Comment Detail

Comment

As a small, rural community bank, the Bank of Advance, Missouri, provides a significant volume of loans to finance residential mortgages. At the end of 2022, over 41% of our entire loan portfolio was comprised of residential real estate mortgages. One hundred percent of the mortgages we make are retained on our balance sheet which enables us to flexibly underwrite and service them so they are tailored for each borrower’s specific needs. Our ability to originate and retain these loans is due to funding sources and liquidity tools provided by the FHLB of Des Moines. Without them and access to their short term and long term fixed rate funding sources we could not provide our current level or quality of residential mortgages. FHLB is our number one source of non-deposit funding and is vital for small financial institutions that provide residential loans.

The second largest segment of our loan portfolio is farm real estate loans which exceeded 18% of our loan portfolio at year end 2022. As with residential mortgages, we originate and retain 100% of these loans on our balance sheet. Our ability to do so is because of the funding and liquidity that FHLB provides. Having impacted nearly 60% of loans as described above, it is very important that the ability for FHLB to provide the funding sources in the manner it currently does remains.

In addition, a number of low to moderate income borrowers have benefited from our participation in the FHLB’s affordable housing program whereby down payment assistance is provided in the form of grants. This has enabled a number of applicants to qualify for a home loan that otherwise would not have.

We believe the FHLB system should continue to function as it currently does as it continues to provides value for its members and significant benefits to the communities they serve.