Slower FHLB Advance Growth May Signal Crunch Is Easing

American Banker (05/27/08) P. 4; Sloan, Steven
The 12 Federal Home Loan Banks (FHLBs) reported an increase in advances of 4.3 percent in the first quarter, down from a 36.6-percent growth rate for all of 2007 as financial institutions sought inexpensive, quick liquidity in the midst of the credit crunch. While some FHLB executives believe the slower growth rate indicates that the credit crunch is stabilizing, the report shows four of the banks--Cincinnati, Dallas, Des Moines and Indianapolis--recorded double-digit gains in advances and five saw single-digit growth rates. FTN Financial Markets Corp.'s Jim Vogel notes, "We see the large banks still in sort of a scramble mode. They are not in a rebalancing mode just yet." During the first quarter, the FHLBs posted a gain in net income to $697 million; and assets and total capital rose 4 percent and 4.2 percent, respectively.