Amended and Restricted Capital Plan of the Federal home Loan Bank of Indianapolis

I.    Introduction

                

The Gramm-Leach-Bliley Act of 1999 specified that the Federal Home Loan Banks (“FHLBanks”) transition from a “subscription” capital form to a permanent capital form. The Act also imposed imposes certain risk-based capital requirements on the FHLBanks. The Federal Home Loan Bank of Indianapolis (“FHLBI”) has initially adopted this its capital plan (“Capital Plan” or “Plan”) in 2002 in accordance with the implementing regulations (as amended, the “Capital Regulations”) issued by the Federal Housing Finance Board (“Finance Board”)., predecessor to the Federal Housing Finance Agency (“Finance Agency”). Subsequent amendments to the FHLBI capital plan were approved by the Finance Board on October 9, 2002 and by the Finance Agency on March 6, 2009, May 18, 2009 and August 5, 2011. The FHLBI is now amending and restating this capital plan (as amended and restated herein, “Capital Plan” or “Plan”) to: (i) modify the ranges of the Capital Stock purchase percentage requirements relating to member activities, (ii) update certain terminology and references to Finance Agency regulations, (iii) remove certain transitional provisions that pertained to the initial adoption of the capital plan in 2002 but are no longer applicable under the Capital Regulations, and (iv) make other clarifying and technical changes. Terms used but not defined herein shall be used as defined in the Act or the Capital Regulations.

investments in the Class B Capital Stock may be adjusted by the Board of Directors, as needed, to enable FHLBI to continue to meet those capital requirements.

C.    Transition Provisions

The Plan will be effective on a date declared by the Board of Directors, which shall not be later than 18 months after approval is received from the Finance Board of the Capital Plan. All outstanding stock of the members will be automatically exchanged for shares of an equal amount of par value of Class B Stock. Any excess Class B Stock then held by a member may be repurchased by the FHLBI in its discretion in accordance with Section IX hereof. A member may elect to terminate its membership with thirty (30) days’ notice to the Finance Board and the FHLBI prior to the Effective Date of this Capital Plan, in accordance with Section IX hereof.

In certain sections of this Capital Plan, the terms “in its discretion” or “in its sole discretion” are used when describing the FHLBI’s decision-making authority. The FHLBI acknowledges that the Finance Agency, in its role as safety and soundness regulator, may limit the FHLBI’s discretion in certain circumstances.

The Capital Plan takes into account the applicable provisions of the Act and the Capital Regulations and it is not intended to contradict such provisions. If any statements contained in provisions of the Capital Plan conflict with the actual provisions of the Act or the Capital Regulations, as amended from time to time, the provisions of the Act or the Capital Regulations, as then in effect, will control.

II. Definitions

In this Capital Plan, unless the context otherwise requires, (a) words describing the singular number shall include the plural and vice versa. and (b) any requirement of written notice by any entity may be satisfied by electronic mail delivery. The following are defined terms used in this Plan.

“Acquired Member Assets” or “AMA” means those assets acquired by the FHLBI from a member that meet the requirements of 12 C.F.R. §955 Part 1268 or successor Finance Agency regulations. This term includes Mortgage Purchase Program (“MPP”) assets.

“Act” means the Federal Home Loan Bank Act, as amended.

“Activity-based Assets” means the total of a member's outstanding Credit Products, Derivative Contracts and Acquired Member Assets, which shall be calculated using the following balances: (a) for lines of credit, the commitment amount; (b) for standby letters of credit, the maximum available credit under the standby letter of credit; (c) for all other Advances or Credit Products, the principal balance on the FHLBI's books; (d) for Derivative Contracts, the amount of collateral required for the transaction; and (e) for Acquired Member Assets, that were (before, on or after the Plan's Effective Date) subject to an Activity-based Stock Requirement as of the date of the applicable MDC, the outstanding principal balance, as adjusted from time to time on the FHLBI's books, provided that all Acquired Member Assets on the FHLBI's books on the Effective Date of the Plan shall not be included in the calculation of a member's Activity-based Assets.

“Activity-based Stock Requirement” means the sum of the outstanding Activity-based Assets of a member multiplied by the applicable percentage for each type of Activity-based Asset, in effect from time to time pursuant to Section V.

 

“Advances” means loans to a member from the FHLBI that are: (a) provided pursuant to a written agreement; (b) supported by a note or other written evidence of the member's obligations; and (c) fully secured by collateral in accordance with the Act, and Finance Agency regulations and the FHLBI's Credit Policy, as such policy has been approved from time to time by the Board of Directors.

“Board” or “Board of Directors” means the board of directors of the FHLBI.

“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which FHLBI is authorized to remain closed or (b) a day on which the Federal Reserve Bank of New York Stock Exchange is closed.

“Capital Ratio” means Total Capital divided by Total Assets.

“Cash Management Services Account” or “CMS Account” means a demand deposit account held by a member at the FHLBI.

“Class B Stock” means the capital stock Capital Stock with a five-year Redemption Period that the FHLBI is authorized to be issued under this Capital Plan, and includes Subseries B-1 Stock and Subseries B-2 Stock.

“Credit Products” means Advances, lines of credit, standby letters of credit, Affordable Housing Program ("AHP") advances, and Community Investment Program ("CIP") advances offered by the FHLBI.

“Credit Risk Capital” means an amount of Permanent Capital equal to the sum of the credit risk capital charges for FHLBI's assets, off-balance sheet items and Derivative Contracts. These charges are calculated using the methodology and risk weights assigned to each classification in the Capital Regulation, as the same may be amended from time to time. Assets that are not rated directly or indirectly by any NRSRO shall be rated by the FHLBI using standards available from an NRSRO or similar standards. Regulations. Assets will be rated in the manner provided by the Capital Regulations, as in effect at the time the rating is performed.

“Derivative Contract” means generally a financial contract, the value of which is derived from the values of one or more underlying assets, reference rates, or indices of asset values, or credit-related events. Derivative Contracts include interest rate, foreign exchange rate, equity, precious metals, commodity and credit contracts and any other instruments that pose similar risks.

“Determination Date” means the dates on which a member's Stock Requirement is recalculated due to the addition of new Activity-based Assets. The Determination Date shall be: (a) for lines of credit, the date of commitment; (b) for Derivative Contracts, the date of the FHLBI confirmation; (c) for standby letters of credit, the date of issuance; (d) for other Advances and other Credit Products, the date of disbursement; and (e) for Acquired Member Assets, the Settlement Date.

“Effective Date,” when used with respect to termination of FHLBI membership, shall means those dates set forth described in Section VII hereof, and, when used with respect to the commencement effective date of this Capital Plan, means the date selected by the FHLBI first issues any stock under this the Board of Directors pursuant to Section IX as the effective date of the Plan.

“Excess Stock” means any shares of Class B Capital Stock held by a member (or its successor) in excess of the member's Stock Requirement.

    

“FHFA” or “Finance Agency” means the Federal Housing Finance Agency, or its predecessor, the Finance Board, or any successor thereto.

“Financial Statements" means a member's annual regulatory Call Report, or similar annual regulatory filing for members that do not file Call Reports, provided that the FHLBI may, if such annual Call Reports or other regulatory filings are unavailable, or if the context otherwise requires, rely upon annual audited financial statements or upon quarterly Call Reports or similar quarterly regulatory filings.

“Information Statement" “Former Member” means the document containing the information concerning an institution for which membership in the FHLBI and has been terminated but which continues to hold Capital Stock pursuant to the Capital Plan, and includes any successor to such institution that is required to be disclosed to members pursuant to 12 C.F.R. § 933.5 continues to hold Capital Stock that was issued to the acquired institution.

“GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

“Leverage Capital” means the sum of Permanent Capital multiplied by 1.5 and all the other components of Total Capital.

“Leverage Capital Requirement” means Leverage Capital divided by Total Assets.

“Market Risk Capital" means an amount of Permanent Capital equal to the sum of the market value of the FHLBI's portfolio at risk and the amount by which the current market value of Total Capital is less than eighty-five percent (85%) of the book value of Total Capital. The risk to the portfolio is defined as that arising from movements in interest rates, foreign exchange rates, commodity prices, and equity prices which might arise during periods of market stress, as measured by an internal market risk model that estimates the market value of all of the FHLBI's instruments and market value of the portfolio at risk, as more fully described in 12 C.F.R. §932.5(b). The market risk model will be validated annually by knowledgeable FHLBI staff outside the FHLBI's Treasury Department or by a qualified third party, with results reviewed by the Board of Directors and provided to the Finance Agency.

“NRSRO” means a credit rating organization regarded as a Nationally Recognized Statistical Rating Organization by the Securities and Exchange Commission.

“Operations Risk Capital” means an amount equal to thirty percent (30%) of the sum of the FHLBI's Credit Risk Capital and Market Risk Capital requirements, or a lesser amount but no less than ten percent (10%) if the FHLBI provides an alternate methodology approved by the Finance Agency or provides for insurance coverage from an insurer that has been rated at least the second highest investment grade rating by an NRSRO.

“Opt-out Date” means the date by which a member must notify the Finance Board and the FHLBI that it wishes to opt out of the stock conversion and withdraw from membership. Such date shall be thirty (30) days prior to the date determined by the Board of Directors as the Effective Date of the Capital Plan.

“Permanent Capital” means retained earnings under GAAP plus the amount paid in for Class B Stock.

“Recalculation Date” means: (1 a) on or about April 1 of each year for re-calculating a member's Total Mortgage Assets, (2 b) each Determination Date for re-calculating a member's Activity-based Stock Requirement due to the acquisition of Activity-based Assets, (3 c) the effective date of any adjustment or amendment to the Stock Requirement percentages under Section V.C., and (4 d) the date of any recalculation performed by the FHLBI due to reductions in the member’s Activity-based Assets as a result of payments or changes in value; or (e) the date of any other recalculation provided for under Section V.B.5 in this Plan.

“Record Date” means December 31 of the calendar year immediately preceding the election year.

“Redemption Cancellation Fee” means the $500 fee that may be imposed by the FHLBI on a member that cancels a redemption notice. for stock constituting part or all of the member's Stock Requirement.

“Redemption Period” is means the five-year period that begins (a) on the date the member's notice of request for redemption of stock Class B Stock is received by the FHLBI from the member or (b) as set forth in Section VII, until the stock can be redeemed.

“Risk-based Capital Requirement” means an amount of Permanent Capital equal to the sum of the FHLBI's required Credit Risk Capital, Market Risk Capital and Operations Operational Risk Capital requirements.

“Risk Management Policy” means the policy of the FHLBI, reviewed by the Board of Directors at least annually, regarding the FHLBI’s risk management practices and procedures as permitted under the Capital Regulation and other rules and regulations of the Finance Agency, and as such policy may be in effect or amended from time to time.

“Settlement Date” means the date Acquired Member Assets are purchased by the FHLBI and proceeds are actually paid to or on behalf of the member.

“Stock Requirement” means the amount of Class B Capital Stock the member is required to hold based upon the greater of a percentage of the member's Total Mortgage Assets (its Membership Stock Requirement) or the its Activity-based Stock Requirement, as described in Section V.     

“Subseries B-1 Stock” means that Subseries of Class B Stock that will initially be is issued and that will pay to satisfy a higher dividend than the Subseries B-2 member's Stock Requirement.

“Subseries B-2 Stock” means that Subseries of Class B Stock into which Subseries B-1 Stock will be converted if the stock becomes subject to a voluntary or automatic redemption request while the stock is still needed by a member to meet its Stock Requirement.

“Time Account” means an investment deposit account maintained by a member with the FHLBI.

“Total Assets,” when used with respect to either the FHLBI or one of its members, means the FHLBI’s entity's total assets as determined in accordance with GAAP the accounting principles or standards that are applicable to the entity.

“Total Capital” means the sum of Permanent Capital, the paid-in value of all Class A stock (if any), general loan loss reserves, and other instruments as may be identified in the Plan from time to time and accepted as components of Total Capital by the Finance Agency.

“Total Mortgage Assets” of the member means the aggregate unpaid principal balance of the member’s Home “home mortgage loans,” as defined in 12 C.F.R. §1263.1 and more specifically means the following: (1) a loan, whether or not fully amortizing, or an interest in such a loan, which is secured by a mortgage, deed of trust, or other security agreement that creates a first lien on one of the following interests in the property: (i) one-to-four family property or multifamily property, in fee simple; (ii) a leasehold on one-to-four family property or multifamily property under a lease of not less than 99 years that is renewable, or under a lease having a period of not less than 50 years to run from the date the mortgage was executed; or (iii) combination business or farm property where at least 50 percent of the total appraised value of the combined property is attributable to the residential portion of the property or, in the case of any community financial institutions, combination business or farm property, on which is located a permanent structure actually used as a residence (other than for temporary or seasonal housing), where the residence constitutes an integral part of the property.; or (2) A mortgage pass-through a security that represents an undivided ownership interest in representing: (i) a right to receive a portion of the cash flows from a pool of long-term loans, provided that, at the time of issuance of the security, all of the loans meet the requirements of item (1) of this definition; or (ii) an undivided ownership interest in long-term loans, provided that, at the time of issuance of the security other securities, all of the loans met which meet the requirements of item (1) of this definition.

“Withdrawal Cancellation Fee” means the $500 fee that may be imposed by the FHLBI on the member for canceling a notice of withdrawal from membership.

III. Capital Requirements

The FHLBI shall maintain a Capital Ratio of at least 4.0 percent.

The FHLBI shall also meet a Leverage Capital Requirement of at least 5.0 percent.

The FHLBI shall maintain a level of Permanent Capital equal to or more than the Risk-based Capital Requirement.

D. its Regulatory Reporting Capital Requirements.

Each month by the fifteenth Business Day, or as otherwise required by the Finance Agency, the FHLBI shall report to the Finance Agency its Total and Permanent Capital amounts and its Risk-based Capital Requirement by components, all calculated as of the close of business on the last Business Day of the prior month.

Risk management assessment procedures and controls for all capital measurements are contained in the FHLBI’s Risk Management Policy, as amended from time to time. The Finance Agency has the authority to require the FHLBI to hold more capital than is set forth in Subsections A, B and C above additional capital, which could require the FHLBI to amend this Capital Plan or the Enterprise Risk Management Policy from time to time.

IV.    Class of Stock; Rights and Dividends

The Board of Directors of the FHLBI hereby approves confirms its approval of the issuance of one a class of stock, to be known as the “Class B Stock,” divided into consisting of Subseries B-1 and Subseries B-2, with the rights, privileges and preferences, and subject to the limitations, set forth below, and the. The FHLBI shall issue no other classes or subseries of stock except by amendment to this Capital Plan and approval by the Finance Agency. The FHLBI, and shall not issue stock other than in accordance with 12 C.F.R. § 931.2 Finance Agency regulations in effect at the time the stock is to be issued. FHLBI stock may only be issued to and held by members (or their successors upon consolidation or merger, with respect to holding existing stock).

member was "required to hold" shall be the member's Stock Requirement as of the Record Date, provided that if the Capital Plan was not in effect as of the Record Date, the number of shares of stock that a member was     required to hold as of the Record Date shall be determined in accordance with Sections 1263.20 and 1263.22 of the Finance Agency regulations. For purposes of this Section IV.A, former members who withdrew from membership after the Record Date will retain the right to vote in the subsequent election occurring after a Record Date on which they were still a member. However, former members who withdrew from membership prior to the Record Date but who still hold Class B Stock to support outstanding obligations are not     considered members hereunder and do not have voting rights with respect to such stock.

2. The FHLBI shall not declare or pay any dividends on the Class B Capital Stock if the FHLBI it is not in compliance with any of its minimum capital requirements, or if the payment of pay a dividend that would cause the FHLBI it to fail to meet any of its minimum capital requirements. The FHLBI shall not declare or pay a dividend if the par value of the Bank's Capital Stock is impaired or is projected to become impaired after paying such dividend. Dividends, if declared, will only be paid from current net earnings or from retained earnings, subject to Section XII.A.

The FHLBI is authorized to issue additional Subseries B-1 Capital Stock, at par value, to its members from time to time. Participation in such offerings shall be voluntary on the part of the members, on terms and conditions to be determined by the Board of Directors, but such offerings shall not discriminate in favor or against any member.

occur on a pro rata basis among all holders of Class B Stock. Following the redemption repurchase in full of all Class B Stock, any remaining assets will be distributed to the holders of Class B Stock in the proportion that each stockholder’s Class B Stock bears to the total Class B Stock outstanding immediately prior to the initial repurchase of Class B Stock pursuant to such liquidation.

V.    Investment by Members

All members of the FHLBI or institutions applying for membership shall be required to maintain a minimum investment in the FHLBI by purchasing shares of its Class B capital stock Capital Stock as follows.

 

B.     Stock Requirement Calculation

of any adjustments to the percentages used in determining the Stock Requirement made pursuant to this Subsection C.3.

    

VI.     Transfer, Redemption or Repurchase of Stock

A.    Transfer to Other Members

With the written approval of the FHLBI, which may be withheld in its sole discretion, a member may transfer any Excess Stock of the FHLBI to another FHLBI member. Any such stock transfers shall be at par value and shall be effective upon being recorded on the appropriate books and records of the FHLBI. All transfers shall be undertaken only in accordance with 12 C.F.R. § 931.6 1277.25 (or successor Finance Agency regulations). The shares subject to the transfer shall be identified by the member in the written notice requesting the transfer. Transferred shares that were subject to a prior notice of redemption shall have the such redemption notice automatically canceled upon the transfer but no cancellation fee will be charged.

B. Redemption of Stock by Member (See Section VII for Membership Withdrawal)

stock shall be re-converted to Subseries B-2 Stock at the next Recalculation Date determined under Section V.B. This pattern of conversion between Subseries B-1 Stock and Subseries B-2 Stock shall continue during the Redemption Period to the extent that the status of the Class B Stock that is subject to the notice of redemption changes as (between Excess Stock and stock that is needed by the member to satisfy its Stock Requirement and Excess Stock).

 

C. Repurchase of Stock by FHLBI

that are Excess Stock and that are not subject to a redemption request, followed by Excess Stock that is subject to a redemption request that and has been outstanding the shortest period of time, and then, (to the extent necessary,) by repurchasing shares of Excess Stock that are subject to a redemption request that was has been outstanding for the next shortest period of time, and continuing in that order, to the extent necessary, until the member no longer has any Excess Stock, or the FHLBI has repurchased all of the member's Excess Stock of the member that the FHLBI intended to repurchase.

D. Additional Limitations to Redemption or Repurchase of Stock

resolve the existing or anticipated collateral such deficiency to the FHLBI's satisfaction, until all such obligations have been satisfied or the anticipated deficiency is resolved to the FHLBI's satisfaction.

Any member may voluntarily withdraw from membership in the FHLBI upon written notice to the FHLBI. Further, membership may be terminated by operation of law as the result of a consolidation or merger of a member into a non-member that does not wish to be, or is not eligible to be, a member of the FHLBI, or into a member of another FHLBank or into another member of the FHLBI. The FHLBI’s Board of Directors may, in its sole discretion at any time, take action to unilaterally terminate the membership of any member (involuntarily) that (i) fails to comply with any requirement of the Act, Finance Agency regulations or this Plan, (ii) becomes insolvent or is otherwise subject to the appointment of a conservator, receiver or other custodian under federal or state law, or (iii) would jeopardize the safety or soundness of the FHLBI if it were to remain a member. The effect of any termination of membership on a member’s stock Capital Stock ownership shall be as follows:

4. Members A member that files a notice to voluntarily withdraw from membership may continue to enter into Activity-based Assets with the FHLBI, subject to the following provisions:

c. On or after the date of the notice of withdrawal, in In the event a withdrawing member engages in additional Activity-based Assets that require the member to purchase additional Class B Stock, which shall be Subseries B-2 Stock, after the date of the notice of withdrawal Capital Stock, such stock shall be deemed to be automatically subject to a notice of redemption with the Redemption Periods to commence on the dates of purchases of the stock. AWhile a withdrawal notice is pending, a withdrawing member shall not be required to purchase additional stock Capital Stock based upon changes in its Total Mortgage Assets (its Membership Stock Requirement) while a withdrawal notice is pending. A member shall have no further right to enter into Activity-based Assets with the FHLBI on or after the date that membership terminates in accordance with 12 C.F.R. §1263.26(b)(or successor Finance Agency regulation), notwithstanding that the member may have additional Class B Capital Stock that was purchased after the date of the notice of withdrawal and for which the Redemption Period has not ended.

d. A Except as authorized by the preceding Subsection (c), a withdrawing member shall continue to maintain Class B Capital Stock sufficient to meet its Stock Requirement in accordance with the provisions of the this Capital Plan until the date on which its membership terminates. Prior to such termination date, any Class B Capital Stock that is not required to meet the member's Stock Requirement shall be Excess Stock subject to repurchase by the FHLBI. On or after such termination date, any Class B Capital Stock that is not required to meet the member's Stock Requirement related to its Activity-based Stock Requirement shall be Excess Stock subject to repurchase by the FHLBI.

 

dividend until the stock is redeemed. A member’s stock that is or becomes Excess Stock during the Redemption Period will continue to be Subseries B-1 Stock or will convert back to Subseries B-1 stock at the next Recalculation Date.

    

b. No stock Capital Stock that is part of a member’s Stock Requirement related to its Activity-based Stock Requirement on the date of such involuntary termination shall be redeemed or repurchased by the FHLBI until such indebtedness or other obligations are repaid or otherwise settled. Excess Stock held by such member may be repurchased, at the sole discretion of the FHLBI before such the indebtedness or other obligations are repaid or otherwise settled.

 

   

    

An institution that has withdrawn from membership or otherwise has had its membership terminated and that has divested all of its shares of FHLBI stock Capital Stock may not be readmitted to membership in any FHLBank or acquire any capital stock Capital Stock of any FHLBank for a period of five (5) years from the date membership was terminated and all of the stock Capital Stock was redeemed or repurchased. However, any institution that withdrew from membership prior to December 31, 1997, may apply for membership at any time, subject to the approval of the Finance Agency.

The Board of Directors shall review the Capital Plan at least annually. The Board of Directors may, from time to time, consider and approve amendments to this Capital Plan. This consideration and approval includes but is not limited to the issuance of subordinated debt as authorized by Section 11 of the Federal Home Loan Bank Act Act (12 U.S.C. § 1431), as amended from time to time, provided that the Finance Agency has determined that subordinated debt can be counted toward the FHLBI’s Total Capital. Except as provided in Section XIII.C, all amendments must be submitted to and approved by the Finance Agency before such amendments will be effective. After receipt of approval, such amendments will be effective fifteen (15) days after the mailing or electronic posting of notice to the members, unless another date is specified in such notice.

The Effective Date of this Capital Plan shall be the date of initial issuance of stock hereunder amended and restated Capital Plan shall be established by a Board of Directors resolution and shall occur within sixty (60) days after the FHLBI's receipt of the Finance Agency's approval of the amended and restated Plan. The FHLBI has made a good faith determination that it will be able to implement this Capital Plan as submitted to the Finance Board Agency and that it shall will be in full compliance with the Risk-based Capital Requirement and Total Capital requirement set forth in the Capital Regulations as of such date the Effective Date. The following actions, which constitute the FHLBI's Plan of Reorganization, within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, are to be taken in order to implement certain changes to the Capital Plan.

A. Exchange of Existing Stock

membership, as set forth in Subsection B below. The FHLBI will then have the opportunity to evaluate the effects of any withdrawals by the members on the FHLBI’s Risk-based Capital Requirement and Total Capital requirement as of the Effective Date. The FHLBI may then make pro rata adjustments in the amount of Excess Class B Stock to be repurchased from members, if necessary, or take any other necessary or appropriate action, to ensure compliance with the FHLBI’s capital requirements. The FHLBI will give members notice as soon as practicable after the Opt-out Date if their actual Stock Requirement is expected to change as a result of the effects of member withdrawals.

to have consented to the exchange and all outstanding stock of the member shall be automatically exchanged for Class B Stock as of the Effective Date. If a member files a notice of withdrawal after the Opt-out Date, the member will be treated as a voluntarily withdrawing member under Section VII of this Capital Plan and the member’s stock will be converted into and exchanged for Class B Stock as of the Effective Date. However, the Redemption Period will be deemed to commence on the date the withdrawal notice was filed with the Finance Board, even though that was prior to the Effective Date. If any member fails to purchase any additional stock needed to meet the member’s Stock Requirement on the Effective Date, such member will be involuntarily terminated and will be subject to all of the provisions of Section VII of this Capital Plan.

If this Capital Plan is effective on or prior to December 31 of a given year, the voting rights for members shall be as set forth in Section IV hereof with respect to directors to be elected in the subsequent year, provided that if any member does not hold its shares of Class B Stock sufficient to satisfy its Stock Requirement under the Capital Plan on December 31 of a given year, only its actual stock holdings will be used in calculating the number of shares entitled to vote and the designation of directorships. If this Plan is not effective on December 31 of a given year, director elections and voting rights for the subsequent year shall be determined in accordance with the Finance Agency’s regulations in effect prior to implementation of the Capital Plan.

The provisions of sections X through XIII shall become effective upon, and only upon, the occurrence of the Interim Capital Plan Amendment Implementation Date. Until the Restriction Termination Date, in the event of any conflict between sections X     through XIII and the

remainder of this Capital Plan, the applicable terms of sections X through XIII shall govern, and shall be interpreted in a manner such that the restrictions set forth therein are supplementary to, and not in lieu of, the requirements of the remainder of this Capital Plan.

As used in these sections X through XIII, the following capitalized terms shall have the following meanings.  Other capitalized terms used but not defined in these sections X through XIII shall have the meanings set forth in section II of this Capital Plan.

“Act” means the Federal Home Loan Bank Act, as amended as of the Effective Date.

“Adjustment to Prior Net Income” means either an increase, or a decrease, to a prior calendar quarter’s Quarterly Net Income subsequent to the date on which any allocation to Restricted Retained Earnings for such calendar quarter was made.

“Agreement” means the Joint Capital Enhancement Agreement adopted by the FHLBanks on the Effective Date and amended on the date on which the FHFA has approved the Retained Earnings Capital Plan Amendments for all of the FHLBanks that have issued capital stock pursuant to a capital plan as of the Effective Date.

“Allocation Termination Date” means the date the FHLBI’s obligation to make allocations to the Restricted Retained Earnings account is terminated permanently. That date is determined pursuant to section XIII of this Capital Plan.

“Automatic Termination Event” means (i) a change in the Act, or another applicable statute, occurring subsequent to the Effective Date, that will have the effect of creating a new, or higher, assessment or taxation on net income or capital of the FHLBanks, or (ii) a change in the Act, another applicable statute, or the Regulations, occurring subsequent to the Effective Date, that will result in a higher mandatory allocation of an FHLBank’s Quarterly Net Income to any Retained Earnings account than the annual amount, or total amount, specified in an FHLBank’s capital plan as in effect immediately prior to the Automatic Termination Event.

“Automatic Termination Event Declaration Date” means the date specified in section XIII.A.1 or XIII.A.2 of this Capital Plan.

“Declaration of Automatic Termination” means a signed statement, executed by officers authorized to sign on behalf of each FHLBank that is a signatory to the Agreement, in which at least 2/3 of the then existing FHLBanks declare their concurrence that a specific statutory or regulatory change meets the definition of an Automatic Termination Event.

“Dividend” means a distribution of cash, other property, or stock to a Stockholder with respect to its holdings of Class B Capital Stock.

“Dividend Restriction Period” means any calendar quarter: (i) that includes the REFCORP Termination Date, or occurs subsequent to the REFCORP Termination Date; (ii) that occurs prior to an Allocation Termination Date; and (iii) during which the amount of the FHLBI’s Restricted Retained Earnings is less than the amount of the FHLBI’s RREM. If the amount of

the FHLBI’s Restricted Retained Earnings is at least equal to the amount of the FHLBI’s RREM, and subsequently the FHLBI’s Restricted Retained Earnings becomes less than its RREM, the FHLBI shall be deemed to be in a Dividend Restriction Period (unless an Allocation Termination Date has occurred).

“Effective Date” means February 28, 2011.

“FHFA” means the Federal Housing Finance Agency, or any successor thereto.

“FHLBank” means a Federal Home Loan Bank chartered under the Act.

“FHLBI’s Total Consolidated Obligations” means the daily average carrying value for the calendar quarter, excluding the impact of fair value adjustments (i.e., fair value option and hedging adjustments), of the FHLBI’s portion of outstanding System Consolidated Obligations for which it is the primary obligor.

“GAAP” means accounting principles generally accepted in the United States as in effect from time to time.

“Interim Capital Plan Amendment Implementation Date” means 31 days after the date by which the FHFA has approved a capital plan amendment substantially the same as the Retained Earnings Capital Plan Amendment for all of the FHLBanks that have issued capital stock pursuant to a capital plan as of the Effective Date.

“Net Loss” means that the Quarterly Net Income of the FHLBI is negative, or that the annual net income of the FHLBI calculated on the same basis is negative.

“Quarterly Net Income” means the amount of net income of an FHLBank for a calendar quarter calculated in accordance with GAAP, after deducting the FHLBank’s required contributions for that quarter to the Affordable Housing Program under section 10(j) of the Act, as reported in the FHLBank’s quarterly and annual financial statements filed with the Securities and Exchange Commission.

“REFCORP Termination Date” means the last day of the calendar quarter in which the FHLBanks’ final regular payments are made on obligations to REFCORP in accordance with Section 997.5 of the Regulations and section 21B(f) of the Act.

“Regular Allocation Amount” means the result of (i) 20 percent of Quarterly Net Income; plus (ii) 20 percent of a positive Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter; minus (iii) 20 percent of the absolute value of a negative Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter.

“Regulations” mean: (i) the rules and regulations of the Federal Housing Finance Board (except to the extent that they may be modified, terminated, set aside or superseded by the

Director of the FHFA) in effect on the Effective Date; (ii) the rules and regulations of the FHFA, as amended from time to time.

“Restricted Retained Earnings” means the cumulative amount of Quarterly Net Income and Adjustments to Prior Net Income allocated to the FHLBI’s Retained Earnings account restricted pursuant to the Retained Earnings Capital Plan Amendment, and does not include amounts retained in: (i) any accounts in existence at the FHLBI on the Effective Date; or (ii) any other Retained Earnings accounts subject to restrictions that are not part of the terms of the Retained Earnings Capital Plan Amendment.

“Restricted Retained Earnings Minimum” (“RREM”) means a level of Restricted Retained Earnings calculated as of the last day of each calendar quarter equal to one percent of the FHLBI’s Total Consolidated Obligations.

“Restriction Termination Date” means the date the restriction on the FHLBI paying Dividends out of the Restricted Retained Earnings account, or otherwise reallocating funds from the Restricted Retained Earnings account, is terminated permanently. That date is determined pursuant to section XIII of this Capital Plan.

  

“Retained Earnings” means the retained earnings of an FHLBank calculated pursuant to GAAP.

“Retained Earnings Capital Plan Amendment” means the amendment to this Capital Plan, made a part thereof, adopted effective on the Interim Capital Plan Amendment Implementation Date adding sections X through XIII to this Capital Plan.

“Special Allocation Amount” means the result of: (i) 50 percent of Quarterly Net Income; plus (ii) 50 percent of a positive Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made in the current calendar quarter; minus (iii) 50 percent of the absolute value of a negative Adjustment to Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has not yet been made by the current calendar quarter.

“Stockholder” means: (i) an institution that has been approved for membership in the FHLBI, and has purchased Class B Capital Stock in accordance with the Regulations; (ii) a former member of the FHLBI that continues to own Class B Capital Stock; or (iii) a successor to an entity that was a member of the FHLBI that continues to own Class B Capital Stock.

“System Consolidated Obligation” means any bond, debenture, or note authorized under the Regulations to be issued jointly by the FHLBanks pursuant to Section 11(a) of the Act, as amended, or any bond or note previously issued by the Federal Housing Finance Board on behalf of all FHLBanks pursuant to Section 11(c) of the Act, on which the FHLBanks are jointly and severally liable, or any other instrument issued through the Office of Finance, or any successor thereto, under the Act, that is a joint and several liability of all the FHLBanks.

“Total Capital” means Retained Earnings, the amount paid-in for Class B Stock, the amount of any general allowance for losses, and the amount of other instruments that the FHFA has determined to be available to absorb losses incurred by the FHLBI.

A. Segregation of Account.

No later than the REFCORP Termination Date, the FHLBI shall establish an account in its official books and records in which to allocate its Restricted Retained Earnings, with such account being segregated on its books and records from the FHLBI’s Retained Earnings that are not Restricted Retained Earnings for purposes of tracking the accumulation of Restricted Retained Earnings and enforcing the restrictions on the use of the Restricted Retained Earnings imposed in the Retained Earnings Capital Plan Amendment.

B. Funding of Account.

The FHLBI shall allocate to its Restricted Retained Earnings account an amount at least equal to the Regular Allocation Amount beginning on the REFCORP Termination Date. The FHLBI shall allocate amounts to the Restricted Retained Earnings account only through allocations from its Quarterly Net Income or Adjustments to Prior Net Income occurring on or after the REFCORP Termination Date, but nothing in the Retained Earnings Capital Plan Amendment shall prevent the FHLBI from allocating a greater percentage of its Quarterly Net Income or positive Adjustment to Prior Net Income to its Restricted Retained Earnings account than the percentages set forth in the Retained Earning Capital Plan Amendment.

During any Dividend Restriction Period that occurs before the Allocation Termination Date, the FHLBI shall continue to allocate its Regular Allocation Amount (or when and if required under subsection XI.B.4 below, its Special Allocation Amount) to its Restricted Retained Earnings account.

In the event the FHLBI sustains a Net Loss for a calendar quarter, the following shall apply: (i) to the extent that its cumulative calendar year-to-date net income is positive at the end of such quarter, the FHLBI may decrease the amount of its Restricted Retained Earnings such that the cumulative addition to the Restricted Retained Earnings account calendar year-to-date at the end of such quarter is equal to 20 percent of the amount of such cumulative calendar year-to-date net income; (ii) to the extent that its cumulative calendar year-to-date net income is negative at the end of such quarter (a) the FHLBI may decrease the amount of its Restricted Retained Earnings account such that the cumulative addition calendar year-to-date to the Restricted Retained Earnings at the end of such quarter is zero, and (b) the FHLBI shall apply any remaining portion of the Net Loss for the calendar

quarter first to reduce Retained Earnings that are not Restricted Retained Earnings until such Retained Earnings are reduced to zero, and thereafter may apply any remaining portion of the Net Loss for the calendar quarter to reduce Restricted Retained Earnings; and (iii) for any subsequent calendar quarter in the same calendar year, the FHLBI may decrease the amount of its quarterly allocation to its Restricted Retained Earnings account in that subsequent calendar quarter such that the cumulative addition to the Restricted Retained Earnings account calendar year-to-date is equal to 20 percent of the amount of such cumulative calendar year-to-date net income.

In the event the FHLBI sustains a Net Loss for a calendar year, any such Net Loss first shall be applied to reduce Retained Earnings that are not Restricted Retained Earnings until such Retained Earnings are reduced to zero, and thereafter any remaining portion of the Net Loss for the calendar year may be applied to reduce Restricted Retained Earnings.

If during a Dividend Restriction Period, the amount of the FHLBI’s Restricted Retained Earnings decreases in any calendar quarter, except as provided in subsections XI.B.3(i) and (ii)(a) above, the FHLBI shall allocate the Special Allocation Amount to its Restricted Retained Earnings account beginning at the following calendar quarter-end (except as provided in the last sentence of this subsection). Thereafter, the FHLBI shall continue to allocate the Special Allocation Amount to its Restricted Retained Earnings account until the cumulative difference between: (i) the allocations made using the Special Allocation Amount; and (ii) the allocations that would have been made if the Regular Allocation Amount applied, is equal to the amount of the prior decrease in the amount of its Restricted Retained Earnings account arising from the application of subsection XI.B.3(ii)(b). If at any calendar quarter-end the allocation of the Special Allocation Amount would result in a cumulative allocation in excess of such prior decrease in the amount of Restricted Retained Earnings: (i) the FHLBI may allocate such percentage of Quarterly Net Income to the Restricted Retained Earnings account that shall exactly restore the amount of the prior decrease, plus the amount of the Regular Allocation Amount for that quarter; and (ii) the FHLBI in subsequent quarters shall revert to allocating at least the Regular Allocation Amount.

If the FHLBI’s RREM decreases from time to time due to fluctuations in the FHLBI’s Total Consolidated Obligations, amounts in the Restricted Retained Earnings account in excess of 150 percent of the RREM may be released by the FHLBI from the restrictions otherwise imposed on such amounts pursuant to the provisions of the Retained Earnings Capital Plan Amendment, and reallocated to its Retained Earnings that are not Restricted Retained Earnings. Until the Restriction Termination Date, the FHLBI may not otherwise reallocate amounts in its Restricted Retained Earnings account (provided that a reduction in the Restricted Retained Earnings account following a Net Loss pursuant to subsection XI.B.3 is not a reallocation).

In the event of the liquidation of the FHLBI, or a taking of the FHLBI’s Retained Earnings by any future federal action, nothing in the Retained Earnings Capital Plan Amendment shall change the rights of the holders of the FHLBI’s Class B Stock that confer ownership of Retained Earnings, including Restricted Retained Earnings, as granted under section 6(h) of the Act.

  

From the REFCORP Termination Date through the Restriction Termination Date, the FHLBI may not pay Dividends, or otherwise reallocate funds (except as expressly provided in subsection XI.B. 5, and further provided that a reduction in the Restricted Retained Earnings account following a Net Loss pursuant to subsection XI.B.3 is not a reallocation), out of Restricted Retained Earnings. During a Dividend Restriction Period, the FHLBI may not pay Dividends out of the amount of Quarterly Net Income required to be allocated to Restricted Retained Earnings.

From the REFCORP Termination Date through the Restriction Termination Date, the FHLBI shall not engage in a repurchase or redemption transaction if following such transaction the FHLBI’s Total Capital as reported to the FHFA falls below the FHLBI’s aggregate paid-in amount of Class B Stock.

If the FHLBI desires to assert that an Automatic Termination Event has occurred (or will occur on the effective date of a change in a statute or the Regulations), the FHLBI shall provide prompt written notice to all of the other FHLBanks (and provide a copy to the FHFA) identifying the specific statutory or regulatory change that is the basis for the assertion. For the purposes of this section, ‘prompt written notice’ means notice delivered no later than 90 calendar days subsequent to: (1) the date the specific statutory change takes effect; or (2) the date an interim final rule or final rule effecting the specific regulatory change is published in the Federal Register.

If within 60 calendar days of transmission of such written notice to all of the other FHLBanks, at least 2/3 of the then existing FHLBanks (including the FHLBI) execute a Declaration of Automatic Termination concurring that the specific statutory or regulatory change identified in the written notice constitutes an Automatic Termination Event, then the Declaration of Automatic Termination shall be delivered by the FHLBI to the FHFA within 10 calendar days of the date that the Declaration of Automatic Termination is executed.

After the expiration of a 60 calendar day period that begins when the Declaration of Automatic Termination is delivered to the FHFA, or is delivered to the FHFA by another FHLBank pursuant to the terms of its capital plan, an Automatic Termination Event Declaration Date shall be deemed to occur (except as provided in subsection XIII.A.3).

If a Declaration of Automatic Termination concurring that the specific statutory or regulatory change identified in the written notice constitutes an Automatic Termination Event has not been executed by at least the required 2/3 of the then existing FHLBanks within 60 calendar days of transmission of such notice to all of the other FHLBanks, the FHLBI may request a determination from the FHFA that the specific statutory or regulatory change constitutes an Automatic Termination Event. Such request must be filed with the FHFA within 10 calendar days after the expiration of the 60 calendar day period that begins upon transmission of the written notice of the basis of the assertion to all of the other FHLBanks.

The FHLBI may request a determination from the FHFA that a specific statutory or regulatory change constitutes an Automatic Termination Event, and may claim that an Automatic Termination Event has occurred, or will occur, with respect to a specific statutory or regulatory change only if the FHLBI has complied with the time limitations and procedures of subsection XIII.A.1.

If within 60 calendar days after the Bank delivers such a request to the FHFA, or another FHLBank delivers such a request pursuant to its capital plan, the FHFA provides the requesting FHLBank with a written determination that a specific statutory or regulatory change is an Automatic Termination Event, then an Automatic Termination Event Declaration Date shall be deemed to occur as of the expiration of such 60 calendar day period (except as provided in subsection XIII.A.3). The date of the Automatic Termination Event Declaration Date shall be as of the expiration of such 60 calendar day period (except as provided in subsection XIII.A.3) no matter on which day prior to the expiration of the 60 calendar day period the FHFA has provided its written determination.

If the FHFA fails to make a determination within 60 calendar days after an FHLBank delivers such request to the FHFA, then an Automatic Termination Event Declaration Date shall be deemed to occur as of the date of the expiration of such 60 calendar day period (except as provided in subsection XIII.A.3); provided, however, that the FHFA may make a written request for information from the requesting FHLBank, and toll such 60 calendar day period from the date that the FHFA transmits its request until that FHLBank delivers to the FHFA information responsive to its request.

If within 60 calendar days after an FHLBank delivers to the FHFA a request for determination that a specific statutory or regulatory change constitutes an Automatic Termination Event (or such longer period if the 60 calendar day period is tolled pursuant to the preceding sentence), the FHFA provides that FHLBank with a written determination that a specific statutory or regulatory change is not an Automatic Termination Event, then an Automatic Termination Event shall not have occurred with respect to such change.

In no case under this subsection XIII.A may an Automatic Termination Event Declaration Date be deemed to occur prior to: (1) the date the specific statutory change takes effect; or (2) the date an interim final rule or final rule effecting the specific regulatory change is published in the Federal Register.

If the FHLBanks terminate the Agreement, then the FHLBanks shall provide written notice to the FHFA that the FHLBanks have voted to terminate the Agreement.

In the event the FHLBanks deliver written notice to the FHFA that the FHLBanks have voted to terminate the Agreement, then without any further action by the FHLBI or the FHFA: (i) the date of delivery of such notice shall be an Allocation Termination Date; and (ii) one year from the date of delivery of such notice shall be a Restriction Termination Date.

If an Automatic Termination Event Declaration Date has occurred, then without further action by the FHLBI or the FHFA: (i) the date of the Automatic Termination Event Declaration Date shall be an Allocation Termination Date; and (ii) one year from the date of the Automatic Termination Event Declaration Date shall be a Restriction Termination Date.

Without any further action by the FHLBI or the FHFA, on the Restriction Termination Date, sections X through XIII of this Capital Plan shall be deleted.

Approved by the Board of Directors of the Federal Home Loan Bank of Indianapolis on September 19June 28, 2002, as amended July 24, 2008, and March 13, 2009, May 19, 2011 and June 28, 2019; and as approved by the Federal Housing Finance Board on July 10, 2002, with amendments approved by the Federal Housing Finance Board on October 9, 2002, and with amendments approved by the Federal Housing Finance Agency on March 6, 2009, and as amended March 13, 2009, as approved by the Federal Housing Finance Agency on May 18, 2009, and as amended May 19, 2011, as approved by the Federal Housing Finance Agency on August 5, 2011 (effective September 5, 2011) and December 13, 2019.