The Federal Home Loan Bank of Des Moines is a federally chartered corporation
organized on October 31, 1932, that is exempt from all federal, state, and local
taxation (except real property taxes) and is one of 11 district FHLBanks. The
FHLBanks were created under the authority of the Federal Home Loan Bank Act
of 1932 (FHLBank Act). With the passage of the Housing and Economic Recovery
Act of 2008 (Housing Act), the Federal Housing Finance Agency (Finance Agency)
was established and became the new independent federal regulator of Federal
National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation
(Freddie Mac) (collectively, Enterprises), as well as the FHLBanks and FHLBanks
Office of Finance (Office of Finance), effective July 30, 2008. The Finance
Agencys mission is to ensure that the Enterprises and FHLBanks operate in a
safe and sound manner so that they serve as a reliable source of liquidity and
funding for housing finance and community investment. The Finance Agency establishes
policies and regulations governing the operations of the Enterprises and FHLBanks.
Each FHLBank operates as a separate entity with its own management, employees,
and board of directors.
We are a cooperative. This means we are owned by our customers, whom we call
members. Our members include commercial banks, thrifts, credit unions, insurance
companies, and community development financial institutions (CDFIs) in our district
of Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota,
Oregon, South Dakota, Utah, Washington, Wyoming, and the U.S. Pacific territories
of American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
While not considered members, we also conduct certain business activities with
state and local housing associates meeting certain statutory criteria.
Our mission is to be a reliable provider of funding, liquidity, and services
for the Banks members so they can meet the housing, business, and economic
development needs of the communities they serve. We strive to achieve our mission
within an operating principle that balances the trade-off between attractively
priced products, reasonable returns on capital stock, and maintaining adequate
capital to support safe and sound business operations.
We are capitalized primarily through the purchase of capital stock by our members.
As a condition of membership, all of our members must purchase and maintain
membership capital stock based on a percentage of their total assets as of the
preceding December 31st subject to a cap of $10 million and a floor of $10,000.
Each member is also required to purchase and maintain activity-based capital
stock to support certain business activities with us. Member demand for our
products expands and contracts with economic and market conditions. Our self-capitalizing
capital structure, which allows us to repurchase or require additional capital
stock based on member activity, provides us with the flexibility to effectively
and efficiently meet the changing needs of our membership. While eligible to
borrow, housing associates are not members and, as such, are not permitted to
purchase capital stock.
Our primary business activities are providing collateralized loans, known as
advances, to members and housing associates and acquiring residential mortgage
loans from or through our members. Our primary source of funding and liquidity
is the issuance of debt securities, referred to as consolidated obligations,
in the capital markets. Consolidated obligations are the joint and several obligations
of all FHLBanks and are backed only by the financial resources of the FHLBanks.
A critical component to the success of our operations is the ability to issue
consolidated obligations regularly in the capital markets under a wide range
of maturities, structures, and amounts, and at relatively favorable spreads
to market interest rates.
Our net income is primarily attributable to the difference between the interest
income we earn on our advances, mortgage loans, and investments, and the interest
expense we pay on our consolidated obligations and member deposits, as well
as components of other income (loss) (e.g., gains and losses on derivatives
and hedging activities). Because we are a cooperative, we operate with narrow
margins and expect to be profitable over the long-term based on our prudent
lending standards, conservative investment strategies, and diligent risk management
practices. Because we operate with narrow margins, our net income is sensitive
to changes in market conditions that can impact the interest we earn and pay
and introduce volatility in other income (loss).
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