In 2015, Kristina K. Williams told the 385 graduates of West Liberty University, her alma mater, that they were the CEOs of their lives, and if they didn’t like the station they were in, or weren’t happy with what life was handing them, the power to affect change belonged to them. At the time, Williams was the chief operating officer for the Federal Home Loan Bank of Pittsburgh and was a well-regarded banking leader in the Three Rivers region, having spent a dozen years at PNC Bank. Tapping a philosophy that had served her for 30-plus years, the West Virginia native advised those gathered for spring commencement to “take charge” rather than get caught up in the woe-is-me narrative of victimhood. Because stuff happens.
Williams became president and CEO of the Federal Home Loan Bank of Des Moines on January 20 of this year, and was soon thereafter reminded that life has a relentless ability to deliver the unexpected. In the earliest days of the pandemic, Williams took charge, organizing a crisis plan, sending roughly 90 percent of her workforce to home offices while keeping 5 percent at the bank’s disaster recovery site and another 5 percent at headquarters. Williams took these steps even as Gov. Kim Reynolds resisted the idea of ordering Iowans to shelter in place.
“We were just really concerned about some of the things we were hearing,” Williams said. The bank has a pandemic team that meets twice a week, and the news reports prompted swift action, she explained. “Our members need us, no matter what, and helping our institutions and their communities was really important to us.”
Swift and decisive action is exactly what the members of the Des Moines-based bank should anticipate from Williams, said Winthrop Watson, president and CEO of the Federal Home Loan Bank of Pittsburgh. “She’s very outgoing and people-oriented, but she’s also very much a problem solver and get-it-done oriented,” said Watson, who groomed Williams by giving her increasing responsibilities, and ultimately recommended her for the top job at the Des Moines-based bank when a search firm called him, despite the potential of losing his valued No. 2.
“I knew she wanted to be a CEO,” Watson said. “I wasn’t the first one to put forward her name.”
With two-thirds of her first 90 days on the job impacted by a global pandemic, Williams remains enthusiastic about her new post. Installed in temporary quarters with her husband and her golden retriever, Sandy (who’s not digging apartment life), Williams is looking beyond the personal frustrations that come with relocation and maintaining a bright hope she’ll soon be out visiting member institutions throughout the bank’s 13-state, three U.S. territory footprint. She’s eager to foster the bank’s mission of supporting affordable housing; and with a resume built on balance sheet and asset quality management, she’s fully qualified to keep the Des Moines bank strong and relevant in an era that, thanks to COVID-19, now presents myriad challenges.
Rates at the floor
Williams considers FHLB advances to be a leading indicator of economic turbulence. As businesses started to shutter in the first quarter and people began to shelter in place, the FHLB of Des Moines saw an uptick in advances going out to smaller institutions. But prepayments from other areas increased and activity leveled. “The system expanded just like we were meant to,” she said.
As a secured lender, banks in the FHLB System have adapted quickly to two pandemic-related finance developments: The Paycheck Protection Program and the widespread need to offer mortgage forbearance. On the latter, Williams said as long as member institutions follow the CARES Act for government mortgages, “we will continue to accept it as collateral.”
On April 27, the Federal Housing Finance Agency, the system’s regulator, reiterated that borrowers in forbearance with GSE-backed mortgages would not be required to repay missed payments in a lump sum (see related story on pg. 13). The FHFA further formalized guidance April 23 that gives banks the opportunity to use PPP loans as collateral for FHLB advances.
Williams likened the bank’s need to respond quickly to inquiries about PPP loans and mortgage forbearance to playing a game of whack-a-mole — she and her team were not moving forward strategically but “reacting with our members, which is what we need to do. I imagine they’re experiencing the same thing,” she said.
Williams admits that FHLB advances are not always competitive with brokered deposits, unless a member considers the total value proposition of their membership, what she calls their “all-in value.”
“Members generally want the lowest cost product they can get, but they still want a return on their stock,” Williams said. What’s an appropriate return? “It’s got to be a balancing act. We run an efficient co-op. We’re very focused on members. We’re not profit-driven; we’re not trying to move our stock price; that’s not our focus. We’re all about mission, not just net income.
“I think if you asked all of our members, what’s the No. 1 thing they want from us, it’s liquidity on demand. I’d rank that first, but overall return is a close second,” Williams said. “Because if you don’t get it in price, you get it in dividend.”
Though access to funding is Reason One to become a member of the Federal Home Loan Bank, Williams said she’s been in the system long enough to understand that there are bankers who view any type of wholesale funding as unsuited to their institution’s goals. This is a hurdle Williams is eager to help bankers operating in the Des Moines region to move beyond.
“It really tamps down their ability to grow,” she said. “We are so much more predictable than any kind of deposit that a member could have, be it brokered or from a customer.”
Williams encourages bankers to consider FHLB advances as an opportunity. “When you borrow from us, you can pick the date, you know it’s going to be there, you can structure it, if you need an amortizing advance to match mortgages, you can specify the term and you know what price you’re getting…” she said.
She hits all the key notes in her pitch, and she’s ready with the counter argument, which bankers often relate from the source — their field regulators. Customer deposits have long been considered the predictable standard.
“I’ve had a lot of interaction with primary regulators in Washington, D.C.,” Williams said, “and they don’t have that view.” To move minds on non-core funding, the Home Loan Banks conduct regulator outreach and hold education sessions with state regulators, and OCC regulators who might not have a direct line to Washington, D.C. “I’d love for Home Loan Bank advances to be included in what’s considered core funding. We are so much more predictable than any kind of deposit.”
A head west
Williams was raised in an academic household. Her widowed father was an associate professor of geography at the same university where Williams earned her undergraduate degree in accounting while living at home and working full-time at a golf course to pay her own tuition.
Williams went on to earn her master’s in accountancy at West Virginia University, with the idea that public accounting would be her vocation. She worked for five years at two of the Big Four accounting firms before finding her way back to the hills of home. She joined Pittsburgh-based PNC and was chief financial officer for wholesale banking when she left in 2004 to become chief accounting officer at the FHLB of Pittsburgh.
Over time, Williams proved herself worthy of gaining oversight over all the operational functions of the bank, which serves member institutions operating in West Virginia, Pennsylvania and Delaware. Importantly, she served as chair of the asset liability committee. In 2011, she was promoted to COO by Watson, who said he took a chance on having her move to a client-facing role: “She never had a revenue-producing, client function before, so that switch from CFO to COO was very significant, and she just excelled at it from the very first day.”
Williams conveys a rare combination of operational knowledge, intellectual curiosity and interpersonal acumen, Watson said. She understands balance sheets, can speak the language of finance (the language of her members), yet she excels by connecting at ground level, with employees or the beneficiaries of affordable housing grants. Some of her best days, she said, were at ribbon-cutting ceremonies where she could see the real-world impact of the FHLB mission.
She’s eager to learn the names of the roughly 350 people who work at the FHLB of Des Moines, but first they need to come back to their desks. When the pandemic struck, Williams had begun the process of updating the bank’s strategic plan. She made one trip to the bank’s western office in Seattle, for a board meeting, and then she was grounded like everyone else.
An obvious challenge for Williams in the near-term is the FHLB of Des Moines footprint, which Watson called “vastly different” from the region served by the Pittsburgh bank. She will need to manage through seven time zones and learn the nuances of regions about which she is mostly unfamiliar. The bank’s footprint stretches from the upper midwestern states lying west of the Mississippi River all the way northwest to the Pacific, plus Alaska and Hawaii, as well as American Samoa, Guam and the Mariana Islands. “And by the way, it’s an opportunity,” Williams said. The footprint is diverse and covers many industries. “We don’t have any concentrations, so it’s a real advantage for us.”
And diversity, whether in landscape or in the way people think “is great,” Williams said. The more differing opinions, the more counter perspectives she comes into contact with, the better, she said, which she traces to her upbringing and her father’s expectation that she always be learning something. “That’s how I’m wired. I ask ‘Why?’ a lot.”
Williams’ greatest strength, in Watson’s view, is her intellectual curiosity. “She has a tremendous capacity to learn,” he said. “That has helped her in every circumstance; she comes up to speed on things very quickly.”
About the pandemic, there’s much to learn, for everyone. For now, face-to-face interactions with employees or members must wait as Williams keeps watch on two key indicators: The rate of virus spread and the effectiveness of government bailouts. She confers often with the presidents of the other banks in the Home Loan system, including her former boss, to learn how their regions are faring, and she listens to front-line employees who are the ones hearing directly from member institutions. She’s also revisiting financial projections, as are most banks, and keeping her eye on the big banks as they increase their loan loss reserves.
Is Williams worried about the future? “Yes,” she said, quickly clarifying, “but I worry about a lot of things. I am not doom and gloom.”