Cooperative Structure

To become a member of an FHLBank, a financial institution must purchase stock in their FHLBank, which is held at par value and not traded. As cooperatives, FHBanks do not have the pressure for high rates of return as do publicly traded companies. They pass their borrowing benefits in the global debt markets on to their members in the form of lower borrowing costs, which are subsequently passed on to consumers, businesses and communities. The nation’s banking system relies on them as a cost-efficient, evenly priced source of short- and long-term funding.

The country benefits by having this access to credit provided to many institutions of all sizes, types and geographies. Regional and local needs are better served. Consumers and businesses have greater choice. Capital and credit for jobs, housing and economic growth flows to communities at a fair cost. The orderly expansion and contraction of funding to members are one of the most fundamental values of the FHLBanks. The amount of advances to local lenders rises and falls depending on demand and broader economic activity.

The FHLBanks are independent cooperatives privately capitalized and owned by thousands of financial institutions big and small from all 50 states, U.S. possessions and territories.