Executive Summary
The Federal Home Loan Bank System was created by the Federal Home Loan Bank Act of 1932 to provide liquidity to its members to support housing and community development projects. As of 2024, there are 1,623 credit unions that are Federal Home Loan Bank members. Utilizing call report data from 1994 to 2024, this research project aims to investigate the impact of FHLB membership on credit union growth, returns, liquidity and risk.
The following report delves into the following questions:
- How does FHLB membership affect credit unions' balance sheets, performance and growth?
- How does FHLB membership affect credit union liquidity and portfolio quality?
- How is credit union mortgage lending impacted by FHLB membership?
- Are there differences in how small, medium and large credit unions utilize FHLB funds?
Credit Union Implications
The analysis indicates that credit unions that are Federal Home Loan Bank members tend to be larger (higher loans and assets) with higher loan share ratios, increased borrowing capacity and borrowing, and increased access to capital markets (more 1st mortgages sold) without significant change in portfolio risk (no change in delinquencies or net charge-offs). Impacts are greater for smaller and lesser for larger credit unions.
This research was commissioned by Federal Home Loan Banks and researched by Filene.
