FHLBC - MPF in Focus

PFI Conversation: “Working with the MPF^® Program Was the Logical Approach”

Pentagon Federal Credit Union (known as PenFed), a member of the Federal Home Loan Bank of Atlanta, is the nation’s third-largest credit union and holds assets of approximately $20 billion. Focused on meeting the needs of active military personnel and veterans, PenFed serves over 1.4 million members in all 50 states, as well as military bases in Guam, Puerto Rico, and Okinawa. MPF in Focus recently spoke with Doug Maxham, Vice President, Secondary Marketing, about the strategy behind PenFed’s decision to partner with the MPF Program.

How long has PenFed been selling through the MPF Program under the MPF Government MBS product?

We executed our first trade in August 2015 under a pilot program with FHLBank Atlanta. We were one of the bigger lenders that participated, and I think that was actually the first trade made through the program. It’s been very successful: since January 2016, we have been consistently delivering around $25 million to $30 million in loans per month.

As a large credit union, why did PenFed choose to sell through the MPF Program?

We were interested in expanding our capital markets business to include an outlet for VA loan production. In the past, as we originated VA loans, we would put them on the balance sheet. Because of the concentration constraints associated with fixed-rate products, we needed some additional liquidity. There were alternatives to deliver to other investors, but the MPF Program fit our needs best because it allowed us to keep all our servicing. Other outlets required servicing-released execution, but the MPF Government MBS product allowed us to retain servicing—and our relationships with customers. We already had an established relationship with FHLBank Atlanta, so working with them on the MPF Program was the logical approach, and it has been very successful.

How would you describe your experience with the MPF Program and MPF Government MBS so far?

The MPF Program has given us the opportunity to expand our product mix and footprint, and it has provided liquidity as we’ve expanded our VA product marketing efforts and grown our VA origination volumes. Pricing through the MPF Program has remained very competitive. Also, delivering through the MPF Program has been easy; any issues or concerns are addressed by the FHLBank Atlanta and MPF teams immediately. We’re very happy with the program and excited to continue expanding this partnership.

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