Federal Home Loan Bank of Des Moines - FORM 8-K/A - EX-99.1 - EXHIBIT 99.1 - August 7, 2015

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EXHIBIT 99.1


UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and explanatory notes are based on the separate historical financial statements of the Des Moines Bank and the Seattle Bank after giving effect to the Merger and the assumptions and adjustments described in the accompanying notes.
The unaudited pro forma condensed combined financial information was prepared under the acquisition method of accounting for mutual entities, with the Des Moines Bank treated as the acquirer. Under the acquisition method, the assets and liabilities of the Seattle Bank, as of the effective date of the Merger, were recorded by the Des Moines Bank at their respective fair values. Based on the consideration transferred, no goodwill was recorded.
The unaudited pro forma condensed combined balance sheet as of March 31, 2015, is presented as if the Merger had occurred on March 31, 2015. The unaudited pro forma condensed combined income statements for the fiscal year ended December 31, 2014 and the three months ended March 31, 2015 are presented as if the Merger had occurred on January 1, 2014. The historical financial information has been adjusted to reflect factually supportable items that are directly attributable to the Merger and, with respect to the income statements only, expected to have a continuing impact on results of operations.
The unaudited pro forma condensed combined financial information is provided for informational purposes only. It is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the Merger been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma condensed combined financial information and related adjustments required management to make certain assumptions and estimates. This financial information does not consider any potential impacts of anticipated cost savings, among other factors.
As explained in more detail in the accompanying notes, the pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment. Adjustments may include, but are not limited to, changes in (i) the Des Moines Bank's and the Seattle Bank's non-merger related business activities through the effective date of the Merger, (ii) the underlying values of assets and liabilities if market conditions differ from current assumptions, and (iii) total merger related expenses if implementation costs vary from current estimates.
The unaudited pro forma condensed combined financial statements should be read together with:
•
the accompanying notes;
•
the Des Moines Bank’s separate audited historical financial statements and accompanying notes as of and for the year ended December 31, 2014, included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014;
•
the Seattle Bank’s separate audited historical financial statements and accompanying notes as of and for the year ended December 31, 2014, included in the Des Moines Bank's Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on June 1, 2015;
•
the Des Moines Bank’s separate unaudited historical financial statements and accompanying notes as of and for the three months ended March 31, 2015, included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015; and
•
the Seattle Bank’s separate unaudited historical financial statements and accompanying notes as of and for the three months ended March 31, 2015, included in the Des Moines Bank's Current Report on Form 8-K filed with the SEC on June 1, 2015.

1

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2015
(dollars in thousands, except capital stock par value)
 
 
Historical
 
Pro Forma
 
 
Des Moines
 
Seattle
 
Adjustments
 
Combined
ASSETS
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
341,844

 
$
144

 
$
—

 
$
341,988

Interest-bearing deposits
 
1,854

 
248

 
—

 
2,102

Securities purchased under agreements to resell
 
9,170,000

 
5,250,000

 
(1
)
A
14,419,999

Federal funds sold
 
1,580,000

 
2,940,800

 
78

B
4,520,878

Investment securities
 
 
 
 
 
 
 
 
Trading securities
 
2,544,459

 
—

 
—

 
2,544,459

Available-for-sale securities
 
12,656,377

 
15,929,939

 
—

 
28,586,316

Held-to-maturity securities
 
1,105,821

 
—

 
—

 
1,105,821

Total investment securities
 
16,306,657

 
15,929,939

 
—

 
32,236,596

Advances
 
63,562,410

 
8,406,368

 
82,364

C
72,051,142

Mortgage loans held for portfolio, net
 
 
 
 
 
 
 
 
Mortgage loans held for portfolio
 
6,544,741

 
619,192

 
$
44,199

D
7,208,132

Allowance for credit losses
 
(1,100
)
 
(717
)
 
717

E
(1,100
)
Total mortgage loans held for portfolio, net
 
6,543,641

 
618,475

 
44,916

 
7,207,032

Accrued interest receivable
 
90,687

 
42,970

 
—

 
133,657

Premises, software, and equipment, net
 
19,792

 
11,235

 
(7,996
)
F
23,031

Derivative assets, net
 
85,236

 
49,545

 
—

 
134,781

Other assets
 
29,987

 
11,723

 
1,219

G
42,929

TOTAL ASSETS
 
$
97,732,108

 
$
33,261,447

 
$
120,580

 
$
131,114,135

LIABILITIES
 
 
 
 
 
 
 
 
Deposits
 
$
717,516

 
$
377,743

 
$
(1
)
H
$
1,095,258

Consolidated obligations
 
 
 
 
 
 
 
 
Discount notes
 
60,419,645

 
14,232,389

 
(525
)
I
74,651,509

Bonds
 
32,031,318

 
14,948,504

 
227,206

J
47,207,028

Total consolidated obligations
 
92,450,963

 
29,180,893

 
226,681

 
121,858,537

Mandatorily redeemable capital stock
 
24,191

 
1,362,688

 
—

 
1,386,879

Accrued interest payable
 
102,816

 
51,299

 
—

 
154,115

Affordable Housing Program payable
 
43,725

 
21,069

 
—

 
64,794

Derivative liabilities, net
 
73,858

 
70,791

 
—

 
144,649

Other liabilities
 
31,631

 
920,282

 
(3,670
)
K
948,243

TOTAL LIABILITIES
 
93,444,700

 
31,984,765

 
223,010

 
125,652,475

CAPITAL
 
 
 
 
 
 
 
 
Capital stock
 
 
 
 
 
 
 
 
Class A putable capital stock ($100 par value)
 
—

 
31,421

 
—

 
31,421

Class B putable capital stock ($100 par value)
 
3,427,778

 
824,435

 
—

 
4,252,213

Total capital stock
 
3,427,778

 
855,856

 
—

 
4,283,634

Additional capital from merger
 
—

 
—

 
318,396

L
318,396

Retained earnings
 
 
 
 
 
 
 
 
Unrestricted
 
647,470

 
291,592

 
(291,592
)
M
647,470

Restricted
 
81,910

 
65,013

 
(65,013
)
N
81,910

Total retained earnings
 
729,380

 
356,605

 
(356,605
)
 
729,380

Accumulated other comprehensive income
 
130,250

 
64,221

 
(64,221
)
O
130,250

TOTAL CAPITAL
 
4,287,408

 
1,276,682

 
(102,430
)
 
5,461,660

TOTAL LIABILITIES AND CAPITAL
 
$
97,732,108

 
$
33,261,447

 
$
120,580

 
$
131,114,135

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

2

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
(dollars in thousands)
 
 
Historical
 
Pro Forma
 
 
Des Moines
 
Seattle
 
Adjustments
 
Combined
INTEREST INCOME
 
 
 
 
 
 
 
 
Advances
 
$
233,094

 
$
65,320

 
$
(56,663
)
A
$
241,751

Prepayment fees on advances, net
 
6,380

 
2,800

 
—

 
9,180

Interest-bearing deposits
 
263

 
51

 
—

 
314

Securities purchased under agreements to resell
 
3,953

 
1,525

 
—

 
5,478

Federal funds sold
 
2,416

 
7,572

 
(58
)
B
9,930

Investment securities
 
180,358

 
160,748

 
23,900

C
365,006

Mortgage loans held for portfolio
 
244,533

 
38,881

 
(2,257
)
D
281,157

Total interest income
 
670,997

 
276,897

 
(35,078
)
 
912,816

INTEREST EXPENSE
 
 
 
 
 
 
 
 
Consolidated obligations - Discount notes
 
43,026

 
9,447

 
1,308

E
53,781

Consolidated obligations - Bonds
 
376,961

 
118,765

 
(50,742
)
F
444,984

Deposits
 
68

 
127

 
25

G
220

Borrowings from other FHLBanks
 
1

 
—

 
—

 
1

Mandatorily redeemable capital stock
 
245

 
1,698

 
—

 
1,943

Total interest expense
 
420,301

 
130,037

 
(49,409
)
 
500,929

NET INTEREST INCOME
 
250,696

 
146,860

 
14,331

 
411,887

(Reversal) provision for credit losses
 
(2,398
)
 
584

 
—

 
(1,814
)
NET INTEREST INCOME AFTER (REVERSAL) PROVISION FOR CREDIT LOSSES
 
253,094

 
146,276

 
14,331

 
413,701

OTHER (LOSS) INCOME
 
 
 
 
 
 
 
 
Net other-than-temporary impairment losses
 
—

 
(4,840
)
 
—

 
(4,840
)
Net gains on trading securities
 
68,008

 
—

 
—

 
68,008

Net gains from sale of available-for-sale securities
 
826

 
—

 
—

 
826

Net gains from sale of held-to-maturity securities
 
8,887

 
—

 
—

 
8,887

Net gains (losses) on financial instruments held at fair value
 
2

 
(239
)
 
—

 
(237
)
Net (losses) gains on derivatives and hedging activities
 
(123,411
)
 
4,211

 
—

 
(119,200
)
Net losses on extinguishment of debt
 
(12,651
)
 
(750
)
 
—

 
(13,401
)
Other, net
 
7,065

 
2,696

 
—

 
9,761

Total other (loss) income
 
(51,274
)
 
1,078

 
—

 
(50,196
)
OTHER EXPENSE
 
 
 
 
 
 
 
 
Compensation and benefits
 
32,189

 
36,792

 
(3,137
)
H
65,844

Other operating expenses
 
22,423

 
38,142

 
(1,410
)
I
59,155

Federal Housing Finance Agency
 
3,914

 
2,627

 
—

 
6,541

Office of Finance
 
3,777

 
2,391

 
—

 
6,168

Other, net
 
5,010

 
336

 
—

 
5,346

Total other expense
 
67,313

 
80,288

 
(4,547
)
 
143,054

NET INCOME BEFORE ASSESSMENTS
 
134,507

 
67,066

 
18,878

 
220,451

Affordable Housing Program assessments
 
13,475

 
6,877

 
1,887

J
22,239

NET INCOME
 
$
121,032

 
$
60,189

 
$
16,991

 
$
198,212


See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information



3

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2015
(dollars in thousands)
 
 
Historical
 
Pro Forma
 
 
Des Moines
 
Seattle
 
Adjustments
 
Combined
INTEREST INCOME
 
 
 
 
 
 
 
 
Advances
 
$
66,176

 
$
16,489

 
$
(14,243
)
A
$
68,422

Prepayment fees on advances, net
 
507

 
558

 
—

 
1,065

Interest-bearing deposits
 
125

 
37

 
—

 
162

Securities purchased under agreements to resell
 
1,310

 
582

 
—

 
1,892

Federal funds sold
 
1,019

 
2,187

 
—

 
3,206

Investment securities
 
47,830

 
38,383

 
5,974

B
92,187

Mortgage loans held for portfolio
 
59,198

 
8,361

 
(552
)
C
67,007

Total interest income
 
176,165

 
66,597

 
(8,821
)
 
233,941

INTEREST EXPENSE
 
 
 
 
 
 
 
 
Consolidated obligations - Discount notes
 
14,824

 
3,471

 
—

 
18,295

Consolidated obligations - Bonds
 
92,667

 
24,964

 
(12,786
)
D
104,845

Deposits
 
15

 
29

 
—

 
44

Mandatorily redeemable capital stock
 
179

 
383

 
—

 
562

Total interest expense
 
107,685

 
28,847

 
(12,786
)
 
123,746

NET INTEREST INCOME
 
68,480

 
37,750

 
3,965

 
110,195

Provision (reversal) for credit losses
 
415

 
(208
)
 
—

 
207

NET INTEREST INCOME AFTER PROVISION (REVERSAL) FOR CREDIT LOSSES
 
68,065

 
37,958

 
3,965

 
109,988

OTHER (LOSS) INCOME
 
 
 
 
 
 
 
 
Net other-than-temporary impairment losses
 
—

 
(51,529
)
 
—

 
(51,529
)
Net gains on trading securities
 
18,863

 
—

 
—

 
18,863

Net gains from sale of available-for-sale securities
 
—

 
52,321

 
—

 
52,321

Net losses on financial instruments held at fair value
 
—

 
(12
)
 
—

 
(12
)
Net (losses) gains on derivatives and hedging activities
 
(30,911
)
 
1,630

 
—

 
(29,281
)
Net losses on extinguishment of debt
 
—

 
(264
)
 
—

 
(264
)
Other, net
 
2,587

 
280

 
—

 
2,867

Total other (loss) income
 
(9,461
)
 
2,426

 
—

 
(7,035
)
OTHER EXPENSE
 
 
 
 
 
 
 
 
Compensation and benefits
 
9,786

 
10,858

 
(1,634
)
E
19,010

Other operating expenses
 
6,990

 
16,562

 
(10,771
)
F
12,781

Federal Housing Finance Agency
 
1,537

 
683

 
—

 
2,220

Office of Finance
 
1,128

 
548

 
—

 
1,676

Other, net
 
691

 
85

 
—

 
776

Total other expense
 
20,132

 
28,736

 
(12,405
)
 
36,463

NET INCOME BEFORE ASSESSMENTS
 
38,472

 
11,648

 
16,370

 
66,490

Affordable Housing Program assessments
 
3,865

 
1,203

 
1,637

G
6,705

NET INCOME
 
$
34,607

 
$
10,445

 
$
14,733

 
$
59,785


See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information




4

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1 — Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting for mutual entities giving effect to the Merger, with the Des Moines Bank as the acquirer. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position had the Merger been consummated at March 31, 2015 or the results of operations had the Merger been consummated at January 1, 2014, nor is it necessarily indicative of the financial position or results of operations in future periods. Assuming the Merger had consummated at March 31, 2015, the consideration included the issuance of $855.9 million in equity consideration as well as the transfer of member interests of approximately $318.4 million.

Under the acquisition method of accounting, the assets and liabilities of the Seattle Bank were recorded at the respective fair values on the merger date. The fair value on the merger date represents management's best estimates based on available information and facts and circumstances in existence on the merger date. The pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined financial information is preliminary and subject to adjustment. Adjustments may include, but are not limited to, changes in (i) the Des Moines Bank's and the Seattle Bank's non-merger related business activities through the effective date of the Merger, (ii) the underlying values of assets and liabilities if market conditions differ from current assumptions, and (iii) total merger related expenses if implementation costs vary from current estimates.


5

Note 2 — Preliminary Allocation of Purchase Price

The unaudited pro forma condensed combined financial information reflects the issuance of $855.9 million in equity consideration as well as the transfer of member interests of approximately $318.4 million. The equity consideration transferred was measured at fair value on the assumed acquisition date of March 31, 2015, which was the par value of shares issued.

The Merger is accounted for using the acquisition method of accounting for mutual entities; accordingly, the Des Moines Bank's cost to acquire the Seattle Bank was allocated to the assets (including identifiable intangible assets) and liabilities of the Seattle Bank at their respective estimated fair values as of the merger date. Based on the consideration transferred, no goodwill was recorded.

The pro forma purchase price was preliminarily allocated to the assets acquired and the liabilities assumed based on their estimated fair values as summarized in the following table (dollars in thousands):
 
March 31, 2015
Pro forma purchase price of the Seattle Bank
 
Fair value of shares issued by the Des Moines Bank ($100 per share)
$
855,856

Member interests
318,396

Total pro forma purchase price
$
1,174,252

Fair value of assets acquired
 
Cash and due from banks
$
144

Interest-bearing deposits
248

Securities purchased under agreements to resell
5,249,999

Federal funds sold
2,940,878

Available-for-sale securities
15,929,939

Advances
8,488,732

Mortgage loans held for portfolio
663,391

Accrued interest receivable
42,970

Premises, software, and equipment
3,239

Derivative assets
49,545

Other assets
12,942

Total assets acquired
$
33,382,027

Fair value of liabilities assumed
 
Deposits
$
377,742

Consolidated obligation discount notes
14,231,864

Consolidated obligation bonds
15,175,710

Mandatorily redeemable capital stock
1,362,688

Accrued interest payable
51,299

Affordable Housing Program payable
21,069

Derivative liabilities
70,791

Other liabilities
916,612

Total liabilities assumed
32,207,775

Fair value of net assets acquired
$
1,174,252





6

Note 3 — Pro Forma Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current assumptions and valuations, which are subject to change.

PRO FORMA BALANCE SHEET ADJUSTMENTS - MARCH 31, 2015
 
(dollars in thousands)
 
 
 
A. Adjustments to Securities Purchased Under Agreements to Resell
 
To reflect fair value at the merger date based on current market rates for similar term investments.
$
(1
)
B. Adjustments to Federal Funds Sold
 
To reflect fair value at the merger date based on current market rates for similar term investments.
$
78

C. Adjustments to Advances
 
To reflect fair value at the merger date based on current market rates for similar term advances.
$
82,364

D. Adjustments to Mortgage Loans Held for Portfolio
 
To reflect fair value at the merger date based on current market rates for similar term mortgage loans.
$
44,199

E. Adjustments to Allowance for Credit Losses
 
To remove the Seattle Bank's allowance for credit losses at the merger date as the credit risk is contemplated in the fair value adjustment above.
$
717

F. Adjustments to Premises, Software, and Equipment
 
To reflect fair value at the merger date based on third-party appraisals and considering the Des Moines Bank's intended use for the assets.
$
(7,996
)
G. Adjustments to Other Assets
 
To record the fair value of an acquired identifiable intangible asset resulting from the Seattle Bank's customer relationships at the merger date. The acquired intangible asset was valued utilizing the cost approach and will be amortized over 20 years.
$
2,968

To reflect fair value of real estate owned at the merger date based on third-party appraisals.
396

To reflect the elimination of the Seattle Bank's unamortized debt concession fees.
(2,145
)
Total adjustments
$
1,219

H. Adjustments to Deposits
 
To reflect fair value at the merger date based on current market rates for similar term deposits.
$
(1
)
I. Adjustments to Consolidated Obligation Discount Notes
 
To reflect fair value at the merger date based on current market rates for similar term discount notes.
$
(525
)
J. Adjustments to Consolidated Obligation Bonds
 
To reflect fair value at the merger date based on current market rates for similar term bonds.
$
227,206

K. Adjustments to Other Liabilities
 
To reflect the elimination of the Seattle Bank's deferred rent and other deferred credits.
$
(3,670
)
L. Adjustments to Additional Capital from Merger
 
To record the Seattle Bank's net assets of $1.2 billion on the merger date adjusted for the par value of the Seattle Bank's outstanding capital stock of $0.9 billion.
$
318,396

M. Adjustments to Unrestricted Retained Earnings
 
To eliminate the Seattle Bank's unrestricted retained earnings.
$
(291,592
)
N. Adjustments to Restricted Retained Earnings
 
To eliminate the Seattle Bank's restricted retained earnings.
$
(65,013
)
O. Adjustments to Accumulated Other Comprehensive Income
 
To eliminate the Seattle Bank's accumulated other comprehensive income.
$
(64,221
)




7

PRO FORMA INCOME STATEMENT ADJUSTMENTS - YEAR ENDED DECEMBER 31, 2014
 
(dollars in thousands)
 
 
 
A. Adjustments to Advance Interest Income
 
To reflect amortization of advance premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 2.5 years at the merger date.
$
(56,663
)
B. Adjustments to Federal Funds Sold Interest Income
 
To reflect amortization of Federal funds sold premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 0.1 years at the merger date.
$
(58
)
C. Adjustments to Investment Security Interest Income
 
To reflect amortization of investment security discounts from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 16.9 years at the merger date.
$
23,900

D. Adjustments to Mortgage Loan Interest Income
 
To reflect amortization of mortgage loan premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 18.9 years at the merger date.
$
(2,257
)
E. Adjustments to Discount Note Interest Expense
 
To reflect amortization of discount note discounts from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 0.1 years at the merger date.
$
1,308

F. Adjustments to Bond Interest Expense
 
To reflect amortization of bond premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 3.2 years at the merger date.
$
(50,742
)
G. Adjustments to Deposit Interest Expense
 
To reflect amortization of deposit discounts from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 0.3 years at the merger date.
$
25

H. Adjustments to Compensation and Benefits Expense
 
To reflect the elimination of the Seattle Bank's one-time merger related costs that will have no continuing impact on the combined organization.
$
(3,130
)
To reflect the elimination of the Des Moines Bank's one-time merger related costs that will have no continuing impact on the combined organization.
(7
)
Total adjustments
$
(3,137
)
I. Adjustments to Other Operating Expense
 
To reflect the elimination of the Seattle Bank's one-time merger related costs that will have no continuing impact on the combined organization.
$
(2,578
)
To reflect the elimination of the Des Moines Bank's one-time merger related costs that will have no continuing impact on the combined organization.
(1,621
)
To reflect amortization of identifiable intangible assets acquired on the merger date. Amortization was calculated using a straight-line method over a period of 20 years.
148

To reflect depreciation based on the fair value of fixed assets acquired on the merger date. Depreciation was calculated using a straight-line method over the weighted average estimated useful life of 1.2 years at the merger date.
2,641

Total adjustments
$
(1,410
)
J. Adjustments to AHP Assessments
 
To reflect an increase in Affordable Housing Program (AHP) assessments due to an increase in combined net income.
$
1,887


8

PRO FORMA INCOME STATEMENT ADJUSTMENTS - THREE MONTHS ENDED MARCH 31, 2015
(dollars in thousands)
 
 
 
A. Adjustments to Advance Interest Income
 
To reflect amortization of advance premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 2.5 years at the merger date.
$
(14,243
)
B. Adjustments to Investment Security Interest Income
 
To reflect amortization of investment security discounts from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 16.9 years at the merger date.
$
5,974

C. Adjustments to Mortgage Loan Interest Income
 
To reflect amortization of mortgage loan premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 18.9 years at the merger date.
$
(552
)
D. Adjustments to Bond Interest Expense
 
To reflect amortization of bond premiums from fair value adjustments on the merger date. Amortization was calculated using an effective-yield method over the weighted average contractual life of 3.2 years at the merger date.
$
(12,786
)
E. Adjustments to Compensation and Benefits Expense
 
To reflect the elimination of the Seattle Bank's one-time merger related costs that will have no continuing impact on the combined organization.
$
(1,470
)
To reflect the elimination of the Des Moines Bank's one-time merger related costs that will have no continuing impact on the combined organization.
(164
)
Total adjustments
$
(1,634
)
F. Adjustments to Other Operating Expense
 
To reflect the elimination of the Seattle Bank's one-time merger related costs that will have no continuing impact on the combined organization.
$
(9,348
)
To reflect the elimination of the Des Moines Bank's one-time merger related costs that will have no continuing impact on the combined organization.
(2,058
)
To reflect amortization of identifiable intangible assets acquired on the merger date. Amortization was calculated using a straight-line method over a period of 20 years.
37

To reflect depreciation based on the fair value of fixed assets acquired on the merger date. Depreciation was calculated using a straight-line method over the weighted average estimated useful life of 1.2 years at the merger date.
598

Total adjustments
$
(10,771
)
G. Adjustments to AHP Assessments
 
To reflect an increase in AHP assessments due to an increase in combined net income.
$
1,637



9

Federal Home Loan Bank of Des Moines Reports