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FHLBI Financial Update 2010 Regional Member Meeting

FHLBI Financial Update 2010 Regional Member Meeting. presented by Milton J. Miller President – CEO. Difficult 12 Months for Many. Unemployment Housing Legal/regulatory environment Credit demand. Other-than-temporary Impairment (OTTI).

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FHLBI Financial Update 2010 Regional Member Meeting

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  1. FHLBI Financial Update 2010 Regional Member Meeting presented by Milton J. Miller President – CEO www.fhlbi.com

  2. Difficult 12 Months for Many • Unemployment • Housing • Legal/regulatory environment • Credit demand 2010 Regional Member Meeting

  3. Other-than-temporary Impairment (OTTI) • Second quarter OTTI charge led to a loss for the quarter • Loss was driven by a substantial change to the System-wide assumptions • Impact of new assumptions on loss estimates for prime MBS 2010 Regional Member Meeting

  4. Private-label MBS Unpaid Principal Balance $ in millions 2007 2008 2010 2009 2010 Regional Member Meeting

  5. Private-label MBS Fair Value Less Amortized Cost $ in millions 2007 2009 2008 2010 2010 Regional Member Meeting

  6. Private-label MBS Fair Value Less Carrying Value $ in millions 2010 2007 2008 2009 2010 Regional Member Meeting

  7. Business Trends - Advances • Loss of LaSalle, Fifth Third, NCB, Irwin • Member deleveraging • Expansion of insurance company lending $ in millions Total advances, at par Insurance Companies 2007 2008 2009 2010 2010 Regional Member Meeting

  8. Business Trends - MPP • Shift to smaller originators • Government dominance of market • New credit structure $ in millions MPP Balances, at par 2008 2007 2009 2010 2010 Regional Member Meeting

  9. Conventional Loan Delinquency 90+ days including foreclosures 2008 2009 January-June 2010 2010 Regional Member Meeting

  10. FHLBI Fundamentals • Strong core earnings • Regulatory capital well in excess of requirements • High level of retained earnings • Dividend well above LIBOR 2010 Regional Member Meeting

  11. Dividend vs 3 month LIBOR Dividend Avg. 3m LIBOR 2005 2006 2007 2008 2010 2009 2010 Regional Member Meeting

  12. GSE Comparison 2010 Regional Member Meeting

  13. Core FHLB Issues • Implied guarantee • Business purpose • Member control The FHLB System is fundamentally strong and doesn’t need to be “fixed” in any significant way. 2010 Regional Member Meeting

  14. Conclusion • It’s a cycle • Housing and small business lending are core economic drivers • The FHLBI is well positioned to lend • The mission of our members and our bank remains vital 2010 Regional Member Meeting

  15. Questions Safe Harbor Statement This presentation contains forward-looking statements concerning plans, objectives, goals, strategies, future events or performance, which are not statements of historical fact. The forward-looking statements contained in this release reflect our current beliefs and expectations. Actual results or performance may differ materially from what is expressed in the forward-looking statements. You are referred to the documents filed by us with the SEC, specifically reports on Form 10-K and Form 10-Q including risk factors that could cause actual results to differ from forward-looking statements. These reports are available at www.sec.gov. The financial information contained within this presentation is unaudited.

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