FHLB dividend helps Bank of Edmonson County prosper

FHLB’s dividend is a key aspect of how we define and deliver the value we provide to our members. We believe the dividend should represent a competitive, stable and reliable return on members’ stock investments in the FHLB and should generally exceed what members would expect to earn by investing in a relatively safe asset.

Our approach has been to balance the cost of providing products and services with the management of financial performance and risks so that we are able to meet these membership investment return objectives. We think that these objectives provide members with a degree of certainty in their financial planning, promote the attractiveness of investing in our cooperative for the long term, and meaningfully lower the effective cost of borrowing liquidity from us.

“The Board continuously seeks the best possible balance between low product prices and attractive investment returns and would not favor charging higher product prices as a means of paying a higher dividend, nor would we favor sacrificing the dividend to allow for lower prices,” said FHLB Board Chair Donald J. Mullineaux.

Over the FHLB’s history, the dividend has been seen to rise and fall with broader economic and financial conditions – sudden, sharp moves are rare. Over the past 10 years, the FHLB has returned more than $1.7 billion of earnings to members in the form of dividends.

“The FHLB dividend had a wonderful return the last several years and we have been thankful to have such a great earning asset. The fact that this investment also provides so many other opportunities to our bank makes it a winning proposition for any community bank,” said Michelle Coleman, Chief Executive Officer, Bank of Edmonson County in Brownsville, Ky.