FHLBank Atlanta Assisting Florida Local Housing Finance Agencies in Converting Challenges into Opportunities Leah Douglass Vice President, Sales and Trading Operations Manager Arthur L. Fleming Senior Vice President, Director of Community Investment Services
Disclaimer This presentation may include “forward - looking statements,” which include statements with respect to the Bank’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond the Bank’s control, and which may cause the Bank’s actual results, performance or achievements to be materially different from the future results, performance, or achievements expressed or implied by the forward-looking statements. The forward-looking statements may not be realized due to a variety of factors, including, without limitation: legislative and regulatory actions or changes; future economic and market conditions; changes in demand for advances or consolidated obligations of the Bank and/or the FHLBank System; changes in interest rates; political, national, and world events; and adverse developments or events affecting or involving other Federal Home Loan Banks or the FHLBank System in general. Additional factors that might cause the Bank’s results to differ from these forward - looking statements are provided in detail in the Bank’s filings with the Securities and Exchange Commission, which are available at www.sec.gov. The information contained herein is provided for illustrative purposes only and is based on certain assumptions that FHLBank Atlanta believes to be reasonable. Different assumptions, however, may lead to materially different results. Additionally, past performance and experience with respect to similar financial products may not necessarily be indicative of actual results. The information, analysis, and applications contained herein should not be relied upon as a substitute for your own business judgment and independent review. You should consult your own regulatory, tax, business, investment, financial and accounting advisors, and should perform your own suitability analysis, before entering into any transaction or structure described herein. Sophisticated financial products are risky and are not appropriate for all persons. FHLBank Atlanta is not a registered investment advisor and does not advise persons on the advisability of investing in, purchasing, or selling sophisticated financial products, or the means by which any such product may be utilized. Nothing in the information herein should be considered an offer to sell or a solicitation of an offer to buy any securities or derivative products. FHLBank Atlanta is not obligated to update or keep current the information or applications contained herein. FHLBank Atlanta may own or have a position relative to certain securities or other financial instruments discussed in this information or used in this analysis. Neither FHLBank Atlanta nor any of its directors, officers, employees, agents, attorneys, or representatives, shall have any liability for any loss or damage arising out of the use of all or any part of this information. 2
Who We Are
FHLBank System Over 80 Years of Helping Institutions Grow and Prosper 4
FHLBank System 5
FHLBank Atlanta Contributing to Our Shareholders’ Success as their Trusted Advisor $132.4 Total Assets billion $92.5 Total billion Advances First Quarter 4.87% Dividend 922 Total Membership Institutions * Data as of March 31, 2016 6
Core Products and Services • Advances (Loans) • Letters of Credit • Interest-rate risk management tools • Derivative Intermediation • Cash management services • Affordable Housing Program (AHP) and Community Investment Program (CIP) 7
Working with Housing Finance Agencies
Housing Finance Agencies (HFAs) Eligibility as Housing Associates Housing Associate of the FHLBanks is defined as… Housing Finance Authorities - a public agency, authority, or publicly sponsored corporation that serves as an instrumentality of any state or political subdivision of any state, and functions as a source of residential mortgage loan financing in that state 9
Housing Associate Eligibility Requirements • Approved by HUD as a “mortgagee” under Title II of the National Housing Act • Chartered institution having succession • Subject to the inspection and supervision of some governmental agency • Principal activity in the mortgage field must consist of lending its own funds • The financial condition is such that advances may be safely made • The authority to borrow funds, pledge collateral, and deposit funds with the FHLBank 10
FHLBank Atlanta Housing Associates Florida Local HFAs • Housing Finance Authority of Miami-Dade County • Manatee County Housing Finance Authority • Orange County Housing Finance Authority • Brevard County Housing Finance Authority • Housing Finance Authority of Lee County • First Housing Development Corporation of FL • Housing Finance Authority of Pinellas County • Florida Housing Finance Corporation • Housing Finance Authority of Palm Beach County • Housing Finance Authority of Broward County 11
Value and Benefits of Becoming a Housing Associate • Access to all liquidity products without purchasing stock • Short-term warehouse • Term funding • Fixed- and variable-rate • Access to Letters of Credit/AAA-rated bond credit enhancement product • Cash management, including safekeeping services • Interest-rate risk management tools 12
FHLBank Atlanta’s HFA Initiative Objective: Enhanced operations and policies to better serve the needs of our Housing Associates 13
Enhanced Operations and Policies for HFAs 2013 – Workshop with State HFA Executive Directors • Expanded collateral policies to accept loans • Created new credit rating methodology for HFAs • Improved discounts applied to securities collateral • Enhanced staff training and understanding of HFA business, operations, and balance sheet 2014 – Luncheon with State HFA Executive Directors at NCSHFA Conference • Feedback on credit and collateral; policy enhancements • New strategies – “Structured Partnerships” • Revised Bank’s advances and security agreement to facilitate HFA pledges of mortgage loans 2015 – Luncheon with Executive Directors of Florida Local Housing Finance Agencies • Building new relationships and awareness • Eligibility requirements clarifications • Structured Partnership concept 14
Affordable Housing Products and Services
FHLBank Atlanta AHP Scale and Impact $692.6 Million AHP Competitive competitive funds awarded to create over 109,600 rental and homeownership opportunities for moderate-, low- Program and very low-income households since 1990. AHP Competitive Leverage Ratio – 1:13 AHP Set-aside Program $167 Million funded through AHP Set-aside products and supporting more than 24,500 units since 1997. AHP Set-aside Purchase Leverage Ratio – 1:20 Community Investment Program $7.5 Billion low-cost CICA advances supporting community Economic economic initiatives and affordable housing development. Development Program *As June 30, 2016 16
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Structured Partnerships $3 Million $900,000 $3.8 Million $1.5 Million $3 Million $1.8 Million 20
Housing Floridians Structured Partnership At least a Structured arrangement between the Federal Home Loan Bank of Atlanta (FHLBank Atlanta) and a group of Florida local housing finance agencies (FL HFAs) using a universal agreement Lead HFA Participating Counties Products HFA of Hillsborough Hillsborough, Brevard, • FHA Loans County Clay, and Jacksonville • VA Loans HFA of Miami-Dade Miami-Dade • RD Loans County • Fannie Mae HFA of Pinellas Pasco, Pinellas, and Polk and Freddie Mac * * Fannie Mae and Freddie Mac available only in Miami-Dade County Funding $1 Million $2 Million 2:1 Ratio FHLBank Atlanta FL HFAs maximum FHLBank Atlanta and FL HFAs commitment is up to commitment is will commit grant funds on at $1 million $2 million least a 2:1 ratio , on a transactional basis 21
Housing Floridians • Generating a pool of new participating lenders for local HFAs • Exclusive access to $11,250 to $22,500 per household in grant funding • Local HFAs via a single agreement (Universal MOA) • Collaborative • CRA Innovation Strategy • Positive branding and awareness 22
Warehousing financing Event mortgage loans Structured Sponsorship to facilitate HFA Partnerships single-family programs LOC for Multi- Balance Sheet family Bods 4% Management LIHTC 23
Appendix
APPENDIX HFA - Credit Scoring and Availability (limits) • Proprietary model assigns ratings from 101 through 104 (101 is the healthiest) • Based upon increasing probability of default • Separate models for banks, credit unions, insurance companies, and HFAs • HFA Credit Model takes the following into account: • B/S strength (Asset/Debt Ratio) • Portfolio performance (% of loans 90 days PD) • Financial performance (Operating income to operating revenue) • Variable rate debt (Variable rate debt to program bonds) • Credit analysts review ratings each quarter 25
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