• One-to-four-unit mortgages that are sold in the secondary market are permitted, including FNMA DUS bonds that fund projects in targeted census areas. • Owned home loans or rental projects that target low-to-medium households (up to 115% area median income), measured either by target lending area or target income level. • Financing for Native American Housing Assistance, Alaska Native or Native Hawaiian Homeland projects (commercial and residential). CIA PRODUCT LOGISTICS The qualification process is easy. At the time a CIA is requested, the member provides summary information to the FHLB Des Moines Community Investment Department about the loans or investments that have or will be funded. Loans must have been originated and funded within the three months prior to the date of the CIA, or a member may take an advance on loans to be originated and funded within the 12 months after date of the advance. The latter alternative is useful to accommodate new construction projects, loans or lines of credit for working capital. Only the funded amount of a loan is eligible for CIAs. For added flexibility and duration-certainty, should the funded loan or investment be terminated or prepaid before the CIA matures, that CIA is not required to be terminated. There are a few other features to be aware of: • The maximum outstanding CIA balance per member was recently doubled and increased to $20 million. • Minimum maturity of a CIA is one year. • Minimum amount per advance is $25,000 and $100,000 for the Commercial and Residential Lending Programs, respectively. • CIA funding from FHLB Des Moines is available on an ongoing basis. • Identified loans used to qualify for CIAs are not collateral for the advance. Rather, a member’s existing collateral pool is pledged separately while an outstanding CIA would offset that collateral. REDUCED RATES AND BALANCE SHEET MANAGEMENT OPPORTUNITIES In addition to accessing funds for the benefits of affordable housing and community investment, CIAs are offered at rates that are consistently offered below posted regular-term advance levels. Our website provides daily rate indications for CIAs. Plus, the positive impact of the cash dividend benefit derived from the FHLB Des Moines activity stock, yields an extremely competitive and duration-certain source of funding. DOUBLE-DIPPING THE CHIP In addition to obtaining funds for providing affordable housing and community capital at a highly competitive rate, the fungible prepayment features of the CIA may be readily applied as a tool to assist a member’s balance sheet and interest risk mitigation strategy. As an example, if a member has sustained decreasing deposit durations and wishes to increase asset sensitivity, deploying low-cost term advances is an effective means of achieving this goal. In many cases, FHLB Des Moines members are already originating residential, commercial, agriculture or small business loans in their regular course of operations. From a funding perspective, the path of least resistance, at least for the first $20 million, should always warrant the CIA. It’s profitable to the communities that you serve to “doubledip the chip.” Please contact Eric Jensen at (206) 434-0581 or ejensen@fhlbdm.com and he can answer any questions and assist you with completing the application. 38697 Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing *We do not reparticipate loans. Craig McCandless Call me at 406.850.3790 Based in Billings, Mont. Serving Montana, Wyoming and Idaho Our Mission Is to Help You Succeed Community Banker 21
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