FEDERAL HOME LOAN BANKS
The FHLBank system is comprised of eleven (11) independent cooperatives. Each FHLBank is privately owned by their member financial institutions - large and small - from across all 50 states, U.S. possessions and territories. The FHLBank system’s +6,800 members include ~5,000 banks and thrifts, >1,400 credit unions and >400 insurance companies. Each FHLBank is privately capitalized by its member-shareholders.
The FHLBanks' mission is to provide reliable liquidity to member institutions to support housing finance and community investment.
The FHLBanks provide long-term and short-term secured loans, called “advances,” to their members. For collateral, FHLBank members primarily use residential mortgage loans, as well as government and agency securities.
The FHLBanks play an essential role by helping member institutions meet the credit needs of communities everywhere in all economic cycles. Without the FHLBanks, it would be more difficult for local lending institutions to provide credit and financial services for families, farms and businesses in every U.S. state and territory. Credit would be tighter and more expensive.
(Source: Council of FHLBanks; FHFA).
The FHLBank Office of Finance serves as the fiscal agent for the FHLBanks issuing and servicing its debt securities (discount notes and bonds).
The Council of FHLBanks serves as the public voice and trade association for the FHLBanks.
The Federal Housing Finance Agency, or FHFA, is the primary regulatory agency for the FHLBanks. The FHFA also serves as the primary regulator for Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).
The FHLBanks, Fannie Mae and Freddie Mac are “government-sponsored enterprises” or “GSEs”. GSEs are privately-held corporations created by Congress with a public purpose to support certain sectors of the economy by being a reliable provider of liquidity and to reduce the cost of credit for those sectors.
HISTORICAL PERSPECTIVE ON FHLBANKS
FHLBANKS & MEMBERSHIP
BALANCE SHEET COMPOSITION OF FHLBANKS
FUNDING: DISCOUNT NOTES AND BONDS
primary mission assets
Affordable Housing Assessments
IMPACT OF BANK & THRIFT INDUSTRY CONSOLIDATION ON FHLBANKS
With the enactment of the Riegle-Neal interstate banking bill in 1994, banks began the consolidation of the various banking charters that existed within their bank holding company across the U.S. Most bank holding companies moved toward a single banking charter to house all of their branches and bank activities.
As the bank & thrift industry consolidation occurred, each FHLBank suffered a decline in the number of banks & thrifts - industry consolidation occurred both within each FHLBank district and across districts.
However, depending upon where the headquarters (or charter) of the acquiring institution resided, the change in market share of banking and thrift industry assets had differing impacts on each FHLBank. Consolidation of banks across various FHLBank districts had a significant impact on the market share of bank and thrift industry assets held by any FHLBank. And this continues as the banking industry consolidation continues.
FHLBank of Des Moines gained market share as a result of the acquisition activity of Wells Fargo (and predecessor firms) and having its banking charter located in South Dakota. FHLBank of Des Moines went from a district with bank and thrifts holding approximately 9% of industry assets to just under 25% - a market share gain of 16 points.
FHLBank of Atlanta gained market share as a result of the acquisition activity of the former NationsBank - now BankAmerica - and predecessor firms and having its banking charter located in North Carolina. FHLBank of Atlanta went from a district with bank and thrifts holding approximately 14% of industry assets to just under 21% - a market share gain of 7 points.
FHLBank of Cincinnati gained market share as a result of the acquisition activity of the former Bank One / Chase Manhattan - now JPMorgan Chase (and predecessor firms) and having its banking charter located in Ohio. FHLBank of Cincinnati went from a district with bank and thrifts holding approximately 6% of industry assets to just under 19% - a market share gain of 13 points.
For those FHLBanks with decline market share of banking industry assets, this results primarily from banks and thrifts headquartered in their districts being acquired by institutions headquartered in another FHLBank district. Two FHLBanks showed significant market share changes. FHLBank of New York’s market share declined by nearly 15 points from 22% in 1992 to 7% in 2018 primarily relating to mergers of Chase Manhattan, JP Morgan and several regional banks. FHLBank of San Francisco’s market share dropped 9 points from approximately 15% to 6% as banks and thrifts across its district were merged into other banks.