2. 1www.fhlbi.com Investing in Communities February/March 2013

3.  FHLBI annually reinvests at least 10 percent of our net earnings into affordable housing in partnership with our members  Like every “dividend,” this contribution is predicated on earnings  FHLB’s Affordable Housing Program (AHP) constitutes the largest single source of private “capital” for affordable housing in the country  No other provider of liquidity pays this dividend “Community Dividend” We Deliver 2

4.  Affordable Housing Program (AHP) – grant funding to create rental and homeownership opportunities for low- and moderate-income households  Homeownership Initiatives (HOP and NIP) – grant funding for down payment, closing cost assistance and homeowner rehabilitation to income-eligible households  Community Investment Program (CIP) Advances and Letters of Credit – discounted advances and letters of credit available to members to support targeted housing and economic development FHLBI Community Investment Programs 3

5. 2013 AHP Allocation to be determined 2012 AHP Contribution (based on 2011 results) 4

6.  Single AHP round funded 27 projects with $10.5M in subsidy (649 affordable units)  Homeownership Initiatives Programs funding of $5.3 million assisted 743 households  Community Investment Program transactions totaled $109.4 million to 25 projects 2012 Highlights 5

7.  Reviewed by AHAC annually before approval by Board, or as amended  Establishes AHP scoring and set-aside program criteria in response to district needs and within regulations  Establishes competitive application round deadlines and set-aside holdback dates  Allocates required annual contributions Implementation Plan 6

8.  The roadmap by which community leaders are brought together to fulfill a common objective  Member institution  Has desire to invest in the community  Foundations or philanthropy goals  Community Reinvestment Act (CRA)  Sponsor/Owner/Developer  Has a desire to invest in the community  Creates long-term, sustainable community housing assets  Fulfills a need or mission  Non–profit with housing as a core mission  FHLBI  Has a desire to invest in the community  Leverages AHP with other stakeholders with common objectives  Creates opportunity for new and existing relationships with members  Creates jobs long term and short-term jobs 2013 Implementation Plan 7

9.  Provides a direct subsidy (grant) for acquisition, rehabilitation or construction of affordable housing of various types  Only FHLBI members may apply for this grant funding  Project sponsors are non-profit or for-profit housing developers who partner with FHLBI member Affordable Housing Program (AHP) 8

10. Community Investment Programs 9 River Center Apartments, Mishawaka, IN 1st Source Bank partnered with Mishawaka Housing Authority & Community Development to obtain an AHP grant of $305,482 to redevelop the former Mishawaka High School into one- and two-bedroom apartments for elderly residents. The apartments will offer unique floor plans, high ceilings and large windows. River Center Apartments, Mishawaka, IN 1st Source Bank partnered with Mishawaka Housing Authority & Community Development to obtain an AHP grant of $305,482 to redevelop the former Mishawaka High School into one- and two- bedroom senior apartments.

11.  Land or building acquisition  Down payment and closing costs for homebuyers  Construction or rehabilitation costs  Owner-occupied rehabilitation  Some soft costs (developer fee, architectural, legal, survey, engineering) Eligible AHP Uses 10

12.  Operating or administrative costs of sponsor  Infrastructure costs  Processing fees charged to administer AHP  Replacement or operating reserves including investor service fees or investor reserves Ineligible AHP Uses 11

13.  2012 was a competitive round with a 2:1 ratio of applications to awarded projects  53 applications received and scored  Average score was 60.2  Lowest score = 52.7  Highest score = 68  Average total subsidy for rental projects = $417,400  Average subsidy per unit for rental projects = $38,900 AHP 2012 Award Summary 12

14.  A single funding round in 2013  Competitive application process  Maximum grant $500,000 per project  No limit on how many AHP projects a member can apply for or be awarded per round  Deliver funds to project through member’s deposit account at FHLBI 2013 AHP 13

15.  March - Round 2013A Opens  April 30 – Notifications of Intent Due (soft deadline)  May 30 – Member Application Deadline (required for technical review)  June 14 – Last day for questions  June 19 – Application Deadline (5:00 PM EDT “in hand”)  September 27 – Award announcement Important 2013 AHP Dates 14

16.  Senior or family rental projects (not assisted living, hospice or nursing homes)  Scattered site single family homes for homeownership, lease purchase or rental  Emergency shelters  Transitional housing  Permanent supportive housing  Habitat for Humanity projects  Neighborhood revitalization projects Typical AHP Projects 15

17.  Development team  Lender  General contractor  Consultant  Architect  Green specialist  Site control and zoning  Funding commitment  Funding gap  Demonstrated market need for housing type  Financially feasible AHP Key Thresholds: 16

18.  Comprehensive community development  Aging in place for seniors and permanent supportive housing  Green building and rehabilitation standards continue to be a focus  Readiness to proceed  Economic diversity  Subsidy per unit increased to 15 points Key 2013 Scoring Categories 17

19. A $500,000 AHP grant from Mercantile Bank of Michigan helped to create or rehabilitate 92 beds and units of transitional housing for very low-income women and their children. The Mel Trotter Ministries project addresses a critical need in Grand Rapids by providing housing with supportive services, as well as solutions for homelessness.

20.  Legal mechanism recorded to ensure property is used for affordable housing during retention period  15 years for rental, 5 years for homeownership  Generally a deed restriction, second mortgage ‘soft’ second  Specific language is required by Regulation to be included in the retention mechanism Retention Requirement 19

21.  Sponsor prepares reports and submits to member semi-annually during development phase; member submits reports to FHLBI  Initial monitoring at completion  Long-term monitoring for rental projects  Project is habitable  Rents and incomes are in compliance with targeting commitments AHP Monitoring 20

22.  Training on Demand (TOD) is available for applications being prepared for the 2013 AHP competitive round. A member may request a face- to-face meeting, conference call or personalized webinar to discuss a potential AHP project.  Five Help Lines between May 7-June 3 (1-2 hour time slots when applicants can call during scheduled times with questions and leave the call at any time)  HelpMail – AHP application questions can be submitted electronically any time and answers will be received within one business day AHP Technical Assistance 21

23.  April 3 - Scoring Overview and Getting Started (tips and scoring requirements)  April 10 - Supportive Housing Rental (development budget/funding sources, pro-forma)  April 17 - Homeownership (development budget, Habitat gap calculation)  April 24 - Rental and Lease Purchase (development budget/funding sources, pro-forma)  May 15 - Member Institutions ONLY (member role and requirements – overview) AHP Webinars (Wednesdays 2:00-4:00 EDT) 22

24. Technical Reviews for complete AHP applications submitted to members by May 30 th will be provided in person subject to scheduling:  June 5 & June 6 9:00 am – 4:00 pm Okemos Conference Center 2187 University Park Drive, Okemos, MI  June 10 & June 11 9:00 am – 4:00 pm FHLBI 8250 Woodfield Crossing Blvd., Indianapolis, IN AHP Application Technical Reviews 23

25. The FHLBI’s homeownership initiative programs can help first-time homebuyers with down payments and closing costs or assist homeowners with repairs to individual homes or entire neighborhoods.

26.  HOP – Homeownership Opportunities Program  Down payment and closing cost assistance for eligible first-time homebuyers  NIP – Neighborhood Impact Program  Owner-occupied rehabilitation for eligible homeowners  DRP – Disaster Relief Program  Rehabilitation or down payment assistance for state or federally declared disaster areas in FHLBI’s district— requires board approval  Members may access up to $300,000 per program, per year 2013 Homeownership Initiatives Programs 25

27. ProgramHouseholdsFunds Disbursed HOP/NSA244$1.6M NIP499$3.7M 2012 Disbursement Summary 26

28.  Member institutions - often used for their own mortgage business  Members often partner with non-profit or government sponsors  Non-profit partners providing required homeownership counseling or manage owner-occupied rehabilitation programs  Municipalities or Land Banks with NSP/HOME/CDBG or other local funds Who uses Homeownership Initiatives? 27

29.  Limit to existing customers or require customer to establish banking relationship  Limit to employees (great for staff recruitment/ retention!)  Limit scope of NIP to basics: windows/doors, siding/ insulation, roofing, etc.  Customize program to meet your institution’s objectives  Require partner organizations attend FHLBI training  Execute MOUs, agency contract or similar agreement with partnering organizations Member electives and program best-practices 28

30.  Member (primary or secondary contact) must complete workshop training or webinar training  Training is available and recommended for anyone planning to use Homeownership Initiative funding  Member institution must complete and submit Master Agreement and Registration Form (covers HOP and NIP)  Registered Members may have contact information posted on FHLBI website Homeownership Initiatives Participation Requirements 29

31.  Income limit of 80% or less of AMI  FHLBI provides $3 per $1 of matching funds  If counseling is required, it must be face-to-face with state or HUD-certified counselor  Member cap of $300,000 per program  5 year retention recorded to property title, prorated recapture over the 5 years  Funding on a first come – first served basis  Available balance posted on FHLBI Website and updated regularly Homeownership Initiatives Requirements 30

32.  First-time homebuyer  Up to $10,000 for member originated mortgages  Up to $5,000 for non-member mortgages with 3:1 eligible matching funds  $1,000 cash contribution from homebuyer  Approved homebuyer counseling (up to $150 of HOP funds allowed toward cost)  No more than $250 cash back to buyer at closing HOP Recipient Requirements 31

33. Lidbeck Family, Iron Mountain, MI – First National Bank & Trust of Iron Mountain has helped 149 area homeowners make improvements to their homes, such as new windows and siding.

34.  Up to $10,000 with required 3:1 eligible matching funds or member first lien-holder  Up to $7,500 with no match  Funding must be used toward eligible repairs, i.e.:  roofing  gutters  siding  windows  doors  HVAC  Own and occupy property for minimum of 6 months NIP Recipient Requirements 33

35. In partnership with 1 st Source Bank in South Bend, IN, Habitat for Humanity renovated an old Frank’s Nursery & Crafts building into a new ReStore that provides items generally needed for housing improvements at reduced prices. The project was financed with a $1.6 million loan funded with a Community Investment Program advance from the FHLBI, along with support from Mishawaka Tax Increment Financing funds.

36.  Community Investment Program advances are FHLBI’s lowest cost funding!  Flexible terms/structure  Variable and fixed to 20 year  Up to 30 year amortization  Same collateral, prepayment terms, and activity- based stock requirements as traditional advances  Available at FHLBI’s cost of funds, plus a nominal administrative fee (non-competitive) Community Investment Program (CIP) Help improve a member’s bottom line… 35

37.  Provide low cost funding for many investment and loan opportunities, including AHP projects  Offer potentially lower rates than competitors  Enhance community relations by meeting the credit needs of your community  Match funding to mitigate interest rate risk  Fulfill Community Reinvestment Act (CRA) lending and/or investment tests* * This does not constitute CRA advice. Please consult appropriate advisors. Other CIP member benefits 36

38.  Use CIP to provide financing for predevelopment, purchase, construction, rehabilitation, or refinance:  Housing (residential)… AHP projects qualify automatically!  Economic development (nonresidential)  Mixed use (combination of residential & nonresidential)  Or to fund:  Future originations  Originations up to 3 months prior  Loan refinancing  Communities or entities financing eligible housing or economic development initiatives (even fire trucks, hospitals or libraries!) Eligible CIP Uses 37

39.  Complete the short application (available year-round)  Multiple ways to qualify a project…  FHLBI staff can help find the easiest way to qualify your project  FHLBI review time less than 10 business days  Minimum typical CIP advance is $100,000 The application process is easy! 38

40.  Documentation required at project qualification only  No penalty for not taking down a commitment  No ongoing monitoring or reporting  Project must be closed and funds fully disbursed or construction draws funded within 3 months prior to the CIP funding date and/or ending 6 months after the funding date The rest is easier! Past Project Funding CIP Funding Future Project Funding 39

41.  Ownership Residential  Individual owner-occupied units owned or purchased  All household incomes <=115% of Area Median Income (AMI) Documentation Required: List of originated mortgages  Rental Residential  Financing of rental units and cooperatives  At least 51% of resident incomes <=115% of AMI or  Rents affordable to at least 51% residents whose incomes are <=115% AMI Documentation Required: Rent roll, FHLBI Rent Schedule or Income Roll CIP Housing Project Qualification 40

42. Project Qualification :  Small Business Concern  Small Business Administration revenue/size standards (North American Industry Classification System Codes (NAICS)) Documentation Required: Proof of revenue  Job creation/retention at qualified wage levels  At least 51% of job salaries <=115% AMI for rural  At least 51% of job salaries <=100% AMI for urban Documentation Required: FHLBI Job Information Form CIP Commercial and Economic Development 41

43. Consumers Credit Union used CIP funds to build its new branch located in Portage, MI. Since opening, the branch has averaged 70 new members per month and increased staff to accommodate the growth.

44.  Services and benefits to a qualified area  Project provides services/benefits to urban or rural area <=100% AMI for urban areas <=115% AMI for rural areas  Project location in targeted area (income exemption) Rural/urban Champion Community/Empowerment Zone or Enterprise Community Native American area Federal Brownfield Tax Credit Area affected by a federal military base closing or realignment State of Michigan Renaissance Zone Federally declared disaster area Documentation Requirement: Verification of AMI or Targeted Area CIP Commercial and Economic Development 43

45.  Combination of housing project and economic development  Project only required to qualify as economic development  Small Business Concern  Job creation/retention at qualified wage levels  Services and benefits to income targeted location or targeted area CIP Mixed Use Project Qualification 44

46. Common CIP Uses Industrial and manufacturing initiatives Factories Bakeries Warehouses Assembly Plant Commercial initiatives Shopping Centers Office Buildings Hotels Retail Stores Member Branches Public-facility initiatives Buildings /vehicles for police and fire departments Social-service initiatives Office space for nonprofits Day-care Centers Hospitals Nursing Homes Infrastructure projects Roads Sidewalks Utilities 45

47. MaryBeth Wott, Community Investment Officer mwott@fhlbi.com 317-465-0368 Marjorie Green, Development Manager mgreen@fhlbi.com 517-230-2361 www.fhlbi.com 800-688-6697 Q & A / Contact Information 46

48. Shannon Fountain, Community Lending Manager sfountain@fhlbi.com 317-465-0428 Ronna Edwards, Compliance Analyst redwards@fhlbi.com 317-465-0369 www.fhlbi.com 800-688-6697 Contact Information – Homeownership Initiatives 47

49. Trish Lewis, AHP Portfolio Manager plewis@fhlbi.com 317-465-0379 Becky Hyink, Compliance Analyst rhyink@fhlbi.com 317-465-0362 Rose Marie Roberts, Compliance Analyst rroberts@fhlbi.com 317-465-0377 www.fhlbi.com 800-688-6697 Contact Information – Competitive AHP 48

50. www.fhlbi.com49