The Federal Home Loan Bank (FHLB) of Des Moines and the North Dakota Department of Financial Institutions announced Friday the signing of a first-in-the-nation information-sharing agreement between a federal home loan bank and a state banking regulator. The agreement, which is endorsed by the Conference of State Bank Supervisors and the Council of Federal Home Loan Banks, will serve as a model for the two-way flow of communication of data regarding extensions of credit, collateral valuation, examination reports and other relevant supervisory information for all 12 banks in the Federal Home Loan Bank system.

FHLB Des Moines President and CEO Richard Swanson said the agreement will increase the stability of the financial services industry in its region, which comprises Iowa, Minnesota, Missouri, North Dakota and South Dakota. “The agreement enhances coordination between our bank and regulatory bodies and ultimately allows us to better serve our members,” he said in a release.

FHLB Des Moines is a federally chartered cooperative wholesale bank with more than 1,200 member financial institutions in its five-state region. One of its major functions is to provide access to low-cost funds for lending through advances to member institutions.

The pact comes as financial institutions are confronted with complex regulations and a wide variety of financial players, said Tim Karsky, commissioner of the North Dakota Department of Financial Institutions and chairman of the Conference of State Bank Supervisors. In addition to making the examination process smoother for banks, “it will also facilitate the timely monitoring of financial institution liquidity and enhance our safety and soundness exams.”

The Iowa Division of Banking is currently considering the agreement, said Vaughn Noring, bank bureau chief with the division. Under Iowa law, the division has been able to share regulatory data with FHLB Des Moines for the past several years, Noring said. If the state enters into a similar agreement, “this would allow the Federal Home Loan Bank to send information back to us,” he said. Federal banking regulators already have a similar data-sharing agreement with the federal home loan banks. Provided the agreement meets state legal requirements, “it would certainly be something we would entertain,” Noring said.

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