Supporting Loan Demand in Rural Iowa: A Message from an Iowa Member

last updated on Thursday, October 12, 2023 in Advances

For more than nine decades the Federal Home Loan Bank System (FHLBanks) has worked to improve the lives of millions of Americans. The customers we serve at Iowa State Bank and Trust have witnessed that impact first-hand.

Even after 90 years, the Federal Home Loan Bank of Des Moines (FHLB Des Moines) has retained its core values. They prioritize providing community-focused financial institutions like ours with affordable liquidity so we can serve families, farms and businesses in our communities. In rural Iowa, access to liquidity is critical– not only to Iowa State Bank and Trust, but the employers, farmers, school districts and non-profits that rely on our employees’ expertise and the bank’s credit products.

Like many places in Iowa, Fairfield is struggling to provide enough options for parents in need of quality childcare. This critical need was identified, and Iowa State Bank and Trust took the lead in financing the construction of a child care facility with space for 185 kids. Using an FHLB Des Moines Community Investment Advance (loan), we were able to price the construction loan 2.25 percent below our stated rate, saving the facility about $45,000 in interest costs annually.

A top 10 employer in Fairfield, Agri-Industrial Plastics, has been a community staple for over 40 years. Iowa State Bank and Trust provided a start-up loan to the company in 1978 and continues to support its amazing growth to this day. As financing needs arise due to factory expansions and machinery purchases, Iowa State Bank is able to utilize FHLB Des Moines’ Community Investment Advances to meet them.

It would be nearly impossible for Iowa State Bank and Trust to support small-businesses or non-profit organizations without FHLB Des Moines. Deposit growth in southeast Iowa is not sufficient to support growing loan demand and the credit needs of our customers. In the last 10 years, we have grown our assets by 130% and loans by 150%, due in part to our access to FHLB Des Moines credit products.

For nearly a century, FHLBanks have supported community banks like Iowa State Bank and Trust, allowing them to better serve their communities. FHLBanks are not frequently recognized but are a critical element of the nation’s financial infrastructure. Their ability to remain viable in all economic cycles is imperative to our organization’s ability to take care of our community. We rely on FHLB Des Moines and our business model would be radically different if we didn’t have access to their products and services.


Aaron Kness
President and CEO of Iowa State Bank and Trust
Fairfield, Iowa

About Iowa State Bank & Trust 

Iowa State Bank & Trust Company opened its doors for the first time on May 19, 1934, after a merger between Iowa State Savings Bank and the Iowa Loan and Trust Company. The merger was completed to create a stronger, unified bank during the Great Depression. Since that time, Iowa State Bank & Trust Company has experienced significant growth, primarily in the Midwest. A new headquarters was constructed in Fairfield, Iowa, in 1996. In 2022, the bank opened its first branch in Ottumwa, Iowa. Today, Iowa State Bank & Trust Company has grown into an institution with more than $200 million in assets.