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Federal Home Loan Bankof Des Moines1
AGENDAFHLB SystemFHLB Des Moines OverviewHow Members Utilize FHLB Des Moines2
FHLB System OverviewPOWER OF PARTNERSHIP3
FHLB SYSTEM OVERVIEWFHLB STRUCTURE4
FHLB SYSTEM OVERVIEWSTRUCTURE 12 District Banks created by Congress in 1932, now 11 DistrictBanks Each Bank is a wholesale cooperative that serves memberfinancial institutions chartered in designated states thatcomprise its District FHLBanks collectively serve approximately 7,500 membersand non-member housing associates Members are credit unions, banks, savings institutions,insurance companies & CDFIs5
FHLB SYSTEM OVERVIEWGOVERNMENT-SPONSORED ENTERPRISESFHLBanksFannie MaeFreddie MacGSEGSERegulator: FHFAGSERegulator: FHFABrings capital to the housingmarkets & provides advancesand other financial products tosupport their members’affordable housing activitiesRegulator: FHFABrings capital to the housingmarketsBrings capital to the housingmarkets6
FHLB SYSTEM OVERVIEWPRODUCTS7
FHLB SYSTEM OVERVIEWPRODUCTSADVANCESDEPOSITSSECURED LENDINGOffer many different advanceproducts tailored to meetspecific member needsMORTGAGEPURCHASEPROGRAMSGrants access to secondarymarkets and offers a variety ofproducts that can increasecompetitive OMMUNITYINVESTMENTHigh-quality, interest bearingdeposit vehiclesCOMMUNITYINVESTMENTOne of the nation's largestsources of grants foraffordable housing projects.In 2018, FHLB Des Moines willmake grant awards of up to 750,000 for qualifyingprojects.8
FHLB SYSTEM OVERVIEWBENEFITS5 KEYS TO SUCCESS AS A COOPERATIVEMembers benefit from access to a variety of products and services designedto help lower their funding costs, mitigate risk, improve asset and liabilitymanagement and meet community credit needs.ProductsPricingReturns onInvested CapitalSafety &SoundnessSupportingCommunities9
FHLB Des Moines OverviewPOWER OF PARTNERSHIP10
FHLB DES MOINESOVERVIEW 117.5billion inAdvancesData as of September 30, 2017, unless noted differently 7.0 Headquartered in DesMoines, Iowa Western Office in Seattle,Washington District includes 13 statesand three U.S. PacificTerritories Over 1,400 members Supports mortgagelending, economicdevelopment andaffordable housing Represented by 74Members of Congress and26 Senatorsbillion inMortgages 7.8billion inRegulatoryCapital11
FHLB DES MOINESSTABLE DIVEDEND HISTORYFHLB Des Moines Dividend RateActivity Stock Dividend, 3Q 2017, 4.00%4.50%Activity Stock Dividend, 1Q 2012, 4.00%Activity Stock Dividend, 2Q 2017, 3.50%4.00%3.50%Rate %3.00%2.50%Membership Stock Dividend, 3Q 2017, 1.50%2.00%Membership Stock Dividend, 2Q 2017, 1.00%1.50%Membership Stock Dividend, 1Q 2012, 0.50%1.00%0.50%0.00%Activity Stock DividendData as of September 30, 2017, unless noted differentlyMembership Stock Dividend3ML12
FHLB DES MOINESPOWER OF PARTNERSHIP13
FHLB DES MOINESMEMBER DEMOGRAPHICSDEPOSITORYMEMBERS*# MEMBERS# ACTIVE% ACTIVEASSETS ( MM)ADV./ASSETS %IA31122874% 93,6294.9%MN30918659% 83,2283.1%MO28714252% 179,6392.5%WA794856% 114,4534.1%ND734358% 36,5464.9%SD663659% 57,2393.7%MT512145% 32,7422.6%OR421331% 52,3902.5%UT361228% 278,8071.5%WY321234% 6,8181.0%HI281032% 60,7260.8%ID191047% 11,2722.0%AK13646% 15,1530.6%Total1,34676757% 1,022,6422.7%*As of 06/30/2017. Excludes Wells Fargo Bank, N.A.14
FHLB DES MOINESPOWER OF PARTNERSHIP 2017 was an excellent year for the FHLB Des Moines driven by recordadvances and broad utilization of our products and services Nearly 66% of our members utilized at least one product from theBank Member penetration rate of 2.87% suggests FHLB Des Moines isfunding almost 3.0% of depository balance sheets Record advances of 131.6 billion and a growing mortgage footprint 27 new members and 75 million contributed to our AffordableHousing Program Bank is scaled to contemplate increases and decreases in memberdemand for advances15
FHLB DES MOINES OVERVIEWHOW MEMBERS UTILIZE FHLBLIQUIDITY MANAGEMENT Just-in-time funding Re-allocate lower yieldingassetsINTEREST RATE RISKMANAGEMENT Control asset/liabilitymismatches Balance sheet (macro)funding Transaction (match)fundingMaintainsProfitability& SafetyCAPITAL MANAGEMENT Increase capital efficiency Allow capital to determineassets size, not deposits Increase net income/returnto ownership (dividends)16
FHLB DES MOINES OVERVIEWHOW MEMBERS UTILIZE FHLBDeposits are a KeyComponent of FundingStrategyAdvances areComplementary toDeposit FundingAdvances can EnhanceValueas Rates Rise Deposits represent the primary source of low-costfunding and franchise value.Deposits are inherently duration-uncertain.Can deposits be run-off and transferred into durationcertain, long-term funding in the form of advances?Advances add duration certainty to the right-handside of the balance sheet.Diversification of funding sources can help reduceoverall volatility of balance sheet.Advances are capital-efficient, customizable, simpleand backed by a strong counterparty.As rates rise, the value of an advance can increase.Offsets losses to fixed-rate assets in rising ratescenario.17
FHLB DES MOINES OVERVIEWMORTGAGE PROGRAMSMortgage Partnership Finance (MPF ) Program Began in 1997 Offered by 9 FHLBanksMortgage Purchase Program (MPP) Offered by the FHLBanks of Cincinnati and IndianapolisOver 2,000 members approved to participate in these programs,members are called Participating Financial Institutions (PFIs)The MPF Program offers several products with various credit risksharing structuresMortgage Partnership Finance” and “MPF” are registered trademarks of the Federal Home Loan Bank of Chicago. The “MPFMortgage Partnership Finance” logo is a trademark of the Federal Home Loan Bank of Chicago18
FHLB DES MOINES OVERVIEWMORTGAGE PRODUCTSMPF Risk Sharing Products Require Risk Sharing with the PFI MPF Original MPF 125 The MPF Program uses a creditmodel to credit enhance each loanto an investment grade level The Credit Enhancement Obligationcreated under each productstructure must be collateralized bythe PFISecondary Market Products MPF Government (FHA, VA, RHS,HUD 184 Loans) MPF Xtra MPF Government MBS MPF Direct – Jumbo product19
FHLB DES MOINES OVERVIEWMORTGAGE PROGRAM IMPORTANCE TO COMMUNITY LENDERS Typical PFI sells 11 million annually (67 loans) Supports the FHLBs housing finance, community and economicdevelopment mission Provides liquidity and reliable access to the secondary mortgagemarket Allows community lenders to offer competitive mortgage productswithin their communities Allows PFIs to manage risk by selling fixed rate loans off their balancesheets MPF Products allow PFIs to be rewarded for good credit decisionsthrough credit enhancement fees Maintain customer relationships through retained loan servicing20
FHLB DES MOINES OVERVIEWDOWNPAYMENT ASSISTANCE PROGRAMSHOME TART—HOME TART PLUS—Up to 250,000 annually toprovide down payment andclosing cost assistance foreligible homeowners.Funds are made availableon a first-come, firstserved basis, subject toavailability.Up to 100,000 to providedown payment and closingcost assistance for eligiblehomeowners. Funds aremade available on a firstcome, first-served basis,subject to availability.Members provide thesefunds to eligiblehouseholds in amounts upto 10,000.NATIVE AMERICANHOMEOWNERSHIPINITIATIVE—Up to 100,000 throughthe NAHI to provide downpayment and closing costassistance for eligiblehomeowners. Funds aremade available tomembers on a first-come,first-served basis, subjectto availability. Membersprovide these funds toeligible households inamounts up to 10,000.21
FHLB DES MOINES OVERVIEWDOWNPAYMENT ASSISTANCE PROGRAMSMPF XTRA3DMPF Xtra 3D is a down payment assistance product option outside of the FHLBanks’Affordable Housing Programs (AHP), available to PFIs under the MPF ProgramWhat features set the 3D product apart? No Mortgage Insurance (MI) Required No Loan Level Price Adjustments (LLPAs) apply After loan purchase, 3% of the unpaid principal balance is added tothe funded amount for down payment assistance and closing costsOther advantages include: Delegated underwriting Down payment assistance funds are received immediately and included in the Loan Funding ConfirmationReport Recapture of the 3% down payment assistance is not required when a borrower refinances or sells the property May be used in conjunction with other Down Payment Assistance Programs (DAP), Community Seconds programs or the Fannie Mae HomeReady product A retention agreement to ensure that the property is retained as affordable housing is not required22
FHLB DES MOINES OVERVIEWAFFORDABLE HOUSING PRODUCTSCompetitive Affordable Housing Program 416 million in grants 76,440 units of affordable housingDown Payment Products 83 million in grants 20,528 units of affordable housingCommunity Investment Advances 11.3 billion in reduced rate advances for affordable housingand economic developmentData as of June 30, 2017, unless noted differently23
FHLB DES MOINES OVERVIEWCOMPETITIVE AFFORDABLE HOUSING PROGRAMForgivable Grants For purchase, construction, or rehabilitation of affordablehousing unitsEligible Projects Owner-occupied housing (household income 80% of AMI Rental housing (at least 20% of households must have incomes 50% of AMI)Member partners with community organizations, developers, orpublic entities to submit an applicationData as of June 30, 2017, unless noted differently24
FHLB DES MOINES OVERVIEWCOMPETITIVE AFFORDABLE HOUSING PROGRAM25
FHLB DES MOINES OVERVIEWDIVERSITY & INCLUSIONCommitment toDiversity &InclusionAt FHLB Des Moines, our diversity & inclusion journey reaches beyond the walls of ourorganization. Led and supported by our Board of Directors, our diversity practices apply to everyaspect of our business with the needs of our members and the diverse business communitiesthey serve, our central focus.26
VISIT OUR WEBSITEMPF.FHLBDM.COMPRODUCT INFORMATIONRESOURCESLearn more about MPF productsbased on your servicing needs, riskpreferences and borrower profile.Browse through helpful MPFresources, including forms, ondemand webinars, links and more!CUSTOMIZED TRAININGCONTACT INFORMATIONGet step-by-step instructions forselling your loans into the MortgagePartnership Finance Program.Do you have more questions abouthow MPF could be right for you?Contact your local MortgageRelationship Manager today.27
STAY IN TOUCH WITH USEd Barker – VP, Mortgage Relationship ManagerOfficePhoneEmail / Website801 Walnut StreetSuite 200Des Moines, IA 50309Office: 515.471.4044Mobile: 708.497.8786ebarker@fhlbdm.comwww.fhlbdm.com28
Federal Home Loan Bank of Des Moines . 2 AGENDA FHLB Des Moines Overview How Members Utilize FHLB Des Moines FHLB System . 3 FHLB System Overview POWER OF PARTNERSHIP . 4 . As rates rise, the value of an advance can increase. Offsets losses to fixed-rate assets in rising rate scenario. Deposits are a Key
