CONGRESS

District 8 • The Federal Home Loan Bank of Des Moines 26
At year-end, the FHLBank of Des Moines was the
second largest FHLBank, with assets of $137.4 billion.
The FHLBank’s balance sheet, which included
assets acquired in a merger 27 with the former FHLBank
of Seattle during 2015, consisted of 64.9 percent advances,
4.9 percent mortgages, and 30.0 percent cash and investments.
MBS investments totaled $18.7 billion, with
negligible investments in private-label MBS. Advances
increased substantially during 2015, and totaled $89.2
billion, an increase of 36.8 percent. Funding through consolidated
obligations totaled $130.2 billion and included
76.0 percent in discount notes and 24.0 percent in bonds.
Consolidated obligations and discount notes with a
remaining maturity of less than one year totaled $18.4 billion
and $99.1 billion, respectively.
The FHLBank’s income, expenses, and financial performance
metrics for 2015 were significantly impacted by
its merger with the FHLBank of Seattle. The FHLBank’s
reported net income of $131 million for the year was the
eighth highest among the FHLBanks. Return on assets was
0.12 percent, which was the lowest. Net interest income
totaled $315 million. Interest income on investments
totaled $271 million, representing 33.2 percent of total
interest income. The FHLBank’s net interest spread of
0.25 percent was the third lowest in the FHLBank System.
The FHLBank’s yield on advances of 0.46 percent was the
second lowest, and its cost of funds on consolidated obligations
of 0.49 percent was the sixth highest. Operating
expenses, of $83 million were the fifth highest of any
FHLBank in nominal terms, but second lowest when compared
to total assets at 0.07 percent.
While the regulatory capital ratio was low compared to
the FHLBank System, the FHLBank held little excess stock.
The FHLBank had retained earnings totaling $801 million
and continued to build retained earnings through
contributions from current income. The FHLBank also
reported $194 million in additional capital from merger,
which reflects the fair value of the net assets acquired in
the merger with the FHLBank of Seattle. Its market value
of capital stock was 116.9 percent of par value.
The FHLBank had 1,445 members at year-end 2015: 1,088
commercial banks, 65 thrifts, 221 credit unions, 67 insurance
companies, and 4 community development financial
institutions. The FHLBank’s ten largest borrowers held
66.5 percent of total advances.
At the time of its September 2015 examination, FHFA
concluded the FHLBank’s overall condition and operations
were satisfactory. The examination observed that
operational risk remained elevated and trended upward
since the previous examination, and that close oversight
by FHFA in the future is warranted because of significant
credit concentration to one large commercial bank member,
as well as the high exposure to insurance company
advances, particularly captive insurance companies. The
examination also determined that the complexities of the
merger, combined with the FHLBank’s already challenged
information technology environment, resulted in further
stresses to the technology environment, and that the
FHLBank needed to continue to enhance its interest rate
risk management practices although improvements
were noted.
The FHLBank’s regulatory capital ratio was 4.23 percent,
which was the second lowest in the FHLBank System.
26
27
This summary reflects conclusions made at the time of FHFA’s 2015 examination of the FHLBank of Des Moines supplemented by year-end financial information.
On May 31, 2015, the FHLBanks of Des Moines and Seattle merged, which was approved by FHFA on December 19, 2014. The headquarters of the surviving institution is located in
Des Moines, but the Bank also maintains an office in Seattle.
38 FEDERAL HOUSING FINANCE AGENCY