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FEDERAL HOME LOAN BANK OF CINCINNATI - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

August 7, 2014

This document contains forward-looking statements that describe the objectives, expectations, estimates, and assessments of the Federal Home Loan Bank of Cincinnati (FHLBank). These statements use words such as "anticipates," "expects," "believes," "could," "estimates," "may," and "should." By their nature, forward-looking statements relate to matters involving risks or uncertainties, some of which we may not be able to know, control, or completely manage. Actual future results could differ materially from those expressed or implied in forward-looking statements or could affect the extent to which we are able to realize an objective, expectation, estimate, or assessment. Some of the risks and uncertainties that could affect our forward-looking statements include the following:

? the effects of economic, financial, credit, market, and member conditions

on our financial condition and results of operations, including changes in

economic growth, general liquidity conditions, inflation and deflation,

interest rates, interest rate spreads, interest rate volatility, mortgage

originations, prepayment activity, housing prices, asset delinquencies,

and members' mergers and consolidations, deposit flows, liquidity needs,

and loan demand;

? political events, including legislative, regulatory, federal government,

judicial or other developments that could affect us, our members, our

counterparties, other FHLBanks and other government-sponsored enterprises

(GSEs), and/or investors in the Federal Home Loan Bank System's (FHLBank

System) debt securities, which are called Consolidated Obligations or Obligations;

? competitive forces, including those related to other sources of funding

available to members, to purchases of mortgage loans, and to our issuance

of Consolidated Obligations;

? the financial results and actions of other FHLBanks that could affect our

ability, in relation to the FHLBank System's joint and several liability

for Consolidated Obligations, to access the capital markets on favorable

terms or preserve our profitability, or could alter the regulations and legislation to which we are subject;

? changes in ratings assigned to FHLBank System Obligations or our FHLBank

that could raise our funding cost;

? changes in investor demand for Obligations;

? the volatility of market prices, interest rates, credit quality, and other indices that could affect the value of investments and collateral we hold

as security for member obligations and/or for counterparty obligations;

? the ability to attract and retain skilled management and other key employees;

? the ability to develop and support technology and information systems that

effectively manage the risks we face;

? the risk of loss arising from failures or interruptions in our ongoing

business operations, internal controls, information systems or other operating technologies;

? the ability to successfully manage new products and services; and

? the risk of loss arising from litigation filed against us or one or more

other FHLBanks.

We do not undertake any obligation to update any forward-looking statements made in this document.



Table of Contents


The following table presents selected Statement of Condition data, Statement of Income data and financial ratios for the periods indicated. (Dollars in millions)

December 31, September 30,

June 30, 2014 March 31, 2014 2013 2013 June 30, 2013 STATEMENT OF CONDITION DATA AT QUARTER END: Total assets $ 101,258$ 100,902$ 103,181$ 96,586$ 95,320 Advances 69,485 65,545 65,270 65,857 65,093 Mortgage loans held for portfolio 6,702 6,698 6,826 6,835 6,993 Allowance for credit losses on mortgage loans 6 7 7 7 9 Investments (1) 24,735 28,418 22,364 22,642 23,101 Consolidated Obligations, net: Discount Notes 35,390 33,225 38,210 33,542 38,926 Bonds 59,653 61,413 58,163 56,251 49,521 Total Consolidated Obligations, net 95,043 94,638 96,373 89,793 88,447 Mandatorily redeemable capital stock 112 115 116 121 125 Capital: Capital stock - putable 4,215 4,199 4,698 4,701 4,690 Retained earnings 647 631 621 604 582 Accumulated other comprehensive loss (9 ) (8 ) (9 ) (10 ) (11 ) Total capital 4,853 4,822 5,310 5,295 5,261

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