. There were no transfers of assets or liabilities between fair value levels during the years ended December 31, 2025 and 2024.

Tables 13.1 and 13.2 present the carrying value, fair value and fair value hierarchy of financial assets and liabilities as of December 31, 2025 and 2024. FHLBank records trading securities, available-for-sale securities, derivative assets, and derivative liabilities at fair value on a recurring basis, and on occasion certain mortgage loans held for portfolio and certain other assets at fair value on a nonrecurring basis. FHLBank measures all other financial assets and liabilities at amortized cost. Further details about the financial assets and liabilities held at fair value on either a recurring or non-recurring basis are presented in Tables 13.3 and 13.4.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

The carrying value, fair value and fair value hierarchy of FHLBank's financial assets and liabilities as of December 31, 2025 and 2024 are summarized in Tables 13.1 and 13.2 (in thousands):

**<u>Table 13.1</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Carrying<br>Value** | **Total<br>Fair<br>Value** | **Level 1** | **Level 2** | **Level 3** | **Netting**<br>**Adjustment and Cash**<br>**Collateral**<sup>1</sup> |
| ***Assets:*** | | | | | | |
| Cash and due from banks | $21729 | $21729 | $21729 | $— | $— | $— |
| Interest-bearing deposits | 1910137 | 1910137 |  | 1910137 |  |  |
| Securities purchased under agreements to resell | 4150000 | 4150000 |  | 4150000 |  |  |
| Federal funds sold | 2850000 | 2850000 |  | 2850000 |  |  |
| Trading securities | 80741 | 80741 |  | 80741 |  |  |
| Available-for-sale securities | 14570751 | 14570751 |  | 14512795 | 57956 |  |
| Held-to-maturity securities | 182806 | 182504 |  | 157145 | 25359 |  |
| Advances | 43667540 | 43745565 |  | 43745565 |  |  |
| Mortgage loans held for portfolio, net of allowance | 9351305 | 8763282 |  | 8755996 | 7286 |  |
| Accrued interest receivable | 245759 | 245759 |  | 245759 |  |  |
| Derivative assets | 392242 | 392242 |  | 75517 |  | 316725 |
| ***Liabilities:*** |  |  |  |  |  |  |
| Deposits | 909553 | 909565 |  | 909565 |  |  |
| Consolidated obligation discount notes | 21309301 | 21312178 |  | 21312178 |  |  |
| Consolidated obligation bonds | 50547734 | 50030635 |  | 50030635 |  |  |
| Mandatorily redeemable capital stock | 5836 | 5836 | 5836 |  |  |  |
| Accrued interest payable | 301720 | 301720 |  | 301720 |  |  |
| Derivative liabilities | 592 | 592 |  | 97971 |  | (97379) |
| ***Other Asset (Liability):*** |  |  |  |  |  |  |
| Industrial revenue bonds | 35000 | 34239 |  | 34239 |  |  |
| Financing obligation payable | (35000) | (34239) |  | (34239) |  |  |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the effect of legally enforceable master netting agreements that allow FHLBank to net settle positive and negative positions and also derivative cash collateral and related accrued interest held or placed with the same clearing agent or derivative counterparty.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>Table 13.2</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Carrying<br>Value** | **Total<br>Fair<br>Value** | **Level 1** | **Level 2** | **Level 3** | **Netting**<br>**Adjustment**<br>**and Cash**<br>**Collateral**<sup>1</sup> |
| ***Assets:*** | | | | | | |
| Cash and due from banks | $25575 | $25575 | $25575 | $— | $— | $— |
| Interest-bearing deposits | 2142423 | 2142423 |  | 2142423 |  |  |
| Securities purchased under agreements to resell | 5150000 | 5150000 |  | 5150000 |  |  |
| Federal funds sold | 3575000 | 3575000 |  | 3575000 |  |  |
| Trading securities | 439963 | 439963 |  | 439963 |  |  |
| Available-for-sale securities | 13057619 | 13057619 |  | 13033440 | 24179 |  |
| Held-to-maturity securities | 219826 | 217476 |  | 187027 | 30449 |  |
| Advances | 41652081 | 41678915 |  | 41678915 |  |  |
| Mortgage loans held for portfolio, net of allowance | 8949433 | 8003324 |  | 8001989 | 1335 |  |
| Accrued interest receivable | 249199 | 249199 |  | 249199 |  |  |
| Derivative assets | 357314 | 357314 |  | 95683 |  | 261631 |
| ***Liabilities:*** |  |  |  |  |  |  |
| Deposits | 989021 | 989023 |  | 989023 |  |  |
| Consolidated obligation discount notes | 14417047 | 14419420 |  | 14419420 |  |  |
| Consolidated obligation bonds | 55864506 | 55000797 |  | 55000797 |  |  |
| Mandatorily redeemable capital stock | 3225 | 3225 | 3225 |  |  |  |
| Accrued interest payable | 347843 | 347843 |  | 347843 |  |  |
| Derivative liabilities | 6131 | 6131 |  | 226367 |  | (220236) |
| ***Other Asset (Liability):*** |  |  |  |  |  |  |
| Industrial revenue bonds | 35000 | 33112 |  | 33112 |  |  |
| Financing obligation payable | (35000) | (33112) |  | (33112) |  |  |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the effect of legally enforceable master netting agreements that allow FHLBank to net settle positive and negative positions and also derivative cash collateral and related accrued interest held or placed with the same clearing agent or derivative counterparty.

*Fair Value Methodologies and Techniques and Significant Inputs:*

The valuation methodologies and primary inputs used to develop the measurement of fair value for assets and liabilities that are measured at fair value on a recurring or nonrecurring basis in the Statements of Condition are listed below. The fair values and levels within the fair value hierarchy of these assets and liabilities are reported in Tables 13.3 and 13.4.

<u>Investment Securities:</u> For long-term (as determined by original issuance date) investment securities, FHLBank obtains prices from multiple designated third-party pricing vendors when available. Pricing vendors use various proprietary models to price investments. The inputs to those models are derived from various sources including, but not limited to, benchmark yields, reported trades, dealer estimates, issuer spreads, benchmark securities, bids, offers and other market-related data. Since many MBS are not traded daily, the pricing vendors use available information as applicable such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to determine the prices for individual securities. Each pricing vendor has an established challenge process in place for all valuations, which facilitates resolution of potentially erroneous prices identified by FHLBank. The use of multiple pricing vendors provides FHLBank with additional data points regarding levels of inputs and final prices that are used to validate final pricing of investment securities.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

Annually, FHLBank conducts reviews of the multiple pricing vendors to confirm and further augment its understanding of the vendors' pricing processes, methodologies, and control procedures. FHLBank's review process includes obtaining available vendors' independent auditors' reports regarding the internal controls over their valuation process, although the availability of pertinent reports varies by vendor.

FHLBank utilizes a valuation technique for estimating the fair values of long-term investment securities as follows:

▪ FHLBank's valuation technique first requires the establishment of a median price for each security. If three prices are received, the middle price is used; if two prices are received, the average of the two prices is used; and if one price is received, it is used subject to validation.

▪ All prices that are within a specified tolerance threshold of the median price are included in the cluster of prices that are averaged to compute a default price.

▪ Prices that are outside the threshold (outliers) are subject to further analysis (including, but not limited to, comparison to prices provided by an additional third-party valuation service, prices for similar securities, and/or non-binding dealer estimates) to determine if an outlier is a better estimate of fair value.

▪ If an outlier (or some other price identified in the analysis) is determined to be a better estimate of fair value, then the outlier (or the other price as appropriate) is used as the final price rather than the default price.

▪ If, on the other hand, the analysis confirms that an outlier (or outliers) is (are) in fact not representative of fair value and the default price is the best estimate, then the default price is used as the final price. In all cases, the final price is used to determine the fair value of the security.

▪ If all prices received for a security are outside the tolerance threshold level of the median price, then there is no default price, and the final price is determined by an evaluation of all outlier prices as described above.

As of December 31, 2025 and 2024, multiple prices were received for substantially all of FHLBank's long-term investment securities so the final prices for those securities were computed by averaging the prices received. Based on FHLBank's reviews of the pricing methods and controls employed by the third-party pricing vendors and the relative lack of dispersion among the vendor prices, FHLBank has concluded that its final prices result in reasonable estimates of fair value and that the fair value measurements are classified appropriately in the fair value hierarchy.

<u>Impaired Mortgage Loans Held for Portfolio and Real Estate Owned:</u> The estimated fair values of impaired mortgage loans held for portfolio and REO on a nonrecurring basis are generally based on broker prices or property values obtained from a third-party pricing vendor. All estimated fair values of impaired mortgage loans held for portfolio and REO are net of any estimated selling costs.

<u>Derivative Assets/Liabilities:</u> FHLBank bases the fair values of derivatives on instruments with similar terms or market prices, when available. However, active markets do not exist for many of FHLBank's derivatives. Consequently, fair values for these instruments are generally estimated using standard valuation techniques such as discounted cash flow analysis.

FHLBank is subject to credit risk due to the risk of nonperformance by counterparties to its derivative transactions. For uncleared derivatives, the degree of credit risk depends on the extent to which master netting arrangements are included in these contracts to mitigate the risk. In addition, FHLBank requires collateral agreements with collateral delivery thresholds on all of its uncleared derivatives. The use of cleared derivatives is intended to mitigate credit risk exposure because a central counterparty is substituted for individual counterparties and collateral is posted daily through a clearing agent for changes in the value of cleared derivatives. FHLBank has evaluated the potential for the fair value of the instruments to be impacted by counterparty credit risk and its own credit risk and has determined that no adjustments were significant or necessary to the overall fair value measurements of derivatives.

The fair values of FHLBank's derivative assets and liabilities include accrued interest receivable/payable and cash collateral. The estimated fair values of the accrued interest receivable/payable and cash collateral approximate their carrying values due to their short-term nature. Derivatives are presented on a net basis by clearing agent by Clearinghouse or by counterparty when it has met the netting requirements. If these netted amounts are positive, they are classified as an asset and, if negative, a liability.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

The discounted cash flow model uses market-observable inputs. Inputs by class of derivative are as follows:

▪ Interest-rate related:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Discount rate assumption - Federal Funds Overnight Index Swap (OIS) or SOFR swap curve depending on the terms of the derivative;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Forward interest rate assumption for rate resets - swap curve of index rate of the instrument (e.g., SOFR or Fed Funds Effective Rate); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Volatility assumptions - market-based expectations of future interest rate volatility implied from current market prices for similar options.

▪ Mortgage delivery commitments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• To be announced (TBA) price - market-based prices of TBAs by coupon class and expected term until settlement.

*Fair Value Measurements:* Tables 13.3 and 13.4 present, for each hierarchy level, FHLBank's assets and liabilities that are measured at fair value on a recurring or nonrecurring basis on the Statements of Condition as of or for the periods ended December 31, 2025 and 2024 (in thousands).

**<u>Table 13.3</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| | **Total** | **Level 1** | **Level 2** | **Level 3** | **Netting**<br>**Adjustment and Cash**<br>**Collateral**<sup>1</sup> |
| Recurring fair value measurements - Assets: |  |  |  |  |  |
| Trading securities: |  |  |  |  |  |
| &nbsp;&nbsp;GSE MBS | $80741 | $— | $80741 | $— | $— |
| *Total trading securities* | 80741 |  | 80741 |  |  |
| Available-for-sale securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury obligations | 3149986 |  | 3149986 |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS | 60428 |  | 60428 |  |  |
| &nbsp;&nbsp;&nbsp;GSE MBS | 11302381 |  | 11302381 |  |  |
| &nbsp;&nbsp;State or local housing agency obligations | 57956 |  |  | 57956 |  |
| *Total available-for-sale securities* | 14570751 |  | 14512795 | 57956 |  |
| Derivative assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-rate related | 392123 |  | 75398 |  | 316725 |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments | 119 |  | 119 |  |  |
| *Total derivative assets* | 392242 |  | 75517 |  | 316725 |
| *TOTAL RECURRING FAIR VALUE MEASUREMENTS - ASSETS* | $15043734 | $— | $14669053 | $57956 | $316725 |
| Recurring fair value measurements - Liabilities: |  |  |  |  |  |
| Derivative liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-rate related | $591 | $— | $97970 | $— | $(97379) |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments | 1 |  | 1 |  |  |
| *Total derivative liabilities* | 592 |  | 97971 |  | (97379) |
| *TOTAL RECURRING FAIR VALUE MEASUREMENTS - LIABILITIES* | $592 | $— | $97971 | $— | $(97379) |
| Nonrecurring fair value measurements - Assets<sup>2</sup>: |  |  |  |  |  |
| Impaired mortgage loans | $7394 | $— | $— | $7394 | $— |
| *TOTAL NONRECURRING FAIR VALUE MEASUREMENTS - ASSETS* | $7394 | $— | $— | $7394 | $— |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the effect of legally enforceable master netting agreements that allow FHLBank to net settle positive and negative positions and also derivative cash collateral, including related accrued interest, held or placed with the same clearing agent or derivative counterparty.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes assets adjusted to fair value during the year ended December 31, 2025 and still outstanding as of December 31, 2025.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>Table 13.4</u>**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| | **Total** | **Level 1** | **Level 2** | **Level 3** | **Netting**<br>**Adjustment**<br>**and Cash**<br>**Collateral**<sup>1</sup> |
| Recurring fair value measurements - Assets: |  |  |  |  |  |
| Trading securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;GSE debentures | $17884 | $— | $17884 | $— | $— |
| &nbsp;&nbsp;GSE MBS | 422079 |  | 422079 |  |  |
| *Total trading securities* | 439963 |  | 439963 |  |  |
| Available-for-sale securities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury obligations | 3237223 |  | 3237223 |  |  |
| &nbsp;&nbsp;&nbsp;U.S. obligation MBS | 77263 |  | 77263 |  |  |
| &nbsp;&nbsp;&nbsp;GSE MBS | 9718954 |  | 9718954 |  |  |
| &nbsp;&nbsp;State or local housing agency obligations | 24179 |  |  | 24179 |  |
| *Total available-for-sale securities* | 13057619 |  | 13033440 | 24179 |  |
| Derivative assets: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-rate related | 357284 |  | 95653 |  | 261631 |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments | 30 |  | 30 |  |  |
| *Total derivative assets* | 357314 |  | 95683 |  | 261631 |
| *TOTAL RECURRING FAIR VALUE MEASUREMENTS - ASSETS* | $13854896 | $— | $13569086 | $24179 | $261631 |
| Recurring fair value measurements - Liabilities: |  |  |  |  |  |
| Derivative liabilities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-rate related | $6058 | $— | $226294 | $— | $(220236) |
| &nbsp;&nbsp;&nbsp;Mortgage delivery commitments | 73 |  | 73 |  |  |
| *Total derivative liabilities* | 6131 |  | 226367 |  | (220236) |
| *TOTAL RECURRING FAIR VALUE MEASUREMENTS - LIABILITIES* | $6131 | $— | $226367 | $— | $(220236) |
| Nonrecurring fair value measurements - Assets<sup>2</sup>: |  |  |  |  |  |
| Impaired mortgage loans | $1350 | $— | $— | $1350 | $— |
| *TOTAL NONRECURRING FAIR VALUE MEASUREMENTS - ASSETS* | $1350 | $— | $— | $1350 | $— |

---

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> 

<sup>1</sup>&nbsp;&nbsp;&nbsp;&nbsp;Represents the effect of legally enforceable master netting agreements that allow FHLBank to net settle positive and negative positions and also derivative cash collateral, including related accrued interest, held or placed with the same clearing agent or derivative counterparty.

<sup>2</sup>&nbsp;&nbsp;&nbsp;&nbsp;Includes assets adjusted to fair value during the year ended December 31, 2024 and still outstanding as of December 31, 2024.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

*Level 3 Disclosure for Assets Measured at Fair Value on a Recurring Basis:* Table 13.5 presents a roll-forward of assets and liabilities measured at fair value on a recurring basis and classified as Level 3 during the years ended December 31, 2025, 2024, and 2023 (in thousands).

**<u>Table 13.5</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Available-for-sale securities - State or local housing agency obligations** | **Year Ended** | **Year Ended** | **Year Ended** |  |
| **Available-for-sale securities - State or local housing agency obligations** | **2025** | **2024** | **2023** |  |
| **Available-for-sale securities - State or local housing agency obligations** | Balance, beginning of the period | $24179 | $— | $|
| Included in net unrealized gains (losses) on available-for-sale securities in OCI | 892 | (286) |  |  |
| Purchases | 34360 | 24465 |  |  |
| Settlements | (1475) |  |  |  |
| Balance, end of the period | $57956 | $24179 | $— |  |
| Total amount of unrealized gains (losses) for the period included in OCI relating to assets held at period end | $606 | $(286) | $— |  |

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**<u>NOTE 14 – COMMITMENTS AND CONTINGENCIES</u>**

*Joint and Several Liability:* As provided in the Bank Act or in FHFA regulations, consolidated obligations are backed only by the financial resources of the FHLBanks. FHLBank Topeka is jointly and severally liable with the other FHLBanks for the payment of principal and interest on all of the consolidated obligations issued by the FHLBanks. The par amounts for which FHLBank Topeka is jointly and severally liable were approximately $1,079,725,972,000 and $1,122,389,398,000 as of December 31, 2025 and 2024, respectively.

The joint and several obligations are mandated by FHFA regulations and are not the result of arms-length transactions among the FHLBanks. As described above, the FHLBanks have no control over the amount of the guaranty or the determination of how each FHLBank would perform under the joint and several liability. Because the FHLBanks are subject to the authority of the FHFA as it relates to decisions involving the allocation of the joint and several liability for all FHLBanks' consolidated obligations, FHLBank Topeka regularly monitors the financial condition of the other FHLBanks to determine whether it should expect a loss to arise from its joint and several obligations. If FHLBank were to determine that a loss was probable and the amount of the loss could be reasonably estimated, FHLBank would charge to income the amount of the expected loss. Based upon the creditworthiness of the other FHLBanks as of December 31, 2025, FHLBank Topeka has concluded that a loss accrual is not necessary at this time.

*Off-balance Sheet Commitments:* Table 14.1 presents off-balance sheet commitments at December 31, 2025 and 2024 (in thousands). No allowance for credit losses was recorded on these commitments at December 31, 2025 and 2024.

**<u>Table 14.1</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
|<br>**Notional Amount** | **Expire<br>Within<br>One Year** | **Expire<br>After<br>One Year** | **Total** | **Expire<br>Within<br>One Year** | **Expire<br>After<br>One Year** | **Total** |
| Standby letters of credit outstanding | $7192143 | $27857 | $7220000 | $7531038 | $11772 | $7542810 |
| Advance commitments outstanding | 5115 | 551 | 5666 | 3615 | 5115 | 8730 |
| Principal commitments for standby bond purchase agreements | 305010 | 893595 | 1198605 | 193815 | 812050 | 1005865 |
| Commitments to fund or purchase mortgage loans | 54782 |  | 54782 | 34524 |  | 34524 |
| Commitments to issue consolidated bonds, at par | 3865000 |  | 3865000 | 250000 |  | 250000 |
| Commitments to issue consolidated discount notes, at par | 257124 |  | 257124 | 200000 |  | 200000 |

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

<u>Commitments to Extend Credit:</u> FHLBank issues standby letters of credit on behalf of its members to support certain obligations of the members to third-party beneficiaries. These standby letters of credit are subject to the same collateralization and borrowing limits that are applicable to advances and are fully collateralized at the time of issuance with assets allowed by FHLBank's Member Products Policy (MPP). Standby letters of credit may be offered to assist members and non-member housing associates in facilitating residential housing finance, community lending, and asset-liability management, and to provide liquidity. In particular, members often use standby letters of credit as collateral for deposits from federal and state government agencies. Standby letters of credit are executed for members for a fee. If FHLBank is required to make payment for a beneficiary's draw, the member either reimburses FHLBank for the amount drawn or, subject to FHLBank's discretion, the amount drawn may be converted into a collateralized advance to the member. However, standby letters of credit usually expire without being drawn upon. FHLBank's current outstanding standby letters of credit expire no later than 2031. Unearned fees as well as the value of the guarantees related to standby letters of credit are recorded in other liabilities and amounted to $2,840,000 and $2,571,000 as of December 31, 2025 and 2024, respectively. Advance commitments legally bind and unconditionally obligate FHLBank for additional advances up to 24 months in the future. Based upon management's credit analysis of members and collateral requirements under the MPP, FHLBank does not expect to incur any credit losses on the outstanding letters of credit or advance commitments.

<u>Standby Bond-Purchase Agreements:</u> FHLBank has entered into standby bond purchase agreements with state housing authorities whereby FHLBank, for a fee, agrees to purchase and hold the authorities' bonds until the designated marketing agent can find a suitable investor or the housing authority repurchases the bond according to a schedule established by the standby agreement. Each standby agreement dictates the specific terms that would require FHLBank to purchase the bond and typically allows FHLBank to terminate the agreement upon the occurrence of a default event of the issuer. The bond purchase commitments entered into by FHLBank expire no later than 2031, though some are renewable at the option of FHLBank. As of December 31, 2025 and 2024, the total commitments for bond purchases included agreements with two in-district state housing authorities. FHLBank was not required to purchase any bonds under any agreements during the years ended December 31, 2025 and 2024.

<u>Commitments to Purchase Mortgage Loans:</u> These commitments that unconditionally obligate FHLBank to purchase mortgage loans from participating FHLBank Topeka members in the MPF Program are generally for periods not to exceed 60 calendar days. Certain commitments are recorded as derivatives at their fair values on the Statements of Condition. FHLBank recorded mortgage delivery commitment net derivative balances of $118,000 and $(43,000) as of December 31, 2025 and 2024, respectively.

<u>Commitments to Issue Consolidated Obligations:</u> FHLBank enters into commitments to issue consolidated obligation bonds and discount notes outstanding in the normal course of its business. Most settle within the shortest period possible and are considered regular way trades; however, certain commitments are recorded as derivatives at their fair values on the Statements of Condition.

*Other Commitments:* On June 28, 2017, FHLBank completed an industrial revenue bond financing transaction with Shawnee County, Kansas (County) that will provide property tax savings for 10 years on FHLBank's new headquarters. In the transaction, the County acquired an interest in the land, improvements, building and equipment (collectively, the Project) by issuing up to $36,000,000 of industrial revenue bonds due December 31, 2027 (IRBs) and leased the Project to FHLBank for an identical 127-month term under a financing lease. The IRBs are collateralized by the Project and the lease revenues for the related leasing transaction with the County. The IRBs were purchased by FHLBank. The County assigned the lease to the bond trustee for FHLBank's benefit as the sole holder of the IRBs. FHLBank can prepay the IRBs at any time, but would forfeit its property tax benefit in the event the IRBs were to be prepaid. As a result, the land and building will remain a component of the property, plant and equipment in FHLBank's Statements of Condition. The IRBs and the equivalent liability are included in FHLBank's Statements of Condition in other assets and other liabilities, respectively. FHLBank, as holder of the IRBs, is due interest at 2.0 percent per annum with interest payable annually in arrears on December 1, beginning December 1, 2018. This interest income is directly offset by the financing interest expense payments on the land and building, which are due at the same time and in the same amount as the interest income. As of December 31, 2025 and 2024, $35,000,000 of the IRBs were issued and outstanding.

*Safekeeping Custodial Arrangements:* FHLBank acts as a securities safekeeping custodian on behalf of participating members. Actual securities are held by a third-party custodian acting as agent for FHLBank. As of December 31, 2025, the total original par value of customer securities held by FHLBank under this arrangement was $92,527,003,000.

Other commitments and contingencies are discussed in Notes 1, 4, 5, 6, 8, 9, and 11.

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**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

**<u>NOTE 15 – TRANSACTIONS WITH STOCKHOLDERS</u>**

FHLBank is a cooperative whose members own most of the capital stock of FHLBank and generally receive dividends on their investments. Certain former members that still have outstanding transactions are required to maintain their investments in FHLBank capital stock until the transactions mature or are paid off. Nearly all outstanding advances are with current members, and the majority of outstanding mortgage loans held for portfolio were purchased from current or former members. FHLBank also maintains demand deposit accounts for members primarily to facilitate settlement activities that are directly related to advances and mortgage loan purchases.

Transactions with members are entered into in the ordinary course of business. In instances where members also have officers or directors who are directors of FHLBank, transactions with those members are subject to the same eligibility and credit criteria, as well as the same terms and conditions, as other transactions with members. For financial reporting and disclosure purposes, FHLBank defines related parties as FHLBank directors' financial institutions and members with capital stock investments in excess of 10 percent of FHLBank's total regulatory capital stock outstanding, which includes mandatorily redeemable capital stock.

*Activity with Members that Exceed a 10 Percent Ownership in FHLBank Regulatory Capital Stock:* Tables 15.1 and 15.2 present information on members that owned more than 10 percent of outstanding FHLBank regulatory capital stock as of December 31, 2025 and 2024 (dollar amounts in thousands). An officer of BOKF, N.A. currently serves on FHLBank's board of directors.

**<u>Table 15.1</u>**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** | **12/31/2025** |
| **Member Name** | **State** | **Total Class A Stock Par Value** | **Percent of Total Class A** | **Total Class B Stock Par Value** | **Percent of Total Class B** | **Total Capital Stock Par Value** | **Percent of Total Capital Stock** |
| MidFirst Bank | OK | $500 | 0.2% | $580765 | 25.8% | 581265 | 23.1% |
| *TOTAL* |  | $500 | 0.2% | $580765 | 25.8% | $581265 | 23.1% |

---

**<u>Table 15.2</u>**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** | **12/31/2024** |
| **Member Name** | **State** | **Total Class A Stock Par Value** | **Percent of Total Class A** | **Total Class B Stock Par Value** | **Percent of Total Class B** | **Total Capital Stock Par Value** | **Percent of Total Capital Stock** |
| MidFirst Bank | OK | $23043 | 5.0% | $473097 | 21.8% | 496140 | 18.8% |
| BOKF, N.A. | OK | 190087 | 40.8 | 137990 | 6.4 | 328077 | 12.5 |
| *TOTAL* |  | $213130 | 45.8% | $611087 | 28.2% | $824217 | 31.3% |

---

Advance and deposit balances with members that owned more than 10 percent of outstanding FHLBank regulatory capital stock as of December 31, 2025 and 2024 are summarized in Table 15.3 (dollar amounts in thousands).

**<u>Table 15.3</u>**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| **Member Name** | **Outstanding Advances** | **Percent of Total** | **Outstanding Advances** | **Percent of Total** | **Outstanding Deposits** | **Percent of Total** | **Outstanding Deposits** | **Percent of Total** |
| MidFirst Bank | $12620000 | 28.9% | $10125000 | 24.2% | $476 | 0.1% | $9002 | 0.9% |
| BOKF, N.A. |  |  | 3000000 | 7.2 |  |  | 72761 | 7.4 |
| *TOTAL* | $12620000 | 28.9% | $13125000 | 31.4% | $476 | 0.1% | $81763 | 8.3% |

---

MidFirst Bank did not sell any mortgage loans into the MPF Program during the years ended December 31, 2025 and 2024. BOKF, N.A. sold $46,075,000 of mortgage loans into the MPF Program during the year ended December 31, 2024.

Interest income from MidFirst Bank was $539,831,000, $562,300,000 and $585,100,000 for the years ended December 31, 2025, 2024, and 2023 respectively, which was in excess of ten percent of total revenue for those years. MidFirst Bank was the only member with interest income in excess of ten percent of revenue for the current and prior year periods.

------

**<u>[**Table of Contents**](#ic7e87acbb8464bab9ca9a49ac22002a4_13)</u>**

*Transactions with FHLBank Directors' Financial Institutions:* Table 15.4 presents information as of December 31, 2025 and 2024 for members that had an officer or director serving on FHLBank's board of directors (dollar amounts in thousands). Information is only included for the period in which the officer or director served on FHLBank's board of directors. Capital stock listed is regulatory capital stock, which includes mandatorily redeemable capital stock.

**<u>Table 15.4</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **12/31/2025** | **12/31/2025** | **12/31/2024** | **12/31/2024** |
| | **Outstanding Amount** | **Percent of Total** | **Outstanding Amount** | **Percent of Total** |
| Advances | $2945294 | 6.7% | $3279439 | 7.8% |
| Deposits | $82057 | 9.0% | $103672 | 10.5% |
| Class A Common Stock | $25389 | 9.7% | $193830 | 41.6% |
| Class B Common Stock | 143419 | 6.4 | 154135 | 7.1 |
| *TOTAL CAPITAL STOCK* | $168808 | 6.7% | $347965 | 13.2% |

---

Table 15.5 presents mortgage loans acquired during the years ended December 31, 2025 and 2024 for members that had an officer or director serving on FHLBank's board of directors in 2025 or 2024 (dollar amounts in thousands). Information is only included for the period in which the officer or director served on FHLBank's board of directors.

**<u>Table 15.5</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **Percent of Total** | **Amount** | **Percent of Total** |
| Mortgage loans acquired | $101896 | 7.2% | $75404 | 5.1% |

---

## Exhibit 24.1

**Exhibit 24.1**

---

| | |
|:---|:---|
| ![fhlbt_logoxexx241a.jpg](fhlbt_logoxexx241a.jpg) | &nbsp;&nbsp;POWER OF ATTORNEY |
| ![fhlbt_logoxexx241a.jpg](fhlbt_logoxexx241a.jpg) | &nbsp;&nbsp;POWER OF ATTORNEY |

---

Each of the undersigned directors of the Federal Home Loan Bank of Topeka does hereby appoint Carl M. Koupal, III, his or her true and lawful attorney-in-fact and agent, to sign for and on behalf of the undersigned the annual report on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) for the fiscal year ending December 31, 2025, to be filed with the Securities and Exchange Commission under the provisions of the Exchange Act, as amended, and any and all amendments to said Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned have caused this Power of Attorney to be signed as of this 2nd day of March, 2026.

---

| | |
|:---|:---|
| &nbsp;&nbsp;*/s/ Barry J. Lockard* | */s/ Milroy A. Alexander* |
| &nbsp;&nbsp;Barry J. Lockard | Milroy A. Alexander |
| &nbsp;&nbsp;Chair | Vice Chair |
| &nbsp;&nbsp;*/s/ Steve G. Bradshaw* | &nbsp;&nbsp;*/s/ Craig A. Meader* |
| &nbsp;&nbsp;Steve G. Bradshaw | &nbsp;&nbsp;Craig A. Meader |
| &nbsp;&nbsp;*/s/ Michael D. Calcote* | &nbsp;&nbsp;*/s/ Jeffrey R. Noordhoek* |
| &nbsp;&nbsp;Michael D. Calcote | &nbsp;&nbsp;Jeffrey R. Noordhoek |
| &nbsp;&nbsp;*/s/ Kyle J. Heckman* | */s/ Douglas E. Tippens* |
| &nbsp;&nbsp;Kyle J. Heckman | Douglas E. Tippens |
| &nbsp;&nbsp;*/s/ Thomas E. Henning* | */s/ Paul E. Washington* |
| &nbsp;&nbsp;Thomas E. Henning | Paul E. Washington |
| &nbsp;&nbsp;*/s/ Holly Johnson* | */s/ Christopher D. Wente* |
| &nbsp;&nbsp;Holly Johnson | Christopher D. Wente |
| &nbsp;&nbsp;*/s/ Lynn Jenkins Katzfey* | */s/ Lance L. White* |
| &nbsp;&nbsp;Lynn Jenkins Katzfey | Lance L. White |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT**

&nbsp;&nbsp;&nbsp;&nbsp; I, Jeffrey B. Kuzbel, President and Chief Executive Officer of Federal Home Loan Bank of Topeka (the "registrant"), certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of the registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: March 12, 2026

---

| |
|:---|
| By: /s/ Jeffrey B. Kuzbel |
| Jeffrey B. Kuzbel |
| President and Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT**

&nbsp;&nbsp;&nbsp;&nbsp; I, Philip D. Bacchus, Senior Vice President and Chief Financial Officer of Federal Home Loan Bank of Topeka (the "registrant"), certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of the registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: March 12, 2026

---

| |
|:---|
| By: /s/ Philip D. Bacchus |
| Philip D. Bacchus |
| Senior Vice President and Chief Financial Officer |

---

## Ex-32

**Exhibit 32**

**CERTIFICATION FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the annual report on Form 10-K of the Federal Home Loan Bank of Topeka (the "Bank") for the period ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Jeffrey B. Kuzbel, as Chief Executive Officer, and Philip D. Bacchus, as Chief Financial Officer of the Bank, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to the best of his/her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Bank.

---

| | |
|:---|:---|
| <u>March 12, 2026</u> | By: /s/ Jeffrey B. Kuzbel |
| Date | Jeffrey B. Kuzbel |
|  | President and Chief Executive Officer |
|  | (Principal Executive Officer) |
| <u>March 12, 2026</u> | By: /s/ Philip D. Bacchus |
| Date | Philip D. Bacchus |
|  | Senior Vice President and Chief Financial Officer |
|  | (Principal Financial Officer) |

---

*A signed original of this written statement required by Section 906 has been provided to the Bank and will be retained by the Bank and furnished to the Securities and Exchange Commission or its staff upon request.*

## Exhibit 99.2

**Exhibit 99.2**

Federal Home Loan Bank of Topeka

Audit Committee Report

The Audit Committee of the board of directors of the Federal Home Loan Bank of Topeka ("FHLBank") is currently comprised of seven directors, four independent directors and three member directors. The Audit Committee operates under a written charter adopted by the board of directors that was last amended on December 15, 2023. The charter is available on the FHLBank's website at http://www.fhlbtopeka.com. The Audit Committee met 12 times during 2025 and has regular executive sessions with both independent and internal auditors.

In accordance with its written charter, the Audit Committee assists the board of directors in fulfilling its responsibility for oversight of the FHLBank's accounting, financial statement and disclosure matters.

In fulfilling its oversight responsibilities, the Audit Committee reviewed the FHLBank's 2025 audited financial statements with management and the FHLBank's independent registered public accounting firm, PricewaterhouseCoopers, LLP ("PwC"). The Audit Committee discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board ("PCAOB") and the rules of the Securities and Exchange Commission ("SEC"). In addition, the Audit Committee received from PwC written disclosures and confirmation required by applicable requirements of the PCAOB regarding PwC's communications with the Audit Committee concerning independence and has discussed PwC's independence from management and the FHLBank.

The Audit Committee discussed with management and PwC the overall scope and plans for the audit of the consolidated financial statements. The Audit Committee meets periodically with management and PwC to discuss the results of their audits, the FHLBank's disclosure controls and procedures, internal control over financial reporting and internal audit function, and the overall quality of the FHLBank's financial reporting.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors that the audited financial statements for the fiscal year ended December 31, 2025, be included in the Form 10-K filed with the SEC.

Holly Johnson, Chair

Milroy A. Alexander

Kyle J. Heckman

Thomas E. Henning

Lynn Jenkins

Craig A. Meader

Douglas E. Tippens

March 11, 2026

<br>