Document:

Ex-10.5

 

EXHIBIT 10.5

THE FEDERAL HOME LOAN BANK OF CINCINNATI

BENEFIT EQUALIZATION PLAN

(2002 Restatement)

(As Amended through October 2002)

     Effective January 1, 2002, THE FEDERAL HOME LOAN BANK OF CINCINNATI (the “Bank”) hereby amends
and completely restates its Benefit Equalization Plan as follows.

INTRODUCTION

     The purpose of this Benefit Equalization Plan (the “Plan”) is to provide to a certain select
group of management and highly compensated employees of the Bank the benefits which would have been
payable under the Comprehensive Retirement Program of the Financial Institutions Retirement Fund,
and benefits equivalent to the matching contributions and 401(k) contributions which would have
been available under the Financial Institutions Thrift Plan, but for the limitations placed on
benefits and matching contributions for such employees by Sections 401(a)(17), 401(k)(3)(A)(ii),
401(m), 402(g) and 415 of the Internal Revenue Code of 1986.

     This Plan is unfunded and all benefits payable under this Plan shall be paid solely out of the
general assets of the Bank. No benefits under this Plan shall be payable by the Financial
Institutions Retirement Fund or its assets or by the Financial Institutions Thrift Plan or its
assets.

ARTICLE I. DEFINITIONS

     For purposes of the Plan, these terms shall have the following meanings:

     1.01 “Actuary” means the independent consulting actuary retained by the Bank to assist the
Committee in its administration of the Plan.

     1.02 “Bank” means THE FEDERAL HOME LOAN BANK OF CINCINNATI and each subsidiary or affiliated
company thereof which participates in the Plan.

     1.03 “Beneficiary” means the beneficiary or beneficiaries designated in accordance with
Article VI of the Plan to receive the benefit, if any, payable upon the death of a Member of the
Plan.

     1.04 “Board of Directors” means the Board of Directors of the Bank.

     1.05 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.

     1.06 “Code Limitations” mean the cap on compensation taken into account by a plan under
Code Section 401(a)(17), the limitations on 401(k) contributions necessary to meet the

 

 

average deferral percentage (“ADP”) test under Code Section 401(k)(3)(A)(ii), the limitations
on employee and matching contributions necessary to meet the average contribution percentage
(“ACP”) test under Code Section 401(m), the dollar limitations on elective deferrals under Code
Section 402(g), and the overall limitations on contributions and benefits imposed on qualified
plans by Code Section 415, as such provisions may be amended from time to time, and any similar
successor provisions of federal tax law.

     1.07 “Committee” means the Personnel Committee of the Board of Directors, which is authorized
to administer the Plan, or other persons or sub-committees as it may appoint from time to time to
supervise certain administrative functions of the Plan.

     1.08 “Disabled” means either (i) to have been determined by the Social Security Administration
to be eligible for disability benefits under Title II of the Federal Social Security Act, (ii) to
be eligible for disability benefits under the Bank’s long-term disability plan, or (iii) to be
eligible for disability retirement benefits under the Thrift Plan or the Retirement Fund.

     1.09 “Member” means any person included in the membership of the Plan as provided in Article
II.

     1.10 “Retirement Fund” means the Comprehensive Retirement Program of the Financial
Institutions Retirement Fund, a qualified and tax-exempt defined benefit pension plan and trust
under Sections 401(a) and 501(a) of the Code, as adopted by the Bank.

     1.11 “Plan” means The Federal Home Loan Bank of Cincinnati Benefit Equalization Plan, as set
forth herein or as it may be amended or restated from time to time.

     1.12 “Thrift Plan” means the Financial Institutions Thrift Plan, a qualified and tax-exempt
defined contribution plan and trust under Sections 401(a) and 501(a) of the Code, as adopted by the
Bank.

ARTICLE II. MEMBERSHIP

     2.01 Each employee of the Bank who is included in the membership of the Retirement Fund shall
become a Member of the Plan on the earliest date on which he, or his beneficiary, would have been
entitled to receive a benefit under Section 3.01 of the Plan had he become a retirant of the
Retirement Fund, or died or become Disabled while in active service on such date. If on the date
that payment of a Member’s benefit from the Retirement Fund commences, the employee who is a Member
under this Section is not entitled under Section 3.01 of the Plan to receive a benefit under the
Plan, his membership in the Plan shall terminate on such date.

     2.02 Each employee of the Bank who is included in the membership of the Thrift Plan shall
become a Member of the Plan on the earliest date on which he is credited with an elective
contribution addition or makeup contribution addition under Section 4.01 or 4.02 of the Plan.

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     2.03 A benefit shall be payable under the Plan to or on account of a Member only upon the
Member’s retirement, death, disability or other termination of employment with the Bank.

ARTICLE III. AMOUNT AND PAYMENT OF PENSION BENEFITS

     3.01 The amount, if any, of the annual pension benefit payable to or on account of a Member
pursuant to the Plan shall equal the excess of (i) over (ii), as determined by the Committee,
where:

	 	“(i)”	 	 is the annual pension benefit (as calculated by the Retirement Fund on the
basis of the form of payment elected under it by the Member) that would otherwise be
payable to or on account of the Member by the Retirement Fund if its provisions were
administered without regard to the Code Limitations and on the basis of salary
unreduced by the amount of any elective contributions under Article IV of this Plan;
and
	 
	 	“(ii)”	 	 is the annual pension benefit (as calculated by the Retirement Fund on the basis of
the form of payment elected under it by the Member) that is payable to or on account of
the Member by the Retirement Fund under the Regulation after giving effect to any
reduction of such benefit required by the Code Limitations and on the basis of salary
reduced by the amount of any elective contributions under Article IV of this Plan.

For purposes of this Section 3.01, “annual pension benefit” includes any “Active Service Death
Benefit,” “Disability Retirement Benefit,” “Retirement Adjustment Payment,” “Annual Increment” and
“Single Purchase Fixed Percentage Adjustment” which the Bank elected to provide its employees under
the Retirement Fund.

     3.02 Unless the Member elects an optional form of payment under the Plan pursuant to Section
3.03 below, the annual pension benefit, if any, payable to or on account of a Member under Section
3.01 above, shall be converted by the Actuary and shall be payable to or on account of the member
in the “Regular Form” of payment, utilizing for that purpose the same actuarial factors and
assumptions then used by the Retirement Fund to determine actuarial equivalence. For purposes of
the Plan, the “Regular Form” of payment means an annual pension benefit payable for the Member’s
lifetime and the death benefit described in Section 3.04 below.

     3.03 (a) A Member may, with the consent of the Committee, elect in writing to have the annual
pension benefit, if any, payable to or on account of a Member under Section 3.02 above converted by
the Actuary to any optional form of payment then permitted under the Retirement Fund or to an
annuity for 5, 10, or 15 years. The Actuary shall utilize for the purpose of that conversion the
same actuarial factors and assumptions then used by the Retirement Fund to determine actuarial
equivalence.

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          (b) If a Member who had elected an optional form of payment under this Section 3.03 dies after
the date his benefit payments under the Plan had commenced, the only death benefit, if any, payable
under the Plan in respect of said Member shall be the amount, if any, payable under the optional
form of payment which the Member had elected under the Plan. If a Member who had elected an
optional form of payment under this Section 3.03 dies before the date his benefit payments under
the Plan commence, his election of an optional form of benefit shall be inoperative and the death
benefit described below in Section 3.04 shall be payable to the Member’s beneficiary.

          (c) An election of an optional form of payment under this Section 3.03 may be made only on a
form prescribed by the Committee, filed by the Member with the Committee, and consented to by the
Committee prior to the commencement of payment of his benefit.

     3.04 Upon the death of a Member who had not elected an optional form of payment under Section
3.03 above or who died before the date the benefit payments under his elected optional form of
payment commenced, a death benefit shall be paid to the Member’s beneficiary in annual installments
over a period of 10 years, or such shorter period as the Member’s beneficiary may elect with the
consent of the Committee in the same manner as provided in Section 3.03(c), above, for a Member’s
option election. The benefit under this Section is equal to the excess, if any, of (i) over (ii),
where

	 	“(i)”	 	 is an amount equal to 12 times the annual pension benefit, if any, payable
under Section 3.02 above, and
	 
	 	“(ii)”	 	 is the sum of the benefit payments, if any, which the member had received under the
Plan.

     3.05 If a Member to whom an annual pension benefit is payable under the Plan dies before
commencement of the payment of his benefit, the death benefit payable under Section 3.04 (and
referred to in Section 3.02) shall be payable to the Member’s beneficiary beginning no later than
April 1 of the calendar year following the calendar year in which the Member died.

     3.06 If a Member to whom an annual pension benefit is payable under the Plan becomes Disabled
before the commencement of the payment of his benefit, and he files an application for benefits
with the Plan within 13 months of the date he became Disabled, a Disability Retirement Benefit
equal to the annual pension benefit earned by the Member pursuant to Section 3.01 as of the date
the Member terminated employment with the Bank shall be payable to the Member. For purposes of the
Plan, unless the Member selects an optional form of benefit under the Plan before the date he
became Disabled, the Disability Retirement Benefit will be made in the “Regular Form” of payment.

     3.07 If a Member is restored to employment with the Bank after payment of his benefit under
the Plan has commenced, all payments under the Plan shall thereupon be discontinued. In the
Member’s subsequent retirement or other termination of employment with the Bank, his

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benefit under the Plan shall be recomputed in accordance with Sections 3.01 and 3.02 and shall
be paid to such Member in accordance with the provisions of the Plan.

     3.08 Notwithstanding any contrary provision of the Plan, if on the date payment under
the Plan would otherwise commence, the lump sum settlement value of a Member’s total Plan benefit
(i.e., Pension benefits and Thrift benefits combined) determined by the Actuary does not exceed
$20,000, then such Member’s benefit may be paid in the form of a lump sum settlement at the
discretion of the Committee.

     3.09 All annual pension benefits under the Plan shall be paid in monthly, quarterly, or annual
installments, as determined by the Committee in its discretion. Benefits shall commence as soon as
practicable following the Member’s retirement date under the Retirement Fund or as soon as
practicable following the date the Member became Disabled and properly applied for benefits under
the Plan, except that no benefits shall be paid prior to the date that benefits under the Plan can
be definitely determined by the Committee.

ARTICLE IV. AMOUNT AND PAYMENT OF THRIFT BENEFITS

     4.01 If the employee’s contributions under the Thrift Plan for such year have reached the
maximum permitted by the Code Limitations as determined by the Committee, and if the employee is
one of a select group of management and highly compensated employees designated by the Committee,
and if the employee elects to reduce his compensation for the current calendar year by delivering a
written election to the Committee prior to the date such compensation is earned on such form as the
Committee may designate, then such employee shall be credited with an elective contribution
addition under this Plan equal to the reduction in his compensation made in accordance with such
election; provided, however, that the sum of all such elective contribution additions for an
employee with respect to any single calendar year shall not be greater than the excess of (i) over
(ii), where

	 	“(i)”	 	 is the maximum amount of compensation (as defined by the
Thrift Plan if its provisions were administered without regard to the Code
Limitations) permitted to be deferred by the employee under the Thrift Plan
without regard to any limitation or reduction on elective contributions
required by the Code Limitations; and
	 
	 	“(ii)”	 	 is an amount equal to his regular account and 401(k) account contributions
actually made under the Thrift Plan for the calendar year after giving effect
to any limitation or reduction on elective contributions required by the Code
Limitations.

If the reduction in an employee’s compensation under such election is determined to exceed the
maximum allowable elective contribution additions for such year, the excess and any related
earnings credited under Section 4.03 of the Plan shall be paid to such employee within the first
two and one-half months of the succeeding calendar year.

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     4.02 If a portion of an employee’s regular account contribution or 401(k) account
contribution to the Thrift Plan for the preceding year is returned to an employee after the end of
such preceding year on account of the Code Limitations, and if the employee is one of a select
group of management and highly compensated employees designated by the Committee, and if the
employee elects to reduce his compensation for the current year by an amount up to the sum of
Thrift Plan contributions and related earnings returned to him for the preceding year by delivering
a written election to the Committee prior to the date such compensation is earned on such form as
the Committee may designate, then such employee shall be credited with a makeup contribution
addition under this Plan equal to the reduction in his compensation made in accordance with such
election.

     4.03 For each elective contribution addition credited to an employee under Section 4.01, such
employee shall also be credited with a matching contribution addition under this Plan equal to the
matching contribution, if any, that would be credited under the Thrift Plan with respect to such
amount if contributed to the Thrift Plan, determined as if the provisions of the Thrift Plan were
administered without regard to the Code Limitations and determined after taking into account the
employee’s actual contributions to and actual matching contributions under the Thrift Plan. For
each makeup contribution addition credited to an employee under Section 4.02, such employee shall
also be credited with a matching contribution addition under this Plan equal to the matching
contribution, if any, that was lost under the Thrift Plan with respect to the contributions
returned for the preceding calendar year.

     4.04 The Committee shall maintain a thrift benefit account on the books and records of the
Bank for each employee who is a Member by reason of amounts credited under Section 4.01 or 4.02.
The elective contribution additions, makeup contribution additions and matching contribution
additions of a Member under Sections 4.01, 4.02 and 4.03 shall be credited to the Member’s thrift
benefit account as soon as reasonably practicable after the date that the compensation reduced
under Section 4.01 and/or 4.02 would otherwise have been paid to such Member.

     4.05 A Member’s thrift benefit account shall be credited from time to time with a
certain return on investment (positive or negative) that is substantially equivalent to the net
return on investment that would have been earned on the Member’s elected investments from those
available under the Thrift Plan (or substantially equivalent investments offered by a separate
financial institution), or at such other return on investment in such amount as may be determined
by the Committee in its discretion; provided, however, that if the Committee modifies this return
on investment figure, such modification shall only have prospective effect; and for amounts already
credited under this Plan at the time of such Committee action, no modification shall have the
effect of depriving a Member of the right to elect a return on investment substantially equivalent
to the return on investment that could be earned by the Member’s selecting between or among the
investment options then available under the Thrift Plan. Further, within the Plan’s investment
options, a Member may change his elected investments under the Plan as often as

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permitted by Committee policy, and may continue to do so after retirement, disability
retirement or other termination of employment with the Bank.

     4.06. Beginning as soon as reasonably practicable after a Member’s retirement, disability
retirement, or other termination of employment from the Bank, the balance credited to the Member’s
thrift benefit account shall be paid to the Member in annual installments over a period of 15
years, unless prior to his retirement, disability, or other termination of employment the Member
elects, with the consent of the Committee pursuant to Section 4.07 below, to have such amounts paid
to him over an installment period that is less than 15 years or in any optional form of payment
then permitted under the Thrift Plan. The amount of an annual installment shall be determined by
dividing the remaining balance of the account by the number of installments remaining to be made.
Notwithstanding the foregoing, if at the time of the Member’s retirement, disability retirement or
other termination of employment from the Bank the value of the portion of his account that is to be
paid in a non-lump sum manner does not exceed $20,000, then that portion may be paid in the form of
a lump sum settlement at the discretion of the Committee.

     4.07. A Member’s optional payment election to receive amounts credited to his thrift benefit
account in annual installments for a period that is less than 15 years or in any optional form of
payment then permitted under the Thrift Plan may be made only on a form prescribed by the
Committee, filed by the Member with the Committee and consented to by the Committee prior to the
commencement of payment of his benefit.

     4.08. Unless a pension purchase option is selected pursuant to Section 4.06 above, if a Member
dies prior to receiving the balance credited to his thrift benefit account, the balance shall be
paid to his beneficiary in annual installments over a period of 10 years, or such shorter period as
the beneficiary may elect with the consent of the Committee pursuant to the same requirements as
set forth in Section 4.07, above.

     4.09 If a Member terminates employment with the Bank because of becoming Disabled, such Member
shall have the same payment options as described in Section 4.06, above.

     4.10 Notwithstanding any contrary provision of the Plan, if on the date payment under the Plan
would otherwise commence the lump sum settlement value of the Member’s total Plan benefit (i.e.,
Pension benefits and Thrift benefits combined) determined by the Actuary does not exceed $20,000,
then that Member’s benefit may be paid in the form of a lump sum settlement at the discretion of
the Committee.

ARTICLE V. SOURCE OF PAYMENTS

     5.01 All payments of benefits under the Plan shall be paid from, and shall only be a
general claim upon, the general assets of the Bank, notwithstanding that the Bank, in its
discretion, may establish a bookkeeping reserve or a grantor trust (as such term is used in Code
Sections 671 through 677) to reflect or to aid it in meeting its obligations under the Plan with

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respect to any Member or prospective member or beneficiary. No benefit whatever provided by
the Plan shall be payable from the assets of the Retirement Fund or the Thrift Plan.

     5.02 No member shall have any right, title or interest whatever in or to any investments which
the Bank may make or any specific assets which the Bank may reserve to aid it in meeting its
obligations under the Plan. To the extent that any person acquires a right to receive payments from
the Bank under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Bank.

ARTICLE VI. DESIGNATION OF BENEFICIARIES

     6.01 Each Member of the Plan may file with the Committee a written designation of one or more
persons as the beneficiary who shall be entitled to receive the amount, if any, payable under the
Plan upon his death. The Member may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be effective unless received
by the Committee prior to the Member’s death, and in no event shall it be effective as of a date
prior to such receipt.

     6.02 If no such beneficiary designation is in effect at the time of a Member’s death, or if no
designated beneficiary survives the Member, or if, in the opinion of the Committee, such
designation conflicts with applicable law, the Member’s estate shall be deemed to have been
designated his beneficiary and shall be paid the amount, if any, payable under the Plan upon the
Member’s death. If the Committee is in doubt as to the right of any person to receive such amount,
the Committee may retain such amount, without liability for any interest thereon, until the rights
thereto are determined, or the Committee may pay such amount into any court of appropriate
jurisdiction and such payment shall be a complete discharge of the liability of the Plan and the
Bank therefor.

ARTICLE VII. ADMINISTRATION OF THE PLAN

     7.01 The Committee shall have general authority over and responsibility for the administration
and interpretation of the Plan. The Committee shall have full power and authority to interpret and
construe the Plan, to make all determinations considered necessary or advisable for the
administration of the Plan and any trust referred to in Article V above, and the calculation of the
amount of benefits payable thereunder, and to review claims for benefits under the Plan. Unless
arbitrary or capricious, the Committee’s interpretations and constructions of the Plan and its
decisions or actions thereunder shall be binding and conclusive on all persons for all purposes.

     7.02 The Committee shall arrange for the engagement of the Actuary, and if the
Committee deems it advisable, it shall arrange for the engagement of legal counsel and certified
public accountants (who may be counsel or accountants for the Bank), and other consultants, and
make use of agents and clerical or other personnel, for purposes of the Plan. The Committee may

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rely upon the written opinions of such Actuary, counsel, accountants and consultants, and upon
any information supplied by the Retirement Fund or the Thrift Plan for purposes of Sections 3.01
and 4.01 of the Plan, and delegate to any agent or to any sub-committee or Committee member its
authority to perform any act hereunder, including without limitations those matters involving the
exercise of discretion; provided, however, that such delegation shall be subject to revocation at
any time at the discretion of the Committee. The Committee shall report to the Board of Directors,
or to a committee designated by the Board, at such intervals as shall be specified by the Board of
such designated committee, with regard to the matters for which it is responsible under the Plan.

     7.03 No Committee member shall be entitled to act on or decide any matters relating solely to
such member or any of his rights or benefits under the Plan.

     7.04 The Committee member shall not receive any special compensation for serving in such
capacity but shall be reimbursed for any reasonable expenses incurred in connection therewith. No
bond or other security need be required of the Committee or any member thereof in any jurisdiction.

     7.05 All claims for benefits under the Plan shall be submitted in writing to the Chairman of
the Committee. Written notice of the decision on each such claim shall be furnished with reasonable
promptness to the Member or his beneficiary (the claimant). The claimant may request a review by
the Committee of any decision denying the claim in whole or in part. Such request shall be made in
writing and filed with the Committee within 30 days of such denial. A request for review shall
contain all additional information which the claimant wishes the Committee to consider. The
Committee may hold any hearing or conduct any independent investigation which it deems desirable to
render its decision, and the decision on review shall be made as soon as feasible after the
Committee’s receipt of the request for review. Written notice of the decision on review shall be
furnished to the claimant. For all purposes under the Plan, such decisions on claims (where no
review is requested) and decisions on review (where review is requested) shall be final, binding
and conclusive on all interested persons as to all matters relating to the Plan.

     7.06 All expenses incurred by the Committee in its administration of the Plan shall be paid by
the Bank.

ARTICLE VIII. AMENDMENT AND TERMINATION

     8.01 The Board of Directors of the Bank may amend, suspend or terminate, in whole or in
part, the Plan without the consent of the Committee, any Member, beneficiary or other person,
except that no amendment, suspension or termination shall retroactively impair or otherwise
adversely affect the rights of any Member, beneficiary or other person to benefits under the Plan
which have accrued prior to the date of such action, as determined by the Committee in its sole
discretion. The Committee may adopt any amendment or take any other action which may be necessary
or appropriate to facilitate the administration, management and interpretation of the

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Plan or to conform the Plan thereto, provided any such amendment or action does not have a
material effect on the then currently estimated cost to the Bank of maintaining the Plan.

ARTICLE IX. GENERAL PROVISIONS

     9.01 The Plan shall be binding upon and inure to the benefit of the Bank and its successors
and assigns and the Members, and the successors, assigns, designees and estates of the Members. The
Plan shall also be binding upon and inure to the benefit of any successor bank or organization
succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan
shall preclude the Bank from merging or consolidating into or with, or transferring all or
substantially all of its assets to, another bank which assumes the Plan and all obligations of the
Bank hereunder. The Bank agrees that it will make appropriate provision for the preservation of
Members’ rights under the Plan in any agreement or plan which it may enter into to effect any
merger, consolidation, reorganization or transfer of assets. In such a merger, consolidation,
reorganization, or transfer of assets and assumption of Plan obligations of the Bank, the term Bank
shall refer to such other bank and the Plan shall continue in full force and effect.

     9.02 Neither the Plan nor any action taken thereunder shall be construed as giving to a Member
the right to be retained in the employ of the Bank or as affecting the right of the Bank to dismiss
any member from its employ.

     9.03 The Bank shall withhold or cause to be withheld from all benefits payable under the Plan
all federal, state, local or other taxes required by applicable law to be withheld with respect to
such payments.

     9.04 No right or interest of a Member under the Plan may be assigned, sold, encumbered,
transferred or otherwise disposed of and any attempted disposition of such right or interest shall
be null and void.

     9.05 If the Committee shall find that any person to whom any amount is or was payable under
the Plan is unable to care for his affairs because of illness, accident or is a minor, or has died,
then any payment, or any part thereof, due to such person or his estate (unless a prior claim
therefor has been made by a duly appointed legal representative), may, if the Committee is so
inclined, be paid to such person’s spouse, child or other relative, an institution maintaining or
having custody of such person, or any other person deemed by the Committee to be a proper recipient
on behalf of such person otherwise entitled to payment. Any such payment shall be in complete
discharge of the liability of the Plan and the Bank therefor.

     9.06 All elections, designations, requests, notices, instructions, and other
communications from a Member, beneficiary or other person to the Committee required or permitted
under the Plan shall be in such form as is prescribed from time to time by the Committee and shall
be mailed by first-class mail or delivered to such location as shall be specified by the Committee
and shall be deemed to have been given and delivered only upon actual receipt thereof at such
location.

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     9.07 The benefits payable under the Plan shall be in addition to all other benefits provided
for employees of the Bank and shall not be deemed salary or other compensation by the Bank for the
purpose of computing benefits to which he may be entitled under any other plan or arrangement of
the Bank.

     9.08 No Committee member shall be personally liable by reason of any instrument executed by
him or on his behalf, or action taken by him, in his capacity as a Committee member nor for any
mistake of judgment made in good faith. The Bank shall indemnify and hold harmless each Committee
member and each employee, officer or director of the Bank, to whom any duty, power, function or
action in respect of the Plan may be delegated or assigned, or from whom any information is
requested for Plan purposes, against any cost or expense (including fees of legal counsel) and
liability (including any sum paid in settlement of a claim or legal action with the approval of the
Bank) arising out of anything done or omitted to be done in connection with the Plan, unless
arising out of such person’s fraud or bad faith.

     9.09 As used in the Plan the masculine gender shall be deemed to refer to the feminine, and
the singular person shall be deemed to refer to the plural, wherever appropriate.

     9.10 The captions preceding the Sections of the Plan have been inserted solely as a matter of
convenience and shall not in any manner define or limit the scope or intent of any provisions of
the Plan.

     9.11 The Plan shall be construed according to the laws of the State of Ohio in effect from
time to time.

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EXHIBIT 10.6

THE FEDERAL HOME LOAN BANK OF CINCINNATI

NONQUALIFIED DEFERRED COMPENSATION PROGRAM FOR DIRECTORS

(1990 RESTATEMENT)

(As Amended through September 2002)

Effective March 1, 1990, THE FEDERAL HOME LOAN BANK OF CINCINNATI (the “Bank”) hereby amends and
restates its Nonqualified Deferred Compensation Program for Directors (the “Program”) to provide
the benefits set forth in this instrument.

Section 1. Elections. (a) Prior to the start of the first board or committee
meeting attended by an individual Director of the Bank in any calendar year during which this
Program is in effect, the Director may elect to defer the Bank’s payment to him of all or any
percentage or specified dollar amount of director’s fees from the Bank that will be earned by him
during such calendar year. Such election shall be made in writing, on the form attached hereto,
and shall be delivered to the President or Secretary of the Bank.

(b) In addition, prior to the start of the first board meeting after the effective date of this
restatement of the Program, a Director may make a deferral election under this Program with respect
to director’s fees from the Bank that will be earned by him during the balance of the calendar year
following receipt of such election. If made, such election shall supersede any previous election
made for that year.

(c) At any time during a year, upon written notice delivered to the President or the Secretary of
the Bank, the Director may revoke his deferral election for the balance of such year. Any such
revocation shall be effective only with respect to director’s fees which have not yet been earned.

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(d) Except as provided above, an election under this Program shall be irrevocable, and the
director’s fees deferred thereunder will not be paid to the Director or his beneficiary until the
time or times prescribed in his election or as otherwise provided in this Program.

Section 2. Accounts and Interest. (a) The Bank shall establish a memorandum
account on its books and records for each Director who has elected to defer fees under this
Program. The memorandum account shall be credited with the amount of any fee deferred as of the
time such fee is earned, and separate subaccounts shall be maintained to the extent necessary to
distinguish amounts deferred under each respective deferral election.

(b) Each Director’s memorandum account shall be credited quarterly with a return on investment
(positive or negative) that is substantially equivalent to the net return on investment that would
have been earned on such Director’s elected investments under this Program. A Director may elect
from the investment options that are approved by the Committee, and such Director may change his
investment elections once each calendar month, including during his retirement.

(c) Notwithstanding any provision to the contrary, if the Bank modifies the return on investment to
be credited to the Directors’ memorandum accounts, such modification shall only have prospective
effect.

Section 3. Payment of Amounts Deferred. (a) Except as provided below, all
amounts deferred under this Program, together with related interest, shall be paid to the Director
at the end of the deferral period and in the form designated by the Director in the respective
deferral election from among the available options.

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(b) In the event that the Director incurs a hardship prior to the receipt of all amounts deferred
under this Program and related interest, then, to the extent necessary to satisfy that part of the
hardship which the Director reasonably represents cannot be satisfied through other resources (such
as insurance or other compensation, reasonable liquidation of assets, cessation of elective
deferrals, or available credit on reasonable terms) of the Director or his immediate family, the
Administrative Committee of the Bank may, in its sole discretion, accelerate the time for payment
of such amounts notwithstanding the deferral period and/or payment method designated by the
Director in his deferral election. For this purpose, a hardship shall be defined as an immediate
and heavy financial need on account of medical expenses, the purchase of a principal residence, the
payment of tuition, or the need to prevent eviction from or foreclosure on a principal residence.

(c) In the event that the Director dies prior to the receipt of all amounts deferred under this
Program and related interest, then the unpaid balance shall be paid to any beneficiary or
beneficiaries designated by the Director in the respective deferral election or in any subsequent
designation of beneficiary election delivered by the Director to the President or Secretary of the
Bank, subject to the requirement that such beneficiary survives the Director by 30 days. Payments
to a beneficiary shall be made as soon as administratively practical in the form designated by the
Director from among the available options; provided, however, that if installment payments to the
Director with respect to a particular deferral have already begun, then any installment payments to
the beneficiary shall be limited to the number of remaining years over which payments would have
continued to the Director had he lived; and provided further that if a designated beneficiary
entitled to payment hereunder dies prior to the receipt of the full amount, then the unpaid balance
shall be paid in lump sum to such beneficiary’s estate.

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If no designation of a beneficiary is made by the Director or if the designated Nonqualified
Deferred Compensation Plan beneficiary does not survive the Director by 30 days, then the deferral
and related interest shall be paid in a lump sum to the Director’s estate.

Section 4. Withholding. The Bank shall withhold from any payments made under this
Program the amount of any taxes required to be withheld under federal, state, or local law.

Section 5. Unfunded Obligation. The obligation of the Bank to provide payments
under this Program is a general contractual obligation of the Bank and imposes no obligation on the
Bank to provide for payment through any specific source or fund. An individual Director and any
person claiming under or through him shall have no greater rights than an unsecured creditor of the
Bank.

Section 6. No Assignment. To the extent permitted by law, no right to any payment
under this Program may be assigned, transferred, pledged, or encumbered, and no right to any
payment under this Program is subject to the claims of creditors or others, or to legal process.

Section 7. Amendment and Termination. The Bank through its Board of Directors may
amend or terminate this Program at any time and for any reason. Except as provided below, no such
amendment or termination shall affect the amount or timing of payments to a Director of amounts
deferred prior to the date of adoption of such amendment or termination, nor reduce the interest to
be credited with respect to such prior deferrals, unless the Director gives his express written
consent to such change. In the event that the Bank is restructured or dissolved, the

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obligation to make payments under this Program may be transferred to any institution which succeeds
to all or any part of the business of the Bank, as determined in sole discretion of the Bank.

5

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