Directors’ Conflict of Interest Policy

March 21, 2019

1. Overview

In accordance with the regulatory requirements of the Federal Housing Finance Agency (the Finance Agency), the Board of Directors of FHLB Cincinnati (the “FHLB”) has adopted the Conflict of Interest Policy (Policy) for its Directors.

2. Purpose

The purpose of this policy is to inform FHLBank Directors of his/her obligations, including both legal and regulatory, in order to avoid conflicts of interest in all Board level matters and ensure the fair administration of duties during his other term of service as a director.

3. Scope

This policy applies to the FHLB’s Board of Directors. The policy addresses activities, roles and relationships (outside of the role as Board member) that may result in a conflict of interest.

4. Definitions

1. “Business Associate" means any individual or entity with whom a Director has a business relationship, including but not limited to:

a. Any corporation or organization of which the Director is an officer or partner, or in which the Director beneficially owns ten percent or more of any class of equity security, including subordinated debt;
b. Any other partner, officer or beneficial owner of ten percent or more of any class of equity security, including subordinated debt, of any such corporation or organization; and
c. Any trust or other estate in which a Director has a substantial beneficial interest or as to which the Director serves as trustee or in a similar fiduciary capacity.

2. “Financial Interest” means a direct or indirect financial interest in any activity, transaction, property or relationship that involves receiving or providing something of monetary value and includes, but is not limited to, any right, Contractual or otherwise, to the payment of money, whether contingent or fixed.
A Financial Interest does not include a deposit or savings account maintained with a member of the FHLB (a “Member”), nor does it include a loan or extension of credit obtained from a Member in the normal course of business on terms generally available to the public.

3. “Gift” includes:

a. A gifted item of more than insubstantial (i.e. token) value;
b. Entertainment or hospitality, the cost of which is in excess of what is considered reasonable, customary and accepted business practice; or
c. Any other item or service for which a Director pays less than market value.

4. “Immediate Family Member” means a parent, sibling, spouse, child or dependent or any other relative sharing the same residence as the Director.

5. Roles & responsibilities

1. The Board shall be responsible for periodically reviewing, updating, approving and interpreting this policy. 
2. The Board shall be responsible for ascertaining that the FHLB’s internal controls are designed to ensure that conflicts of interest are reported, disclosed and resolved.
3. The Board may delegate administrative responsibilities under this Policy as it deems appropriate to one or more committees of the Board.
4. The President is responsible for reporting to the Chair by March 1 the status of each Director’s Questionnaire and Director Eligibility Certification Form.
5. The First Vice President of Human Resources is responsible for submitting to the Human Resources, Compensation, and Inclusion Committee any recommendations for revisions to the language or changes to the administrative process for this policy.

6. Policy

Fair Administration:
Each Director shall administer the affairs of the FHLB fairly and impartially and without discrimination in favor of or against any Member or non-Member borrower.

Confidential Information:
A Director shall not disclose or use confidential information received by reason of the Director’s position with the FHLB to obtain any benefit for himself or herself or for any other person or entity.

Actual and Apparent Conflicts of Interest:
A Director shall avoid being or appearing to be on both sides of a transaction in which the FHLB is a participant; such actions will make it difficult for the Director to perform objectively and effectively for the FHLB. This prohibition does not preclude business transactions, otherwise consistent with this Policy, between the FHLB and a Member of which the Director is an officer, director or shareholder or between the FHLB and a Member of whose affiliate the Director is an officer, director or shareholder.

Independent Directors:
During his or her term of service as a Director, an Independent Director shall not serve as an officer, employee or director of any Member of the FHLB or any entity that is the recipient of advances from the FHLB or as an officer of any Federal Home Loan Bank. Each Independent Director and nominee for an independent directorship shall immediately disclose any such interest to the FHLB. However, an Independent Director may serve as an officer, employee or director of a holding company that controls one or more Members of, or recipients of advances from, the FHLB so long as the assets of all such Members or all such recipients of advances constitute and continue to constitute less than 35% of the consolidated assets of the holding company. For purposes of this paragraph, any officer, employee or director position held by the spouse of an Independent Director shall be attributed to such
Independent Director.

Gifts:
A Director is prohibited from using his or her official position for personal gain. A Director shall not accept, and shall discourage his or her immediate Family Members from accepting any Gift, no matter the value, that the Director believes or has reason to believe is given with the intent to influence the Director’s actions as a member of the Board, or where acceptance of such Gift would have the appearance of intending to influence the Director’s actions as a member of the Board.

Compensation:
A Director shall not accept compensation for services performed for the FHLB from any source other than the FHLB.

Affordable Housing Program (“AHP”) Applications:
If a Director or an immediate Family Member of a Director has a Financial Interest in, or is a director, trustee, officer or employees of an organization involved in a project that is the subject of a pending or approved AHP application, the Director shall not participate in or attempt to influence decisions by the FHLB regarding the evaluation approval, funding or monitoring of, or any remedial process for, such project.

Involvement in Director Elections:
A Director may support the candidacy of any person nominated by the Board for election as an Independent Director. Additionally, acting solely in his or her personal capacity, a Director may support the nomination or election of any individual for a member directorship so long as the Director does not purport to be representing or expressing the views of the FHLB or the Board in so doing.

Except as provided above, a Director shall not communicate in any manner that he or she supports or opposes the nomination or election of a particular individual for a directorship or take any other action to influence the voting with respect to a particular individual.

The following procedures should be followed in the event of a disclosure of a conflict of interest.

Disclosure and Recusal:
A Director shall in good faith fully disclose to the Board as soon as possible each instance or actual or apparent conflict of interest, whether or not specifically enumerated in this Policy.

A Director shall disclose to the Board any Financial interest(s) that he or she has as well as any Financial Interest(s) known to the Director of any immediate Family Member or Business Associate of the Director, in any matter to be considered by the Board and in any other business matter or proposed business matter involving the FHLB and any other person or entity.

A Director shall refrain from considering or voting on any issue in which the Director, any immediate Family Member or any Business Associate has a Financial Interest.

Procedures for Disclosing and Resolving Conflicts:
Where a Director, other than the Chair of the Board (the Chair), has a disclosure concerning a Financial Interest or any actual or possible conflict of interest or other violation of this Policy, that information must be disclosed in a written report submitted in a timely manner to the Chair on behalf of the Board. The report shall fully disclose the nature of the Director’s interest in the matter along with any information that the Chair requests or may need to aid in the consideration of the Director’s interest.

The Chair, when appropriate, will make the necessary investigation to determine if the conflict or violation can be resolved. At his or her discretion, the Chair may consult with other Board members, FHLB staff or FHLB counsel to assist in making such determination. Until the conflict or violation is resolved, the Chair will ensure that the affected Director takes no part in the consideration of or voting on any matter before the Board for which a possible conflict exists.

When the Chair has a disclosure concerning an actual or possible conflict of his or her own interest or other violation of this Policy, that information must be submitted to the Vice Chair, who will make the necessary investigation and determinations (as provided above) to resolve the matter. If the matter is not resolved, the Vice Chair will preside over the consideration and voting of any issues for which a conflict for the Chair may exist.

7. Compliance and enforcement

This Policy will be given to each Director every year and is incorporated by reference in the Finance Agency’s annual Director’s eligibility certification process.
Additionally, each Director must annually certify his or her compliance with the standards established in this Policy. The FHLB will maintain the signed certifications in each Director’s file.

Before signing, a Director may confidentially discuss with the Chair or the President, any situation or circumstances that appears to conflict with the standards identified in the Directors’ Conflict of Interest Policy. The Chair, in consultation with the President, will determine the appropriate action to be taken before the Director signs this certification.

Each Director shall submit to the FHLB’s President (or his designee) an executed Director Questionnaire on or before the FHLB’s February Board meeting of each year. The Director Questionnaire shall require, among other items, that the Director provide a list of relevant Financial Interests. Business Associates, activities and other associations that potentially could involve actual or possible conflicts of interest with an obligation to update such list if changes occur.

As required annually by the Finance Agency, on or before the FHLB’s February Board meeting of each year, each Director shall submit to the FHLB’s President (or his or her designee) an executed Director Eligibility Certification Form to the FHLB.

8. Exception to policy

No exceptions permitted – see Disclosure and Recusal.

8.1 Policy Waiver
Policy will not be waived – see Disclosure and Recusal.

8.2 Policy Violations
Any violation of this policy shall be immediately reported to one of the following FHLB staff: President and Chief Executive Officer, Executive Vice President, Chief Business Officer, Executive Vice President, Chief Financial Officer, Senior Vice President, General Counsel, First Vice President, Human Resources, or directly to the Board Chair or Vice Chair.