1. Building Stronger Communities 1 Governor’s Housing Conference October 7, 2015

2.  Congressionally chartered in 1932, privately owned wholesale bank.  Government Sponsored Enterprise (GSE)  Not a government agency; no Federal appropriations  Owned by “Member Financial Institutions”  Cooperative Structure; Members are both owners and customers. General FHLB Profile 2

3. FHLB Mission Provide liquidity and term finance to our Members for housing and economic development through: 3

4. Housing and Community Investment (HCI) 4

5. Housing and Community Investment Programs  Affordable Housing Program (AHP)  Welcome Home Program (WHP)  Carol M. Peterson Housing Fund (CMPHF)  Disaster Reconstruction Program (DRP)  Community Investment Program (CIP)  Economic Development Program (EDP)  Zero Interest Fund (ZIF) 5

6. Welcome Home Program (WHP)  Available funding for 2015 was $10.5 million.  Program opened on March 2, 2015 and closed on April 6.  Provides funds for down payment and closing costs assistance.  Maximum grants of $5,000 per household.  Members limited to $200,000 annually. 6

7. Carol M. Peterson Housing Fund (CMPHF)  Provides grants up to $7,500 per household for accessibility and emergency repairs.  Opened and closed June 1, 2015.  $1 million available.  Member must partner with a Sponsor, who completes or supervises the work. 7

8. Disaster Reconstruction Program (DRP)  Provides grants up to $20,000 to households adversely impacted by a natural disaster.  Used for the acquisition, new construction, or rehabilitation of a single family home.  Only for properties located in Kentucky, Ohio, or Tennessee.  Must apply within 24 months of the disaster declaration. 8

9. Community Investment Program (CIP)  Provides discount loans to promote financing of housing and economic development projects.  Priced daily at FHLB cost of funds.  Subject to normal underwriting and collateral policies (reference FHLB Credit Policy Manual) and Member’s available borrowing capacity.  Member can mark-up the rate to their customer.  May be used with other FHLB HCI products (i.e., AHP, Welcome Home, etc.). 9

10. CIP Eligible Uses  Housing  Purchase, construction, or rehab of housing  Single-family homes, apartment buildings, manufactured housing, etc.  Must benefit households with incomes at or below 115% of HUD Area Median Income (AMI).  Economic Development  Economic development projects benefiting households with incomes at or below 80% of AMI or small business concerns  Other  Mixed use projects are eligible.  Flexible financing tool for construction or long-term lending. 10

11. Eligible CIP Advance Types Minimum term of one year required. 11  Balloon Payment  Constant Monthly Payment  Regular Fixed Rate  Special Amortizing  Callable  Regular Mortgage Matched  Select Payment Mortgage Matched

12. CIP Rate Structure Normal Rate CIP RateSavings (bps) Regular Mortgage Matched Advance (10 years) 2.441.9450 Select Pay MMA 15 Year (15-0 % CPR) 2.582.2830 Balloon Payment Advance (30/10) 2.862.5630 Constant Monthly Payment Advance (5 years) 1.421.1725 1-year Bullet (Fixed Rate Advance) 0.740.5024 12 Rates as of September 10, 2015 and subject to change.

13. Example - CIP for Housing New construction of 68 units for elderly and special needs households, of which 41 will have income at or below 50% of AMI and 27 will have income at or below 60% of AMI.  Purpose:New Construction  Amount:$675,000  Balloon Payment Advance:15 years  CIP Rate:1.82%  Normal Rate:2.12%  Savings to Member:30 bps 13

14. Economic Development Program (EDP)  Provides discount loans to promote financing of economic development and job creation/retention.  Priced at FHLB cost of funds plus 3 bps.  Subject to normal underwriting and collateral policies (reference FHLB Credit Policy Manual) and Member’s available borrowing capacity.  Member can mark-up the rate to their customer.  May be used with other FHLB HCI products (i.e., AHP) 14

15. EDP Eligible Uses  Commercial, industrial, agricultural, small business, public facilities, and infrastructure projects. Mixed use projects are eligible.  Purchase, construction, or rehab of real estate; working capital, inventory, or equipment.  Must benefit households with annual income of 115% of AMI for Rural or 100% of AMI for Urban; OR,  Provide benefits based on Neighborhood location, Job Creation/Retention, and/or, business size. 15

16. Eligible EDP Advance Types Minimum term of one year required 16  Balloon Payment  Constant Monthly Payment  Regular Fixed Rate  Special Amortizing  Callable  Regular Mortgage Matched  Select Payment Mortgage Matched

17. EDP Pricing Normal Rate EDP Rate Savings (bps) Regular Mortgage Matched Advance (10 years) 2.441.9747 Select Payment Mortgage Matched Advance (15 years- 0% CPR) 2.582.3127 Balloon Payment Advance (30/10) 2.862.5927 Constant Monthly Payment Advance (5 years) 1.421.2022 1-year Bullet (Fixed Rate Advance) 0.740.5321 17 Rates as of September 10, 2015 and subject to change.

18. Example-Economic Development New construction for street and road improvements in rural area. Project qualified based on neighborhood.  Purpose:New construction  Amount:$353,000  MMA:15 years  EDP Rate:2.03%  Normal Rate:2.70%  Savings to Member:67 bps 18

19. CIP and EDP Application Processing 19 Step One Step Two Step Three CIP/EDP

20. Zero Interest Fund  Provides zero-interest loans to finance early-in/ predevelopment costs for housing and economic development projects located in Kentucky, Ohio, and Tennessee.  $2 million interest-free, revolving loan fund.  Available on a first-come, first-served basis.  A Member may request up to $100,000 per project.  Members are generally limited to one draw per year. 20

21. ZIF Terms and Conditions  Member mark-up limited to reasonable and customary fees.  Loan must be evidenced by a Note and/or loan document for a term not to exceed:  Housing – 18 months  Economic Development – 24 months  Member must notify the FHLB of early repayment. 21

22. ZIF Eligible Uses  Appraisals  Architectural Drawings  Consulting Fees  Engineering Fees  Environmental Testing  Feasibility Analyses  Legal Costs  Licensing and Permit Fees  Market Studies  Infrastructure  Land Acquisition 22

23. Application Guidelines  Similar to CIP/EDP Process, except:  Application must be submitted within 30 days of the Member’s loan to the customer closing.  FHLB Funding Agreement must be received prior to disbursement. (Note: The Funding Agreement will be emailed to the Member with the approval letter.) 23

24. ZIF Example Purchase of undeveloped land for new construction of single-family homes for sale to moderate income households. Project qualifies as pre-development costs.  Purpose:Land Acquisition/Infrastructure  Amount:$100,000  Term:18 months  Rate:0%  Normal Rate: 4% 24

25. Affordable Housing Program  Provides direct grants to support development of housing for households with income at or below 80% of the area median income (AMI).  Federally Regulated  AHP Implementation Plan sets forth policies for administering the federal regulations  Competitive application process; projects are evaluated based on:  Eligibility and Threshold Requirements  Financial Feasibility  Scoring Criteria 25

26. Source of AHP  10% of FHLB Net Earnings  Private dollars  25 years of providing AHP Subsidy 26 10 percent Creates AHP Subsidy Welcome Home Competitive

27. AHP Participants  Members are the applicants  Commercial Banks, Savings Institutions, Thrifts  Credit Unions  Community Development Financial Institutions  Insurance Companies ‾Only a Member financial institution of the FHLB Cincinnati can submit an AHP application.  Sponsors are housing providers & developers  Non-profit organizations  For-profit entities  Government Agencies 27

28. AHP Eligible Uses  Ownership or Rental Housing  Costs directly related to housing development  New Construction  Rehabilitation  Acquisition/Purchase of land or buildings  Any of combination of the above 28

29. AHP Threshold Requirements  Enough funds to cover all project costs.  Demand for the housing at the income and occupancy targets, and rent or mortgage expected.  Appropriate for the population being served.  Marketed to the target population and comply with all Fair Housing and Accessibility Laws.  Sponsor has experience/capacity to complete the project.  Sponsor has site control.  Development costs are reasonable. 29

30. AHP Threshold Requirements  All units will be occupied by households with incomes at or below 80% AMI.  Rental projects must have at least 20% of the units occupied by households with incomes at or below 50% AMI.  Units will be affordable to targeted households.  Rental projects: 20-30% of tenant’s monthly income.  Ownership projects: no more than 31% of buyer’s monthly income.  Project will begin incurring AHP eligible expenses within 12 months and be complete within 36 months.  If project requires new permanent debt, the Member must provide the permanent loan. 30

31. 31 AHP Feasibility Guidelines  Total Project Cost (TPC) per unit <=$185,000  Total Project Cost/bed or Owner-occupied Rehab<=$50,000  Total Contractor Costs (as percent of hard costs) <= 14%  Developer Fee (as percent of TDC) <= 15%  Owner-occupied Rehab or Acquisition Only <= 5% or <= 10%  AHP Subsidy per Unit <= $50,000  AHP Subsidy per Bed <= $15,000  Total AHP subsidy lesser of $1,000,000 or 75% of TPC

32. 32 AHP Feasibility Guidelines  Operating Expenses / unit <= $5,000/yr  Annual Replacement Reserves / unit <= $400/yr  Vacancy Ratio (as percent of income) <= 10%  Management Fee (as percent of net income) <= 10%  Capitalized Costs <= 12 months  Debt Coverage Ratio (debt projects) 1.15 - 1.35  Expense to Income Ratio (no debt projects) >= 80%  Net Cash Flowpositive for 15 years  Tax Credit Sale Price <= $0.80

33. AHP Scoring Criteria (100 Point System)  FHLB Cincinnati Priorities  Member Participation(5)  First-time Homebuyers(5)  Community Involvement(3)  Projects in OH, KY& TN(5)  Special Needs Housing(10)  Housing in Appalachia (3)  Funding Commitments (4)  AHP Leveraging(5)  All FHLBs  Donated Property(5)  Sponsorship(5)  Empowerment(5)  AHP Subsidy per Unit(10)  Income Targeting(20)  Homeless Housing(5)  Community Stability(10) 33

34. AHP Steps for Sponsors  Sponsor plans the project, develop a written plan:  Identify location (site control or acquisition plan) ;  Project type (ownership, owner-occupied rehab or rental) ;  Income and occupancy targets (special needs/elderly/homeless) ;  Size and number of housing units or beds (floor plan) ;  Development costs (cost estimates) ;  Sources of funds for development (including AHP subsidy) ;  Rent or mortgage affordability for targeted households;  Operating costs and source of funds (if rental) ; and,  Identify and meet with a Member to present the project plan. 34

35. AHP Steps for Members  Meets with Sponsor to review project concept; and,  If Member decides to partner with Sponsor, then:  Determines what type of contributions or concessions will be made to the project;  If a loan is needed, underwrite the Sponsor and project or homebuyers;  Sets deadline to receive the online application from Sponsor in order to gain necessary approvals prior to submission deadline. 35

36. AHP Application Process  Sponsor registers online for a Sponsor ID and Password, completes the online application and submits the application to the Member electronically.  Member reviews the application, completes the Member information, and submits the application electronically to the FHLB Cincinnati.  Sponsor and Member submit Required Documents to support the online application.  AHP application is not complete until the Required Documents are received by the FHLB Cincinnati. 36

37. AHP Required Documents  The AHP online application identifies documents required based on answers to certain questions.  The AHP online application system sends an email to the Sponsor and Member listing the Required Documents that must be submitted to complete the application.  Examples:  Warranty Deeds for project property  Member & Sponsor Certifications (FHLB forms signed by authorized representatives, dated in the current year) 37

38. AHP Monitoring  All approved AHP projects are subject to monitoring by the FHLB through:  Periodic Progress Reports (until completion and final funding) for both ownership and rental projects.  Initial Monitoring (at disbursement) for both ownership and rental projects. Rental projects are also reviewed and audited nine months after final funding.  Long-Term Monitoring (15 years) for non-tax credit rental projects. 38

39. 39 AHP Retention  AHP-assisted units are subject to a deed restriction requiring FHLB be notified of any sale, refinancing, foreclosure, deed in lieu of foreclosure, or assignment to HUD within five (5) years of funding for ownership and within fifteen (15) years of funding for rental projects.  Enforced by deed restriction or restrictive covenant on the property for projects receiving $250,000 or less in AHP subsidy.  Enforced by a lien on the property for projects receiving more than $250,000 in AHP subsidy.  Specific restrictive language is provided by the FHLB.

40. Disbursement of AHP Funds  AHP funds are disbursed to the Member only after construction or rehabilitation is complete.  Member disburses AHP funds to the Sponsor/ project.  Documentation sufficient to allow the FHLB to disburse AHP funds must be submitted no later than six months prior to the AHP commitment expiration. 40

41. More Information at www.fhlbcin.com 41

42. 42 Contact list for AHP NamePhoneE-mail Address Mary L. Hernandez(513) 852-7604hernandezml@fhlbcin.com Affordable Housing Program Manager Cassandra L. Larcarte(513) 852-7619larcartecl@fhlbcin.com Housing Financial Analyst II Laura K. Overton(513) 852-7603overtonlk@fhlbcin.com Housing Financial Analyst II T. Scott Prowse(513) 852-7612prowsets@fhlbcin.com Housing Financial Analyst II Samantha M. Walker(513) 852-7621walkersm@fhlbcin.com Housing Financial Analyst I

43. 43 Contact list for WHP, CMPHF, DRP, CIP, EDP, and ZIF NamePhoneE-mail Address Jill A. Cravens(513) 852-7550cravensja@fhlbcin.com Voluntary Programs Manager Jodi M. Pendleton(513) 852-7602pendltonjm@fhlbcin.com Housing Financial Analyst I Jasmine P. Grant(513) 852-7617grantjp@fhlbcin.com Housing Financial Analyst I Kristina L. Jordan(513) 852 – 7609jordankl@fhlbcin.com Housing Program Assistant I

44. 44 Federal Home Loan Bank of Cincinnati P.O. Box 598 Cincinnati, OH 45201-0598 Toll free: (888) 345-2246 Fax: (513) 852-7647 Website: www.fhlbcin.com Contact Us

45. Questions? 45