A loan from a Federal Home Loan Bank to one of its member institutions, made under a written agreement and fully secured by collateral such as mortgage loans.
The Federal Home Loan Banks are lenders to lenders. Their members, which include banks, savings institutions and credit unions, can borrow from them. Each borrowing is called an advance. By rule an advance is made under a written agreement, backed by a note, and fully secured.
The collateral is mostly the member’s own loans. Eligible security includes first mortgage loans on residential property, government and agency securities, and cash on deposit at the Home Loan Bank. Other real estate collateral can also qualify, and the rule names commercial real estate loans and mortgage loan participations. Smaller members that qualify as community financial institutions can pledge small business and small farm loans as well.
A borrower never signs anything with a Home Loan Bank, but advances affect what a local lender can offer. Deposits can leave on short notice, while an advance can be borrowed for a set term. A bank that wants to hold a fixed-rate commercial mortgage for several years can fund it with an advance of similar length. A lender with pledged collateral to spare also has a source of money beyond its deposits.
How it shows up in the data here
FHLB advances are not a field on this site. Banks report them on the Call Report, but the files loaded here cover loans held, loans made and capital. The nearest figure is Loans to deposits on each bank page, which shows how far a bank's lending has run past or behind its deposits. Search for banks by that ratio.
Go further
- Search banks by loans to deposits: Banks with loans at 90 percent of deposits or less.
- Methodology: What is loaded from each public file.
- How to read a bank call report as a loan searcher: Every bank files a call report each quarter. One schedule in it lists the bank's loans by kind. Read that schedule and you know what the bank holds. You still do not know what it made last quarter.
- How to pick banks for a deal with public data: Public filings cannot tell you which bank will say yes. They can tell you which banks are large enough, already hold loans like yours and lend where the property is. That is enough to turn four thousand banks into six phone calls.
Related terms
- Loan-to-deposit ratio: A lender's total loans divided by its total deposits, which shows how much of the money customers keep with it is already lent out.
- Portfolio lender: A portfolio lender is a lender that keeps the loans it makes on its own books instead of selling them to an investor.
- Community bank: A community bank is a smaller bank that takes deposits and lends mostly in the area around its offices, and decides on loans close to home.
- Fixed rate loan: A loan whose interest rate is set at closing and does not change for a stated period, often the whole term, so the principal and interest payment stays the same.
- Loan participation: A loan in which other lenders buy shares from the lender that made it, under a written agreement that keeps the first lender in the loan for its whole life.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.