BEWARE THE PERFECT STORM - FHLBank Topeka

WINTER 2007 

ocus fTHE RIGHT RESOURCES. RIGHT NOW. 

BEWARE THE 

PERFECT STORM 

by Frank Farone 

Managing Director 

Darling Consulting Group , Inc. 

Earlier this year I had the privilege of presenting my 

banking analogy to the movie “The Perfect Storm” at 

one of FHLBank Topeka’s regional fall meetings. You 

may recall the story of the Andrea Gale, a fishing boat 

whose captain, determined to appease restless investors 

after a run of bad trips, put his boat and crew in peril by 

ignoring warnings of a major storm on the horizon. He 

chose to move beyond his normal territory in search of a 

big catch. Unfortunately, after landing a rainmaker catch, 

the storms indeed closed in, the boat’s ice machine failed, 

and the communications system faltered. It was then 

that the captain faced a major choice. Play it safe and 

exercise prudence by riding out the storm in calm waters. 

Doing so would leave the fish to spoil. Alternatively, a run 

for port would deliver a huge cash windfall if the ship and 

crew survived the storm. Sadly, the captain’s high-risk strategy 

failed, and as the boat sailed for port, three separate 

storms converged on the Andrea Gale at once and all was 

lost - boat, crew and fish. 

Bankers might have felt recently that they were facing 

their own financial version of a perfect storm. Earnings 

were under pressure, the yield curve was inverting, and 

margins were getting squeezed as competitors were 

continued on page 3 

INSIDE THIS ISSUE 

2 MESSAGE FROM FHLBANK TOPEKA’S PRESIDENT: FHLBANK IS DOING WHAT 

WE DO BEST: PROVIDING LIQUIDITY TO HOUSING LENDERS 

6 WILARY WINN ON THE MOST COMMON MISCONCEPTIONS WHEN 

SELLING MORTGAGES 

10 COREFIRST BANK & TRUST: COMMITTED TO ITS COMMUNITY 

16 CENTRAL NATIONAL BANK: PROVIDING HOMEOWNERSHIP 

OPPORTUNITIES WITH FHLBANK’S FIRST-TIME HOMEBUYER FUNDS 

AND THE MPF PROGRAM 

17 HIGHLIGHTS FROM FHLBANK’S MORTGAGE OPERATIONS 

CONFERENCE AND REGIONAL FALL MEETINGS 

18 CONGRESSIONAL OUTREACH UPDATE 

19 MARK YOUR CALENDARS FOR FHLBANK’S AMC 2008 

www.fhlbtopeka.com 1 

SERVING COLORADO, KANSAS, NEBRASKA AND OKLAHOMA

MESSAGE FROM THE PRESIDENT 

DOING WHAT WE DO BEST: MEETING THE 

LIQUIDITY NEEDS OF HOUSING INVESTORS 

MESSAGE FROM THE PRESIDENT 

Andy Jetter 

President and CEO 

FHLBank Topeka 

A severe lack of confidence in the fixedincome 

markets causes many housing lenders 

to pull back. Typical channels for raising 

funds for home financing are blocked. 

Funds, if available at all, are at much higher 

rates. People trying to finance homes are 

facing significant hurdles. 

Sound familiar No, I’m not talking about 

the recent liquidity crisis. I’m describing the 

state of the economy in the early 1930s 

that led President Hoover to propose a 

system of 12 Federal Home Loan Banks 

dedicated to providing liquidity to housing 

lenders. President Hoover and the Congress 

recognized the importance of ensuring a 

stable supply of funds for housing lenders. 

Because the need for liquidity would change 

depending on the markets, the FHLBanks 

needed to expand and contract easily. 

Therefore, the FHLBanks were created as 

cooperatives whose capital would adjust 

in proportion to the demand for liquidity 

by housing lenders. When liquidity needs 

were large, the FHLBanks grew to meet 

those needs. When liquidity needs fell, the 

FHLBanks dropped in size. 

The role taken by the FHLBanks in addressing 

the liquidity needs of housing lenders 

during the recent liquidity crisis was exactly 

what was contemplated when the 

THE FHLBANKS ARE CONSERVATIVE 

COLLATERALIZED LENDERS. BECAUSE 

OF OUR CONSERVATIVE PRACTICES, NO 

FEDERAL HOME LOAN BANK HAS EVER 

HAD A CREDIT LOSS ON AN ADVANCE. 

THAT INCLUDES A PERIOD OF MARKET 

DISRUPTION IN THE LATE 80S THAT MAKES 

OUR RECENT EXPERIENCE LOOK LIKE A 

WALK IN THE PARK. 

FHLBanks were created in 1932. And the 

FHLBanks met the additional need for 

liquidity in a virtually seamless manner, just 

as anticipated in 1932. One big difference 

between 1932 and today - this time around 

the FHLBanks supplied needed liquidity 

immediately. The suffering in the 30s took 

much longer to resolve itself. 

But not everyone seems to be in agreement. 

I read with some satisfaction a Bloomberg 

article published on October 30. The overall 

tone of the article was intended to be 

critical, but I think most readers probably 

reached the opposite conclusion. In brief, 

the article noted that the foremost housing 

lenders in the country turned to the 

FHLBanks for liquidity when the normal 

channels of housing finance dried up. A 

quote from the article is an excellent case 

in point: 

“The cost of asset-backed commercial paper, 

when it was available, shot up. The home 

loan banks were the only game in town for 

a lot of borrowers. Even AAA-rated credits 

were having a tough time issuing paper. It 

took everyone back to the Federal Home 

Loan Banks.” 

The article raised concerns about the risk of 

growth in FHLBank borrowings needed to 

close the liquidity hole. I don’t share the concern. 

The FHLBanks are conservative, collateralized 

lenders. Because of our conservative 

practices, no Federal Home Loan Bank has 

ever had a credit loss on an advance. That 

includes a period of market disruption in the 

late 80s that makes our recent experience 

look like a walk in the park. 

I’m proud to be a part of the FHLBank 

System as we continue doing what we do 

best: providing liquidity to housing lenders 

to ensure that the supply of funds for residential 

mortgage lending is not disrupted. 

Sincerely, 

President and CEO 

2 

FHLBank Focus | Winter 2007

THE PERFECT STORM CONTINUED FROM COVER 

A GOOD ALM PROCESS SHOULD SERVE AS 

THE COMPASS THAT GUIDES THE BANK- 

ING SHIP AND EMERGENCY ALERT SYSTEM. 

REACHING OUTSIDE YOUR ALM GUIDELINES 

AND BRANCHING OUT INTO UNKNOWN 

TERRITORIES CAN BE DANGEROUS TO YOUR 

INSTITUTION’S HEALTH. 

becoming increasingly irrational in their 

product offerings on both sides of the balance 

sheet. It seemed there was no relief in 

sight as the Fed was expected to keep the 

pressure on. 

OUR ADVICE: NEVER LET 

GREED OVERCOME YOUR 

FEARS! A good ALM process should 

serve as the compass that guides the 

banking ship and emergency alert system. 

Reaching outside your ALM guidelines and 

branching into unknown territories can be 

dangerous to your institution’s health. 

STRATEGY 

At the August FHLBank regional fall meeting 

in Colorado, I discussed the inverted curve 

and its implications for banks. First and foremost 

I reminded folks that an ALCO’s role 

is not to forecast rates. However, historically, 

the inverted yield curve has been a precursor 

to recession; long rates have generally 

peaked by the time the curve inverts, and 

the next move in rates is generally down. 

Given the fact that most banks were 

expected to benefit if the curve steepened 

yet couldn’t afford the pain of higher rates, 

we spent a good deal of time reviewing the 

benefits of caps embedded in advances. The 

cost of insurance against rising rates was 

very inexpensive and that continues to be 

true today. We also discussed strategies for 

banks exposed to falling rates, which included 

pre-investing 2008 investment cashflows; 

leveraging to offset declining loan volumes 

due to a slowdown in the economy; using 

embedded floors in advances to protect 

against falling rates; and booking more fixed 

rate assets at lower rates than floating rates 

for commercial loans. 

FED LOWERS RATES - WHAT 

NOW The Fed has lowered rates by 

100 basis points since September, and rates 

across the yield curve spectrum have followed 

suit. Bankers, on the other hand, have 

been reluctant to lower their deposit rates for 

a variety of reasons. For some, they may not 

recognize the impact these lower rates have 

on their bottom line. For others, it’s a matter 

of who blinks first in their market by lowering 

rates ahead of the crowd. 

Meanwhile, loan yields and investment 

yields are screaming down, causing further 

margin erosion for bankers. Additionally, this 

lower rate environment may cause a whole 

new refinancing boom, causing the roof to 

cave in on asset yields and flooding bankers 

with unwanted cash flow at a time when 

they’ll want it least. 

9 SIMPLE STEPS YOU CAN TAKE RIGHT NOW: 

1. IMMEDIATELY LOWER CD RATES IN LINE WITH 

WHOLESALE FUNDING COSTS. 

Depending on a bank’s need for funding and liquidity position, most CDs should be 

at, or a quarter point below, FHLBank comparable maturities. Wholesale funds should 

be utilized for any funding needs beyond 12 months -- period! Currently, you can borrow 

3-year money at 3.77% and 5-year money at 4.06%. I still see 5% handles on CDs! 

My advice: Don’t be the village fool. Lower your rates and reap the immediate rewards. 

You’ll be surprised just how much your margins will widen while your deposit levels 

remain relatively stable. Any outflow can be replaced by wholesale funds at a considerably 

lower cost. One of my clients took this approach. Everyone in his market followed 

suit, and the five handles disappeared. 

2. MMDAS SHOULD BE DROPPED TO REFLECT MONEY 

MARKET RATES, NOT CD RATES. 

The Fed lowered rates in December, so be prepared to lower rates again on these 

accounts. Some banks have acted already, as the 91-day Treasury bill is now 2.83%. 



ASSET\LIABILITY STRATEGIES

9 STEPS YOU CAN TAKE RIGHT NOW 

CONTINUED FROM PAGE 3 

ASSET/LIABILITY STRATEGIES 

3. PRE-INVESTING CASH FLOW NOW COULD PAY BIG 

DIVIDENDS FOR ASSET SENSITIVE BANKS IF RATES 

CONTINUE TO FALL. 

Most bank investment portfolios will soon be throwing off considerable cash flows 

that need to be reinvested as loan demand has slowed. Now is an excellent time to 

consider restructuring some of those “callable” securities and buying call protection. 

Special note: Be careful of floating rate TRUPs, especially at discounts. 

4. LIABILITY SENSITIVE BANKS SHOULD GIVE SERIOUS 

CONSIDERATION TO EXTENDING FUNDING AND 

LOWERING THEIR DEPENDENCY ON CDS. 

Banks can extend funding and lower their costs considerably. Don’t waste marketing 

dollars promoting CDs; now is an excellent time to design your own liability structure 

at bargain prices. 

5. CONSIDER EMBEDDED DERIVATIVES TO OFFSET 

OPTIONALITY. 

Embedded caps and structured advances are very compelling now. Keep in mind that 

you don’t want to extend too far and create a falling rate problem down the road. 

6. TAKE ADVANTAGE OF THE CURRENT LIQUIDITY CRISIS. 

The best way to increase yields is to hold loans in portfolio and take advantage of the 

risk premium of both conforming and non-conforming loans. Yield premiums are significantly 

higher than normal, particularly on Jumbo loans. 

7. CONSIDER BUYING LOANS IF YOU CANNOT GENERATE 

THEM YOURSELVES OR IF YOU HAVE CONCERNS OVER 

CONCENTRATION RISK. 

C&I loans can be purchased at attractive rates from some very large banks. We 

encourage you to do your due diligence and underwrite these loans accordingly. 

8. SELL OPTIONS AND GET PAID A PREMIUM RATE. 

Offer a no-cost refinance option on mortgage loans for a stated period but charge a 

quarter point higher. Most consumers won’t refinance until rates fall significantly, in 

which case they would have refinanced anyway, but maybe not with your bank! A win/ 

win for the bank and customer. The same applies to “no penalty” CDs that pay a lower 

rate initially for the opportunity to withdraw funds before final maturity (after seven 

days). In a falling rate environment, this is a real winner that competes well with highercosting 

term CDs. 

9. LASTLY, REVISIT YOUR LIQUIDITY AND CONTINGENT 

LIQUIDITY POLICIES TO ENSURE COMPLIANCE AND 

TO PROVIDE FLEXIBILITY FOR THE BANK. 

FHLBank advances are significantly less expensive than brokered CDs and national 

market CDs, yet I still see banks rolling over CDs because they are reaching their 

internal borrowing limit even though they have sufficient collateral to borrow from 

an FHLBank. Hint: Change your borrowing limit if it makes good business sense. 

BOTTOM LINE: 

NOW IS A GOOD 

TIME TO TAKE 

ACTION REGARDLESS 

OF YOUR BANK’S IRR 

POSITION. DON’T 

WAIT FOR RATES TO 

CHANGE BEFORE 

MAKING BALANCE 

SHEET MANAGE- 

MENT DECISIONS; 

IT MAY BE TOO LATE! 

AND, REMEMBER 

THE ANDREA GALE. 

The Darling Consulting Group specializes in 

education, strategic planning and management 

tools for banks, thrifts and credit unions. DCG’s 

nearly 300 clients consistently outperform their 

peers by over 60 percent, based on ROE. 

Frank Farone is a managing director of DCG, 

working nationwide with financial institution 

CEOs and CFOs to increase earnings through 

the proactive management of capital, liquidity/funding 

risk and interest rate risk. He assists 

clients in anticipating the effects of changing 

market conditions on their balance sheets and 

develops strategies based on a clear understanding 

of risk/reward tradeoffs. 

Contact Mr. Farone at 978.463.0400, ext. 171, or 

e-mail him at ffarone@darlingconsulting.com. 

This article may not be reproduced or distributed 

without written permission from DCG. 

4 


www.fhlbtopeka.com 5

MORTGAGE OPERATIONS 

COMMON MISCONCEPTIONS WHEN 

SELLING MORTGAGES 

Many institutions sell the mortgage loans 

they originate with the servicing rights 

released because they believe it is the best 

price. Wilary Winn, a St.Paul, Minn.-based 

consulting firm that provides objective and 

independent fee-based advice to financial 

intermediaries, believes that in many cases, 

the best all-in price comes from selling the 

loan servicing retained under the Federal 

Home Loan Bank’s Mortgage Partnership 

Finance® (MPF®) Program. We believe an 

institution can and should recognize both 

the value of the servicing it retains and the 

value of the credit enhancement fees the 

program provides. Both amounts should be 

recorded at the time of sale providing current 

income. In addition, we believe retaining 

the servicing allows institutions to maintain 

their relationship with their customers, 

thus providing better long-term profitability. 

This article begins with a brief general 

description of the MPF Program. We then 

discuss many of the economic misconceptions 

related to selling mortgages. We 

believe these misconceptions result in institutions 

making sales decisions that are not 

in their best economic interest. 

MPF® Program Flow Chart 

The following diagram represents 

a simplified and general version of 

how the Program works. 

BORROWER 

Principal & Interest 

Closing Costs 

Loan Funds 

Doug Winn 

President 

Wilary Winn LLC 

OVERALL DESCRIPTION OF THE MPF® PROGRAM 

The MPF Program, offered by FHLBank Topeka, provides an alternative to selling loans to 

Fannie Mae, Freddie Mac or other secondary market participants. Institutions participating 

in the program (PFIs) sell their fixed-rate residential mortgage loans to FHLBank Topeka. 

The MPF Program is best understood by viewing a fixed-rate mortgage as a bundle of risks 

and rewards that can be split into their component parts. Each risk and its related reward 

is assigned to the institution best situated to manage it. For example, experience has 

demonstrated that local lenders know their customers best. As a result, under the MPF 

Program, the mortgage lender originator has the primary responsibility for managing the 

credit risk (the risk that the homebuyer will be unable to repay the loan) of the loans it 

originates. Similarly, under the MPF Program, the local lender handles all functions involving 

the customer relationship. 

By contrast, FHLBank Topeka is responsible for managing the interest-rate risk, prepayment 

risk, and liquidity risk of the long-term fixed-rate mortgage loans because of its expertise 

at properly hedging such interest rate risks and its ability as a GSE to raise low-cost, longterm 

funds in the global capital markets. 

CREDIT ENHANCEMENT 

The credit risks of MPF loans are managed by structuring the possible losses into several 

layers. As is customary for conventional mortgage loans sold to Fannie Mae or Freddie 

Mac, private mortgage insurance (PMI) is required for MPF loans with down payments 

of less than 20 percent of the original purchase price. Losses beyond the PMI layer and 

the borrower’s equity are absorbed by a “first loss” account (FLA) established by FHLBank 

Topeka. If “second losses” beyond this first layer are incurred, the losses (not to exceed a 

specific maximum) are absorbed through a credit enhancement provided by the PFI. 

PARTICIPATING 

FINANCIAL 

INSTITUTION 

(member) 

Credit Enhancement 

P& I 

(Net of Servicing Fees) 

Credit 

Enhancement Fees 

Loan Funds 

The Mortgage Partnership Finance Program, MPF and the MPF logo are registered trademarks of the Federal Home Loan Bank of Chicago. 

First Loss Account 

FHLB 

6 


THE MPF PROGRAM IS BEST UNDERSTOOD 

BY VIEWING A FIXED-RATE MORTGAGE AS A 

BUNDLE OF RISKS AND REWARDS THAT CAN 

BE SPLIT INTO THEIR COMPONENT PARTS. 

EACH RISK AND ITS RELATED REWARD IS 

ASSIGNED TO THE INSTITUTION BEST 

SITUATED TO MANAGE IT. 

The credit enhancement layer ensures that 

the lender retains a credit stake in the loans 

it originates. For managing this risk, PFIs 

receive monthly “credit enhancement fees” 

from FHLBank Topeka. 

Although FHLBank Topeka offers several 

MPF product alternatives, this article, for 

the sake of simplicity, focuses on the 

Original MPF product. 

ORIGINAL MPF® 

Under the Original MPF product, the first 

layer of foreclosure losses arising from loans 

sold in excess of the amount covered by 

PMI coverage is paid by FHLBank Topeka 

up to the balance in the FLA. The FLA 

accumulates monthly at the rate of 4 basis 

points per year. The PFI then provides a 

second loss CE Obligation for each Master 

Commitment based on the underlying 

quality of the loans sold. This second loss 

obligation generally averages around 2.5 

percent of the loans sold under the commitment. 

Foreclosure losses beyond the first 

and second layers are absorbed by FHLBank 

Topeka. We note here that since the inception 

of the program at FHLBank Topeka, all 

foreclosure losses have been covered by the 

FLA and no PFI has suffered a loss arising 

from its second loss obligation. 

In return for bearing a portion of the credit 

risk, an institution receives monthly fees on 

the outstanding balance of the loans at a 

rate equal to 10 basis points annually. We 

estimate that in today’s market, the present 

value of this fee equates to approximately 

$475 for a $125,000, 30-year fixed rate loan. 

FIVE COMMON 

SERVICING 

MISCONCEPTIONS 

WHEN SELLING 

MORTGAGES 

1. SELLING MORTGAGES 

SERVICING RELEASED 

PROVIDES MORE CURRENT 

INCOME THAN SELLING 

SERVICING RETAINED. FALSE 

Selling loans servicing released provides 

immediate income and cash flow from the 

purchaser. However, when selling loans servicing 

retained an institution can and should 

record the value of the servicing asset, which 

also provides immediate income. 

In addition, by selling loans under the MPF® 

Program, an institution can generally generate 

upfront income by capitalizing the credit 

enhancement fee. Wilary Winn believes it 

is appropriate to capitalize this asset, as do 

the regulators. However, there are dissenting 

opinions, so check with your accountants 

before making your decision. 

Below is an example where we compare selling 

a $125,000, 30-year loan with a 6.375% 

interest rate servicing retained to FHLBank 

Pricing 

Components 

FHLBank 

Topeka 

Servicing 

Aggregator 

Cash Price 100.22% 99.59% 

Servicing 1.07% 1.25% 

CE Fee 0.37% 0.00% 

Credit Obligation 0.00% 0.00% 

101.66% 100.84% 

Topeka vs. selling the same loan servicing 

released to a large aggregator of servicing 

rights. 

2. THE 25-BASIS-POINT 

SERVICING FEE IS THE ONLY 

SOURCE OF INCOME 

RELATED TO RETAINED 

SERVICING. FALSE 

In addition to the servicing and credit 

enhancement income mentioned above, 

an institution that retains servicing has the 

right to collect late fees and other ancillary 

income from the borrower. Purchasers 

of servicing often include the benefits of 

cross-selling in their bids – whether the 

income arises from getting the borrower to 

open a demand or time deposit account, 

purchase insurance, make an investment, 

or obtain a loan. In our opinion, the mortgage 

application contained within the loan 

file contains the most comprehensive and 

detailed information available to effectively 

cross-sell. When performing an economic 

comparison analysis, we believe institutions 

should consider the loss of cross-selling 

opportunities -- or worse still the loss of a 

customer -- in their analysis. 

3. SMALLER SERVICING 

PORTFOLIOS ARE COST 

PROHIBITIVE. FALSE 

Wilary Winn believes that one of the age 

old myths in mortgage banking is that 

an institution must have scale in order to 

profitably service loans. We have found 

that our clients with smaller portfolios 

efficiently service loans by keeping it simple 

– they service for one or two investors; 

use the same remittance option; maximize 

the number of borrowers who pay electronically; 

originate high-quality loans; and 

determine if escrowing the loan voluntarily 

(investors require that high LTV loans be 

escrowed) makes sense in the institution’s 

geographic area. 

Institutions that do not want to service 

their mortgages in-house may wish to 

consider contracting the function to an 

MPF approved sub-servicer. 




COMMON MISCONCEPTIONS WHEN SELLING 

MORTGAGES CONTINUED FROM PAGE 7 


OUR CLIENTS WITH SMALLER PORTFOLIOS 

EFFICIENTLY SERVICE LOANS BY KEEPING 

IT SIMPLE – THEY SERVICE FOR ONE OR 

TWO INVESTORS; USE THE SAME REMIT- 

TANCE OPTION; MAXIMIZE THE NUMBER 

OF BORROWERS WHO PAY ELECTRONICALLY; 

ORIGINATE HIGH-QUALITY LOANS; AND 

DETERMINE IF ESCROWING THE LOAN 

VOLUNTARILY MAKES SENSE IN THE 

INSTITUTION’S GEOGRAPHIC AREA. 

4. SELLING THE SERVICING RIGHTS PROVIDES FOR A SIMPLE 

LOAN OFFICER COMMISSION STRUCTURE. FALSE 

Many institutions include the price received for selling the servicing rights into the loan 

officer commission calculation. The same can be done with servicing rights that are 

retained. We have clients who simply add the capitalized servicing asset to the sales price 

in order to calculate commissions. We provide our clients with a schedule of booking 

rates that allows them to calculate the value of the retained servicing right based on the 

loan size, loan term and whether or not the loan is escrowed. They use the schedule to 

determine the amount to record for the mortgage servicing right for their gain on sale 

and commission calculations. 

5. AN INSTITUTION CANNOT SELL LOANS SERVICING 

RELEASED TO FHLBANK TOPEKA. FALSE 

Although the majority of loans sold to FHLBank Topeka are sold servicing retained, an 

institution can sell its loan servicing released under the MPF Program. FHLBank Topeka 

has a contract with Colonial National Mortgage to purchase servicing rights for loans sold 

into the MPF Program. We note that Colonial’s prices are often less than other servicing 

released bidders in the marketplace. We believe this is due in part to their commitment 

under the program to not cross-sell. 

Institutions that elect to sell to the MPF Program servicing released do not give up their 

credit enhancement position. They continue to receive credit enhancement fees from 

FHLBank Topeka and continue to be responsible for their credit enhancement obligation. 

IMPLEMENTING THE MPF PROGRAM. WONDERING HOW 

TO GET STARTED 

First, we recommend that an institution compare the economics of the program to other 

alternatives. We have found the MPF Program to generally be more favorable. 

Second, we recommend that an institution 

consider the accounting and regulatory 

requirements of the program. Wilary Winn 

can provide a complimentary Accounting 

and Regulatory Guidance manual designed 

to help you with implementation. 

Third, we recommend that you develop 

analytics to provide you with the proper 

amounts to record for the mortgage servicing 

rights assets, credit enhancement fees 

receivable and credit enhancement obligation 

liabilities. In this regard, we are pleased 

to report that we are working to create 

a pilot program under which FHLBank 

Topeka will provide us directly with data 

on loans sold by a PFI to the Bank (e.g. loan 

amount, term, interest rate). We will in turn 

combine this data with information we 

obtain from the marketplace (e.g. expected 

prepayment speeds, market servicing costs, 

market required discount rates) and determine 

the value of the assets and liabilities 

at the loan level using our proprietary cash 

flow engine. We will then provide an institution 

that elects to participate in the program 

with a monthly (or quarterly depending 

on loan volume) MPF portfolio value 

report, the necessary accounting entries to 

record the loan sales and a file that calculates 

the ongoing monthly amortization at 

the loan level. 

It goes without saying, but we will say it 

anyway to the people responsible for the 

accounting: Our calculations and reports 

meet all of the requirements of FAS 140, 

FAS 156, and FAS 157. 

Wilary Winn LLC President and co-founder 

Douglas Winn has more than 25 years of executive 

level financial experience and has served 

as a management consultant for the last nine. 

His areas of expertise include business planning, 

treasury management, residential mortgage 

lending and asset-backed securitization. Mr. 

Winn can be reached at 651.224.1200. Visit 

Wilary Winn’s Web site at www.wilwinn.com. 

8 


BACK TO COMMON SENSE LENDING 

If you’ve been considering participating 

in the Mortgage Partnership Finance® 

(MPF®) Program offered by FHLBank 

Topeka as a secondary market alternative, 

now could be the best time. The MPF 

Program supports the common-sense 

residential mortgage lending that you, our 

members, provide in your communities. 

WHY THE MPF® PROGRAM 

MAKES SENSE 

Fannie Mae and Freddie Mac’s purchase 

programs require that they be compensated 

upfront for forecasted credit risk. 

Recently, both companies indicated they 

will increase their upfront loss compensation 

charges as a result of the turbulent 

mortgage market. 

With the MPF Program, we don’t charge 

a guaranty or delivery fee, nor do we 

adjust price sheets based on riskier loan 

characteristics. It simply doesn’t make 

sense to charge our customers an upfront 

fee for losses that may or may not occur. 

Instead, we ask that our members share in 

Unlike repos, FHLBank’s short-term 

advances don’t require a specific security to 

be pledged against them, but short-term 

advances are priced competitively to repos. 

We refer to these short-term advances as 

repos because their rate is competitive with 

repos and brokered CDs. However, be careful 

when making comparisons between 

advances and other funding sources; the 

varying day basis and interest payment 

frequencies make it difficult to draw an 

accurate conclusion. 

FHLBank’s Member Services staff is available 

to assist you in making an apples-to-apples 

WITH THE MPF® PROGRAM, WE DON’T 

CHARGE A GUARANTY OR DELIVERY FEE, 

NOR DO WE ADJUST PRICE SHEETS BASED 

ON RISKIER LOAN CHARACTERISTICS. IT 

SIMPLY DOESN’T MAKE SENSE TO CHARGE 

OUR CUSTOMERS AN UPFRONT FEE FOR 

LOSSES THAT MAY OR MAY NOT OCCUR. 

a portion of a credit loss only if it occurs. 

And for taking on the pre-determined 

credit risk, we pay YOU an income stream 

for the life of the loan! 

Our members are financial institutions with 

historically low residential loan losses. So 

why pay an upfront fee to an investor for 

a loss that most likely won’t happen We 

know our members … our members know 

their customers. With the MPF Program, 

we focus on providing what is best for our 

Q & A 

FREQUENTLY ASKED QUESTION: 

rate comparison, even if FHLBank advance 

rates don’t come out on top. 

Did you also know that FHLBank shortterm 

advances are available in terms ranging 

from 3 to 93 days in maturity Rates are 

listed on Members Only and include standard 

maturities of 1-, 2-, 3-week and 

1-, 2-, 3-month. However, they are also available 

for any term in between. Short-term 

advance rates are interpolated in order to 

quote off-standard maturity dates. 

The process of interpolation assigns a rate 

value to each day’s increase in term. For 

customers and the communities we serve. 

If you’re currently selling mortgage loans 

to other investors and would like another 

option, consider the MPF Program. We 

offer competitive upfront pricing and the 

potential for a continued stream of credit 

enhancement fees. To start selling your 

fixed-rate, first mortgage loans into the 

MPF Program, contact us today at 

866.571.8171. For more information, visit 

our Web site at www.fhlbtopeka.com. 

WHY ARE FHLBANK SHORT-TERM ADVANCES CALLED REPOS 

example, when the 2- and 3-week rates 

are 5.00% and 5.07%, respectively, a 17-day 

advance would receive a rate of 5.03%. 

In this example, there is a 1-basis-point 

increase in the advance rate per day of 

increase in term (17 days is three more than 

14 days, so the rate would be 3 basis points 

higher). 

The next time your institution needs to 

compare advance rates to repos or brokered 

deposits, or needs a quote for a very specific 

advance term, give us a call in Member 

Services at 800.809.2733. 


FHLBANK PRODUCT NEWS

COMMITTED TO COMMUNITY 

FHLBANK MEMBER COREFIRST BANK & TRUST 

USES FHLBANK PRODUCTS TO ENHANCE ITS 

COMMUNITY OUTREACH 

by Laura Maag Lutz 

AVP, Congressional and Community Outreach 


COREFIRST: AHP IN ACTION 

Imagine having 13 kids under your roof 

– the logistics of preparing dinner for such 

a rowdy bunch and supervising homework 

each night is mind-boggling. It doesn’t faze 

Ken Davis, however. He and his wife, Kellie, 

are house parents at The Villages in Topeka, 

a nonprofit corporation that provides family-style 

group homes for youth ages 6 to 18 

years who have been abused, abandoned 

or neglected. Ken has watched The Villages 

grow during the last 11 years that he and his 

wife have served as house parents, and he’s 

been witness to the fact that it’s not always 

easy for a non-profit to make ends meet. 

That’s why Davis, as well as executives and 

the board of directors of The Villages, are 

grateful for the recent assistance the organization 

has received thanks to a partnership 

between FHLBank Topeka and CoreFirst 

Bank & Trust. 

FHLBank member CoreFirst helped The 

Villages apply for grant assistance from 

FHLBank’s Affordable Housing Program, 

which resulted in the organization qualifying 

for two grants totaling $610,000. The funds 

are being used to renovate five homes in 

Topeka and two in Lawrence that house 

up to 10 youth each along with their house 

parents. The homes are getting new siding, 

windows, exterior doors, roofs and gutters. 

“One of the first things I noticed as I walked 

into one of the homes that had the siding 

and windows replaced was how quiet it 

was,” said Villages’ executive director Sylvia 

Crawford. She hopes the grants, which 

have been referred to as Another 40 Years, 

will live up to their name and help breathe 

another four decades of life into The 

Villages’ ranch-style homes. 

L to r: John Fager, Kent Fager and Bob Derstein of CoreFirst Bank & Trust; Sylvia Crawford, executive director of 

The Villages; and Terry Wright, FHLBank account manager. 

Long-time Villages board member and CoreFirst senior vice president and trust officer, Bob 

Derstein, said, “These grants were a shot in the arm. It allowed us to make a number of needed 

improvements much sooner than we’d have been able to otherwise.” The majority of The 

Villages’ income comes from reimbursement for care, Derstein said, but that just covers the 

basics. “We’ve always been dependent on outside resources beyond feeding and clothing 

the kids,” he added. 

CoreFirst’s support of The Villages is typical of the bank’s community-minded spirit. The 

Villages’ grants represent CoreFirst’s 5th and 6th successful FHLBank AHP applications since 

becoming a member of FHLBank Topeka in 1993. All total, CoreFirst has secured $987,000 in 

AHP grant funds, which has helped develop 167 units of affordable housing in the Topeka area. 

CoreFirst chairman, president and CEO, Duane Fager, who served on the FHLBank board of 

directors from 1997 to 2004, recalled, “When the board would look at the impact the AHP 

was having across the Tenth District and all of the money that went to different organizations 

and to different programs, it’s just phenomenal. We’re glad to be just a little piece of 

that here in the Topeka community. There are some organizations and programs in this area 

that wouldn’t be nearly as good as they are today without these programs. The FHLBank 

housing programs are so valuable,” Fager said. 

Given CoreFirst’s commitment to community, it’s no surprise that in October, the FDIC 

gave the institution, which has assets of more than $1 billion, an outstanding rating on its 

10 


MORE ON THE VILLAGES 

AND FHLBANK TOPEKA 

In addition to the partnership between FHLBank Topeka and 

CoreFirst Bank & Trust to secure $610,000 in AHP grant monies, 

FHLBank employees also partnered with The Villages staff in 2006 

and 2007 to raise money and provide more than 1,200 volunteer 

hours to the organization. 

Bob Derstein, SVP and trust officer for CoreFirst, sits on The Villages board of directors. 

His relationship with The Villages eventually led to CoreFirst’s partnership with 

FHLBank Topeka in securing $610,000 in AHP grants for the organization. 

The Villages was founded in 1967 by Dr. Karl Menninger, the 

renowned psychiatrist of The Menninger Clinic, formerly located in 

Topeka on the very spot where FHLBank’s offices are now located. 

The Villages operates five group homes in Topeka and two in 

Lawrence, each housing up to 10 youth at a time. A set of house 

parents live in each home, often with their biological children to 

provide love, support and structure. 

Community Reinvestment Act obligations. An outstanding CRA 

rating is rare in the industry, especially among larger community 

financial institutions. “We’re pretty proud of that,” Fager said. “We’ve 

got four core commitments – to our stockholders, to our customers, 

to our employees and to our communities.” 

In addition to CoreFirst branches and ATMs conveniently located 

throughout town, their logo can be found on numerous community 

events indicating their sponsorship and support of everything 

from fundraising walks to symphony concerts. Fager said CoreFirst’s 

community-minded approach is vital to its everyday operations. 

“Giving back to the community is a key part of our strategic plan.” 

“It’s just part of the culture here and it starts from Emery on down,” 

said Kent Fager, senior vice president and commercial loan officer at 

CoreFirst, whose grandfather, Emery Fager, helped found CoreFirst 

and has long been a role model for his son and grandchildren who 

followed him into the banking business. Kent Fager said CoreFirst 

employees recently contributed to the renovation of two Habitat 

homes in Topeka, and that nearly 90% of CoreFirst officers are 

involved in charitable causes by serving on boards and donating 

their time and money to improve the communities CoreFirst does 

business in. “And anytime we can help out an organization like The 

Villages, it’s a great thing,” Fager said. 

Derstein realizes daily how important it is for The Villages to have 

access to grant funding. “Like many of us, I was fortunate to have 

grown up in a supportive home, and I was well into adulthood 

before I realized that it wasn’t the way everyone grows up. I’m grateful 

to be able to serve on the board of an organization like The 

Villages to be able to make a difference for disadvantaged youth.” 

Derstein is also grateful that his employer is supportive of an organization 

like The Villages. Derstein adds, “Maybe some of these kids 

will grow up to be bankers one day.” 

Dr. Menninger’s vision of helping troubled youth by showing them 

a model of concerned parents and a well-functioning family is 

in full bloom at The Villages. House parents provide a nurturing 

atmosphere for the children in their care. The organization, like a 

family, is always interested in ways to improve the lives of its members. 

Over the course of the partnership, FHLBank Topeka employees 

have organized workdays to tackle a variety of projects ranging 

from installing new electrical outlets to building raised garden 

beds and basketball courts. The workdays have made a lasting 

impact on Villages residents. “The facelift our homes have gotten 

as a result of the FHLBank workdays has lifted spirits across the 

complex,” said executive director of The Villages, Sylvia Crawford. 

Sylvia Crawford explains how FHLBank’s assistance has made a difference to 

The Villages. “The new roofs, siding and windows we paid for with help from 

the AHP grant have lowered our utility bills, freeing up dollars for other special 

treats for the kids.” 

COREFIRST: AHP IN ACTION 


COREFIRST BANK & TRUST 

FINDING VALUE IN FHLBANK MEMBERSHIP 

With mergers and acquisitions continuing to be the course of 

business for many financial institutions, CoreFirst Bank & Trust, a 

member of the Commerce Bank & Trust Holding Company family 

in Topeka, Kan., prides itself on its commitment to customers 

and community. A family-run bank since 1959, CoreFirst recently 

changed its name from Commerce Bank & Trust to CoreFirst Bank & 

Trust, allowing it the opportunity to expand into additional Kansas 

markets. With a charter recently acquired in Colorado, CoreFirst is 

also poised to take its Kansas strategy of putting its customers first 

into that state. 

A CLOSER LOOK AT COREFIRST 

With nearly $1.2 billion in assets, CoreFirst has been an FHLBank 

Topeka member since 1993. Chairman, president and CEO Duane 

Fager served on the FHLBank board from 1997 until 2004 and 

understands the unique cooperative nature of FHLBank Topeka and 

the relationship it holds with its more than 880 members. 

Fager says that CoreFirst’s access to FHLBank Topeka credit is one of 

the most important aspects of membership with FHLBank Topeka. 

“When you’re a community bank and you’re trying to grow and 

meet the needs of your community, that sometimes doesn’t line 

up with available liquidity. Having that liquidity available through 

FHLBank Topeka with a simple phone call is probably the supreme 

benefit of membership,” Fager said. 

He also places value on the dividend his institution receives. “It helps 

make the package more attractive when you consider what you’re 

paying in advance rates and then calculate what you’re getting back 

in stock,” he added. “I’ve always felt very positive about that.” 

CoreFirst’s new branch at 37th & Wanamaker Rd. in Topeka. 

FHLBANK PRODUCTS USED BY COREFIRST: 

Advances | Line of Credit | Overnight Deposits 

Safekeeping Services | MPF® Program | AHP 

Front to back: CoreFirst executives Missy Hiestand, EVP and CFO, Emery Fager, 

chair of the holding company, Duane Fager, chairman, president and CEO, and 

Jeff Hiestand, SVP/commercial lending, discuss their institution’s relationship 

with FHLBank Topeka. 

“WE’VE SEEN OUR LOANS GROWING 

FASTER THAN OUR DEPOSITS, AND 

THAT OBVIOUSLY CREATES A NEED 

FOR FUNDING. FHLBANK TOPEKA 

MAKES IT EASY - ONE QUICK PHONE 

CALL AND THE MONEY’S THERE.” 

- MISSY HIESTAND 

EVP AND CFO 

COREFIRST BANK & TRUST 

12 


FHLBANK PRODUCT NEWS 

AT A GLANCE 

M P F ® L O A N S F U N D E D 

A D V A N C E A C T I V I T Y 

SEPT. 2007 - NOV. 2007 

SEPT. 2007 NOV. 2007 

15000 

DOLLARS IN THOUSANDS 

12000 

9000 

6000 

3000 

The graph above illustrates the volume and average note rates of loans sold 

into the MPF Program over the past few months. 

250 

200 

150 

100 

50 

0 

LOAN TERM 

FIXED 15 YEAR 

FIXED 20 YEAR 

FIXED 30 YEAR 

% of TOTAL 

$ FUNDED 

17% 

8% 

60% 

AVERAGE 

NOTE RATE 

6.23% 

6.47% 

6.51% 

GOVERNMENT 30 15% 

6.61% 

MEMBER HCD PROGRAM PARTICIPATION 

2005 2006 2007 

0 

Callable 

Convertibles 

Fixed/Amort. 

ST/Adjustable 

The graph above illustrates the dollar amount of outstanding advance balances 

by type as of month-end September 2007 and November 2007. November’s 

month-end balance was $32.6 billion, with Convertible and Callable Advances 

providing the majority of activity. Line of Credit continued to be a valuable 

funding tool with November’s end of month balance of $1.202 billion. Funding 

opportunities for Sept. - Nov. included three Convertible windows and a 

fixed-rate advance special offered in conjunction with FHLBank’s Regional Fall 

Meetings held in August, September and October. 

Callable 

The graph at left illustrates the number of 

member institutions that have filed applications 

in FHLBank’s various Housing and Community 

Development Programs over the past two years 

and year-to-date for 2007. 

Convertibles 

Fixed/Amort. 

ST/Adjustable 

FHLBANK PRODUCT NEWS 

AHP 

CHP/CDP 

RFHP 

TOP 

JOBS 

AHP 

CHP/CDP 

RFHP 

TOP 

JOBS 

AHP 

CHP/CDP 

RFHP 

TOP 

JOBS 


HOMEOWNERSHIP IN THE HEARTLAND 

CENTRAL NATIONAL BANK 

MAKING HOMEOWNERSHIP A PRIORITY IN 

JUNCTION CITY, KANSAS 

Loan originators at Central National 

Bank know a good deal when they see 

one. They’ve got a great thing going 

with FHLBank Topeka’s Rural First-time 

Homebuyer Program (RFHP), which, since 

2005, has helped more than 20 Central 

National customers get into a home by 

providing down payment or closing cost 

assistance. 

Since 2005, CNB has used $74,239 in FHLBank 

RFHP funds to help its customers realize the 

American Dream of homeownership. Tina 

Barker, vice president of CNB’s Mortgage 

Banking division, said, “The majority of 

potential homebuyers in our market don’t 

have money saved up for a down payment. 

We get calls on a daily basis from consumers 

wanting to know if there is any down payment 

assistance available. FHLBank Topeka’s 

funds are making a huge difference for new 

homebuyers.” CNB has also recently begun 

accessing a modified version of RFHP that 

assists first-time homebuyers who are disabled 

or who have a family member who 

is disabled. FHLBank’s Targeted Ownership 

Program (TOP) offers $4,000 in down payment 

assistance and closing costs to disabled 

homebuyers. 

Debra Lovgren, a native of Junction City, 

received TOP funds from CNB and FHLBank 

in 2007. Debra’s mother, Joyce, is nearly completely 

blind due to complications from diabetes. 

The mother-daughter duo has lived 

together since 1996 with Debra lovingly 

serving as her mother’s caretaker. 

“I’ve always been a mama’s girl,” Debra said. 

“They called me her shadow when I was 

growing up. Wherever she went, I went.” 

Now her mother is often Debra’s shadow, 

grasping her daughter’s elbow as she leads 

her out to the porch or into the next room 

of their new home. 

During all the years they’ve lived in rental 

properties, Debra has dreamed of sitting 

at her own kitchen table in her own home 

just looking out the window. Today, she 

can do that very thing thanks to the down 

payment assistance she’s received. “I sit at 

the table and I open up the blinds, and I 

just look outside and my mom will be like, 

‘What are you doing’ And I’ll say, ‘Oh, I’m 

just sitting here looking out the window.’” 

Adam Litzinger, a loan originator at CNB, 

used to work with Debra at Wal-Mart in 

Junction City where Debra still works as a 

service manager. When she came through 

the doors of Central National looking for a 

home loan, Adam immediately thought of 

FHLBank’s down payment program. “When 

I saw Debra, I remembered that her mother 

was visually impaired, and I knew she’d be eligible 

for FHLBank’s TOP funds,” Adam said. 

By Laura Maag Lutz 

AVP, Congressional and Community Outreach 


L to R: Michele Carter, FHLBank AHP homeowner program supervisor; Central National Bank’s Adam Litzinger, loan 

originator; Tina Barker, CNB’s VP/mortgage banking division; Steve Barker, CNB’s VP/mortgage lending; and 

Jessie Nikkel, CNB loan originator, have collaborated to provide nearly $75,000 in down payment assistance to CNB 

customers since 2005. 

Michele Carter, supervisor of FHLBank’s 

homeowner programs, said, “We hope our 

FHLBank customers will remember that in 

addition to the RFHP, they also have access 

to this other program, TOP, to assist disabled 

homebuyers.” 

Barker says CNB will make an extra effort 

in 2008 to promote the availability of TOP 

funds in their service areas. “We have plans 

to reach out to some of the Special Olympic 

groups as well as other groups that have 

families that could benefit from these funds 

who probably don’t know they’re available.” 

On nice days, Debra likes sitting outside on 

the porch watching her spirited miniature 

Dachsund challenge the big dog next door 

to races up and down the fence line. “We 

can even sit outside on the porch if it’s raining, 

because the roof was redone before we 

moved in,” Debra added. Her mom says of 

14 


her new home, “I feel good, I sleep good, I 

feel safe, and it’s nice and warm.” 

Just a few blocks away is another Junction 

City homeowner who benefited from 

FHLBank downpayment assistance through 

CNB. A former U.S. Marine, Tommy Lopez 

(pictured below) proudly points out to 

visitors some remodeling he’s doing in the 

kitchen of his new home after being inspired 

by a segment on DIY (Do-it-Yourself network). 

“I’ve always wanted to try tiling, so 

I’m trying to give this kitchen sort of an Old 

Spanish look,” Lopez says. 

Lopez returned from Iraq a little less than 

two years ago where he escorted convoys 

throughout the country. He’s moved 

around a lot in his life. “I joined the military 

pretty much right out of high school, and 

I’ve been moving around, haven’t had one 

place that I could really call home,” he said. 

But when he finally finished active duty service, 

Junction City was the place he wanted 

to put down roots. 

Lopez landed a job in the human resources 

division of UPU Industries in Junction City, a 

company that makes plastic netting for hay 

bales. “We’re the largest net wrap manufacturer 

in the nation,” Lopez said. Once settled 

in his new job, Lopez wanted to find a place 

Joyce Andrews and her daughter, Debra Lovgren, 

stand in front of their new home in Junction City. 

Debra qualifed for FHLBank Topeka’s Targeted Ownership 

Program funds for down payment assistance 

on the home, where she lives with and cares for her 

visually disabled mother. 

“WE GET CALLS ON A DAILY BASIS FROM 

CONSUMERS WANTING TO KNOW IF THERE 

IS ANY DOWN PAYMENT ASSISTANCE 

AVAILABLE.” 

- TINA BARKER 

VP AND SALES MANAGER 

CENTRAL NATIONAL BANK 

closer to work, and he wanted to stop paying rent. His realtor alerted him to the down payment 

assistance program for new homebuyers through Central National Bank, which works 

hard to promote the program to realtors in its area. “We want realtors to understand how 

easy this program is to use,” Barker said. “We also promote RFHP and TOP by advertising in 

the local paper.” 

Lopez admits it was hard to save enough money for a down payment on a home. “You 

know, for me, there are two American Dreams. One is saving for a home, but also saving 

money for my children’s college education.” Lopez and his wife, who have a 14-year-old 

daughter and a 2-year-old son, were trying to do both at the same time. “This down payment 

assistance came along at a great time.” 

Lopez celebrated Halloween night in his new home by sitting in his favorite spot on the 

porch and handing out candy to trick-or-treaters. “This is my home. It’s not just somewhere 

I’ll be at for a little while, and it’s definitely not a tent in the desert,” he says with a smile. 

Lopez says his homeowner status makes him feel more “a part of this community.” He adds, 

“And I know when I make that house payment that I’m investing in myself and my family.” 

Former U.S. Marine and new homeowner Tommy Lopez describes the tiling project he’s undertaken in the 

kitchen of his new house in Junction City. Lopez received downpayment assistance through Central National 

Bank and FHLBank Topeka’s Rural First-time Homebuyer Program. “I feel more a part of this community,” Lopez 

said, “and I know when I make that house payment that I’m investing in myself and my family.” 


HOMEOWNERSHIP IN THE HEARTLAND

MORE ON CENTRAL NATIONAL BANK 

MORE ON CENTRAL NATIONAL BANK 

Central National Bank has been an FHLBank 

member since 1996. With more than $800 

million in assets, CNB is a cornerstone 

to 20 small- to mid-sized communities 

throughout Kansas, and also has a branch in 

Superior, Neb. 

FHLBANK MEMBERSHIP 

VALUE 

Ed Meekins, Central National’s EVP and COO 

recalled, “When we first joined FHLBank 

Topeka in 1996, we joined for two reasons. 

One was to have a backup source of liquidity 

beyond our traditional relationships with 

correspondent banks to meet our short-term 

borrowing needs. The second was for the 

ability to match fund long-term loans.” 

Now, 11 years later, CNB’s line of credit with 

FHLBank Topeka has become much more 

important as its balance sheet has grown 

and liquidity volatility has come into play. 

“We went through a period in September 

where we went from $10 million in excess 

funds available for overnight investing to 

$30 million in overnight borrowing in the 

course of two weeks,” said Jim Van Slyke, 

CNB’s CFO. “The largest source of borrowing 

we tapped into at the time was our 

FHLBank line of credit. It’s very nice to have 

that available without having to pledge 

securities as collateral. And to be able to tap 

into that with a simple phone call!” 

While CNB’s primary value in its membership 

comes in the form of its line of credit 

with FHLBank, Jim also takes FHLBank’s 

stock into consideration. “The dividends 

we receive from our stock investment with 

FHLBank Topeka make it a good asset to 

have,” he said. “The returns that we’re getting 

on our FHLBank stock compares very favorably 

to our other investments right now, so 

we see it as an extra bonus.” 

ON COMMUNITY 

As participating financial institutions in the 

Mortgage Partnership Finance Program; 

frequent users of the Rural First-time 

Homebuyer and Targeted Ownership 

programs as illustrated in the previous 

pages and participation in the Community 

Housing Program, CNB clearly understands 

how to meet the needs of their mortgage 

customers. A recent $25,000 Joint 

Opportunities for Success grant for a loan 

pool in Minneapolis, Kan. is also bolstering 

that community’s economic growth. 

L to R: Ed Meekins, CNB EVP; Terry Wright, FHLBank account manager; and Jim Van Slyke, CNB CFO, in the 

lobby of Central National Bank’s facility in Topeka. 

“THE RETURNS 

WE’RE GETTING 

ON OUR FHLBANK 

STOCK COMPARE 

FAVORABLY TO OUR 

OTHER INVEST- 

MENTS RIGHT NOW, 

SO WE SEE IT AS AN 

EXTRA BONUS.” 

- JIM VAN SLYKE, CFO 

CENTRAL NATIONAL 

BANK 

FHLBANK PRODUCTS 

AND SERVICES USED: 

Advances 

Line of Credit 

Overnight Deposits 

Safekeeping Services 

MPF® Program 

Rural First-time Homebuyer 

Program 

Targeted Ownership Program 

Community Housing Program 

Joint Opportunities for Building 

Success grant 

16 


BANKERS ATTEND MEETING IN 

OKLAHOMA, MPF SEMINAR IN TOPEKA 

Jeff Hairston (standing), FHLBank’s senior account manager for institutions in southern 

and central Oklahoma, talks with bankers attending FHLBank’s regional fall meeting in 

Edmond, Okla., Oct. 15. Attendees listened to Jeffrey Reynolds of Darling Consulting Group 

talk about balance sheet strategies for increasing earnings and reducing risk. The morning 

meeting was followed by a complimentary round of golf at Oak Tree Country Club. 

Dick Wertzberger, SVP at Landmark National Bank, listens to Rod Alba (at right) discuss the 

subprime mortgage meltdown. Community bank members in the audience agreed that 

banks in the midwest had little involvement in the subprime problem being felt across the 

nation. 

Don Cushing, FHLBank’s senior account manager for institutions in central 

and northern Kansas, sits with some of his customers at FHLBank’s 

Secondary Mortgage Operations Conference held Oct. 10 in Topeka. 

Rod Alba, former senior director of government affairs for the MBA 

in Washington, D.C., spoke about the subprime mortgage crisis at 

FHLBank’s Secondary Mortgage Operations Conference held Oct. 10 in 

Topeka. 

EDUCATIONAL OPPORTUNITIES 


FHLBANK TOPEKA HOSTS MEMBERS 

OF CONGRESS AT DISTRICT EVENTS 

FHLBank had opportunities last quarter to educate Members of Congress about its mission and how members are using FHLBank 

products and services for the benefit of communities throughout Colorado, Kansas, Nebraska and Oklahoma. Some visited FHLBank 

member institutions while others attended affordable housing events or visited nonprofit organizations with which FHLBank partners. 

U.S. Senator Ben Nelson (2nd from left) 

welcomed Pat Doran, FHLBank general 

counsel, Tom Henning, FHLBank board 

member, and Mark Woita, FHLBank 

account manager, to his Lincoln, Neb., 

office Nov. 20 for a discussion about the 

mortgage markets. 

CONGRESSIONAL OUTREACH 

Congressman John Sullivan (2nd from 

right) joined Richard Brierre, deputy 

director of INCOG, Andy Jetter, FHLBank 

president and CEO, and Joe Robson, 

former FHLBank director, at a luncheon 

in Tulsa Nov. 27 to learn more about 

INCOG, a voluntary association of local 

governments serving five counties in and 

around Tulsa. Sullivan also was presented 

FHLBank’s Friend of Housing Award. 

Colorado Congresswoman Diana 

DeGette joined FHLBank president and 

CEO Andy Jetter and Gete Mekonnen, 

executive director of the Northeast 

Denver Housing Center, on Nov. 2 

for the grand opening of Central 

Park Apartments at Stapleton, which 

received FHLBank Affordable Housing 

Program funding. 

18 


Nebraska’s first district Congressman Jeff Fortenberry (2nd from right) visited 

FHLBank member City Bank & Trust in Lincoln on Nov. 20. President Paul Schelstraete 

(far right) talked with Fortenberry about how important it is for community 

financial institutions to have FHLBank as a funding partner to meet community 

development needs. Also attending the meeting was Chris Linhart, vice president at 

CB&T (far left), and Pat Doran, FHLBank general counsel. 

Nebraska’s third district Congressman Adrian Smith (middle) visited FHLBank 

member financial institution First National Bank of Sidney, Neb., Nov. 30. Smith 

spoke with Tom Olson, Nebraska banker and member of FHLBank’s board of directors 

(right), and Pat Doran, FHLBank general counsel. 

HELPFUL 

NUMBERS 

save 

the DATE 

April 23-25, 2008 

FHLBank Topeka’s 

Annual Management 

Conference 

Sheraton Overland Park Hotel, Overland Park, Kansas 

REGISTRATION INFORMATION COMING SOON! 

800.809.2733 Advances (option 1) 

Deposits (option 2) 

Members Only/Interest/Capital Stock (option 3) 

Letters of Credit (option 4) 

Membership (option 5) 

866.571.8171 Mortgage Partnership Finance® Program 

866.571.8155 Housing and Community Development Programs 

800.934.9473 Wire Transfer Services 

877.933.7803 Safekeeping Services 

800.905.2733 Collateral 

800.933.2988 Sales 

Editor 

Kimberly Gerlach 

External Communications Specialist 

kimberly.gerlach@fhlbtopeka.com 

FHLBank Topeka promotes housing, jobs and general 

prosperity by offering products and services that help our 

members provide affordable credit in their communities. 

© All information in this issue is copyrighted and 

cannot be reprinted without permission from 

FHLBank Topeka. 

CONTACT US 


Our best wishes for a prosperous 

2008 for your families, businesses 

and communities. 

CONGRESSIONAL OUTREACH 

One Security Benefit Pl, Ste 100 

PO Box 176 

Topeka, KS 66601-0176 

From your partners at FHLBank Topeka 

PRSRT STD 

U.S. POSTAGE 

PAID 

SHAWNEE MISSION, KS 

PERMIT # 834 

20

BEWARE THE PERFECT STORM - FHLBank Topeka

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