Frequently Asked Questions

About FHLBank San Francisco

Q. What is the Federal Home Loan Bank of San Francisco (FHLBank San Francisco)?
We are a wholesale bank serving nearly 330 financial institution members in Arizona, California, and Nevada. We change lives for millions by delivering vital liquidity to our members (loans that we call “advances”) day in, and day out, in all economic cycles to propel homeownership, help finance affordable housing, drive economic vitality, and revitalize communities.

FHLBank San Francisco is one of 11 Federal Home Loan Banks established in 1932 by an act of Congress and regulated by the Federal Housing Finance Agency (FHFA). The mission of the Federal Home Loan Banks is to provide liquidity to member institutions to support housing finance and community investment. 

Q. What is the ownership structure of FHLBank San Francisco?
We are a wholesale cooperative owned by our member financial institutions. We are governed by an elected board of directors comprised of both member directors and non-member independent directors who all share a common purpose of providing funding that supports the economic needs of the communities we serve. 

Q. How do FHLBanks raise funds to lend to your members?
The FHLBanks raise funds to provide advances to our members by issuing and servicing debt securities in the U.S. and the global financial markets. Principal and interest from all consolidated obligations are backed by the financial strength of the entire FHLBank System. Through our ability to access the capital markets daily, we can provide reliable access to low-cost funding that helps our diverse membership mitigate risk, navigate changing economic landscapes, and help individuals, families, and entire communities prosper.

We are privately capitalized and receive no taxpayer assistance to operate

Q. Is FHLBank San Francisco staying true to its core mission?
FHLBank San Francisco remains focused on and committed to our mission of delivering vital liquidity to our members in the form of advances – day in and day out – to propel homeownership, help finance affordable housing, drive economic growth, revitalize communities, and change lives for millions of people. 

Q. What is your role in the current “FHLBanks at 100: Focusing on the Future” review by the FHFA?
For over 90 years, the FHLBanks have provided critical funding and risk management tools so our members can consistently offer their customers access to funding for mortgages, small business loans, and other economic revitalization initiatives. We are working cooperatively with the FHFA, the other FHLBanks, our members, our community partners, and other stakeholders during this review period. We support the process and believe that our mission will be strengthened through a thoughtful, transparent, and non-partisan review. 

Q. Are FHLBanks a lender of last resort?
We are a stabilizing force in the U.S. financial system and ready to assist our members when they need us. We provide advances to our members during all economic cycles. Our advances are critical liquidity and risk management tools that enable our members to consistently offer their customers access to financing for mortgages, small business loans, and community development initiatives. Our members increase and decrease their borrowings over time based on the changing needs of their institutions. An analysis of advances since 2006 makes clear that at any given time more than 50% of our members have accessed advances for their funding needs. 

Q. Do FHLBanks pay taxes?
FHLBanks are exempt from paying federal, state taxes, and local taxes. However, by statute, all FHLBanks are required to direct a minimum 10% of net income to make grants to build and rehabilitate affordable housing and support homeownership and community development. In addition, we make direct grants to community organizations and nonprofits and provide downpayment assistance to low- and moderate-income consumers, economic development grants, and other critical support for our communities. 

About Membership

Q. What kind of financial institutions are members of FHLBank San Francisco? 
Our members are hundreds of community banks, credit unions, insurance companies, commercial banks, and community development financial institutions. FHLBank San Francisco provides critical liquidity and risk management tools so our members can consistently offer their customers access to financing for mortgages, small business loans, and other economic development initiatives.

Q. How do you determine how much to advance to a member institution?
Each FHLBank manages its credit exposure to advances through an integrated approach that provides for the ongoing review of the financial condition of its members coupled with collateral and lending policies and procedures designed to limit its risk of loss while balancing its members’ needs for a reliable source of funding. Each FHLBank uses a rigorous methodology to evaluate the financial condition of its members based on financial, regulatory, and other qualitative information, including examination reports. Each FHLBank reviews its borrowers’ financial condition on an ongoing basis using current information and makes changes to its collateral guidelines to mitigate credit risk and determine advances readily available for our members.

We are committed to our mission of delivering vital liquidity to our members day in and day out when needed during all economic cycles

Q. How often can a member borrow from FHLBank San Francisco?
Our members have consistent access to advances, as long as there is sufficient collateral to support these loans and the member meets the eligibility criteria. Any member financial institution with a principal place of business in the states of Arizona, California, or Nevada, the three states that make up District 11 of the Federal Home Loan Bank System, that meets our conservative underwriting standards is allowed access to our advances. 

Q. Are taxpayers responsible for your advances for your members?
No. We are privately capitalized and receive no taxpayer assistance to operate. Our capital comes from our member institutions and our earnings, and we maintain capital levels in excess of our regulatory requirement. 

Q. Can you explain the “super lien” and how this works?
The FHLBank’s statutory lien position was specifically granted by Congress in amendments in 1987 to the Federal Home Loan Bank Act, the law that created the FHLBank System and under which we continue to operate. The goal of this provision was to give the FHLBanks assurances that they could provide significant amounts of liquidity on very short notice without engaging in cumbersome procedures, such as couniting mortgage loans by hand, to make sure they would maintain their rights as a secured creditor with a priority lien. Since that time, there have been changes in the laws governing secured lending that established alternative mechanisms for perfecting a security interest without such cumbersome procedures.

As a result, the FHLBanks usually do not need to rely on the so-called super lien to protect their interest in the collateral that a member pledges to them, but instead rely on perfecting their security interest following the ordinary procedures set out in the Uniform Commercial Code as adopted by each state. However, whether the FHLBanks rely on the super lien or on perfecting their security interest in collateral under state law, the goal is the same: to give FHLBanks the assurance that they can safely make loans to members who are experiencing stress at the very times when they have liquidity needs, just as Congress intended.

Q. Have you ever turned down a member’s request for advances, including a member in a negative tangible capital situation?
By regulation, we can’t lend to a member with negative tangible capital as defined under the FHFA regulations, however the Bank has never turned down an eligible member’s request for advances when there is sufficient collateral to support it. To date, FHLBank San Francisco has not received a request from a member’s regulator to make an advance in a negative tangible capital situation. For over 90 years, we have provided critical liquidity and risk management tools so our members can consistently offer their customers access to mortgages, small business loans, and community development initiatives.

About Our Commitment to Affordable Housing

FHLBank San Franciso has awarded over $1.25 billion in AHP grants to create or preserve nearly 148,000 affordable homes

Q. How do FHLBanks and their members support development and preservation of affordable housing?
Each year, we contribute 10% of our net income from the preceding year to our Affordable Housing Program (AHP). The majority of these funds are awarded through a competitive application process and used by members to help finance the development, acquisition, or rehabilitation of rental and owner-occupied multifamily and single-family housing for families and individuals earning up to 80% of the area median income. A portion of the Bank's AHP funds are set aside for our matching grant homeownership programs for very low-, low-, and moderate-income first-time homebuyers, expanding access to homeownership in the neighborhoods our members serve.

Since the AHP was created in 1990, we’ve awarded over $1.25 billion in grants to aid the purchase, development, or rehabilitation of nearly 148,000 affordable homes in the regions our members serve. In 2023, FHLBank San Francisco’s board of directors voted to voluntarily allocate up to 5% of the Bank’s annual net income – in addition to the 10% we set aside for the Bank’s AHP – to fund economic development grants, homeownership programs, and special purpose credit programs that enrich people’s lives and revitalize communities.