Principia Partners, a solution provider for the management and administration of structured finance investments, today announced that the US Federal Home Loan Banks (FHLBanks) of Atlanta, Boston, Cincinnati, Des Moines and New York have now been successfully using the Principia Structured Finance Platform (Principia SFP) for 15 years. The five regional home loan banks, which were among Principia’s earliest adopters, are currently using the platform to perform their debt issuance and associated hedge valuations, operational straight through processing and accounting activities.
While the application varies from bank to bank, the FHLBanks typically manage their debt issuance as well as a wide array of fixed income investments and complex hedging instruments using the software. The banks also found that Principia SFP was unique in its ability to accurately model and price the advances made to their community bank members. Often these products are structured with callable and embedded optionality features that are not handled well by other solutions.
Patrick Morgan, CFO at FHLBank of New York said, “Principia is integral to the ongoing investment analysis and automated processes that drive our entire trade lifecycle management. Its provision of data and powerful analytics ensure accurate valuations and the effective risk management of our investments, debt issuance and hedging positions so that we can more easily provide readily available, low-cost funding for our members. Streamlining these processes into Principia’s reporting and accounting framework has helped to eliminate operationally intensive tasks and processes – in particular it has ensured we maintain compliance with complex accounting requirements such as ASC 815 (formerly FAS 133) for many years.”
Usage of the platform has expanded significantly as Principia has worked with the FHLBank sector. The platform is now also used by the banks for its extensive reporting capabilities, workflow control and automated accounting. From front to back office, the banks are able to analyse highly structured fixed income investments, including Asset Backed and Mortgage Backed Securities and value associated hedges, issued debt and FHLBank advances. On the same system they can then summarise the resulting accounting entries to accurately and more efficiently assess and report on the effectiveness of hedging relationships.
“Maintaining these key strategic relationships with our long standing clients in this rapidly changing marketplace is very rewarding and has been vital to our own ongoing growth and success. We are pleased that our drive to deliver the dedicated functionality and support required by these important US government institutions has helped them to achieve their organisational goals. We look forward to working with our existing FHLBank clients and the remaining institutions in the Federal Home Loan Banking System to help them benefit from the latest developments to our software,” states Theresa Adams, CEO and president of Principia Partners.