News

“What keeps you up at night?” That was the question in a recent meeting with the executive staff of one of our members that, besides doing business with FHLBank Topeka, was a large investor in FHLBank System consolidated obligations. My answer related few concerns with FHLBank Topeka or the FHLBank System. All of the FHLBanks have been rapidly building capital the last few years, and all are blessed with sound leadership providing prudent and conservative management. In particular, FHLBank Topeka’s strong profitability allowed it to pay dividends well in excess of current short-term rates while adding significantly to retained earnings.

What I said keeps me up at night is the future of small- and medium-size community lenders in the current economic and regulatory environment. The long-term trend toward consolidation has accelerated, with ever more of the banking assets in this country being concentrated in the nation’s largest “too big to fail” institutions. A telling statistic is the number of new bank, thrift and credit union charters granted over the last few years - virtually none. Near zero interest rates and stifling regulation that disproportionately harms smaller institutions is taking a heavy toll.

We understand that our future at FHLBank Topeka is tied directly to the success of small- and medium-sized community lenders, and, therefore, our focus is to do everything in our power to support our members. We believe the most significant role we can play is to provide the products and services necessary for our members to compete in today’s marketplace. We strive to find products that capitalize on the strengths of community lenders. A great example of this is the MPF® Program that has gained so much of a following with our members. The traditional MPF Program provides a way for local lenders that know their customers, in a way far beyond what any automated underwriting software could ever provide, to be paid for their superior underwriting expertise and have skin in the game that yields returns, not future costs.

With the possibility of significant regulatory and statutory changes that could impact our ability to serve our members, our goal is to explore areas where we can leverage the unique strengths of both FHLBank Topeka and our members to enhance their competitive position. As a new year arrives with unparalled uncertainty, our goal is to work cooperatively with you, our members, and your trade associations to seek changes that will enhance the partnership of success we share.

We at FHLBank Topeka thank you for your business and wish you every success in 2013.

MPF is a registered trademark of the Federal Home Loan Bank of Chicago.