The Need For A Policy Statement

Federal securities laws make it illegal for any director, officer, employee or agent of the Federal Home Loan Bank of Cincinnati (FHLBank) to buy or sell the FHLBank’s securities at a time when that person possesses “material nonpublic information relating” to the FHLBank. This conduct is known as “insider trading.” Passing such material nonpublic information on to someone else who may buy or sell securities - which is known as “tipping” - also is illegal. These prohibitions apply to the capital stock of the FHLBank, the debt securities issued by the FHLBank System, and any other securities eventually issued by the FHLBank. The prohibitions apply as well to securities of member institutions or other companies if a FHLBank director, officer, employee or agent learns something in the course of his or her duties that may affect the value of those securities.

The requirements and prohibitions in this Policy Statement are supplemental, and in addition to, the FHLBank’s Standards of Conduct, Directors’ Conflict of Interest Policy, Code of Ethics for Senior Financial Officers and Information Classification Policy. In the event of a conflict between this Policy Statement and any of the policies listed above, the most restrictive applicable requirement will control.

The Consequences

The consequences of insider trading violations can be staggering:

Any of the above consequences, even an SEC investigation that does not result in prosecution, can tarnish the FHLBank’s reputation and irreparably damage the careers of those involved.

FHLBank Policy on Insider Trading

A. Restrictions on Trading. If a director, officer or any employee has material nonpublic information relating to the FHLBank, it is the FHLBank’s policy that neither that person nor any related person may (1) buy or sell securities of the FHLBank or engage in any other action to take advantage of that information or (2) communicate that information to other persons not having a need to know the information for legitimate, FHLBank-related reasons. This policy also applies to information obtained by a director, officer or employee relating to any member institution, counterparty, vendor, or other company.

Even transactions that may be motivated by or justified on independent reasons (such as the need to raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to preserve the FHLBank’s reputation for adhering to the highest standards of conduct.

B. Material Information Defined. Material information is any information that a reasonable investor would consider important in a decision to buy, hold or sell a security.

C. When Information Is Public. If you are in possession of material information which has not previously been made public, it is also improper for you to enter a trade immediately after the FHLBank, the member institution or other company has made a public announcement of the information. Before entering into a trade, the investing public must be afforded sufficient time to receive the information and act upon it. Although the amount of time you must wait varies with the type and complexity of the information released, a good general rule is to wait until the third business day following the public release of the information before engaging in a trade.

D. Twenty-Twenty Hindsight. Remember, if your securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction you should carefully consider how regulators and others might view your transaction in hindsight.

E. Transactions By a Director’s Institution. The restrictions set forth in paragraph III. A. above apply to the member institution(s) where a director serves as an officer or director. Directors should not discuss material nonpublic information with the individuals at their institution(s) who make decisions or execute transactions involving either the capital stock of the FHLBank, the debt issued by the FHLBank System, or the securities of other member institutions. Directors are responsible for the compliance of their institutions.

F. Transactions By Family Members. Although family members cannot own FHLBank capital stock, they can own FHLBank debt securities. The restrictions set forth in paragraph III. A. above apply to your family members and others living in your household, and you are expected to be responsible for their compliance. You should not discuss material nonpublic information with family or household members. During times when you possess material nonpublic information, family and household members should be prevented from trading, to the extent possible, although this should be done without revealing the information you possess.

In the context of insider trading, there is no precise definition of family member. Your spouse and any person living in your household (whether or not related to you) definitely are included, as are children temporarily living away from home. Adult relatives of you and your spouse (parents, grown children, siblings, etc.) who do not live with you arguably are beyond your control. Bear in mind, however, that transactions by these persons are likely to be suspect in an insider trading investigation. Therefore, it is crucial that you do not disclose confidential information concerning the FHLBank, any member institution, counterparty, vendor, or other company to anyone, including members of your household and your extended family.

G. Disclosing Information to Others. Whether the information is proprietary information about our FHLBank or information that could have an impact on the desire to buy, hold or sell FHLBank stock or debt securities, you must not pass the information on to others (including other persons within the FHLBank, family members, friends and, if you are a director, employees of your member institution) unless the person has a need to know the information for legitimate FHLBank-related reasons. Be careful not to discuss such information in public places where it can be overheard, such as elevators, restaurants, taxis and airplanes; do not leave confidential documents on conference tables, desks, or otherwise unguarded; and take whatever other steps are reasonably necessary to keep confidential information from being disclosed. Even within the FHLBank, confidential information should be distributed or discussed with others only on a need-to-know basis, and those people should be told that the information is confidential.

If you improperly reveal material inside information to another person, you can be held liable for the trading activities of your "tippee" and of any other person with whom the tippee shares the information. These penalties apply whether or not you benefit financially from the trades and whether or not you knew or intended that another person would trade on the basis of the information revealed. In order to avoid even the appearance of impropriety, it is recommended that you refrain from providing advice or making recommendations regarding the purchase or sale of FHLBank System debt securities, whether or not you are then in possession of material nonpublic information.

In addition, you must be especially alert to inquiries about the FHLBank and the FHLBank System which may be made by the financial press, investment analysts, trade analysts, member institutions, or, depending on the situation, other System FHLBanks. All such communications on behalf of the FHLBank, except such communication in the ordinary course of transacting FHLBank business, must be made through an appropriately designated officer under carefully controlled circumstances. Unless you are expressly authorized to the contrary, if you receive inquiries of this nature, you should decline comment and refer the inquirer to the President or the Vice President, Public Affairs, of the FHLBank.

H. Trading in Securities of Members. The penalties for insider trading, and this Policy Statement apply equally to material nonpublic information concerning member institutions and other System FHLBanks. The FHLBank routinely is in possession of nonpublic information related to its member institutions, and often as to other System FHLBanks. You (and, if you are an elected director, your member institution) are prohibited from trading in the securities of any member institution about which you have material nonpublic information, and you must not disclose such information to others unless the person has a need to know the information for legitimate, FHLBank-related reasons.

I. Trading in Securities of Vendors and Counterparties. The penalties for insider trading, and this Policy Statement also apply to material nonpublic information concerning vendors, counterparties, and other companies with which the FHLBank has business dealings that you obtain through your employment or association with the FHLBank. You must refrain from trading securities of another company (whether public or private) while in possession of such material nonpublic information concerning it, and you must not disclose such information to others unless the person has a need to know the information for legitimate, FHLBank-related reasons.

Trading Blackout

Blackout periods may be established from time to time by the Executive Committee of the Board of Directors when the FHLBank is in possession of material nonpublic information relating to itself, its members, or the FHLBank System. A blackout period notice will state how long the blackout period will be in effect. Depending upon the reason for the blackout, the FHLBank may cease repurchases of FHLBank excess stock or prohibit trading in member securities or FHLBank System debt securities.

Pre-Approval Requirement – Excess Stock Redemptions

Excess stock redemption requests (except for certain de minimis redemption amounts as determined by the Board) from member institutions which have a director or officer who also is a director of the FHLBank must be approved by the Board of Directors or, in circumstances where the full board is not available, by the Executive Committee of the Board.

Certification

You will be required to certify that you understand and will comply with this Policy Statement. Failure to comply with this Policy Statement may be grounds for your dismissal from employment for cause or, if you are director, your removal from the Board.

FHLBank Assistance

Any person who has any questions about specific transactions or general questions about this Policy Statement may obtain additional guidance from the Vice President, Human Resources and Administration. Remember, however, the ultimate responsibility for adhering to the Policy Statement and avoiding improper transactions rests with you. In this regard, it is imperative that you use your best judgment.