Bank Notes

Dear Valued Members,

As we end a second year in the shadow of a global pandemic, I am hopeful that the new year will bring a significant lessening of the uncertainties we have all been contending with because of the COVID-19 virus. As we look forward, I’ll share a few notes about what’s happening at the Bank and in our operating environment.

State of Our Cooperative   

The Bank is on track to officially return to our offices on January 18, with a hybrid model that balances valuable time together in the office with flexibility for our team members to also work remotely some days. We are certainly hopeful that we will not have to delay return to the office. In the meantime, more and more team members are now coming to the office on a voluntary basis, and our relationships managers are back out in the field, meeting members in person and at industry events. It’s been a pleasure for me personally to meet some of you live at recent industry events, like the MBA conference in San Diego, as well as virtually at Bank events.

As member financial institutions continue to be flush with deposits, our advance levels reflect that low demand for liquidity. But the ability of the Federal Home Loan Banks to expand and contract has been tested many times, and it’s an operating model that works. Your cooperative is financially strong: for the past three quarters, our annualized dividend has remained steady at 6%. We are poised and ready to provide you with low-cost liquidity when your needs and the operating environment demand it.

The Legislative and Regulatory Landscape

The recently passed Infrastructure Investment and Jobs Act represents the biggest investment in the long-term health of our economy in decades and creates opportunities for the FHLBanks and our member financial institutions.

For example, with infrastructure dollars ultimately flowing into states, cities, and towns throughout our district, members can use the Bank’s AAA-rated Letters of Credit to secure Public Unit Deposits under various state and local agency deposit programs. This is currently the most popular use of our LOCs, but there are other ways you can leverage the Bank’s credit rating to deepen your involvement in the communities where you do business, since as infrastructure is upgraded or installed across the country, and especially in rural areas throughout our district, it supports new housing production. I encourage you to talk to your relationship manager about how you can use our LOCs to meet your business objectives in 2022, and beyond.

Still wending its way through Congress as part of the Budget Reconciliation bill, the Build Back Better Act has the potential to impact housing and homeownership even more directly, with billions of dollars potentially earmarked to support affordable housing and homeownership. In its current form, this bill includes an increase from 10% to 15% in the amount of annual net income each of the FHLBanks currently contribute to the Affordable Housing Program.

This week, the Biden Administration announced its intent to nominate Acting FHFA Director Sandra Thompson, who has broad support across the industry, to serve as Director. Having been with the FDIC for over 20 years, Acting Director Thompson is naturally focused on safety and soundness. She is equally engaged with the housing mission of the GSEs, and I had a very good meeting with her recently about the importance of the Federal Home Loan Bank System.

Advancing Racial Equity in Housing

Inequities in rates of homeownership and access to wealth building are pernicious and persistent for people of color in America. I am proud of the way that FHLBank San Francisco has stepped up to lead on developing potential solutions to these long-standing structural disparities, through ground-breaking partnerships, programs, and initiatives.

Our recently announced research and development collaboration with the Urban Institute – a Racial Equity Accelerator - is aimed at rewriting traditional mortgage finance rules that have had the effect of disadvantaging minority communities, especially Black communities. This is just one of several initiatives we will be originating or joining to advance racial equity in housing, broadly.

Last week, the board approved a new matching grant fund that our members can use to support the housing counseling agencies that play such a critical role in helping families in our communities become first-time homebuyers or sustain affordable homeownership. We are in the process of defining parameters for the program and will be sharing more on this soon.

We look forward to your engagement with these efforts and I welcome your suggestions for other ways we can make our communities more equitable, with economic prosperity achievable for everyone.

Diversity, Equity, & Inclusion

In other recent Bank news, please join me in offering congratulations to our board of directors for winning the National Association of Corporate Directors (NACD) 2021 Diversity, Equity, and Inclusion award. The vision and support of our Board is vital to our ability to foster DE&I in all aspects of how we engage with our members, our workforce, our business and community partners, and our other stakeholders.

We are also planning a DE&I-focused event to be held in 2022 aimed at helping members better understand the role that their institutions can play in narrowing the racial homeownership gap and reducing wealth disparities while at the same time growing your business. The event will provide historical perspective on structural barriers that need to be broken down along with strategies and tactics for reaching out to diverse customers and the benefits (and business imperative) of having a workforce that reflects the communities our members serve. Look for your invitation to this important event in the new year.

Expanded Engagement

Lastly, I’d like to thank all the members who were able to join us for a virtual 2021 Member Conference event last month. Pivoting away from the live event we were planning was a difficult decision, but attendance for the virtual event and the feedback we received on our diverse slate of speakers – industry trailblazers, thought leaders, visionaries, and innovators – was overwhelmingly positive. If you missed any part of the program, recordings are available on our member portal. For my part, I was delighted to have an opportunity to meet quite a few members during the conference’s Zoom social hour.

Engagement with our membership is a high priority for the Bank, and for me personally as I have more opportunities to see you in person. I’m glad to share that planning has already begun for next year’s Member Conference. We’re excited to be returning to the Ritz-Carlton San Francisco on September 14-16, 2022 for our usual one-of-a-kind learning and networking opportunity. We are also looking forward to presenting an in-person Spring Seminar in 2022 and busy planning other valuable educational and networking events for you throughout the coming year. And again, 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.

December 2021 | FHLBank San Francisco