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100TH COMMERCIAL BANK JOINS FHLB OF CINCINNATI; VALUE OF MMA CREDIT PRODUCT CITED

 100TH COMMERCIAL BANK JOINS FHLB OF CINCINNATI;
 VALUE OF MMA CREDIT PRODUCT CITED
 CINCINNATI, March 27 /PRNewswire/ -- Mid America Bank, Louisville, Ky., is the 100th commercial bank approved for membership in the Federal Home Loan Bank (FHLB) of Cincinnati. Mid America Bank has assets of $970 million and operates 32 banking facilities in the Louisville area. Charles Lee Thiemann, president of the Cincinnati FHLB commented, "We are pleased to have Mid America Bank as a member of the Cincinnati Bank. They are one of the premier financial institutions and housing lenders in the state of Kentucky.
 "It is also an honor to be the first FHLB to reach the milestone of 100 commercial bank members. Membership in the FHLB System, however, is not a regional phenomenon. Many banks in other parts of our District and throughout the nation are finding FHLB products and services can be an integral part of their lending operations," said Thiemann.
 Bertram W. Klein, chairman and CEO of Mid America Bank, remarked on the value of FHLB membership, "Our decision to join the FHLB of Cincinnati was evaluated in terms of how we believe their programs could support and strengthen our residential lending commitment to our community. Their programs provides us with added flexibility in the types of mortgage products we can offer. We plan to use their long term fixed rate programs, especially the Mortgage Matched Advance, to meet the growing demand for fixed rate mortgages. Over time, we'll consider their other programs as the credit needs of our institution and customers change."
 The Cincinnati FHLB product most often cited as an attractive membership benefit is the Mortgage Matched Advance (MMA) Program, introduced in 1990. The MMA, unique to the FHLB of Cincinnati, is a 10-, 15-, or 20-year fixed rate advance that amortizes exactly like a mortgage, with level montly payments. With a resurgence in the demand for fixed rate mortgage products including new mortgages and mortgage refinancings, the MMA has been a popular choice. More than 80 institutions have borrowed a total of $500 million under the MMA program in just the last 18 months.
 William R. Bryan, president of Cuyahoga Savings, $320 million institution in Cleveland, is using the MMA to complement his institution's adjustable rate lending practices. "Our primary focus in residential lending has always been and will remain the adjustable rate product. However, there are occasions when our customers simply will not accept anything but a fixed rate mortgage. In addition, some of our ARMs can be converted to a fixed rate product. We wanted a funding source which would match fund these fixed rate mortgages while insulating us from interest rate risk. The MMA accomplished this goal," said Bryan.
 At the Bank of Sharon, a $50 million institution in Sharon, Tenn., the MMA has facilitated the offering of a fixed rate mortgage which has resulted in a substantial increase in residential leanding activity. Mark Prince, president, commented, "We have always had a commitment to serving the housing needs of our community. But the products we could offer were limited because our funding sources were limited. Prior to FHLB membership, we did not offer fixed rate mortgages. The MMA allows us to engage in prudent fixed rate lending and demonstrate our responsiveness to our customers' credit needs."
 In mid-March, total Cincinnati FHLB membership consisted of 401 financial institutions while 40 more institutions were applying for membership. Six months earlier, membership stood at 367. Thiemann fully expects membership growth to continue. "The recent expansion in membership in our bank is very encouraging. Based on membership applications we are processing at this time, and the general feedback we are getting from the banking community, we have every reason to believe that membership growth will continue at its current pace. A larger membership base bodes well for existing stockholders, new stockholders, and the entire FHLB system. We will continue to provide customized products to meet the housing finance needs of all bank stockholders," Thiemann concluded.
 One of 12 District Banks in the FHLB System, the FHLB of Cincinnati is a credit reserve bank chartered by Congress in the 1930s to provide reliable, low cost credit to housing finance lenders. While commercial banks have engaged in housing finance for several years, they have only been eligible for FHLB membership since the passage of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989. Since FIRREA, nearly 700 commercial banks nationwide have entered the FHLB System to take advantage of these housing finance products.
 FHLB of Cincinnati Background
 The District Banks raise funds to lend to members through triple-A rated consolidated obligations. This debt has been historically priced at a veces this money in the form of credit, called advances, for its members. These products can be used for a variety of purposes including liquidity management, asset/liability management and restructuring, community development and reinvestment lending, and fixed rate mortgage finance.
 MMA Program Background
 The credit program which is the most popular among Fifth District member institutions is the Mortgage Matched Advance (MMA). In addition to the benefits of matching existing fixed rate mortgages, the borrowing institution can exercise an annual option to prepay a percent of the outstanding principle with no prepayment fee. This percent is a published index which reflects recent national prepayment rates of comparable mortgage-backed securities. The MMA offers solid protection against two prominent risks associated with portfolio lending of fixed rate mortgages -- interest rate risk and prepayment risk. In addition, the lender has added flexibility in the design of its mortgage product since the lender dictates, all the terms and conditions of the mortgage. No restrictions are placed by the FHLB on the pricing of the mortgage nor does the mortgage need to comply with secondary market standards.
 -0- 3/27/92
 /CONTACT: Thomas J. Ciresi, vice president, marketing and communications of Federal Home Loan Bank of Cincinnati, 513-852-7695/ CO: Federal Home Loan Bank of Cincinnati ST: Ohio IN: FIN SU: JVN


LC -- CL005 -- 2305 03/27/92 10:42 EST
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Date:Mar 27, 1992
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