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About the Federal Home Loan Bank of Pittsburgh

The Federal Home Loan Bank of Pittsburgh provides readily available low-cost funding and opportunities for affordable housing and community development to 316 member financial institutions in Delaware, Pennsylvania and West Virginia. It ensures the availability of funds for housing and enhances the quality of the communities it serves. It held approximately $65 billion in assets as of December 31, 2009.

FHLBank Pittsburgh is one of twelve FHLBanks nationwide. Congress created this national network of privately owned wholesale banks in 1932 to ensure available funding for mortgages. Today, as the only wholesale source of community-building funds for neighborhood banks, the FHLBanks fill a critical vacuum by providing liquidity for small business, community development, rural and agricultural loans — as well as home mortgage financing.

The FHLBanks are a unique combination of private and public resources:

• Private capital drives the engine and bears the risk
• Public sponsorship provides favorable access to financial markets
• There is not one dime of public money in the FHLBanks
• Each Bank is a cooperative whose member institutions own the capital stock 
• The Banks are regulated by the Federal Housing Finance Agency, an independent agency in the executive branch of the U.S. government

Throughout its existence, the Federal Home Loan Bank System has been a fundamental part of the country’s financial system, like the Federal Reserve or federal deposit insurance. More than 8,000 U.S. lending institutions – about 80% of those eligible – rely on the FHLBanks for funds. No matter what size local lender you see doing business, it’s likely they’re financing much of their community lending via low-cost funds provided by their regional FHLBank.

FHLBanks: A Model That Works

The primary purpose of the FHLBanks is to provide members with liquidity. Financial institutions are limited in how they meet liquidity needs. Most community institutions don’t have the ability to access the credit markets on their own. For the majority of members, the FHLBanks are the only source of credit market access.

Because the FHLBanks are cooperatives, their low costs are passed on to consumers and communities. This efficient supplier of liquidity has been a life saver during the current financial crisis.

While the FHLBanks are successfully executing their primary mission of providing low-cost liquidity over all economic cycles, they’re doing so in a safe and sound manner. All twelve Banks continuously assess the credit strength of their member banks. The FHLBank System maintains prudent credit risk standards. Before making a loan (advance) to a member, the FHLBank makes absolutely sure that the loan is fully collateralized and backed by adequate capital. No FHLBank has lost even a penny on an advance – ever.

To receive an advance from an FHLBank, a local bank must also simultaneously purchase stock proportional to the level of borrowing. This self-capitalizing mechanism keeps FHLBank capital ratios strong. 

As a cooperative, the FHLBanks don’t have the pressure for high returns that they might otherwise have if their stock were publicly traded. The returns they do make go directly to replenishing their ability to keep a reliable supply of low-cost funds flowing to communities through local banks. 

To strengthen the housing market, build infrastructure and create jobs, it’s vital to keep low-cost funds flowing to banks and other lenders. That’s what the AAA-rated Federal Home Loan Bank of Pittsburgh is structured to do. 

Visit one of our local financial institution members.