Membership in the FHLBank System is available to insured depositories and certain other financial institutions. From a low of 2,855 in the early 1990's, the number of FHLBank members has risen considerably since that time. As of September 30, 2011, total membership was 7,781, comprised of 5,377 commercial banks, 1,063 savings institutions, 1,093 credit unions, 240 insurance companies, and 8 community development financial institution (CDFI). Each member is a shareholder in one of the 12 regional FHLBanks, which are privately capitalized, separate corporate entities operating in a cooperative structure.
FHLBank loan products and services are highly valued, particularly by a large percentage of current members that can be described as community financial institutions (under $1,040 million in assets effective 01/01/11). For these institutions, there is often no other source of funds that is both cost-effective and reliable. At any given time, a substantial majority of the membership is using FHLBank loans to make a difference in their communities.
"...The FHLBank System serves an important role in the U.S. housing market by providing liquidity to its member institutions. The 12 individual FHLBanks are located in 12 distinct regions of the U.S. The public purpose of the 12 FHLBanks is to provide member institutions with advances as a supplement to deposit flows and other funding sources in meeting residential mortgage-credit needs...The FHLBank System continues to be a reliable source of liquidity for its member institutions, supporting their participation in the U.S. housing market. The FHLBank System has afforded their member institutions a readily available liquidity channel without adding unwarranted credit risk in the FHLBank System's lending activities...The FHLBank System's reliability was most noteworthy during 2008, when member institution demand for liquidity was high and market confidence in asset values disappeared, resulting in FHLBank System's advance balances reaching their peak of $1.01 trillion and the FHLBank System's combined balance sheet swelled to $1.43 trillion. Advance balances have since subsided, but the FHLBanks also provide many other services to benefit their member institutions..."
Standard & Poor's, July 2011