The Bazemore Update

photo of teresa bazemore

Welcome to the end-of-year issue of our Bank Notes member newsletter, in which we shine a spotlight on topical issues for our cooperative and the financial industry.

While the last few years have been challenging in an array of different ways, we are proud to be your partner in resilience, adding value to your enterprise and helping you to meet the ever-changing needs of your customers and communities.

I am very happy to say that we are ending 2022 stronger together, and I thank you for your membership and ongoing support for our cooperative.

State of the Cooperative  

Our cooperative continues to be financially strong. Advance usage has rebounded significantly as the economic cycle has moved into a new phase of monetary tightening and rapidly rising interest rates. Advance volume across the FHLBank System has returned to pre-pandemic levels, totaling $655 billion as of September 30, up 86 percent from yearend 2021, according to the FHLBanks’ Office of Finance data.

At FHLBank San Francisco, advances for the third quarter of 2022 increased to $65.7 billion, up from $17.0 billion at December 31, 2021, as member demand for primarily short-term advances increased. Throughout the pandemic and its aftermath, member dividends remained consistent with our Board’s established dividend philosophy. Your dividend rate for the third quarter of 2022 was 7 percent , up from a steady and healthy 6 percent in the prior three quarters.

We are well positioned to continue to be a reliable source of on-demand liquidity and to provide value for institutions of all sizes. As I have noted in previous issues of Bank Notes, the ability of Federal Home Loan Banks to expand and contract to meet the needs of the moment has been proven many times. It is an operating model that has endured for 90 years because it works in all economic environments.

The Regulatory Landscape

In September, the Federal Housing Finance Agency (FHFA), our regulator, launched a national public review designed to gather feedback from stakeholders about what the FHLBanks might do to continue to meet the evolving needs of their members and the communities they serve. Under the general rubric  “FHLBank System at 100: Focusing on the Future,” FHFA has so far held three days of listening sessions and seven regional roundtables on more targeted topics. The FHFA plans to host more regional roundtables in early 2023, with some held in our region.

Together with our fellow FHLBanks around the country, we welcome this opportunity to examine how best the mission and role of the FHLBanks can be enhanced while protecting the interests of existing FHLBank members. We are also productively engaged with the other 10 FHLBanks and the FHLBanks Office of Finance in exploring ways to innovate to make our individual Banks and the whole System stronger for the future.

It is our members and their community partners who will be most impacted by any potential changes to the System. We are immensely grateful to all the member lenders, members of our Affordable Housing Advisory Council, and other stakeholders who spoke compellingly of the vital role, unique value, and broad community impact of our Bank at the first listening session or by submitting written comments to FHFA.

Director Sandra Thompson, head of the FHFA, has repeatedly expressed her support for the FHLBanks and believes that we continue to be an important part of our country’s financial system. Another listening session will likely be held in the early part of 2023 after the regional roundtables are held. Stay tuned for details and other upcoming opportunities to add your voice to this important and timely conversation about the FHLBank System’s next 90 years.

Diversity, Equity & Inclusion

I am proud to share that for the second year in a row, your FHLBank’s board of directors has been recognized by the National Association of Corporate Directors (NACD) in its Diversity, Equity, and Inclusion awards process. After being one of three winners in 2021, this year our board was honored to be among 20 world-class companies named as finalists for the 2022 award.

It’s important to note that because we are a member-owned cooperative, the composition of our board is a result of the value that you, our members, place on having a majority-diverse board and on the Bank’s continued investment in making diversity, equity, inclusion, and belonging such an essential and enriching part of the Bank’s culture.

One of the highlights of our events calendar last year was the Diversity, Equity, and Inclusion Symposium that we held in May. DE&I touches every aspect of success today, and at this half-day event, our expert panelists focused on three ways DE&I can benefit financial services businesses:

  • The importance of outreach to diverse customers,
  • How systemic change in home financing can narrow the Black/white homeownership gap, and
  • What it takes to recruit and retain a diverse workforce.

It was a great discussion, and this brief video, which we presented in the fall at our annual Member Conference, showcases some of the key takeaways from the Symposium. If you missed seeing it at the Conference, I encourage you to take a look.

Advancing Racial Equity in Homeownership and Expanding Affordable Housing Options

Continuing our commitment to being part of the solution to narrowing the Black homeownership and wealth gaps, our $1.5 million Racial Equity Accelerator collaboration with Urban Institute has delivered two important research papers to date.

The Accelerator’s first report is Using Rental Payment History in Mortgage Underwriting Is a Promising Strategy to Close the Black-White Homeownership Gap. We started with underwriting standards because most conventional lenders won’t touch a potential homebuyer without a traditional credit score, despite the fact that someone may have been making regular payments for rent, utilities, cellphones, and more, for years. Such payments clearly show someone’s ability and willingness to pay.

The report asserts that heavy reliance on credit scoring, and the automated credit history data that undergirds the system, "discriminates against people of color through process, not just through risk assessment.” And it proposes concrete solutions that use other data to determine credit worthiness.

Another area of focus for our Accelerator and the topic of the second paper is the role of student loan debt in perpetuating racial inequities. The American dream of homeownership should be available to everyone, including those paying off their college education. Understanding the effects of student loans on mortgage lending, particularly for Black graduates who are more likely to be burdened with debt after graduation, can help us to bridge the racial homeownership gap with actionable solutions. And the Bank is actively looking at how we might test potential solutions to this problem, in partnership with our member financial institutions and other stakeholders.

During the Fall, the Bank also held two of a planned series of four Homeownership Solutions Summits aimed at identifying tangible solutions to leveling the playing field in the housing and homeownership marketplace. These Summits are bringing together stakeholders from across the affordable housing and mortgage finance industries together with community and political leaders to share ideas, explore best practices, and, we hope, to ignite public and private collaborations that can address the urgent demand for affordable housing and equitable homeownership.

Our team at FHLBank San Francisco is proud to provide a forum for bringing these key stakeholders together, sometimes for the first time, to engage in these important community conversations. A recap of our Sacramento Homeownership Solutions Summit is included in this edition of Bank Notes. After the conclusion of our series of Summits, we plan to publish a report that captures what we’ve learned and identifies a range of solutions to increasing affordable and sustainable housing options for Black and other minority prospective homebuyers.

We look forward to engaging with members and other stakeholders on all our mutual efforts to make our communities more vibrant, equitable, and resilient.

Community Investment Review

In 2022, FHLBank San Francisco’s Affordable Housing Program (AHP) General Fund awarded $31.9 million to support the building or preservation of more than 2,700 housing units that will be an affordable place to call home for lower-income families and individuals in need. We are grateful to all our member financial institutions for making this funding possible, year after year.

To help address the extreme shortage of affordable housing in Nevada, which is experiencing the most severe affordable housing crisis in the country, we are launching a new AHP Nevada Targeted Fund in 2023. The first competitive application cycle for this specially targeted funding will begin in the first quarter of 2023, concurrent with the AHP General Fund competition.

Also in 2022, 43 of our member banks and credit unions, including 14 participating for the first time, were approved for the WISH Program to deliver our allocation of $11.1 million in matching grants of up to $22,000 to eligible low- and moderate-income first-time homebuyers. Our maximum WISH grants will increase to just over $29,000 in 2023!

Our AHEAD Program, which provides grants to advance innovative economic and community development initiatives that bring greater opportunity to underserved populations, awarded $1.5 million to 55 nonprofits in 2022. We are proud to partner with our members on delivering AHEAD funding to strengthen the economic vitality of our communities.

Finally, earlier this year, we announced a $1 million matching grant program designed to empower Black homeownership by supporting HUD-approved Housing Counseling Agencies (HCAs) operating in targeted areas. We are thrilled that, in partnership with participating members, the funding provided to 22 local HCAs in our district to help them better serve homebuyers and at-risk homeowners totaled over $2.2 million.

Member Engagement

As you know, engagement with our membership is a high priority for the Bank. Throughout the past year, your Bank team has welcomed opportunities to reconnect with our members face-to-face again, and for me it has been wonderful to meet so many of you in person at Bank events and industry gatherings.

It was exciting to hold our first in-person Member Conference since 2019 at the Ritz-Carlton, San Francisco, in September, and from the reviews we received our attendees really appreciated the opportunity to connect and network with their peers. If you missed it, or if you did attend and want to revisit any of the fantastic content that was presented, we have an event wrap-up web page for you that includes a photo gallery.

Planning for next year’s Member conference has already begun: Mark your calendar now to join us at the Ritz-Carlton in Laguna Nigel September 13-15, 2023. Also stay tuned for invitations to other valuable educational and networking events we will be offering throughout the coming year. And, as always, we welcome your ideas on other ways we can add value to your membership, including subjects that would be of interest.

I wish each of you a very Happy Holiday season and a peaceful and prosperous New Year.


Teresa Bryce Bazemore

President and CEO, FHLBank San Francisco