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Language Translation Disclosure
This Advisory Bulletin provides Federal Housing Finance Agency (FHFA) guidance on Federal Home Loan Bank (Bank) core mission achievement. It should be considered in conjunction with FHFA's Advisory Bulletin 2010-AB-02,
Strategic Plans. The Advisory Bulletin also describes how FHFA will assess the Banks' core mission achievement, as well as FHFA's expectations about the content of the strategic plans for Banks with core mission assets below specified levels.
FHFA currently has in place a core mission activities regulation (12 CFR § 1265.2), which describes the mission of the Banks as follows:
The mission of the Banks is to provide to their members and housing associates financial products and services, including but not limited to advances, that assist and enhance such members' and housing associates' financing of: (a) housing, including single-family and multi-family housing serving consumers at all income levels; and (b) community lending.
Further, the regulation defines core mission activities to include:
When developing its strategic business plan with respect to core mission, FHFA will expect each Bank to consider the guidelines established in this Advisory Bulletin. FHFA's regulation on strategic business plans requires each Bank's board of directors to adopt, maintain, and periodically review a strategic business plan that "describes how the business activities of the Bank will achieve the mission of the Bank consistent with" the core mission activities provisions.
Components of Core Mission
Core mission assets and activities should be divided into two parts.
Measuring Core Mission Achievement
FHFA will assess each Bank's core mission achievement by calculating the ratio of its Primary Mission Assets relative to consolidated obligations (COs). FHFA will make these calculations, starting at year-end 2015, using annual average par values, as reported by the Banks in FHFA's Call Report System (CRS), and will assess each Bank's core mission achievement on an annual basis as part of the examination process.
Consideration of Core Mission Achievement
When considering its core mission achievement, FHFA will expect each Bank to use the following framework.
For Banks that maintain a "Preferred Advances and AMA Ratio," FHFA will not undertake a further evaluation regarding its mission achievement. Nonetheless, a Bank in this category should include as part of its strategic plan an assessment of its prospects for maintaining this level of mission achievement.
For Banks that have an "Evolving Advances and AMA Ratio," FHFA will undertake a further evaluation regarding its mission achievement, the nature of which will depend on the Bank's actual ratio. For those Banks where the ratio is:
FHFA will evaluate in detail Banks with Primary Mission Asset ratios below 55 percent. At a minimum, FHFA will expect the Bank's strategic plan to include a robust explanation describing in detail the circumstances that caused the Primary Mission Asset ratio to fall below 55 percent, as well as a detailed description of its plans to increase its ratio.
In assessing the mission achievement of such Banks, FHFA will take into consideration the potential effects of business cycle fluctuations on advance demand and the Banks' ability to influence that demand. However, FHFA will expect that if a Bank were to have a Primary Mission Assets ratio below 55 percent over the course of several consecutive reviews, then the Bank's board of directors should consider possible strategic alternatives, in addition to the balance sheet actions noted above, as part of its strategic planning.
 The regulation on strategic business plans is currently located at 12 CFR § 917.5, but FHFA has proposed to relocate the provision to 12 CFR § 1239.31
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