NON-DEPOSITORY COMMUNITY FINANCIAL INSTITUTION MEMBERSHIP IN THE FEDERAL HOME LOAN BANKS SYLVIA MARTINEZ, DIVISION OF HOUSING MISSION AND GOALS

Federal Home Loan Banks FHLBanks are cooperatives owned by their member financial institutions, most of which are regulated depositories Each FHLBank has its own independent board. 11 FHLBank Districts vary greatly in size and assets 2

2016 Update In 2015 the Federal Home Loan Banks of Seattle and Des Moines merged The resultant Des Moines FHLBank consists of 13 states, two territories and one Commonwealth The Indianapolis FHLBank consists of two states. Assets, financial profiles and capital plans differ at each Bank 3

FHLBank Districts Map Provided by Council of Federal Home Loan Banks

Advantages of Membership Access to FHLBank housing and community development products Access to liquidity Longer term, lower-priced advances for community lending Member dividends 5

Update on Non-Depository CDFIs. CDFI activity on the rise 41 CDFI members in 22 states I4 CDFIs took borrowed advances in 2015 Total amount of advances was $114,499,883 6

Borrowing by CDFIs 7

Membership Requirements Membership in a FHLBank is based on where the member has its principal place of business. Certification from the CDFI Fund Must meet regulatory standards for financial condition Minimum stock and activity purchase requirements 8

Bank Act Collateral Requirements A. Whole first mortgages, or securities B. Government insured or guaranteed mortgages or insured MBS C. Cash or deposits D. Other real estate collateral with “readily ascertainable value”; and, the Bank must perfect its interest in the collateral 9

Bank Act Collateral Requirements Technical Error in 2010 Amendments E. “Secured Loans for small business, agriculture, or community development activities or securities representing a whole interest in such secured loans, in the case of any community financial institution.” 10

Affordable Housing Program FHFA is in the process of reviewing the Affordable Housing Program and plans to amend the existing rule CDFIs are users of the AHP and important stakeholders We encourage your comments! 11

SUMMARY Slow but steady progress in CDFI membership and borrowing CDFIs are adapting their business lines to qualify for membership FHLBanks are differentiating the perception of risk from true risk Some stumbling blocks remain but they are not insurmountable 12

Questions? Observations? 13