Pub. 7 2019 Issue 2

22 The Community Banker www.mibonline.org “That is the first time I’ve heard the Declaration of Inde- pendence deconstructed and given a Marxist reinterpreta- tion,” I commented on my way out of a speech at the FHLBanks Director conference in Washington, D.C. this past May. I had just sat through a speech given by a prominent community organizer who used his platform to attack member financial institutions of the FHLB for being a big part of our country’s problems. In his mind, the Social Contract, as spelled out in the Declaration, is ob- viously broken because 40 percent of Americans don’t have $400 to meet an emergency … and in his world, it’s our fault! This gentleman started his speech saying that he had been warned that he was like a lamb going into the lion’s den with his message, but he preferred to think of himself as the lion going into the lamb’s den. With that introduction, he launched into an attack on what you (and I) do every day in serving our customers and communities. In his world, we are the perpetrators of these problems in America. Now, I don’t know exactly what this gentleman was trying to accomplish, but his impact on me was probably the exact opposite of his goal. His words reminded me that it is time well spent going to Washington to get our story to decision makers. Our ability to serve our communities, without undue interference from elitists like him, requires regular face time to tell our story to legislators. After that speech I was happy to head up to capitol hill to lobby on behalf of our FHLB cooperative that is such an important part of our business model. The attitude among legislators is very good toward the FHLB system. I had the chance to spend time with Senator Tester on behalf of Montana financial institutions who own our FHLB coop- erative. Senator Tester is, of course, of great strategic importance to us because of his role on the Senate banking committee. He is knowledgeable about the critical role FHLB’s play in our business model and assured me of his continued support. I also compared notes with our lobbyist, John Cwiklinski, who confirmed that there is an overall positive view of the FHLB on capitol hill. Equally important to us as shareholders in the FHLB are the views of the new FHFA director, Mark Calabria, who was sworn in on April 15, 2019, after being nominated by President Trump. While Director Calabria and Senator Tester have many divergent views because they come from different political parties, it was very encouraging to hear that their views on the FHLB are very similar. Calabria also recognizes the importance of communi- ty financial institutions and wants to preserve the FHLB as an important liquidity provider to us. He has a very large agenda on reforming the other GSEs, and that’s where he and Senator Tester will be in conflict, but on my mission to lobby on behalf of our cooperative, they seem to be singing out of the same hymnal. I also want to update you on our activities to replace retiring CEO Mike Wilson. Mike has agreed to remain until his replace- ment is found. We have hired a prominent executive recruitment firm, formed a search committee, and identified the traits we are looking for in our next CEO. I believe the large size of the Des Moines bank, its strong profitability, and abundant capital will at- tract a very large pool of exceptional candidates to choose from. Whenever I talk to Montana member institutions, I usually get questions about dividends. We have raised our activity stock dividend to 5.75 percent and membership stock dividend to 3.25 percent. As many of us consider the cost of funding our liquid- ity needs between choices such as brokered CDs verses FHLB borrowings, it’s important to include in the calculation our strong dividends as part of the comparison. Finally, I have been encouraging members to look at a couple of FHLB products that have become more popular in Montana. First, to address liquidity challenges, FHLB offers an alternative to securing public funds by pledging government bonds. A number of our members have begun using the FHLB Standby Letter of Credit product, and you might want to talk to your FHLB rela- tionship manager if your ALCO committee is looking for a way to preserve balance-sheet liquidity. And second, with housing affordability a growing problem in Montana, I am encouraging our member institutions to consider participating in the FHLB HomeStart program that could result in a $7,500 grant for home purchases to families that receive one. Joe Kesler , FHLB Member Director FHLB AT WORK By Joe Kesler, FHLB Des Moines Member Director Guest Article