Agency Academics for GIOA Members FHLBank Overview and Debt Funding Programs March 2011

1. Agency Academics for GIOA Members FHLBank Overview and Debt Funding Programs March 2011

2. FORWARD-LOOKING STATEMENTS This is not an offer to sell. FHLBank debt is not an obligation of or guaranteed by the United States and may not be offered or sold in any jurisdiction requiring its registration. No recommendation is made concerning the securities described. Please refer to the offering documents before purchasing these securities. Statements contained in this presentation, including statements describing the objectives, projections, estimates, or future predictions of the FHLBanks and the Office of Finance, may be “forward-looking statements.” By their nature, these forward-looking statements are subject to risks and uncertainties related to the operations of the FHLBanks and the business environment, all of which are difficult to predict and many of which are beyond the control of the FHLBanks. These risks and uncertainties could cause actual results to differ materially from those expressed or implied in forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. Such risks and uncertainties include the following: changes in interest rates, housing prices, employment rates and the general economy; the size and volatility of the residential mortgage market; demand for FHLBank advances; volatility of market prices, rates, and indices or other factors, including natural disasters, that could affect the value of investments or collateral held by the FHLBanks as security; political events, including legislative, regulatory, judicial or other developments that affect the FHLBanks, their members, counterparties and/or investors in the consolidated obligations of the FHLBanks; competitive forces, including other sources of funding available to FHLBank members, other entities borrowing funds in the capital markets, and the ability to attract and retain skilled individuals; the pace of technological change and the ability to develop and support technology and information systems; changes in investor demand for consolidated obligations and/or the terms of interest-rate exchange agreements and similar agreements; timing and volume of market activity; volatility of reported results due to changes in the fair value of certain assets and liabilities; the ability to introduce new FHLBank products and services and successfully manage the risks associated with those products and services; risk of loss arising from litigation; and inflation/deflation. Investors are encouraged to consider these and other risks and uncertainties that are discussed in periodic combined financial reports posted on the OF website, www.fhlb-of.com, and in reports filed by each FHLBank with the Securities and Exchange Commission. Any duty to update is disclaimed. This data has not been audited and has been prepared for informational purposes only. While it is believed to be correct, accuracy cannot be guaranteed.

3. How the FHLB System Works Collateral FHLBanks Investors Members Advances Mortgage Lending & Community Investment Investment Capital Issuance Proceeds Debt Securities Office of Finance Dealers Homeowners Issuance Proceeds • FHLBanks serve the general • public by providing readily available, • low-cost funding to nearly 8,000 members, • thereby increasing the availability of credit • for residential mortgage lending and • investment in housing and community • development • The FHLBanks fund their • operations principally • through the sale of debt • Securities through the Office of • Finance The 12 FHLBanks are government-sponsored enterprises (GSEs) organized under an act of Congress (Federal Home Loan Bank Act of 1932)

4. All Senior Debt is Joint & Several Seattle Pittsburgh Des Moines San Francisco Indianapolis Cincinnati Atlanta Dallas H AW AI I U.S. Territories Puerto Rico Guam Virgin Islands American Samoa Northern Mariana Islands A L AS K A • The twelve FHLBanks are linked by a common mission to support housing, a shared safety and soundness regulator (FHFA), and a multilateral responsibility to repay debt obligations • All debt securities issued through the Office of Finance are joint and several obligations of the entire FHLBankSystem Boston Chicago New York Topeka

5. The FHLBanks are Part of the Solution Scalable Balance Sheet Allowed the FHLBanks to Rapidly Expand Lending Despite a Severe, Systemic Contraction of Credit $64 $331 The FHLBanksprovided $372 billion in liquidity during the credit crisis $500 Source: Historical Combined Financial Reports – subject to rounding

6. Total Debt Outstanding Debt Outstanding has Declined, Reflecting Trends in Advances $797 • YoY Net Change (in billions) *Advances as of 3Q10 Source: FHLBanks Office of Finance – by settlement date – as of YE and subject to rounding

7. Term Debt Issuance Issuance Tracks Advances & Adapts to Shifts in Investor Preference $51 billion issued during Jan - Feb Source: FHLBanks Office of Finance – by settlement date – as of 2/28/11 and subject to rounding

8. Debt Issuance is Flexible & Adaptable Flexible Issuance Model is Heavily Geared Toward Investor Reverse Inquiry More “Pull” Than “Push” Reverse Inquiry Accounts for Approximately 87% of Term Debt Issuance (Thru 4Q10) Crisis Driven Flight-to-Quality Short-Term Debt* as a % of Total Debt Outstanding ($ in millions) *All debt (incl. DNs) outstanding with remaining maturity ≤ 397 days *Includes syndicated Globals Source: FHLBanks Office of Finance – by settlement date – as of 2/28/11 and subject to rounding

9. Full Range of Debt Products Medium-Term Notes (MTNs) Auction method used to distribute bullet (TAP) and American option callable securities Reverse inquiry process extensively use for callable, floating rate, and structured note issuance Discount Notes Globals Daily window postings and twice-weekly auctions of set maturity buckets Programmatic calendar issuance of syndicated “benchmark” size bullets FHLBanks use multiple debt issuance programs to fund the balance sheet and respond to investor needs

10. Discount Notes • Active window program with maturity and settlement flexibility and twice weekly auction program for 1-, 2-, 3-, and 6-month maturities • 19 member selling group (and broader reallowance group) • Term DNs represent approximately 23% of total debt outstanding and had an outstanding WAM of 43 days as of 2/28/11; over 80% of DN issuance are overnight maturities Window Sales by Maturity ($ in millions) Auction Sales by Maturity ($ in millions) Source: FHLBanksOffice of Finance – by settlement date – as of 2/28/11 and subject to rounding

11. Discount Note Spreads O/N FHLB DN Rate vs. Agency RP (in bps) 3-Mo FHLB DN Rate vs. 3-Mo T-Bill & 3-Mo LIBOR (in bps) Source: FHLBank Office of Finance – as of 2/28/11 and subject to rounding

12. Floaters and Short Bullets (3 years and in) • FHLBank short duration needs reflected in short maturity issuance • About 37% of bonds issued in 2010 mature within 3 years • FHLBanks communicate price targets to dealers each morning (≤18-mo) • 2- to 3-year maturities generally issued via Global program or TAP auction Source: FHLBanks Office of Finance - *bonds with 3 years or less to maturity

13. FHLBanks are a Significant Issuer of Callables Callable Debt • Benefits to the FHLBanks • Essential component of core funding for both advances and investment portfolios • Provides a natural hedge to embedded optionality in MBS investments • Benefits to Investors • Flexible reverse inquiry process delivers a high degree of customization • Callables offer enhanced yield over comparable bullets and allow investors to express views on volatility and/or the yield curve without sacrificing credit quality Issuance by Lockout Issuance by Option Type Source: FHLBanks Office of Finance – by settlement date – Mar 2010 thru Feb 2011 and subject to rounding

14. Negotiated Callable Bonds • An underwriter proposes a specific structure to the FHLBanks • Generally have associated interest rate swaps • Highly tailored in response to investor and dealer demand • Announced on market screens at dealer discretion and posted at www.fhlb-of.com (Debt Securities … New Bond Issuance) Source: FHLBanks Office of Finance

15. Swapped Bond Process Sequence of events for a swapped transaction: • Dealer assesses market demand; dealer canvasses firms that enter into swaps with individual FHLBanks looking for best price • If swap pricing and market demand offer funding that meet FHLBank targets, bond/swap package is proposed electronically to a FHLBank • If FHLBanks accept the trade, final pricing is established via conference call FHLBank Office of Finance Underwriter Swap Counterparty Investor

16. Callable Step-Up Bonds • Motivation for issuance and process identical to swapped callables • Associated interest rate enables tailoring to investor/dealer demand • Reflects steep yield curve environment (2- to 10-yr at 270-285 bps) • Defensive structure in a rising rate environment • Step-ups accounted for 31% of callable issuance in 2010 • Over 90% of Structured bonds are step-up callables • Minimum denominations are $100,000 Source: FHLBanks Office of Finance

17. Callable Auction Program • An FHLBank needs for a specific duration/convexity profile to funding the purchase of an asset (e.g. MBS) • Hedging with a mix of callable and non-callable debt • Bonds issued through an auction typically do not have an associated interest rate swap • Process begins with underwriters assessing market for various structures and providing feedback to the FHLBanks • FHLBanks compare bond indications with asset pricing; matching market demand with portfolio opportunities Source: FHLBanks Office of Finance

18. Auctioned Callable Bonds • American-style options auctioned (up to) once daily • Auctioned through defined dealer bidding group of 24 firms • Announced at www.fhlbtradedesk.com at 9:45am ET • Real-time posting of bid details and results

19. TAP Program Created to coordinate and standardize issuance of non-Global bullet debt New securities issued on a quarterly basis and then re-opened as frequently as daily throughout the 90-day cycle via a 20 dealer selling group TAPs typically offer liquidity-adjusted yield over comparable FHLB Globals and other agency benchmarks Recent TAP Issuance Cycles ($ in billions) TAP vs. Global Spreads (in bps) 3-Yr Mean: 12.3 St Dev: 12.6 Source: FHLBanksOffice of Finance – as of 1/31/11 and subject to rounding

20. TAP Auctions • Re-openings of most liquid on-the-run TAPs • Auctioned through defined dealer bidding group of 20 firms • Announced at www.fhlbtradedesk.com at 11:00am ET • Real-time posting of bid details and results

21. Global Bond Program • FHLBanks announce the maturity, size, and dealer selection of Globalson predetermined dates • New Globals are issued through dealer syndicates during multi-day distribution periods • Re-openings issued via competitive auction • Large minimum sizes and standardized coupon features used to facilitate liquidity • $20.25 billion in new supply issued over five new transactions and five re-openings during 2010 • Globals announced on market screens; investors should contact dealers in syndicate with interest Source: FHLBanks Office of Finance

22. Global Bond Distribution Bullet Issues – March 2010 through February 2011 By Region By Investor Type Source: FHLBanks Office of Finance – subject to rounding – “Other” may include investors not specified by underwriters

23. Global Bond Spreads 2-Yr Global Spread (in bps) 3-Yr Global Spread (in bps) Source: FHLBanks Office of Finance – as of 1/31/11

24. Term Debt Refunding Scheduled Maturities ($ in billions) Projected Calls ($ in billions) $30 billion Bond Maturities during Jan-Feb 2011 $343 billion Maturities in 2010 Estimates based on certain rate and volatility assumptions.  Actual call activity may differ, and can be affected by a variety of factors including but not limited to shifts in the interest rate environment, the amount of callable debt outstanding, debt refunding costs, FHLBank asset/liability strategy, and the overall funding environment. Source: FHLBanks Office of Finance and subject to rounding

25. Investor Relations Contacts David Messerly Director Global Investor Relations 703-467-3609 messerly@fhlb-of.com Jonathan Hartley Vice President Global Investor Relations 703-467-2948 jhartley@fhlb-of.com Denise de Bombelles Vice President Global Investor Relations 703-467-3677 debombelles@fhlb-of.com FHLBanks Office of Finance www.fhlb-of.com 1818 Library Street Suite 200 Reston, VA 20190