Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The number of shares outstanding of the registrant’s Class B Stock, par value $100, as of ~~April 30,~~July 31, 2007, was ~~59,005,062.~~63,474,127.


	As of						As of
	March 31, 2007			December 31, 2006			June 30, 2007			December 31, 2006
ASSETS
Cash and due from banks	$	20,057		$	28,671		$	39,401		$	28,671
Interest-bearing deposits (includes deposits with other FHLBanks of $3,710 and $5,016 as of March 31, 2007 and December 31, 2006, respectively)		1,073,220			800,982
Interest-bearing deposits (includes deposits with other FHLBanks of $3,676 and $5,016 as of June 30, 2007 and December 31, 2006, respectively)								867,594			800,982
Federal funds sold		11,176,000			10,532,000			15,467,000			10,532,000
Trading securities (includes $668,808 and $164,831 pledged as collateral as of March 31, 2007 and December 31, 2006, respectively, that may be repledged and other FHLBanks’ bonds of $279,360 and $280,488 as of March 31, 2007 and December 31, 2006, respectively)		4,521,576			4,515,309
Held-to-maturity securities, net (fair value of $18,801,685 and $18,984,477 as of March 31, 2007 and December 31, 2006, respectively)		19,071,570			19,329,711
Mortgage loans held for portfolio, net of allowance for credit losses on mortgage loans of $646 and $774 as of March 31, 2007 and December 31, 2006, respectively		3,161,425			3,003,399
Trading securities (includes other FHLBanks’ bonds of $271,645 and $280,488 as of June 30, 2007 and December 31, 2006, respectively)								4,445,212			4,515,309
Held-to-maturity securities, net (fair value of $18,565,744 and $18,984,477 as of June 30, 2007 and December 31, 2006, respectively)								19,053,878			19,329,711
Mortgage loans held for portfolio, net of allowance for credit losses on mortgage loans of $685 and $774 as of June 30, 2007 and December 31, 2006, respectively								3,252,625			3,003,399
Advances, net		101,344,777			101,476,335			104,182,061			101,476,335
Accrued interest receivable		623,987			692,493			635,963			692,493
Premises and equipment, net		30,409			30,594			30,240			30,594
Derivative assets		220,723			259,024			338,767			259,024
Other assets		83,654			89,913			85,625			89,913

TOTAL ASSETS	$	141,327,398		$	140,758,431		$	148,398,366		$	140,758,431

LIABILITIES AND CAPITAL
Deposits
Interest-bearing	$	6,139,886		$	4,600,756		$	5,747,187		$	4,600,756
Noninterest-bearing		25,961			19,712			35,727			19,712

Total deposits		6,165,847			4,620,468			5,782,914			4,620,468

Securities sold under agreements to repurchase		500,000			500,000			500,000			500,000
Consolidated obligations, net:
Discount notes		6,726,770			4,934,073			4,624,283			4,934,073
Bonds		119,685,625			122,067,636			128,562,835			122,067,636

Total consolidated obligations, net		126,412,395			127,001,709			133,187,118			127,001,709

Mandatorily redeemable capital stock		247,356			215,705			226,511			215,705
Accrued interest payable		1,150,069			1,386,989			1,481,850			1,386,989
Affordable Housing Program		134,073			130,006			137,582			130,006
Payable to REFCORP		23,771			23,606			23,311			23,606
Derivative liabilities		467,657			569,983			349,071			569,983
Other liabilities		131,176			136,328			445,667			136,328

Total liabilities		135,232,344			134,584,794			142,134,024			134,584,794

Commitments and contingencies (Note 9)

CAPITAL
Capital stock Class B putable ($100 par value) issued and outstanding shares: 56,813 shares and 57,718 shares as of March 31, 2007 and December 31, 2006, respectively		5,681,258			5,771,798
Capital stock Class B putable ($100 par value) issued and outstanding shares: 58,428 shares and 57,718 shares as of June 30, 2007 and December 31, 2006, respectively								5,842,839			5,771,798
Retained earnings		418,244			406,376			425,862			406,376
Accumulated other comprehensive loss		(4,448	)		(4,537	)		(4,359	)		(4,537	)

Total capital		6,095,054			6,173,637			6,264,342			6,173,637

TOTAL LIABILITIES AND CAPITAL	$	141,327,398		$	140,758,431			$148,398,366			$140,758,431


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006			2007			2006
INTEREST INCOME
Advances	$	1,368,674		$	1,133,331		$	1,381,148		$	1,269,274		$	2,749,822		$	2,402,605
Prepayment fees on advances, net		493			232			547			668			1,040			900
Interest-bearing deposits		9,418			5,495			14,991			9,985			24,409			15,480
Federal funds sold		127,829			100,472			181,943			123,836			309,772			224,308
Trading securities		66,344			76,094			66,464			72,289			132,808			148,383
Held-to-maturity securities		231,413			228,829			228,649			228,828			460,062			457,657
Mortgage loans held for portfolio		40,264			36,130			42,222			37,300			82,486			73,430
Loans to other FHLBanks		3			19			—			11			3			30

Total interest income		1,844,438			1,580,602			1,915,964			1,742,191			3,760,402			3,322,793


INTEREST EXPENSE
Consolidated obligations:
Discount notes		76,049			67,028			78,785			111,947			154,834			178,975
Bonds		1,541,693			1,295,200			1,597,036			1,400,968			3,138,729			2,696,168
Deposits		59,021			49,421			71,607			54,942			130,628			104,363
Borrowings from other FHLBanks		—			10			29			13			29			23
Securities sold under agreements to repurchase		6,124			5,092			6,184			5,793			12,308			10,885
Mandatorily redeemable capital stock		3,183			1,933			3,563			1,884			6,746			3,817
Other borrowings		23			204			271			50			294			254

Total interest expense		1,686,093			1,418,888			1,757,475			1,575,597			3,443,568			2,994,485


NET INTEREST INCOME BEFORE MORTGAGE LOAN LOSS PROVISION		158,345			161,714
Reversal for credit losses on mortgage loans held for portfolio		(128	)		(3	)
NET INTEREST INCOME								158,489			166,594			316,834			328,308
Provision (reversal) for credit losses on mortgage loans held for portfolio								39			(60	)		(89	)		(63	)


NET INTEREST INCOME AFTER MORTGAGE LOAN LOSS PROVISION		158,473			161,717
NET INTEREST INCOME AFTER MORTGAGE LOAN LOSS PROVISION (REVERSAL)								158,450			166,654			316,923			328,371


OTHER INCOME (LOSS)
OTHER (LOSS) INCOME
Service fees		674			607			656			569			1,330			1,176
Net gain (loss) on trading securities		4,918			(105,860	)
Net (loss) gain on derivatives and hedging activities		(9,322	)		106,121
Net loss on trading securities								(77,733	)		(74,052	)		(72,815	)		(179,912	)
Net gain on derivatives and hedging activities								72,240			77,300			62,918			183,421
Other		101			135			478			307			579			442

Total other income (loss)		(3,629	)		1,003
Total other (loss) income								(4,359	)		4,124			(7,988	)		5,127


OTHER EXPENSE
Operating		21,067			21,125			23,983			21,705			45,050			42,830
Finance Board		1,252			1,272			1,251			1,271			2,503			2,543
Office of Finance		1,013			755			774			609			1,787			1,364
Other		768			1,202			774			941			1,542			2,143

Total other expenses		24,100			24,354			26,782			24,526			50,882			48,880


INCOME BEFORE ASSESSMENTS		130,744			138,366			127,309			146,252			258,053			284,618

Affordable Housing Program		10,998			11,492			10,756			12,131			21,754			23,623
REFCORP		23,949			25,378			23,311			26,826			47,260			52,204


Total assessments		34,947			36,870			34,067			38,957			69,014			75,827


NET INCOME	$	95,797		$	101,496		$	93,242		$	107,295		$	189,039		$	208,791


	Capital Stock Class B Putable					Retained Earnings				Accumulated Other Comprehensive Loss				Total Capital				Capital Stock Class B Putable							Retained Earnings				Accumulated Other Comprehensive Loss				Total Capital
	Shares		Par Value							Accumulated Other Comprehensive Loss			Shares	Total Capital					Par Value						Retained Earnings				Accumulated Other Comprehensive Loss				Total Capital
BALANCE, December 31, 2005	57,532		$	5,753,203		Retained Earnings		$	328,369			$	—			$	6,081,572			57,532			$	5,753,203			$	328,369			$	—			$	6,081,572
Issuance of capital stock	9,091			909,092			—				—				909,092			20,395				2,039,531				—				—				2,039,531
Repurchase/redemption of capital stock	(9,132	)		(913,152	)		—				—				(913,152	)		(18,006	)			(1,800,563	)			—				—				(1,800,563	)
Net shares reclassified to mandatorily redeemable capital stock	(15	)		(1,530	)		—				—				(1,530	)		(15	)			(1,530	)			—				—				(1,530	)
Net income	—			—			101,496				—				101,496			—				—				208,791				—				208,791
Cash dividends on capital stock	—			—			(77,522	)			—				(77,522	)		—				—				(159,554	)			—				(159,554	)

BALANCE, March 31, 2006	57,476		$	5,747,613		$	352,343			$	—			$	6,099,956
BALANCE, June 30, 2006																		59,906			$	5,990,641			$	377,606			$	—			$	6,368,247

BALANCE, December 31, 2006	57,718		$	5,771,798		$	406,376			$	(4,537	)		$	6,173,637			57,718			$	5,771,798			$	406,376			$	(4,537	)		$	6,173,637
Issuance of capital stock	9,834			983,423			—				—				983,423			20,815				2,081,617				—				—				2,081,617
Repurchase/redemption of capital stock	(10,395	)		(1,039,593	)		—				—				(1,039,593	)		(19,646	)			(1,964,636	)			—				—				(1,964,636	)
Net shares reclassified to mandatorily redeemable capital stock	(344	)		(34,370	)		—				—				(34,370	)		(459	)			(45,940	)			—				—				(45,940	)
Comprehensive income:
Net income	—			—			95,797				—				95,797			—				—				189,039				—				189,039
Other comprehensive loss:
Benefit Plans:
Benefit plans:
Net loss	—			—			—				260				260			—				—				—				520				520
Net prior service credit	—			—			—				(181	)			(181	)		—				—				—				(362	)			(362	)
Net transition obligation	—			—			—				10				10			—				—				—				20				20

Other comprehensive loss	—			—			—				89				89			—				—				—				178				178

Total comprehensive income	—			—			—				—				95,886			—				—				—				—				189,217
Cash dividends on capital stock	—			—			(83,929	)			—				(83,929	)		—				—				(169,553	)			—				(169,553	)

BALANCE, March 31, 2007	56,813		$	5,681,258		$	418,244			$	(4,448	)		$	6,095,054
BALANCE, June 30, 2007																		58,428			$	5,842,839			$	425,862			$	(4,359	)		$	6,264,342


	Three Months Ended March 31,						Six Months Ended June 30,
	2007			2006			2007			2006
OPERATING ACTIVITIES
Net income	$	95,797		$	101,496		$	189,039		$	208,791
Adjustments to reconcile income to net cash (used in) provided by operating activities:
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization:
Net premiums and discounts on consolidated obligations		5,572			5,692			5,983			24,183
Net premiums and discounts on investments		(771	)		(3,169	)		(1,780	)		(2,482	)
Net premiums and discounts on mortgage loans		(196	)		18			(382	)		(136	)
Concessions on consolidated obligation bonds		7,709			7,359			15,442			14,885
Net deferred loss on interest-rate exchange agreements		70			92			151			181
Premises and equipment		597			586			1,220			1,176
Capitalized software		1,107			838			2,235			1,862
Other		89			—			(7,696	)		(7,602	)
Reversal for credit losses on mortgage loans held for the portfolio		(128	)		(3	)		(89	)		(63	)
Gain due to early extinguishment of debt								(234	)		(259	)
Gain due to change in net fair value adjustment on derivative and hedging activities		(59,068	)		(89,657	)		(168,960	)		(175,868	)
Net change in:
Trading securities		(4,918	)		105,860			72,815			738,086
Accrued interest receivable (excluding derivative accrued interest)		68,506			47,241			56,530			(49,358	)
Other assets		1,337			(252,193	)		1,024			(1,303	)
Affordable Housing Program (AHP) liability and discount on AHP advances		3,937			6,550
Affordable Housing Program (AHP) liability								8,000			13,768
Accrued interest payable (excluding derivative accrued interest)		(236,920	)		(86,358	)		94,861			52,113
Payable to REFCORP		165			1,023			(295	)		6,058
Other liabilities		(1,853	)		435,414			2,481			4,007

Total adjustments		(214,765	)		179,293			81,306			619,248

Net cash (used in) provided by operating activities		(118,968	)		280,789
Net cash provided by operating activities								270,345			828,039

INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits		(273,544	)		(359,215	)		(67,952	)		(582,668	)
Federal funds sold		(644,000	)		1,132,500			(4,935,000	)		(941,500	)
Deposits to other FHLBanks for mortgage loan programs		1,306			(16	)		1,340			1
Premises and equipment		(427	)		(108	)
Software		(710	)		(292	)
Held-to-maturity securities:
Proceeds		704,647			661,472			1,487,022			1,840,611
Purchases		(447,083	)		(790,082	)		(903,662	)		(1,767,655	)
Advances:
Proceeds from principal collected		39,928,319			43,613,427			82,944,729			88,806,175
Made		(39,584,471	)		(40,622,475	)		(85,997,656	)		(90,940,569	)
Mortgage loans held for portfolio:
Proceeds from principal collected		87,172			80,440			191,526			170,925
Purchases		(244,796	)		(74,448	)		(440,495	)		(310,445	)
Capital expenditures:
Purchase of premises and equipment								(884	)		(357	)
Purchase of software								(1,520	)		(743	)

Net cash (used in) provided by investing activities		(473,587	)		3,641,203
Net cash used in investing activities								(7,722,552	)		(3,726,225	)


	Three Months Ended March 31,						Six Months Ended June 30,
	2007			2006			2007			2006
FINANCING ACTIVITIES
Net change in deposits		1,545,379			293,726			1,162,446			(371,117	)
Proceeds from issuance of consolidated obligations:
Discount notes		199,667,034			87,999,713			436,896,387			244,706,209
Bonds		29,063,282			7,548,478			55,961,485			21,241,466
Bonds transferred from other FHLBanks		—			30,343			—			67,518
Payments for debt issuance costs		(3,423	)		(2,878	)		(13,413	)		(12,006	)
Payments for maturing and retiring consolidated obligations:
Discount notes		(197,872,584	)		(90,285,982	)		(437,195,901	)		(241,904,707	)
Bonds		(31,669,650	)		(9,421,721	)		(49,258,776	)		(20,890,706	)
Proceeds from issuance of capital stock		983,423			909,092			2,081,617			2,039,531
Payments for repurchase/redemption of capital stock		(1,039,593	)		(913,152	)		(1,964,636	)		(1,800,563	)
Payments for repurchase/redemption of mandatorily redeemable capital stock		(2,719	)		(5,750	)		(35,134	)		(12,402	)
Cash dividends paid		(87,208	)		(66,739	)		(171,138	)		(144,261	)

Net cash provided by (used in) financing activities		583,941			(3,914,870	)
Net cash provided by financing activities								7,462,937			2,918,962


Net (decrease) increase in cash and cash equivalents		(8,614	)		7,122
Net increase in cash and cash equivalents								10,730			20,776

Cash and cash equivalents at beginning of the period		28,671			13,345			28,671			13,345


Cash and cash equivalents at end of the period	$	20,057		$	20,467		$	39,401		$	34,121


Supplemental disclosures of cash flow information:
Cash paid for:
Interest paid	$	1,833,549		$	1,425,630		$	3,165,975		$	2,739,868
					��
AHP assessments paid, net	$	6,931		$	6,635		$	14,179		$	12,841

REFCORP assessments paid	$	23,784		$	24,354		$	47,555		$	46,146


Noncash items:
Noncash investing and financing activities:
Dividends declared but not paid	$	83,929		$	77,522		$	85,624		$	82,032

Net shares reclassified to mandatorily redeemable capital stock	$	34,370		$	1,530		$	45,940		$	1,530

Held-to-maturity securities acquired with accrued liabilities							$	308,466		$	—

The accompanying unaudited interim financial statements of the Federal Home Loan Bank of Atlanta (the “Bank’”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could be different from these estimates. The foregoing interim financial statements are unaudited; however, in the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods, have been included. The results of operations for interim periods are not necessarily indicative of results to be expected for the year ending December 31, 2007, or for other interim periods. The unaudited interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2006, which are contained in the Bank’s 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2007 (“Form 10-K”).

Descriptions of the significant accounting policies of the Bank are included in Note 1 to the 2006 audited financial statements. There have been no significant changes to these policies as of ~~March 31,~~June 30, 2007.

Certain reclassifications have been made in the prior-year financial statements to conform to current presentation.

Statement of Financial Accounting Standards(“SFAS”) No. 157, Fair Value Measurements(“SFAS 157”) was issued in September 2006. In defining fair value, SFAS 157 retains the exchange price notion in earlier definitions of fair value. However, the definition of fair value under SFAS 157 focuses on the price that would be received to sell an asset or paid to transfer a liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). SFAS 157 applies whenever other accounting pronouncements require or permit assets or liabilities to be measured at fair value. Accordingly, SFAS 157 does not expand the use of fair value in any new circumstances. SFAS 157 also establishes a fair value hierarchy that prioritizes the information used to develop assumptions used to determine the exit price. Under this standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Bank ~~has~~does not ~~yet determined~~expect the ~~effect that the implementation~~adoption of SFAS 157 ~~will~~to have a material effect on its financial condition or results of ~~operations or financial condition.~~operations.

financial assets and financial liabilities, with changes in fair value recognized in earnings as they occur. SFAS 159 requires an entity to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of assets and liabilities measured using another measurement attribute on the face of the statement of financial position. SFAS 159 also requires an entity to provide information that would allow users to understand the effect on earnings of changes in the fair value on those instruments selected for the fair value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted. The Bank does not expect the adoption of SFAS 159 to have a material effect on its financial condition or results of operations.

FASB Staff Position No. FIN 39-1, Amendment of FASB Interpretation No. 39 (“FSP FIN 39-1”), issued in April 2007, permits an entity to offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) arising from derivative instruments recognized at fair value executed with the same counterparty under a master netting arrangement. Under FSP FIN 39-1, the receivable or payable related to cash collateral may not be offset if the amount recognized does not represent or approximate fair value or arises from instruments in a master netting arrangement that are not eligible to be offset. The decision whether to offset such fair value amounts represents an elective accounting policy decision that, once elected, must be applied consistently. An entity should recognize the effects of applying FSP FIN 39-1 as a change in accounting principle through retrospective application for all financial statements presented unless it is impracticable to do so. Upon adoption of FSP FIN 39-1, an entity is permitted to change its accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. FSP FIN 39-1 is effective for fiscal years beginning after November 15, 2007, with earlier application permitted. The Bank has not yet determined the effect that the ~~implementation~~adoption of ~~SFAS 159~~FSP FIN 39-1 will have on its financial condition or results of ~~operations or financial condition.~~operations.

Redemption Terms.The Bank had advances outstanding, as summarized below (in thousands):


	As of March 31, 2007			As of December 31, 2006			As of June 30, 2007			As of December 31, 2006

Year of maturity:

Overdrawn demand deposit accounts	$	38		$	699		$	6,305		$	699

Due in 1 year or less		33,686,786			36,478,661
Due after 1 year through 2 years		15,419,823			18,351,050
Due after 2 years through 3 years		14,012,306			10,350,987
Due after 3 years through 4 years		9,528,600			6,871,301
Due after 4 years through 5 years		7,202,793			6,870,784
Due after 5 years		21,719,944			22,990,520
Due in one year or less								37,220,066			36,478,661
Due after one year through two years								8,635,328			18,351,050
Due after two years through three years								16,109,286			10,350,987
Due after three years through four years								13,096,298			6,871,301
Due after four years through five years								9,136,348			6,870,784
Due after five years								20,760,627			22,990,520

Total par value		101,570,290			101,914,002			104,964,258			101,914,002
Deferred commitment fees		(136	)		—			(612	)		—
Discount on AHP advances		(13,548	)		(13,070	)		(13,239	)		(13,070	)
Discount on EDGE* advances		(12,153	)		(12,761	)		(13,016	)		(12,761	)
SFAS 133** hedging adjustments		(199,676	)		(411,836	)		(755,330	)		(411,836	)

Total	$	101,344,777		$	101,476,335		$	104,182,061		$	101,476,335

The following table summarizes advances by year of original maturity or next conversion date for convertible advances (in thousands):

The Bank has never experienced any credit losses on advances to a member. Based on the collateral pledged as security for advances, management’s credit analysis of members’ financial condition, and prior repayment history, no allowance for losses on advances is deemed necessary by management. No advance was past due as of ~~March 31,~~June 30, 2007 ~~and~~or December 31, 2006.

Interest-rate Payment Terms.The following table details interest-rate payment terms for advances (in thousands):


	As of March 31, 2007		As of December 31, 2006		As of June 30, 2007		As of December 31, 2006
Par value of advances:
Fixed-rate	$	43,735,420	$	42,736,147	$	46,545,877	$	42,736,147
Variable-rate		57,834,870		59,177,855		58,418,381		59,177,855

Total	$	101,570,290	$	101,914,002	$	104,964,258	$	101,914,002


	As of March 31, 2007		As of December 31, 2006		As of June 30, 2007		As of December 31, 2006
Interest-bearing deposits:
Demand and overnight	$	6,029,738	$	4,445,172	$	5,508,511	$	4,445,172
Term deposits of $100,000 or more		8,715		13,215		7,415		13,215
Term deposits less than $100,000		10		10		10		10
Other		101,423		142,359		231,251		142,359

Total	$	6,139,886	$	4,600,756	$	5,747,187	$	4,600,756

The Bank acts as a pass-through correspondent for member institutions required to deposit reserves with the Federal Reserve Banks. The amount of pass-through reserves deposited with Federal Reserve Banks was approximately ~~$26.0~~$35.7 million and $19.7 million as of ~~March 31,~~June 30, 2007 and December 31, 2006, respectively. The Bank includes member reserve balances in “Noninterest-bearing deposits” on the Statements of Condition.

Consolidated obligations, consisting of consolidated obligation bonds and discount notes, are the joint and several obligations of the ~~FHLBanks~~12 Federal Home loan Banks (“FHLBanks”) and are backed only by the financial resources of the 12 FHLBanks. The FHLBanks issue consolidated obligations through the Office of Finance as their agent. In connection with each debt issuance, each FHLBank specifies the amount of debt it wants issued on its behalf. The Office of Finance tracks the amount of debt issued on behalf of each FHLBank. In addition, the Bank separately tracks and records as a liability its specific portion of consolidated obligations for which it is the primary obligor. The Federal Housing Finance Board (“Finance Board”) and the U.S. Secretary of the Treasury have oversight over the issuance of FHLBank debt through the Office of Finance. Consolidated obligation bonds are issued primarily to raise intermediate and long-term funds for the FHLBanks and are not subject to any statutory or regulatory limits on maturity. Consolidated obligation discount notes are issued primarily to raise short-term funds. These notes sell at less than their face amounts and are redeemed at par value when they mature.

Interest-rate Payment Terms.The following table details consolidated obligation bonds by interest-rate payment type (in thousands):


	As of June 30, 2007		As of December 31, 2006
Par value of consolidated bonds:
Fixed-rate	$	108,930,455	$	98,016,465
Step-up		13,571,050		16,337,550
Simple variable-rate		4,411,900		4,801,900
Variable capped floater		1,443,875		1,838,875
Fixed that converts to variable		614,950		1,079,450
Zero-coupon		709,060		832,760
Variable that converts to fixed		80,000		170,000
Inverse floating-rate		24,500		24,500


Total	$	129,785,790	$	123,101,500

Redemption Terms.The following is a summary of the Bank’s participation in consolidated obligation bonds outstanding, by year of original maturity (dollar amounts in thousands):


	As of March 31, 2007		As of December 31, 2006		As of June 30, 2007		As of December 31, 2006
Par value of consolidated bonds:
Noncallable	$	38,422,675	$	39,511,725	$	43,975,215	$	39,511,725
Callable		82,066,025		83,589,775		85,810,575		83,589,775

Total	$	120,488,700	$	123,101,500	$	129,785,790	$	123,101,500

The following table summarizes consolidated obligation bonds outstanding, by year of original maturity or next call date (in thousands):


	As of June 30, 2007
Year of maturity or next call date:
Due in one year or less	$	90,390,980
Due after one year through two years		19,378,840
Due after two years through three years		7,706,075
Due after three years through four years		2,328,645
Due after four years through five years		1,481,000
Due after five years		8,500,250

Total par value	$	129,785,790

Consolidated Obligation Discount Notes.The Bank’s participation in consolidated obligation discount notes, all of which are due within one year, was as follows (in thousands):


	Book Value		Par Value		Book Value		Par Value
As of March 31, 2007	$	6,726,770	$	6,740,340
As of June 30, 2007					$	4,624,283	$	4,645,501

As of December 31, 2006	$	4,934,073	$	4,952,285	$	4,934,073	$	4,952,285

Capital Requirements. The Bank was in compliance with the Finance Board’s regulatory capital rules and requirements as shown in the following table (dollar amounts in thousands):


	As of March 31, 2007						As of December 31, 2006						As of June 30, 2007						As of December 31, 2006
	Required			Actual			Required			Actual			Required			Actual			Required			Actual
Regulatory capital requirements:
Risk based capital	$	792,224		$	6,346,858		$	830,446		$	6,393,879		$	924,635		$	6,495,212		$	830,446		$	6,393,879
Total capital-to-assets ratio		4.00	%		4.49	%		4.00	%		4.54	%		4.00	%		4.38	%		4.00	%		4.54	%
Total regulatory capital	$	5,653,096		$	6,346,858		$	5,630,337		$	6,393,879		$	5,935,935		$	6,495,212		$	5,630,337		$	6,393,879
Leverage ratio		5.00	%		6.74	%		5.00	%		6.81	%		5.00	%		6.57	%		5.00	%		6.81	%
Leverage capital	$	7,066,370		$	9,520,287		$	7,037,922		$	9,590,819		$	7,419,918		$	9,742,818		$	7,037,922		$	9,590,819

Mandatorily Redeemable Capital Stock. The Bank’s activity for mandatorily redeemable capital stock was as follows (in thousands):


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006			2007			2006
Balance, beginning of period	$	215,705		$	143,096		$	247,356		$	138,876		$	215,705		$	143,096
Capital stock subject to mandatory redemption reclassified from equity during the period due to attainment of nonmember status		34,370			1,530			11,570			—			45,940			1,530
Repurchase/redemption of mandatorily redeemable capital stock during the period		(2,719	)		(5,750	)		(32,415	)		(6,652	)		(35,134	)		(12,402	)

Balance, end of period	$	247,356		$	138,876		$	226,511		$	132,224		$	226,511		$	132,224

The following table shows the amount of mandatorily redeemable capital stock by year of redemption (in thousands). The year of redemption in the table is the later of the end of the five-year redemption period, or the maturity date of the activity the stock is related to, if the capital stock represents the activity-based stock purchase requirement of a non-member.

   As of March 31, 2007    As of December 31, 2006
Contractual year of redemption:

Due in 1 year or less
   $ 214,522    $ 187,953
Due after 1 year through 2 years
   3,782    23,573
Due after 2 years through 3 years
   405    360
Due after 3 years through 4 years
   1,706    627
Due after 4 years through 5 years
   2,302    225
Due after 5 years
   24,639    2,967

   $ 247,356    $ 215,705


	As of June 30, 2007		As of December 31, 2006
Contractual year of redemption:
Due in one year or less	$	195,019	$	187,953
Due after one year through two years		5,445		23,573
Due after two years through three years		405		360
Due after three years through four years		1,706		627
Due after four years through five years		2,302		225
Due after five years		21,634		2,967

	$	226,511	$	215,705

Components of the net periodic benefit cost for the Bank’s supplemental defined benefit pension plan ~~and postretirement health benefit plan for the three months ended March 31, 2007 and 2006~~ were as follows (in thousands):


	Supplemental Defined Benefit Pension Plan						Postretirement Health Benefit Plan					Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006		2007			2006			2007			2006
Service cost	$	200		$	129		$	147		$	185	$	200		$	129		$	400		$	258
Interest cost		150			87			133			158		150			87			300			174
Net transition obligation		—			—			10			—
Amortization of prior service (credit) cost		(31	)		(31	)		(150	)		11
Amortization of prior service credit													(31	)		(31	)		(62	)		(62	)
Amortization of net loss		150			72			110			125		150			72			300			144

Net periodic cost	$	469		$	257		$	250		$	479	$	469		$	257		$	938		$	514

Components of the net periodic benefit cost for the Bank’s postretirement health benefit plan were as follows (in thousands):

~~The Bank may enter into interest-rate swaps, swaptions, interest-rate cap~~For accounting policies and ~~floor agreements, calls, puts,~~additional information concerning derivatives and ~~forward contracts (collectively, interest-rate exchange agreements)~~hedging activities, see Note 14 to ~~manage its exposure to changes~~the 2006 audited financial statements included in interest rates. The Bank may use these instruments to adjust the maturity, repricing frequency, or option characteristics of financial instruments to, in effect, achieve risk management objectives. The Bank uses interest-rate exchange agreements in three ways: (1) as a fair value hedge of an underlying financial instrument or a firm commitment, (2) as an intermediary transaction, or (3) as a non-SFAS 133 qualifying hedge for purposes of asset liability management. For example, the Bank uses interest-rate exchange agreements in its overall interest-rate risk management to adjust the interest-rate sensitivity of consolidated obligations to approximate more closely the interest-rate sensitivity of assets (advances, investments and mortgage loans), and/or to adjust the interest-rate sensitivity of advances, investments or mortgage loans to approximate more closely the interest-rate sensitivity of liabilities. In addition to using interest-rate exchange agreements to manage mismatches of interest rates between assets and liabilities, the Bank also uses interest-rate exchange agreements to manage embedded options in assets and liabilities, to hedge the market value of existing assets and liabilities, to hedge the duration risk of prepayable instruments, and to reduce funding costs.

Consistent with Finance Board regulation, the Bank enters into derivatives only to reduce the interest rate risk exposures inherent in otherwise unhedged assets and funding positions, to achieve the Bank’s

risk management objectives, and to act as an intermediary between its members and counterparties. Bank management uses derivatives when they are considered to be the most cost-effective alternative to achieve the Bank’s ~~financial and risk management objectives. Accordingly, the Bank may enter into derivatives that do not necessarily qualify for hedge accounting (non-SFAS 133 qualifying hedges).~~

A non-SFAS 133 qualifying hedge is defined as an interest-rate exchange agreement, hedging specific or non-specific underlying assets, liabilities or firm commitments that is an acceptable hedging strategy under the Bank’s risk management program and Finance Board regulatory requirements, but does not qualify for hedge accounting under the rules of SFAS 133. This type of hedge by definition introduces the potential for earnings variability because only the change in fair value on the interest-rate exchange agreement(s) is recorded and is not offset by corresponding changes in the fair value of the hedged asset, liability, or firm commitment.Form 10-K.

Net ~~(loss)~~ gain on derivatives and hedging activities was as follows (in thousands):

The following table represents outstanding notional balances and estimated fair values of the derivatives outstanding used for fair value and ~~non-SFAS~~SFAS 133 ~~qualifying~~non-qualifying hedging (in thousands):


	As of March 31, 2007					As of December 31, 2006					As of June 30, 2007					As of December 31, 2006
	Notional		Estimated Fair Value			Notional		Estimated Fair Value			Notional		Estimated Fair Value			Notional		Estimated Fair Value
Interest-rate swaps:
Fair value	$	166,027,244	$	(227,793	)	$	164,868,741	$	(245,987	)	$	182,809,410	$	(115,890	)	$	164,868,741	$	(245,987	)
Non-SFAS 133 qualifying		7,333,064		(142,821	)		7,447,836		(130,852	)
SFAS 133 non-qualifying												6,880,167		(52,508	)		7,447,836		(130,852	)
Interest-rate swaptions:
Non-SFAS 133 qualifying		115,000		6,454			345,000		7,227
SFAS 133 non-qualifying												115,000		3,493			345,000		7,227
Interest-rate caps/floors:
Non-SFAS 133 qualifying		2,954,000		6,898			3,039,000		7,045
SFAS 133 non-qualifying												2,954,000		2,359			3,039,000		7,045
Interest-rate futures/forwards:
Non-SFAS 133 qualifying		1,500		38			1,500		51
SFAS 133 non-qualifying												1,500		(20	)		1,500		51
Mortgage delivery commitments:
Non-SFAS 133 qualifying		8,938		(19	)		5,312		(15	)
SFAS 133 non-qualifying												5,236		—			5,312		(15	)

Total	$	176,439,746	$	(357,243	)	$	175,707,389	$	(362,531	)	$	192,765,313	$	(162,566	)	$	175,707,389	$	(362,531	)

Total derivatives excluding accrued interest			$	(357,243	)			$	(362,531	)			$	(162,566	)			$	(362,531	)
Accrued interest				110,309					51,572					152,262					51,572

Net derivative balances			$	(246,934	)			$	(310,959	)			$	(10,304	)			$	(310,959	)

Net derivative asset balances			$	220,723				$	259,024				$	338,767				$	259,024
Net derivative liability balances				(467,657	)				(569,983	)				(349,071	)				(569,983	)

Net derivative balances			$	(246,934	)			$	(310,959	)			$	(10,304	)			$	(310,959	)

The fair values of bifurcated derivatives presented on a combined basis with the host contract and not included in the above table are as follows (in thousands):


	As of March 31, 2007			As of December 31, 2006			As of June 30, 2007			As of December 31, 2006
Host contract:
Advances	$	(999	)	$	(2,405	)	$	(2,131	)	$	(2,405	)
Callable bonds		1,334			1,635			1,211			1,635

Total	$	335		$	(770	)	$	(920	)	$	(770	)

The Bank is subject to credit risk due to the risk of nonperformance by counterparties to the derivative agreements. The amount of counterparty risk on derivative agreements depends on the extent to which master netting arrangements are included in such contracts to mitigate the risk. The Bank manages counterparty credit risk through credit analysis, collateral requirements and adherence to the requirements set forth in Bank policy and Finance Board regulations. Based on credit analyses and collateral requirements, Bank management presently does not anticipate any credit losses on its derivative agreements.

The contractual or notional amount of interest-rate exchange agreements reflects the involvement of the Bank in the various classes of financial instruments. The notional amount of interest-rate exchange agreements does not measure the credit risk exposure of the Bank, and the maximum credit exposure of the Bank is substantially less than the notional amount. The Bank requires collateral agreements that establish collateral delivery thresholds for all derivatives. The maximum credit risk is the estimated cost of replacing favorable interest rate swaps, forward agreements, mandatory delivery contracts for mortgage loans, and purchased caps and floors that have a net positive market value, if the counterparty defaults and the related collateral, if any, is of no value to the Bank. This collateral has not been sold or repledged.

As of ~~March 31,~~June 30, 2007 and December 31, 2006, the Bank’s maximum credit risk, as defined above, was approximately ~~$220.7~~$338.8 million and $259.0 million, respectively. These totals include ~~$108.9~~$126.4 million and $100.6 million, respectively, of net accrued interest receivable. In determining maximum credit risk, the Bank considers accrued interest receivables and payables, and the legal right to offset assets and liabilities by counterparty. Cash and securities held and pledged to the Bank as collateral for interest-rate exchange agreements totaled ~~$169.4~~$275.1 million and $212.0 million as of ~~March 31,~~June 30, 2007 and December 31, 2006, respectively. Additionally, collateral with respect to interest-rate exchange agreements with member institutions includes collateral assigned to the Bank, as evidenced by a written security agreement and held by the member institution for the benefit of the Bank.

As described in Note 5, consolidated obligations are backed only by the financial resources of the 12 FHLBanks. The Finance Board, under 12 CFR Section 966.9(d), may at any time require any FHLBank to make principal or interest payments due on any consolidated obligations, whether or not the primary obligor FHLBank has defaulted on the payment of that obligation. No FHLBank has had to assume or pay the consolidated obligation of another FHLBank.

The par value of the FHLBanks’ outstanding consolidated obligations for which the Bank is jointly and severally liable was approximately ~~$824.2~~$836.5 billion and $823.9 billion at ~~March 31,~~June 30, 2007 and December 31, 2006, respectively, exclusive of the Bank’s own outstanding consolidated obligations.

~~Outstanding~~The Bank’s outstanding standby letters of credit were as follows:


	As of March 31, 2007		As of December 31, 2006		As of June 30, 2007		As of December 31, 2006
Outstanding notional (in thousands)	$	1,659,635	$	1,437,718	$	1,798,445	$	1,437,718
Original terms		1-15 years		1-15 years		1-15 years		1-15 years
Final expiration year		2018		2017		2018		2017

Unearned fees for transactions prior to 2003 as well as the value of the guarantees related to standby letters of credit entered into after 2002 are recorded in other liabilities and amount to $5.4 million and $5.1 million as of ~~March 31,~~June 30, 2007 and December 31, 2006, respectively. Based on management’s credit analyses and collateral requirements, the Bank does not deem it necessary to record any additional liability on these commitments.

Commitments that unconditionally obligate the Bank to purchase closed mortgage loans totaled ~~$8.9~~$5.2 million and $5.3 million at ~~March 31,~~June 30, 2007 and December 31, 2006, respectively, and are generally for periods not to exceed 45 days.

The Bank executes interest-rate exchange agreements with major banks and broker-dealers and generally enters into bilateral collateral agreements. As of ~~March 31,~~June 30, 2007 the Bank had pledged, as collateral to broker-dealers who have market risk exposure from the Bank related to interest-rate exchange agreements, securities with a carrying value of $727.6 million, which includes securities with a carrying value of $58.8 million that were received as collateral from broker-dealers who have market risk exposure to the Bank, which cannot be sold or repledged and ~~thus are not identified on the Statements of Condition, and $668.8 million of which can be sold or repledged. As of~~ December 31, 2006, the Bank had pledged, as collateral to broker-dealers who have market risk exposure from the Bank related to interest-rate exchange agreements, securities with a carrying value of $130.2 million and $238.4 million, respectively, which ~~includes securities with a carrying value~~can be sold or repledged. As of ~~$73.6 million that were~~June 30, 2007 and December 31, 2006, the Bank received, as collateral from broker-dealers who have market risk exposure to the Bank related to interest-rate exchange agreements, securities with a carrying value of $24.6 million and $73.6 million, respectively, which cannot ~~be sold or repledged and, thus are not identified on the Statements of Condition, and $164.8 million of which can~~ be sold or repledged.

The Bank is subject to legal proceedings arising in the normal course of business. After consultation with legal counsel, management does not, as of the date of the financial statements, anticipate that the ultimate liability, if any, arising out of these matters will have a material effect on the Bank’s financial condition or results of operations.

Note 10—Transactions with Members and their Affiliates and with Housing Associates

The Bank is a cooperative whose member institutions own almost all of the capital stock of the Bank. Former members own the remaining capital stock to support business transactions still carried on the Bank’s Statements of Condition. All holders of the Bank’s capital stock are able to receive dividends on their investments, to the extent declared by the Bank’s board of directors. All advances are issued to members and eligible “housing associates” under the Federal Home Loan Bank Act of 1932, as

amended (“FHLBank Act”), and mortgage loans held for portfolio are purchased from members. The Bank also maintains demand deposit accounts primarily to facilitate settlement activities that are related directly to advances and mortgage loan purchases. All transactions with members are entered into in the ordinary course of the Bank’s business. Transactions with any member that has an officer

or director who also is a director of the Bank are subject to the same Bank policies as transactions with other members.

The Bank defines related parties as each of the other FHLBanks and those members with regulatory capital stock outstanding in excess of 10 percent of total regulatory capital stock. Based on this definition, one member institution, which held ~~20.6~~21.8 percent of the Bank’s total regulatory capital stock as of ~~March 31,~~June 30, 2007, was considered a related party. Total advances outstanding to this member were ~~$26.5~~$28.8 billion and $28.2 billion as of ~~March 31,~~June 30, 2007 and December 31, 2006, respectively. Total deposits held in the name of this member were ~~$48.9~~$73.9 million and $50.8 million as of ~~March 31,~~June 30, 2007 and December 31, 2006, respectively. No mortgage loans were acquired from this member during the ~~three~~six months ended ~~March 31,~~June 30, 2007 and 2006. Total mortgage-backed securities acquired from this member were ~~$323.9~~$123.3 million and ~~$74.8~~$447.2 million, ~~during~~respectively, for the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007, compared to $344.0 million and ~~2006, respectively.~~$419.6 million for the same periods ended June 30, 2006.

Some of the statements made in this quarterly report on Form 10-Q may be “forward-looking statements,” which include statements with respect to the plans, objectives, expectations, estimates and future performance of the Bank and involve known and unknown risks, uncertainties, and other factors, many of which may be beyond the Bank’s control and which may cause the Bank’s actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. The reader can identify these forward-looking statements through the Bank’s use of words such as “may,” “will,” “anticipate,” “hope,” “project,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “could,” “intend,” “seek,” “target,” and other similar words and expressions of the future. Such forward-looking statements include statements regarding any one or more of the following topics:

The forward-looking statements may not be realized due to a variety of factors, including, without limitation, those risk factors provided under Item 1A of the Bank’s Form 10-K and those risk factors presented under Item 1A in Part II of this quarterly report on Form 10-Q.

All written or oral statements that are made by or are attributable to the Bank are expressly qualified in their entirety by this cautionary notice. The reader should not place undue reliance on forward-looking

statements, since the statements speak only as of the date that they are made. The Bank has no obligation and does not undertake publicly to update, revise, or correct any of the forward-looking statements after the date of this quarterly report, or after the respective dates on which these statements otherwise are made, whether as a result of new information, future events, or otherwise.

The discussion presented below provides an analysis of the Bank’s results of operations and financial condition for the ~~three months~~three- and six-months ended ~~March 31,~~June 30, 2007 and 2006. Management’s discussion and analysis should be read in conjunction with the financial statements and accompanying notes presented elsewhere in the report, as well as the Bank’s audited financial statements for the year ended December 31, 2006.

The Bank is a cooperative whose primary business activity is providing loans, which the Bank refers to as “advances,” to its members and eligible housing associates. The Bank also purchases single-family mortgage loans from members, makes grants and subsidized advances under its Affordable Housing Program (“AHP”), and provides correspondent banking services to members and eligible nonmembers. The consolidated obligations issued by the Office of Finance on behalf of the Federal Home Loan Bank System are the principal funding source for Bank assets. The Bank is primarily liable for repayment of consolidated obligations issued on its behalf and is jointly and severally liable for the consolidated obligations issued on behalf of the other FHLBanks. Deposits, other borrowings, and the issuance of capital stock provide additional funding to the Bank.

As of ~~March 31,~~June 30, 2007, total assets were ~~$141.3~~$148.4 billion, an increase of ~~$569.0 million,~~$7.6 billion, or ~~0.40~~5.43 percent, from December 31, 2006, primarily as a result of an increase in ~~interest-bearing deposits and~~ federal funds ~~sold.~~sold and advances. Advances, the largest asset on the Bank’s balance sheet, ~~decreased~~increased by ~~$131.6 million,~~$2.7 billion, or ~~0.13~~2.67 percent, during this same period.

As of ~~March 31,~~June 30, 2007, total liabilities were ~~$135.2~~$142.1 billion, an increase of ~~$647.6 million,~~$7.5 billion, or ~~0.48~~5.61 percent, from December 31, 2006, primarily as a result of an increase in ~~deposits.~~consolidated obligation bonds. Consolidated obligations, the largest liability on the Bank’s balance sheet, ~~decreased~~increased by ~~$589.3 million,~~$6.2 billion, or ~~0.46~~4.87 percent, during this same period. ~~The decrease in consolidated~~Consolidated obligations increased during the first ~~three~~six months of 2007 ~~was~~primarily due ~~primarily~~ to the ~~maturity and retirement of consolidated obligations and a reduction in funding required~~Bank’s need to increase its liquidity level to fund the increased demand for ~~new~~ advances by the Bank’s members during ~~this same~~the period.

As of ~~March 31,~~June 30, 2007, total capital was ~~$6.1~~$6.3 billion, ~~a decrease~~an increase of ~~$78.6~~$90.7 million, or ~~1.27~~1.47 percent, from December 31, 2006. The Bank increased its retained earnings during the second quarter of 2007 by $7.6 million. The Bank’s retained earnings balance was $425.9 million as of June 30, 2007. The Bank continues to meet capital-to-assets regulatory ratios and liquidity requirements at levels well above regulatory minimums.

The Bank views return on equity (“ROE”) as the most important measure of profitability with net income as a second priority. ROE is a measure of a shareholder’s return on its investment in the Bank. While under the Bank’s current business model, net income fluctuates with interest rates, ~~(in general,~~

~~net income will decline in lower interest rate cycles and increase in higher interest rate cycles),~~ maintaining a minimum amount of net income is important to meet higher operating costs and to ensure that volatility associated with derivative accounting under ~~SFAS 133~~GAAP can be absorbed with current income. In addition, AHP and Resolution Funding Corporation (“REFCORP”) assessments are tied directly to

net income. The Bank attempts to provide a return on this investment, which, when combined with providing members with access to low-cost funding, will be competitive with comparable investments.

The Bank’s net income for the three months ended ~~March 31,~~June 30, 2007 totaled ~~$95.8~~$93.2 million, a decrease of ~~5.61~~13.1 percent from ~~$101.5~~$107.3 million for the three months ended ~~March 31,~~June 30, 2006. The ~~first~~second quarter 2007 performance resulted in an annualized ROE of ~~6.25~~6.05 percent, compared to ~~6.74~~6.85 percent for the ~~first~~second quarter 2006, and an annualized return on average assets of 0.26 percent for the second quarter 2007, compared to 0.31 percent for the second quarter 2006.

For the six months ended June 30, 2007, net income totaled $189.0 million, a decrease of 9.46 percent from $208.8 million for the six months ended June 30, 2006. The Bank’s annualized ROE was 6.15 percent for the six months ended June 30, 2007 as compared to 6.80 percent for the six months ended June 30, 2006, and the Bank’s annualized return on average assets was 0.27 percent for the ~~first quarter~~six months ended June 30, 2007, compared to 0.30 percent for the ~~first quarter~~six months ended June 30, 2006.

The decrease in ROE for the three- and six-month periods ended June 30, 2007 compared to the same periods ended June 30, 2006 was due primarily to a decrease in net income during the reported periods. Another factor that affects ROE is the Bank’s average capital, which has not changed significantly during the reported periods. For the three- and six-month periods ended June 30, 2007 the Bank’s average capital was $6.2 billion, a decrease of 1.54 percent and 0.12 percent, respectively, compared to the same periods ended June 30, 2006.

The decrease in net income for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 2007 compared to the same ~~period~~periods ended ~~March 31,~~June 30, 2006 was due to a decrease in both net interest income and other income. The decrease in net interest income was due primarily to ~~the continuing effects of both the flat to inverted yield curve and~~ the fact that interest expense on interest-bearing liabilities increased faster than interest income on interest-earning assets. The decrease in other income was due primarily to the effect of the interaction of interest rates on the Bank’s trading securities and ~~derivative~~derivatives and hedging activities. These decreases were offset partially by a decrease in non-interest expense during the periods.

For the ~~three months~~quarter ended ~~March 31,~~June 30, 2007, the Bank distributed ~~$83.9~~$85.6 million of earnings to members as a return on their capital investment in the Bank, representing an annualized dividend rate of ~~5.90~~6.00 percent ~~unchanged from~~for the second quarter, as compared to the annualized dividend rate of 5.90 percent for each of the quarter ended December 31, 2006. The Bank also contributed $11.9 million to retained earnings during the first quarter of 2007. The Bank’s retained earnings balance was $418.2 million as of March 31, 2007.previous two quarters.

Management expects that the Bank will continue to provide attractive financial products across a wide range of business, financial, and economic environments while also generating competitive returns for members. One factor, however, could affect the Bank’s ability to meet these expectations.

The Bank’s earnings performance tends to follow the direction of market interest rates. The Bank generally maintains a positive duration of equity, which means that liabilities reprice more frequently than assets. Consequently, increases in interest income lag increases in interest expense when rates ~~rise, which decreases the Bank’s earnings.~~rise. However, because the Bank’s duration of equity is relatively short (typically one to three years), this unfavorable factor is short-lived and soon is offset by repricing assets at higher interest rates. The opposite occurs as rates fall.

In addition, the relationship between short- and long-term interest rates affects the Bank’s profitability. The two most unfavorable interest-rate scenarios are (1) a dramatic rise in short-term rates coupled with a modest or no increase in long-term rates and (2) a dramatic decrease in long-term rates coupled with little change in short-term rates. Under the first scenario ~~which is the current interest rate environment with the present inverted yield curve,~~ the ability to generate additional returns by managing the interest-rate risk associated with retaining longer term assets and funding with

shorter liabilities is limited. This environment, if sustained for a long period of time, could reduce the Bank’s ability to generate competitive returns. The second scenario would be expected to result in significant mortgage prepayments and a related increase in expense recognized from mortgage premium amortization along with lower investment yields.

Management does not expect any significant changes in the overall components of the balance sheet through 2007, with modest growth in the Bank’s advance and Mortgage Purchase Program (“MPP”) portfolios. These modest increases should not have a material effect on the Bank’s risk position.

Management expects to continue to use interest-rate derivatives to hedge the Bank’s mortgage-backed securities (“MBS”) and mortgage ~~portfolio.~~portfolios. These derivatives assist in mitigating interest-rate and prepayment risk. However, to the extent that they do not qualify for hedge accounting treatment under ~~SFAS 133,~~GAAP, their use could result in earnings volatility. Management also uses derivative instruments to hedge other macro-level risks that do not qualify for hedge accounting treatment under ~~SFAS 133.~~GAAP. However, management seeks to contain the magnitude of mark-to-market adjustments by limiting the use of derivative instruments to hedge macro-level risks. Alternatively, management uses cash market liabilities that are not subject to mark-to-market requirements.

Management strives to maintain relatively low operating ~~expense ratios,~~expenses, consistent with a wholesale banking structure, without sacrificing adequate systems and staffing. Management expects that operating expenses as a percent of assets generally should remain stable over the next few years, and that operating expenses on an absolute basis should increase moderately due to increased staffing and system expenses. These increases should not have a material adverse effect on the Bank’s financial performance.

The Bank’s principal assets consist of advances, short- and long-term investments, and mortgage loans held for portfolio. The Bank obtains funding to support ~~Bank~~its business primarily through the issuance by the Office of Finance on the Bank’s behalf of debt securities in the form of consolidated obligations.

The following table presents the distribution of the Bank’s total assets, liabilities, and capital by major class as of the dates indicated (dollar amounts in thousands). These items are discussed in more detail below:


	As of March 31, 2007					As of December 31, 2006					Increase/(Decrease)					As of June 30, 2007			As of December 31, 2006			Increase/(Decrease)
	Amount			Percent of Total		Amount			Percent of Total		Amount			Percent		Amount		Percent of Total	Amount		Percent of Total	Amount			Percent
Advances, net	$	101,344,777		71.71		$	101,476,335		72.10		$	(131,558	)	(0.13	)	$	104,182,061	70.21	$	101,476,335	72.10	$	2,705,726		2.67
Investments		23,593,146		16.69			23,845,020		16.94			(251,874	)	(1.06	)
Long-term investments																	23,499,090	15.84		23,845,020	16.94		(345,930	)	(1.45	)
Federal funds sold		11,176,000		7.91			10,532,000		7.48			644,000		6.11			15,467,000	10.42		10,532,000	7.48		4,935,000		46.86
Mortgage loans, net		3,161,425		2.24			3,003,399		2.13			158,026		5.26			3,252,625	2.19		3,003,399	2.13		249,226		8.30
Interest-bearing deposits		1,073,220		0.76			800,982		0.57			272,238		33.99			867,594	0.58		800,982	0.57		66,612		8.32
Other assets		978,830		0.69			1,100,695		0.78			(121,865	)	(11.07	)		1,129,996	0.76		1,100,695	0.78		29,301		2.66

Total assets	$	141,327,398		100.00		$	140,758,431		100.00		$	568,967		0.40		$	148,398,366	100.00	$	140,758,431	100.00	$	7,639,935		5.43

Consolidated obligation bonds	$	119,685,625		88.51		$	122,067,636		90.70		$	(2,382,011	)	(1.95	)
Consolidated obligation discount notes		6,726,770		4.97			4,934,073		3.67			1,792,697		36.33
Consolidated obligations, net:
Bonds																$	128,562,835	90.45	$	122,067,636	90.70	$	6,495,199		5.32
Discount notes																	4,624,283	3.25		4,934,073	3.67		(309,790	)	(6.28	)
Deposits		6,165,847		4.56			4,620,468		3.43			1,545,379		33.45			5,782,914	4.07		4,620,468	3.43		1,162,446		25.16
Other liabilities		2,654,102		1.96			2,962,617		2.20			(308,515	)	(10.41	)		3,163,992	2.23		2,962,617	2.20		201,375		6.80

Total liabilities	$	135,232,344		100.00		$	134,584,794		100.00		$	647,550		0.48		$	142,134,024	100.00	$	134,584,794	100.00	$	7,549,230		5.61

Capital stock	$	5,681,258		93.21		$	5,771,798		93.49		$	(90,540	)	(1.57	)	$	5,842,839	93.27	$	5,771,798	93.49	$	71,041		1.23
Retained earnings		418,244		6.86			406,376		6.58			11,868		2.92			425,862	6.80		406,376	6.58		19,486		4.80
Accumulated other comprehensive loss		(4,448	)	(0.07	)		(4,537	)	(0.07	)		89		—
Accumulated other comphrensive loss																	(4,359)	(0.07)		(4,537)	(0.07)		178		(3.92)

Total capital	$	6,095,054		100.00		$	6,173,637		100.00		$	(78,583	)	(1.27	)	$	6,264,342	100.00	$	6,173,637	100.00	$	90,705		1.47

Advances were ~~$101.3~~$104.2 billion at ~~March 31,~~June 30, 2007, ~~a decrease~~an increase of ~~$131.6 million,~~$2.7 billion, or ~~0.13~~2.67 percent, from December 31, 2006. The ~~decrease~~increase in advances ~~during the first three months of 2007~~ was due primarily to a $3.8 billion increase in fixed-rate advances that was offset partially by a $759.5 million decrease in variable-rate advances. Fixed-rate advances increased as members increased their borrowing during the ~~flat~~second quarter of 2007 in response to ~~inverted yield curve, member institutions’ relatively high liquidity levels, and competition from other wholesale funding sources, such as providers of brokered certificates of deposits.~~their own balance sheet demands. At ~~March 31,~~June 30, 2007, ~~56.9~~55.7 percent of the Bank’s advances were variable-rate, the majority of which were indexed primarily to ~~LIBOR.~~the London Interbank Offered Rate (“LIBOR”). The Bank also offers variable-rate advances tied to the federal funds ~~rate,~~rate; prime rate and ~~constant~~CMS (constant maturity ~~swap~~swap) rates.

The Bank is subject to concentration risk from advance exposure to a relatively small number of commercial banks and savings institutions. As of ~~March 31,~~June 30, 2007 and December 31, 2006, the concentration of the Bank’s advances was ~~$64.5~~$67.3 billion and $64.7 billion, respectively, to 10 member institutions, and this concentration represented 64.1 percent and 63.5 percent, respectively, of the Bank’s total advances ~~outstanding for each respective period end.~~outstanding. Management believes that the Bank holds sufficient collateral, on a member-specific basis, to secure the advances to these 10 institutions, and the Bank does not expect to incur any credit losses on these advances.

The Bank maintains a portfolio of investments for liquidity purposes, to provide for the availability of funds to meet member credit needs and to provide additional earnings. Investment income also enhances the Bank’s capacity to meet its commitment to affordable housing and community investment, to cover operating expenses, and to satisfy the Bank’s annual REFCORP and AHP assessments. ~~The Bank’s purchase of~~In addition, by purchasing MBS, ~~also helps~~the Bank further ~~the Bank’s~~supports its commitment to ~~supporting the~~ affordable ~~housing market.~~housing.

The Bank’s short-term investments consist of overnight and term federal funds, and interest-bearing deposits. The Bank’s long-term investments consist of MBS issued by government-sponsored mortgage agencies or that carry the highest rating from Moody’s or S&P, securities issued by the U.S. government or U.S. government agencies, and consolidated obligations issued by other FHLBanks. The long-term investment portfolio generally provides the Bank with higher returns than those available in the short-term money markets. The following table sets forth more detailed information regarding ~~short-term~~short- and long-term investments held by the Bank (dollar amounts in thousands):

As of ~~March 31,~~June 30, 2007, total short-term investments were ~~$12.2~~$16.3 billion, an increase of ~~$916.2 million~~$5.0 billion from December 31, 2006. This increase was due primarily to ~~the~~an increase in member deposits with the Bank, as the Bank typically invests deposit funds in liquid short-term ~~assets.~~assets, and higher liquidity levels at quarter-end. The Bank’s interest-bearing deposits consist of Certificates of Deposits, deposits held as collateral for interest-rate exchange agreements, and deposits with other FHLBanks. ~~The increase in the Bank’s federal funds sold balance as of March 31, 2007 was due primarily to higher member deposits and higher liquidity levels.~~

As of ~~March 31,~~June 30, 2007, total long-term investments were ~~$23.6~~$23.5 billion, a decrease of ~~$251.9~~$345.9 million from December 31, 2006. This decrease was due primarily to paydowns on the Bank’s MBS portfolio.

The Finance Board limits an FHLBank’s investment in MBS and asset-backed securities by requiring that the total book value of MBS owned by the FHLBank may not exceed 300 percent of the FHLBank’s previous month-end regulatory capital on the day it purchases the securities. On ~~March 31,~~June 30, 2007, these investments amounted to ~~298.66~~292 percent of the Bank’s total regulatory capital.

Held-to-maturity securities are evaluated for impairment on a quarterly basis, or more frequently if events or changes in circumstances indicate that these investments are impaired. The Bank would record an impairment charge when a held-to-maturity security has experienced an other-than-temporary decline in fair value, or its cost may not be recoverable. The Bank reviewed its held-to-maturity securities as of ~~March 31,~~June 30, 2007 and has determined that all unrealized losses were temporary and related to increases in interest rates. Additionally, the Bank has the ability and the intent to hold such investments to maturity, at which time the unrealized losses will be recovered.

Mortgage loans purchased from participating financial institutions under the MPP and Mortgage Partnership Finance^® Program (“MPF^® Program”) and loan participations purchased under the Affordable Multifamily Participation Program (“AMPP”) comprised ~~2.24~~2.19 percent of the Bank’s total assets as of ~~March 31,~~June 30, 2007, compared to 2.13 percent as of December 31, 2006. The mortgage loan balance at ~~March 31,~~June 30, 2007 was ~~$3.2~~$3.3 billion, representing an increase of ~~$158.0~~$249.2 million, or ~~5.26~~8.30 percent, from the 2006 year-end balance. In 2006, the Bank ceased purchasing assets under AMPP but retains its existing portfolio, which eventually will be reduced to zero in accordance with the ordinary course of the maturities of the assets. Currently, the Bank plans for slow, modest growth in its mortgage loan portfolio with a strategic emphasis on MPP over the MPF Program. The Bank believes it will be able to fund these additional mortgage purchases through the issuance of bullet and callable consolidated obligations.

As of ~~March 31,~~June 30, 2007 and December 31, 2006, the Bank’s mortgage loan portfolio was concentrated in the Southeast because those members selling loans to the Bank were located primarily in the Southeast.

The Bank funds its assets primarily through the issuance of consolidated obligation bonds and, to a lesser extent, consolidated obligation discount notes. Consolidated obligation issuances financed ~~89.4~~89.7 percent of the ~~$141.3~~$148.4 billion in total assets at ~~March 31,~~June 30, 2007, a slight decrease from the financing ratio of 90.2 percent as of December 31, 2006.

As of ~~March 31,~~June 30, 2007, the Bank had outstanding consolidated bonds totaling ~~$119.7~~$128.6 billion, compared to $122.1 billion as of December 31, 2006. Consolidated obligation bonds outstanding at ~~March 31,~~June 30, 2007 and December 31, 2006 were primarily fixed-rate debt. However, the Bank often enters into interest-rate exchange agreements simultaneously with the issuance of consolidated obligation bonds to convert, in effect, the investor-defined terms of these debt instruments into terms more consistent with management’s funding strategies. Of the par value of ~~$120.5~~$129.8 billion of consolidated obligation bonds outstanding as of ~~March 31,~~June 30, 2007, ~~the aggregate notional amount of outstanding interest-rate~~

~~exchange agreements used to reconfigure the terms of specific consolidated obligation bonds was $94.3~~$106.4 billion, or ~~78.3~~82.0 percent, had their terms reconfigured through the use of ~~the total par value of consolidated obligation bonds.~~interest rate exchange agreements. The comparable notional amount of such outstanding interest-rate exchange agreements at December 31, 2006 was $99.2 billion, or 80.6 percent, of the total par value of consolidated obligation bonds.

As of ~~March 31,~~June 30, 2007, the Bank had outstanding consolidated discount notes totaling ~~$6.7~~$4.6 billion, compared to $4.9 billion as of December 31, 2006. The ~~decrease~~increase in consolidated obligation bonds and ~~increase~~decrease in discount notes from December 31, 2006 to ~~March 31,~~June 30, 2007 ~~was~~were due primarily to the Bank’s increased ~~use~~used of ~~overnight~~bonds over discount notes ~~and decreased use of bonds~~ due to slightly more attractive pricing and ~~the Bank’s overall~~a more stable funding ~~needs.~~

The funding mix between the use of non-callable and callable consolidated obligation bonds has been relatively stable. As of March 31, 2007, callable consolidated obligation bonds constituted 68.1 percent of the total par value of consolidated obligation bonds outstanding, compared to 67.9 percent at December 31, 2006. The interest-rate exchange agreements that the Bank may employ to hedge against the interest-rate risk associated with the Bank’s consolidated obligation bonds generally are callable by the counterparty. The Bank generally would call the hedged consolidated obligation bond if the call feature of the interest-rate exchange agreements was exercised. These call features could require the Bank to refinance a substantial portion of outstanding liabilities during times of decreasing interest rates. Call options on unhedged callable consolidated obligation bonds generally are exercised when the bond can be replaced at a lower economic cost.source.

The Bank offers demand and overnight deposits and a short-term deposit program to members primarily as a liquidity management service. In addition, a member that services mortgage loans may deposit in the Bank funds collected in connection with the mortgage loans, pending disbursement of those funds to the owners of the mortgage loan. For demand deposits, the Bank pays interest at the overnight rate. The rate paid on term deposits is dependent upon the term of the deposit.

Most of these deposits represent member liquidity investments, which members may withdraw on demand. Therefore, the total account balance of the Bank’s deposits may be quite volatile. As a matter of prudence, the Bank typically invests deposit funds in liquid short-term assets. Member loan demand, deposit flows, and liquidity management strategies influence the amount and volatility of deposit balances carried with the Bank. Deposits totaled ~~$6.2~~$5.8 billion as of ~~March 31,~~June 30, 2007, compared to $4.6 billion as of December 31, 2006. Demand deposits comprised the largest percentage of deposits, representing ~~97.8~~95.3 percent of total deposits as of ~~March 31,~~June 30, 2007 compared to 96.2 percent as of December 31, 2006.

To support its member deposits, the FHLBank Act requires the Bank to have as a reserve an amount equal to or greater than the current deposits received from its members. These reserves are required to be invested in obligations of the United States, deposits in eligible banks or trust companies, or advances with maturities not exceeding five years. The Bank was in compliance with this depository liquidity requirement as of ~~March 31,~~June 30, 2007.

~~Accrued interest payable and derivative liabilities represent 61.0 percent and 66.1 percent of other liabilities as of March 31, 2007 and December 31, 2006, respectively.~~ The ~~$308.5~~$201.4 million, or ~~10.4~~6.80 percent, ~~decrease~~increase in other liabilities to ~~$2.7~~$3.2 billion at ~~March 31,~~June 30, 2007 from the 2006 year-end balance iswas due primarily to a $308.5 million payable related to securities purchased but not yet delivered and a $94.9 million increase in accrued interest payable due primarily to an increase in consolidated obligation bonds. These increases were offset partially by a $220.9 million

decrease in derivative liabilities due primarily to the interaction of interest rates on the associated ~~derivatives resulting in a $102.3 million decrease in derivative liabilities and a $236.9 million decrease in accrued interest payable.~~derivatives.

As of ~~March 31,~~June 30, 2007, the Bank had total capital of ~~$6.1~~$6.3 billion, ~~a decrease~~an increase of ~~$78.6~~$90.7 million, or ~~1.27~~1.47 percent, from the 2006 year-end balance. ~~Decreased~~Increased advance balances that resulted in ~~decreased~~increased equity balances for members were the primary factors causing the ~~decrease~~increase in the Bank’s total capital.

The FHLBank Act and Finance Board regulations specify that each FHLBank must meet certain minimum regulatory capital standards. Finance Board staff has indicated that mandatorily redeemable capital stock is considered capital for regulatory purposes, and the Bank’s $226.5 million and $215.7 million in mandatorily redeemable capital stock at June 30, 2007 and December 31, 2006, respectively, is included in the line item “total regulatory capital” in the table below.

The Bank was in compliance with the Finance Board’s regulatory capital rules and requirements as shown in the following table (dollar amounts in thousands):


	As of March 31, 2007						As of December 31, 2006						As of June 30, 2007						As of December 31, 2006
	Required			Actual			Required			Actual			Required			Actual			Required			Actual
Regulatory capital requirements:
Risk based capital	$	792,224		$	6,346,858		$	830,446		$	6,393,879		$	924,635		$	6,495,212		$	830,446		$	6,393,879
Total capital-to-assets ratio		4.00	%		4.49	%		4.00	%		4.54	%		4.00	%		4.38	%		4.00	%		4.54	%
Total regulatory capital	$	5,653,096		$	6,346,858		$	5,630,337		$	6,393,879		$	5,935,935		$	6,495,212		$	5,630,337		$	6,393,879
Leverage ratio		5.00	%		6.74	%		5.00	%		6.81	%		5.00	%		6.57	%		5.00	%		6.81	%
Leverage capital	$	7,066,370		$	9,520,287		$	7,037,922		$	9,590,819		$	7,419,918		$	9,742,818		$	7,037,922		$	9,590,819

As of ~~March 31,~~June 30, 2007, the Bank had ~~$247.4~~$226.5 million in capital stock subject to mandatory redemption from 1011 members and former members, consisting of B1 membership stock and B2 activity-based stock. The Bank is not required to redeem or repurchase such stock until the expiration of the five-year redemption period or, with respect to activity-based stock, until the later of the expiration of the ~~five year~~five-year redemption period or ~~until~~ the activity no longer remains outstanding. In accordance with the Bank’s current practice, if activity-based stock becomes excess stock as a result of an activity no longer remaining outstanding, the Bank will repurchase the excess activity-based stock if the dollar amount of excess stock exceeds the threshold specified by the Bank, which is currently $100 thousand. As of ~~March 31,~~June 30, 2007 and December 31, 2006, the Bank’s activity-based stock included ~~$21.2~~$13.0 million and $52.6 million, respectively, of excess shares subject to repurchase by the Bank at its discretion. The Bank’s excess stock threshold and standard repurchase practice may be changed at the Bank’s discretion with proper notice to members.

The following table sets forth the Bank’s significant income items for the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007 and 2006 and provides information regarding the changes during the periods (dollar amounts in thousands):

Net income decreased during the three- and six-month periods ended June 30, 2007 compared to the same periods ended June 30, 2006, primarily as a result of a decrease in other income due to the effects of SFAS 133 and SFAS No. 115,Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”). The decrease in net income also was due to a decrease in net interest income, which resulted from a decrease in the Bank’s interest rate ~~spread.~~spread, which is discussed in more detail below.

The primary source of the Bank’s earnings is net interest income. Net interest income equals interest earned on assets (including member advances, mortgage loans, MBS held in portfolio, and other investments), less the interest expense incurred on consolidated obligations, deposits, and other borrowings. Also included in net interest income are miscellaneous related items such as prepayment fees earned and the amortization of debt issuance discounts, concession fees and SFAS 133-related adjustments.

Net interest income for the periods presented was affected by changes in average balances (volume change) and changes in average rates (rate change) of interest-earnings assets and interest-bearing liabilities.

The following ~~table presents~~tables present spreads between the average yield on total interest-earning assets and the average cost of interest-bearing liabilities during the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007, compared to the same ~~period~~periods ended ~~March 31,~~June 30, 2006 (dollar amounts in thousands). As noted in the below ~~table,~~tables, during the three- and six-month periods ended June 30, 2007 compared to the same periods ended June 30, 2006, interest rate spread decreased by ~~three~~four basis points. Two basis points ~~during~~of the ~~three months ended March 31, 2007, compared to the same period ended March 31, 2006. This~~ decrease is due ~~primarily~~to the removal of less interest expense associated with derivatives in SFAS 133 non-qualifying hedging relationships on long-term securities. The remainder of the decrease is due to the fact that the Bank’s liabilities (representing interest expense) have re-priced faster than the Bank’s

assets (representing interest income) in the rising interest rate environment, thus reducing the Bank’s interest rate spread.


	Three Months Ended March 31,														Three Months Ended June 30,
	2007							2006							2007							2006
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Assets

Federal funds sold	$	9,694,240		$	127,829	5.35	%	$	8,999,200		$	100,472	4.53	%	$	13,645,896		$	181,943	5.35	%	$	9,939,811		$	123,836	5.00	%
Interest-bearing deposits		704,374			9,418	5.42	%		482,697			5,495	4.62	%		1,115,569			14,991	5.39	%		790,936			9,985	5.06	%
Long-term investments (1)		23,466,004			297,757	5.15	%		24,542,538			304,923	5.04	%		23,174,357			295,113	5.11	%		24,146,240			301,117	5.00	%
Advances		102,196,440			1,369,167	5.43	%		100,210,756			1,133,563	4.59	%		102,150,880			1,381,695	5.43	%		100,277,720			1,269,942	5.08	%
Mortgage loans held for portfolio (2)		3,065,886			40,264	5.33	%		2,858,209			36,130	5.13	%		3,202,841			42,222	5.29	%		2,912,609			37,300	5.14	%
Loans to other FHLBanks		222			3	5.48	%		1,667			19	4.62	%		—			—	0.00	%		879			11	5.02	%

Total earning assets		139,127,166			1,844,438	5.38	%		137,095,067			1,580,602	4.68	%
Total interest-earning assets																143,289,543			1,915,964	5.36	%		138,068,195			1,742,191	5.06	%

Allowance for credit losses on mortgage loans		(771	)						(550	)						(647	)						(525	)
Other assets		2,572,858							2,091,137							2,672,727							2,323,666

Total assets	$	141,699,253						$	139,185,654						$	145,961,623						$	140,391,336


Liabilities and Capital

Demand and overnight deposits	$	4,416,353			57,000	5.23	%	$	4,375,739			47,618	4.41	%	$	5,283,186			69,041	5.24	%	$	4,237,017			51,354	4.86	%
Term deposits		11,867			154	5.26	%		31,015			336	4.39	%		7,881			103	5.24	%		31,115			380	4.91	%
Other interest-bearing deposits		142,175			1,867	5.33	%		130,725			1,467	4.55	%		185,459			2,463	5.33	%		257,969			3,208	4.99	%
Short-term borrowings		5,886,860			76,072	5.24	%		6,206,776			67,242	4.39	%		6,115,154			79,085	5.19	%		9,162,230			112,010	4.90	%
Long-term debt		120,971,753			1,541,693	5.17	%		118,318,004			1,295,200	4.44	%		124,009,963			1,597,036	5.17	%		116,571,435			1,400,968	4.82	%
Other borrowings		718,796			9,307	5.25	%		642,762			7,025	4.43	%		738,154			9,747	5.30	%		641,428			7,677	4.80	%

Total interest-bearing liabilities		132,147,804			1,686,093	5.17	%		129,705,021			1,418,888	4.44	%		136,339,797			1,757,475	5.17	%		130,901,194			1,575,597	4.83	%

Noninterest-bearing		23,994							32,685
Noninterest-bearing deposits																31,320							35,400
Other liabilities		3,307,309							3,341,086							3,406,494							3,173,710
Total capital		6,220,146							6,106,862							6,184,012							6,281,032

Total liabilities and capital	$	141,699,253						$	139,185,654						$	145,961,623						$	140,391,336

Net interest income and net yield on interest-earning assets				$	158,345	0.46	%				$	161,714	0.48	%				$	158,489	0.44	%				$	166,594	0.48	%

Interest rate spread ~~(3)~~						0.21	%						0.24	%						0.19	%						0.23	%

Average interest-earning assets to interest-bearing liabilities						105.28	%						105.70	%						105.10	%						105.48	%

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected the Bank’s interest income and interest expense (in thousands). As noted in the ~~table,~~tables, the overall change in net interest income during the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007, compared to the same ~~period~~periods ended ~~March 31,~~June 30, 2006 iswere due primarily to increases in interest rates.


									Three Months Ended June 30,									Six Months Ended June 30,
	Three Months Ended March 31, 2007 vs. 2006								2007 vs. 2006									2007 vs. 2006
	Volume			Rate		Increase (Decrease)			Volume			Rate			Increase (Decrease)			Volume			Rate			Increase (Decrease)
Increase (decrease) in interest income:
Federal funds sold	$	8,180		$	19,177	$	27,357		$	48,900		$	9,207		$	58,107		$	56,450		$	29,014		$	85,464
Interest-bearing deposits		2,843			1,080		3,923			4,327			679			5,006			7,192			1,737			8,929
Long-term investments		(13,567	)		6,401		(7,166	)		(12,288	)		6,284			(6,004	)		(25,851	)		12,681			(13,170	)
Advances		22,864			212,740		235,604			24,070			87,683			111,753			47,023			300,334			347,357
Mortgage loans held for portfolio		2,692			1,442		4,134			3,801			1,121			4,922			6,496			2,560			9,056
Loans to other FHLBanks		(19	)		3		(16	)		(5	)		(6	)		(11	)		(31	)		4			(27	)

Total		22,993			240,843		263,836			68,805			104,968			173,773			91,279			346,330			437,609

Increase (decrease) in interest expense:
Demand and overnight deposits		446			8,936		9,382			13,433			4,254			17,687			13,360			13,709			27,069
Term deposits		(239	)		57		(182	)		(301	)		24			(277	)		(542	)		83			(459	)
Other interest-bearing deposits		136			264		400			(951	)		206			(745	)		(784	)		439			(345	)
Short-term borrowings		(3,607	)		12,437		8,830			(39,087	)		6,162			(32,925	)		(42,283	)		18,188			(24,095	)
Long-term debt		29,623			216,870		246,493			92,413			103,655			196,068			119,801			322,760			442,561
Other borrowings		891			1,391		2,282			1,229			841			2,070			2,116			2,236			4,352

Total		27,250			239,955		267,205			66,736			115,142			181,878			91,668			357,415			449,083

(Decrease) increase in net interest income	$	(4,257	)	$	888	$	(3,369	)
Increase (decrease) in net interest income									$	2,069		$	(10,174	)	$	(8,105	)	$	(389	)	$	(11,085	)	$	(11,474	)

The following table presents the components of other (loss) income ~~(loss)~~ (in thousands):


	Three Months Ended June 30,						Increase (Decrease)			Six Months Ended June 30,						Increase (Decrease)
	2007			2006			Increase (Decrease)			2007			2006			Increase (Decrease)
Other (loss) income:
Service fees	$	656		$	569		$	87		$	1,330		$	1,176		$	154
Net loss on trading securities		(77,733	)		(74,052	)		(3,681	)		(72,815	)		(179,912	)		107,097
Net gain on derivatives and hedging activities		72,240			77,300			(5,060	)		62,918			183,421			(120,503	)
Other		478			307			171			579			442			137

Total other (loss) income	$	(4,359	)	$	4,124		$	(8,483	)	$	(7,988	)	$	5,127		$	(13,115	)

The Bank’s net ~~gain (loss)~~loss on trading securities and net ~~(loss)~~ gain on derivatives and hedging activities comprise the majority of other ~~income~~ (loss). income. The Bank hedges trading securities with derivative transactions, and the income effect of the market-value change for these securities under SFAS 115 during the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007 and 2006 was offset by market-value changes in the related derivatives. The overall changes in other (loss) income ~~(loss)~~ during the periods were caused primarily by the adjustments required to report trading securities at fair value, as required by ~~SFAS 115,~~ GAAP,

and hedging-related adjustments, ~~required by SFAS 133,~~ which are reported in the overall hedging activities (including those related to trading securities). The net ~~gain~~loss on trading securities for the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007 was due to ~~falling~~rising interest rates in the ~~portion~~portions of the yield curve pertaining to the maturities of these securities.

The following table details each of the components of net ~~(loss)~~ gain on derivatives and hedging activities, for the ~~three months~~three- and six-month periods ended ~~March 31,~~June 30, 2007 and 2006 (in thousands). When hedging, both the derivative instrument and the related asset or liability are marked to market and net ~~(loss)~~ gain on derivatives and hedging activities reflects the degree of ineffectiveness in the hedging activity, which can be ~~either~~ favorable or unfavorable to net income at any particular point. Net ~~(loss)~~ gain on derivatives and hedging activities also includes the interest component for hedging activity not qualifying for hedge accounting treatment under ~~SFAS 133.~~GAAP.


	Advances		Purchased Options, Macro Hedging and Synthetic Macro Funding			Trading Securities			MPF/MPP Loans			Consolidated Obligations		Intermediary Positions			Total
Six Months Ended June 30, 2006

Interest-related	$	—	$	(1,978	)	$	(25,308	)	$	—		$	—	$	54		$	(27,232	)
SFAS 133 qualifying fair-value hedges		15,626		—			—			—			7,102		—			22,728
SFAS 133 non-qualifying hedges and other		—		6,695			181,660			(295	)		—		(135	)		187,925

Total gain (loss)	$	15,626	$	4,717		$	156,352		$	(295	)	$	7,102	$	(81	)	$	183,421

Management generally uses derivative instruments to hedge net interest income, with a primary goal of stabilizing the interest-rate spread over time and mitigating interest-rate risk and cash-flow variability.

If a hedging activity qualifies for hedge accounting treatment under SFAS 133, the Bank includes the related interest income or interest expense of the hedge instrument in the relevant income statement caption consistent with the hedged asset or liability. In addition, the Bank reports as a component of other income the fair values of both the hedge instrument and the hedged item. If the hedging relationship is discontinued, the Bank will cease marking the hedged item to fair value and will begin to amortize the cumulative fair-value adjustment that has occurred as a part of the hedge as interest income or interest expense over the life of the hedged asset or liability.

If a hedging relationship does not qualify for hedge accounting treatment under SFAS 133, the Bank reports the hedge instrument’s components of interest income or interest expense, together with the effect of the fair valuation, as components of other income. However, there is no corresponding fair value adjustment for the hedged asset or liability.

In summary, SFAS 133 requires the Bank to record all derivatives at fair value and to recognize unrealized gains or losses on derivative positions, regardless of whether offsetting gains or losses applicable to the underlying hedged assets or liabilities may be recognized in a symmetrical manner. Therefore, SFAS 133 introduces the potential for the income statement to reflect considerable timing differences between the current market valuation of the hedge instruments and the delayed effect from related hedged assets or liabilities (which often are reflected as components of interest income or interest expense over time). Furthermore, the effect of certain hedging transactions using derivatives is spread throughout the income statement into captions other than net interest income.

The Bank’s hedging strategy for trading securities is to swap them into variable-rate instruments. Securities characterized as trading securities on the balance sheet are reported at fair value under SFAS 115. Management hedges the Bank’s exposure to fair-value fluctuations, but the hedging activity does not qualify for hedge accounting treatment under SFAS 133. Because the hedge is intended to mirror the trading security, the interest component of the hedging instrument is reported in other income and offsets partially the amount of interest income earned on the trading securities. One side of the derivative will mirror the interest received on the trading security with interest paid on the swap while the other side of the derivative will provide the interest received on the derivative (which is a variable rate representing LIBOR plus a spread). Net interest income includes the interest earned on these securities, which was $66.3 million and $76.1 million for the three months ended March 31, 2007 and 2006, respectively. Changes in the fair value of these securities are reported as a separate component of other income.

The table below outlines the overall effect of hedging activities on net interest income and other (loss) income related results (in thousands). For a description regarding the individual interest components discussed below, see the Bank’s Form 10-K.

   Three Months Ended March 31,
   2007 2006
Net interest income
   $ 158,345 $ 161,714

Interest components of hedging activities included in net interest income:

Hedging advances
   $ 159,231 $ 86,046
Hedging consolidated obligations
   (119,767 ) (141,115 )
Hedging related amortization
   (6,515 ) (16,076 )

Net increase (decrease) in net interest income
   $ 32,949 $ (71,145 )

Interest components of derivative activity included in other income:

Purchased options
   $ 329 $ 1,451
Synthetic macro funding
   (2,364 ) (2,647 )
Trading securities
   (4,789 ) (15,936 )
Other
   26 27

Net decrease in other income
   $ (6,798 ) $ (17,105 )


	Three Months Ended March 31,							Three Months Ended June 30,				Increase (Decrease)			Six Months Ended June 30,				Increase (Decrease)
	2007		2006		Increase (Decrease)			2007		2006		Increase (Decrease)			2007		2006		Increase (Decrease)
Other expense:
Salaries and employee benefits	$	14,210	$	13,378	$	832		$	15,784	$	13,537	$	2,247		$	29,994	$	27,394	$	2,600
Occupancy cost		807		838		(31	)		847		922		(75	)		1,654		1,760		(106	)
Other operating expenses		6,050		6,909		(859	)		7,352		7,246		106			13,402		13,676		(274	)

Total operating expenses		21,067		21,125		(58	)		23,983		21,705		2,278			45,050		42,830		2,220

Finance Board and Office of Finance		2,265		2,027		238			2,025		1,880		145			4,290		3,907		383
Other		768		1,202		(434	)		774		941		(167	)		1,542		2,143		(601	)

Total other expense		24,100		24,354		(254	)		26,782		24,526		2,256			50,882		48,880		2,002


Assessments:
Affordable Housing Program		10,998		11,492		(494	)		10,756		12,131		(1,375	)		21,754		23,623		(1,869	)
REFCORP		23,949		25,378		(1,429	)		23,311		26,826		(3,515	)		47,260		52,204		(4,944	)

Total assessments		34,947		36,870		(1,923	)		34,067		38,957		(4,890	)		69,014		75,827		(6,813	)

Total non-interest expense	$	59,047	$	61,224	$	(2,177	)	$	60,849	$	63,483	$	(2,634	)	$	119,896	$	124,707	$	(4,811	)

Non-interest expense during the three- and six-month periods ended June 30, 2007 decreased ~~3.56~~4.15 percent ~~for the three months ended March 31, 2007~~and 3.86 percent, respectively, compared to the same ~~period~~periods ended ~~March 31,~~June 30, 2006. ~~This decrease was~~These decreases were due primarily to decreased AHP and REFCORP assessments. The REFCORP assessment is established as a fixed percent of net income, and the AHP assessment is established as a fixed percent of regulatory net income (which is the Bank’s net income before interest expense related to mandatorily redeemable capital stock under SFAS 150).

Liquidity is necessary to satisfy members’ borrowing needs on a timely basis, repay maturing and called consolidated obligations (“COs”), and meet other obligations and operating requirements. Many members rely on the Bank as a source of standby liquidity, and the Bank attempts to be in a position to meet member funding needs on a timely basis.

The Bank attempts to maintain sufficient liquidity to service debt obligations for at least 90 days, assuming restricted debt market access. In addition, Finance Board regulations and Bank policy require the Bank to maintain contingent liquidity in an amount sufficient to meet its liquidity needs for five business days if it is unable to access the capital markets. The Bank was in compliance with these requirements at ~~March 31,~~June 30, 2007.

The Bank’s principal source of liquidity is CO debt instruments. COs enjoy ~~GSE~~government-sponsored enterprise status and are rated Aaa/P-1 by Moody’s and AAA/A-1+ by S&P. To provide liquidity, the Bank also may use other short-term borrowings, such as federal funds purchased, securities sold under agreements to repurchase, and loans from other FHLBanks. These funding sources depend on the Bank’s ability to access the capital markets at competitive market rates. Although the Bank maintains secured and unsecured lines of credit with money market counterparties, the Bank’s income and

liquidity would be affected adversely if it were not able to access the capital markets at competitive rates for a long period. Historically, the FHLBanks have had excellent capital market access.

Contingency plans are in place that prioritize the allocation of liquidity resources in the event of operational disruptions at the Bank or the Office of Finance, as well as systemic Federal Reserve wire transfer system disruptions. Additionally, the FHLBank Act authorizes the Secretary of Treasury, at his or her discretion, to purchase COs up to an aggregate principal amount of $4 billion. No borrowings under this authority have been outstanding since 1977.

Should an FHLBank be unable to satisfy its payment obligation under a ~~consolidated obligation~~CO for which it is the primary obligor, any of the other FHLBanks, including the Bank, could be called upon to repay all or any part of such payment obligation, as determined or approved by the Finance Board. The Bank considers the joint and several liability as a related party guarantee. These related party guarantees meet the scope exceptions in Financial Interpretation Number 45,Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. Accordingly, the Bank has not recognized a liability for its joint and several obligations related to other FHLBanks’ consolidated obligations at ~~March 31,~~June 30, 2007 or December 31, 2006. As of ~~March 31,~~June 30, 2007, the FHLBanks had ~~$951.4~~$970.9 billion in aggregate par value of consolidated obligations issued and outstanding, ~~$127.2~~$134.4 billion of which was attributable to the Bank.

As of ~~March 31,~~June 30, 2007, the Bank had outstanding standby letters of credit of approximately ~~$1.7~~$1.8 billion with original terms of one to 15 years, with the longest final expiration ~~currently~~ in 2018. Commitments to extend credit, including standby letters of credit, are agreements to lend. The Bank issues a standby letter of credit on behalf of a member in exchange for a fee. A member may use these standby letters of credit to facilitate a financing arrangement. If the Bank is required to make payment for a beneficiary’s draw, the Bank converts such paid amount to a collateralized advance to the member. The Bank requires its borrowers to collateralize fully the face amount of any letter of credit issued by the Bank, as if such face amount were an advance to the borrower. Based on management’s credit analyses and collateral requirements, the Bank presently does not deem it necessary to have an allowance for these unfunded letters of credit.

There has not been a material change in the Bank’s contractual obligations reported in the Bank’s Form 10-K.

A discussion of the Bank’s risk management is described in detail in the Bank’s Form 10-K. Management does not expect that the problems in the residential loan market involving subprime loans will affect the Bank’s financial condition or results of operation. The Bank believes that it has minimal exposure to subprime loans due to its business model and its credit risk policies pertaining to advances, investments, and mortgage loan programs.

The Bank’s critical accounting policies and estimates are described in detail in the Bank’s Form 10-K. There have been no material changes to these policies and estimates during the period reported.

SFAS No. 157, Fair Value Measurements(“SFAS 157”), was issued in September 2006. In defining fair value, SFAS 157 retains the exchange price notion in earlier definitions of fair value. However, the definition of fair value under SFAS 157 focuses on the price that would be received to sell an asset or paid to transfer a liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). SFAS 157 applies whenever other accounting pronouncements require or permit assets or liabilities to be measured at fair value. Accordingly, SFAS 157 does not expand the use of fair value in any new circumstances. SFAS 157 also establishes a fair value hierarchy that prioritizes the information used to develop assumptions used to determine the exit price. Under this standard, fair value measurements would be disclosed separately by level within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Bank ~~has~~does not ~~yet determined~~expect the ~~effect that the implementation~~adoption of SFAS 157 ~~will~~to have a material effect on its financial condition or results of ~~operations or financial condition.~~operations.

SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115(“SFAS 159”), issued in February 2007, creates a fair value option allowing an entity irrevocably to ~~irrevocably~~ elect fair value as the initial and subsequent measurement attribute for certain financial assets and financial liabilities, with changes in fair value recognized in earnings as they occur. SFAS 159 requires an entity to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of assets and liabilities measured using another measurement attribute on the face of the statement of financial

position. SFAS 159 also requires an entity to provide information that would allow users to understand the effect on earnings of changes in the fair value on those instruments selected for the fair value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted. The Bank does not expect the adoption of SFAS 159 to have a material effect on its financial condition or results of operations.

or payable related to cash collateral may not be offset if the amount recognized does not represent or approximate fair value or arises from instruments in a master netting arrangement that are not eligible to be offset. The decision whether to offset such fair value amounts represents an elective accounting policy decision that, once elected, must be applied consistently. An entity should recognize the effects of applying FSP FIN 39-1 as a change in accounting principle through retrospective application for all financial statements presented unless it is impracticable to do so. Upon adoption of FSP FIN 39-1, an entity is permitted to change its accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. FSP FIN 39-1 is effective for fiscal years beginning after November 15, 2007, with earlier application permitted. The Bank has not yet determined the effect that the ~~implementation~~adoption of ~~SFAS 159~~FSP FIN 39-1 will have on its financial condition or results of ~~operations or financial condition.~~operations.

Changes in interest rates and spreads can have a direct effect on the value of the Bank’s assets and liabilities. As a result of the volume of interest-earning assets and interest-bearing liabilities held by the Bank, the most significant component of market risk to the Bank is interest-rate risk. A description of the Bank’s management of interest-rate risk is contained in the Bank’s Form 10-K.

The Bank uses derivative financial instruments, such as interest-rate swaps, swaptions, interest-rate cap and floor agreements, call, puts and forward contracts to mange its exposure to changes in interest rates. This enables the Bank to adjust the effective maturity, repricing frequency, or option characteristics of financial instruments to achieve, in effect, risk management objectives.

The following table summarizes the fair-value amounts of derivative financial instruments, excluding accrued interest, by product type (in thousands). ~~In addition to interest-rate exchange agreements,~~The categories “Fair value” represent hedge strategies for which hedge accounting is achieved. The category “SFAS 133 non-qualifying” represents hedge strategies for which the derivatives are not in designated hedge relationships that formally meet the hedge accounting requirements under GAAP. The table also includes mandatory delivery commitments for purchased loans under both the MPF Program and MPP, which are accounted for as derivatives in accordance with ~~SFAS 133.~~


		As of March 31, 2007					As of December 31, 2006						As of June 30, 2007					As of December 31, 2006
		Total Notional		Estimated Fair Value Gain /(Loss) (excludes accrued interest)			Total Notional		Estimated Fair Value Gain /(Loss) (excludes accrued interest)				Total Notional		Estimated Fair Value Gain /(Loss) (excludes accrued interest)			Total Notional		Estimated Fair Value Gain /(Loss) (excludes accrued interest)
Advances:
Fair value		$	72,453,631	$	175,054		$	66,304,379	$	384,970			$	76,578,797	$	724,962		$	66,304,379	$	384,970
Non-SFAS 133 qualifying			1,140,400		957			1,236,900		2,366
Fair value-firm commitments														450,000		3,220			—		—
SFAS 133 non-qualifying														931,150		2,089			1,236,900		2,366

Total			73,594,031		176,011			67,541,279		387,336				77,959,947		730,271			67,541,279		387,336

Investments:
Non-SFAS 133 qualifying			8,018,337		(128,002	)		8,461,216		(115,875	)
SFAS 133 non-qualifying														7,975,413		(46,149	)		8,461,216		(115,875	)

Total			8,018,337		(128,002	)		8,461,216		(115,875	)			7,975,413		(46,149	)		8,461,216		(115,875	)

MPF/MPP loans:
Stand alone delivery commitments			8,938		(19	)		5,312		(15	)			5,236		—			5,312		(15	)

Total			8,938		(19	)		5,312		(15	)			5,236		—			5,312		(15	)

Consolidated obligations bonds:
Fair Value			93,573,612		(402,846	)		98,564,362		(630,957	)
Non-SFAS 133 qualifying			739,500		(2,564	)		629,500		(3,230	)
Fair value														105,780,613		(844,072	)		98,564,362		(630,957	)
SFAS 133 non-qualifying														589,500		(2,709	)		629,500		(3,230	)

Total			94,313,112		(405,410	)		99,193,862		(634,187	)			106,370,113		(846,781	)		99,193,862		(634,187	)

Intermediary positions:
Intermediaries			505,328		177			505,720		210				454,604		93			505,720		210

Total			505,328		177			505,720		210				454,604		93			505,720		210


Total notional and fair value		$	176,439,746	$	(357,243	)	$	175,707,389	$	(362,531	)		$	192,765,313	$	(162,566	)	$	175,707,389	$	(362,531	)

Total derivatives excluding accrued interest	Total derivatives excluding accrued interest			$	(357,243	)			$	(362,531	)	Total derivatives excluding accrued interest			$	(162,566	)			$	(362,531	)
Accrued interest					110,309					51,572						152,262					51,572

Net derivative balance				$	(246,934	)			$	(310,959	)				$	(10,304	)			$	(310,959	)


Net derivative assets balance				$	220,723				$	259,024					$	338,767				$	259,024
Net derivative liabilities balance					(467,657	)				(569,983	)					(349,071	)				(569,983	)

Net derivative balance				$	(246,934	)			$	(310,959	)				$	(10,304	)			$	(310,959	)

Bank policy requires the Bank to maintain its duration of equity within a range of +60 months to – 60 months, assuming current interest rates, and within a range of +84 months to – 84 months, assuming an instantaneous parallel increase or decrease in market interest rates of 200 basis points. The table below reflects the Bank’s duration exposure measurements as calculated in accordance with Bank policy.


	As of March 31, 2007				As of December 31, 2006				As of June 30, 2007			As of December 31, 2006
	Up 200 Basis Points	Current	Down 200 Basis Points		Up 200 Basis Points	Current	Down 200 Basis Points		Up 200 Basis Points	Current	Down 200 Basis Points	Up 200 Basis Points	Current	Down 200 Basis Points
Assets	6.6	6.6	4.7		6.7	6.8	5.0		6.3	6.5	4.8	6.7	6.8	5.0
Liabilities	5.9	6.2	5.2		5.9	6.0	5.2		5.3	5.6	4.7	5.9	6.0	5.2
Equity	24.6	14.6	(5.0	)	26.6	24.1	(0.5	)	30.0	28.7	7.2	26.6	24.1	(0.5	)
Duration gap	0.7	0.4	(0.5	)	0.8	0.8	(0.2	)	1.0	0.9	0.1	0.8	0.8	(0.2	)

As shown in the table above, as of ~~March 31,~~June 30, 2007 and December 31, 2006, the Bank’s base case duration gap was ~~0.4~~0.9 months and 0.8 months, with a duration of equity of ~~14.6~~28.7 months and 24.1 months, respectively. These measures were ~~lower~~higher at ~~March 31,~~June 30, 2007 due to slightly ~~lower short-~~higher medium- and ~~medium-term~~long-term interest rates.

Management has determined that it would be prudent to consider interest-rate movements of a lesser magnitude than +/-200 basis point shifts. The table below shows duration exposure to increases and decreases in interest rates in 50 basis-point increments as of ~~March 31,~~June 30, 2007.


	As of March 31, 2007								As of June 30, 2007
	Up 150 Basis Points	Up 100 Basis Points	Up 50 Basis Points	Current	Down 50 Basis Points	Down 100 Basis Points	Down 150 Basis Points		Up 150 Basis Points	Up 100 Basis Points	Up 50 Basis Points	Current	Down 50 Basis Points	Down 100 Basis Points	Down 150 Basis Points
Assets	6.7	6.8	6.8	6.6	6.2	5.7	5.1		6.4	6.5	6.5	6.5	6.4	5.9	5.4
Liabilities	5.9	6.0	6.0	6.2	5.8	5.4	5.2		5.4	5.5	5.4	5.6	5.6	5.2	4.9
Equity	25.0	24.6	24.0	14.6	14.9	11.4	1.5		29.7	30.3	32.1	28.7	24.2	23.4	16.4
Duration gap	0.8	0.8	0.8	0.4	0.4	0.3	(0.1	)	1.0	1.0	1.1	0.9	0.8	0.7	0.5

Another way the Bank analyzes its interest-rate risk and market exposure is by evaluating the theoretical market value of equity. The market value of equity represents the net result of the present value of future cash flows discounted to arrive at the theoretical market value of each balance sheet item. By using the discounted present value of future cash flows, the Bank is able to factor in the various maturities of assets and liabilities, similar to the duration analysis discussed above. The difference between the market value of total assets and the market value of total liabilities is the market value of equity. A more volatile market value of equity under different shock scenarios tends to result in a higher duration of equity, indicating increased sensitivity to interest rate changes. As shown in the table below, the Bank’s base case market value of equity was approximately ~~$6.0 billion and~~ $6.1 billion as of ~~March 31,~~June 30, 2007 and December 31, ~~2006, respectively.~~2006.


	As of March 31, 2007						As of December 31, 2006						As of June 30, 2007						As of December 31, 2006
	Up 200 Basis Points		Current		Down 200 Basis Points		Up 200 Basis Points		Current		Down 200 Basis Points		Up 200 Basis Points		Current		Down 200 Basis Points		Up 200 Basis Points		Current		Down 200 Basis Points
Assets	$	140,636	$	142,219	$	143,560	$	140,380	$	141,989	$	143,389	$	148,270	$	149,868	$	151,336	$	140,380	$	141,989	$	143,389
Liabilities		134,846		136,201		137,463		134,496		135,848		137,126		142,457		143,751		145,007		134,496		135,848		137,126
Equity		5,790		6,018		6,097		5,884		6,141		6,263		5,813		6,117		6,329		5,884		6,141		6,263

The Bank’s ~~Interim~~ President and Chief Executive Officer and ~~Interim~~the Bank’s Chief Financial Officer (the “Certifying Officers”) are responsible for establishing and maintaining a system of disclosure controls and procedures designed to ensure that information required to be disclosed by the Bank in the reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. The Bank’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Bank in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Bank’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the Bank’s disclosure controls and procedures, the Bank’s Certifying Officers recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of ~~March 31,~~June 30, 2007, the Bank’s Certifying Officers have evaluated the effectiveness of the design and operation of the Bank’s disclosure controls and procedures. Based on that evaluation, they have concluded that the Bank’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Bank in the reports that it files or submits under the Exchange Act (1) is accumulated and communicated to the Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure; and (2) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

~~For~~During the ~~first~~second quarter of 2007, there were no changes in the Bank’s internal control over financial reporting that have affected materially, or are reasonably likely to affect materially, the Bank’s internal control over financial reporting.

The Bank may be subject to various legal proceedings arising in the normal course of business. After consultation with legal counsel, management is not aware of any such proceedings that might result in the Bank’s ultimate liability in an amount that will have a material effect on the Bank’s financial condition or results of operations.

For discussion of the Bank’s risk factors, see “Item 1A. Risk Factors” in the Bank’s Form 10-K. There have been no material changes from those risk factors previously disclosed in the Bank’s Form 10-K.

~~None.~~On August 9, 2007, the Bank appointed Steven J. Goldstein, 56, as Executive Vice President and Chief Financial Officer. Mr. Goldstein had served as the Bank’s Interim Chief Financial Officer since April 23, 2007.

The Bank will pay an annual fee of $380,000 for Mr. Goldstein’s services. In addition, the Bank, in its discretion, also may pay an annual incentive fee in an amount up to the maximum annual incentive compensation award opportunity available to an executive vice president of the Bank under the Bank’s Executive Incentive Compensation Plan in connection with the provision of Mr. Goldstein’s services to the Bank.

A description of Mr. Goldstein’s business experience is contained in the Current Report on Form 8-K that the Bank filed on April 23, 2007 in connection with his appointment as Interim Chief Financial Officer.

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.


Federally chartered corporation		56-6000442
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1475 Peachtree Street, NE, Atlanta, Ga.		30309
(Address of principal executive offices)		(Zip Code)


PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Statements Of Condition	1
	Statements Of Income	2
	Statements Of Capital	3
	Statements Of Cash Flows	4
	Notes To Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3334
Item 4.	Controls and Procedures	3637
Item 4T.	Controls and Procedures	37
PART II. OTHER INFORMATION		3738
Item 1.	Legal Proceedings	3738
Item 1A.	Risk Factors	3738
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3738
Item 3.	Defaults Upon Senior Securities	3738
Item 4.	Submission of Matters to a Vote of Security Holders	3738
Item 5.	Other Information	3738
Item 6.	Exhibits	3739
SIGNATURES		3839


	As of March 31, 2007					As of December 31, 2006
	Amount			Weighted Average Interest Rate		Amount			Weighted Average Interest Rate
Year of Maturity:
Due in 1 year or less	$	35,581,215		4.37	%	$	38,957,115		4.25	%
Due after 1 year through 2 years		37,319,465		4.77	%		37,843,965		4.66	%
Due after 2 years through 3 years		16,792,025		4.84	%		13,362,175		4.56	%
Due after 3 years through 4 years		6,811,895		4.75	%		8,758,745		4.61	%
Due after 4 years through 5 years		5,319,450		4.91	%		5,359,100		4.82	%
Due after 5 years		18,664,650		4.94	%		18,820,400		4.88	%

Total par value		120,488,700		4.69	%		123,101,500		4.56	%
Premiums		22,811					24,997
Discounts		(420,712	)				(429,583	)
SFAS 133 hedging adjustments		(403,871	)				(627,904	)
Deferred net losses on terminated interest-rate exchange agreements		(1,303	)				(1,374	)

Total	$	119,685,625				$	122,067,636


	As of June 30, 2007					As of December 31, 2006
	Amount			Weighted Average Interest Rate		Amount			Weighted Average Interest Rate
Year of maturity:
Due in one year or less	$	36,129,005		4.55	%	$	38,957,115		4.25	%
Due after one year through two years		39,247,665		4.82	%		37,843,965		4.66	%
Due after two years through three years		19,580,075		5.05	%		13,362,175		4.56	%
Due after three years through four years		6,476,645		4.91	%		8,758,745		4.61	%
Due after four years through five years		6,783,000		5.21	%		5,359,100		4.82	%
Due after five years		21,569,400		5.01	%		18,820,400		4.88	%

Total par value		129,785,790		4.84	%		123,101,500		4.56	%
Premiums		20,367					24,997
Discounts		(404,774	)				(429,583	)
SFAS 133 hedging adjustments		(837,326	)				(627,904	)
Deferred net losses on terminated interest-rate exchange agreements		(1,222	)				(1,374	)

Total	$	128,562,835				$	122,067,636


					Increase/ (Decrease)
	As of June 30, 2007		As of December 31, 2006		Amount			Percent
Short-term investments:
Interest-bearing deposits	$	867,594	$	800,982	$	66,612		8.32
Federal funds sold		15,467,000		10,532,000		4,935,000		46.86

Total short-term investments	$	16,334,594	$	11,332,982	$	5,001,612		44.13


Long-term investments:
Trading securities:
Government-sponsored enterprises debt obligations	$	4,114,290	$	4,175,011	$	(60,721	)	(1.45	)
Other FHLBanks’ bonds		271,645		280,488		(8,843	)	(3.15	)
State or local housing agency obligations		59,277		59,810		(533	)	(0.89	)
Held-to-maturity securities:
State or local housing agency obligations		122,311		107,180		15,131		14.12
Mortgage-backed securities:
U.S. agency obligations-guaranteed		54,520		65,882		(11,362	)	(17.25	)
Government-sponsored enterprises		2,003,756		2,160,861		(157,105	)	(7.27	)
Other		16,873,291		16,995,788		(122,497	)	(0.72	)

Total long-term investments	$	23,499,090	$	23,845,020	$	(345,930	)	(1.45	)


	As of March 31, 2007
Year of original maturity or next conversion date:

Overdrawn demand deposit accounts	$	38

Due in 1 year or less		47,929,951
Due after 1 year through 2 years		20,681,073
Due after 2 years through 3 years		15,097,256
Due after 3 years through 4 years		8,606,115
Due after 4 years through 5 years		4,697,143
Due after 5 years		4,558,714

Total par value	$	101,570,290


	As of June 30, 2007		As of December 31, 2006
Subclass B1 capital stock – membership	$	1,333,763	$	1,386,914
Subclass B2 capital stock – activity		4,509,076		4,384,884

Total	$	5,842,839	$	5,771,798


	Three Months Ended March 31,					Increase (Decrease)			Increase (Decrease)%
	2007			2006		Increase (Decrease)			Increase (Decrease)%

Net interest income	$	158,345		$	161,714	$	(3,369	)	(2.08	)

Other income (loss)		(3,629	)		1,003		(4,632	)	(461.81	)

Other expense		24,100			24,354		(254	)	(1.04	)

Total assessments		34,947			36,870		(1,923	)	(5.22	)

Net income		95,797			101,496		(5,699	)	(5.61	)


	Three Months Ended June 30,					Increase/ (Decrease)			Increase/ (Decrease) %	Six Months Ended June 30,					Increase/ (Decrease)			Increase/ (Decrease) %
	2007			2006		Increase/ (Decrease)			Increase/ (Decrease) %	2007			2006		Increase/ (Decrease)			Increase/ (Decrease) %
Net interest income	$	158,489		$	166,594	$	(8,105	)	(4.86)	$	316,834		$	328,308	$	(11,474	)	(3.49	)
Other (loss) income		(4,359	)		4,124		(8,483	)	(205.70)		(7,988	)		5,127		(13,115	)	(255.80	)
Other expense		26,782			24,526		2,256		9.20		50,882			48,880		2,002		4.10
Total assessments		34,067			38,957		(4,890	)	(12.55)		69,014			75,827		(6,813	)	(8.98	)
Net income		93,242			107,295		(14,053	)	(13.10)		189,039			208,791		(19,752	)	(9.46	)



3.1		Restated Organization Certificate of the Federal Home Loan Bank of Atlanta, incorporated by reference to Exhibit 3.1 to the Bank’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on March 17, 2006.

3.2		Revised and Restated Bylaws of the Federal Home Loan Bank of Atlanta, incorporated by reference to Exhibit 3.2 to the Bank’s Form 8-K filed with the Securities and Exchange Commission on September 27, 2006.

10.1		~~Amended and Restated Consulting Agreement, dated April 26, 2007, between the~~ Federal Home Loan Bank of Atlanta Credit and ~~PEAC Ventures, Inc.~~Collateral Policy, as amended.

10.2		Employment Agreement, dated June 13, 2007, between the Bank and Richard A. Dorfman.

10.3		Amended and Restated Services Agreement, dated August 9, 2007, between the Bank, SJG Financial Consultants, LLC, and Steven J. Goldstein.

31.1		Certification of the ~~Interim~~ President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the ~~Interim~~ Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the ~~Interim~~ President and Chief Executive Officer and the ~~Interim~~ Chief Financial Officer pursuant to 18 U.S.C. Section ~~135,~~1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


	Federal Home Loan Bank of Atlanta

Date: ~~May 10,~~August 13, 2007	By	/s/ ~~William H. Ott, Jr.~~Richard A. Dorfman
		Name:	~~William H. Ott, Jr.~~Richard A. Dorfman
		Title:	~~Interim~~ President and Chief Executive Officer

	By	/s/ Steven J. Goldstein
		Name:	Steven J. Goldstein
		Title:	~~Interim~~ Executive Vice President and Chief Financial Officer