Banks Shift Funding Sources as Share From FHLB Advances Drops

Banks’ short-term borrowings from the Federal Home Loan Banks fell in the third quarter as they shifted their funding mix to replace an exodus of deposits.

The percentage of FHLB advances outstanding relative to bank borrowing dropped to 41% as of end-September, which is lower than the same period a year ago, according to Citigroup Inc. That’s also down from 53% seen at the end of 2022 and the beginning of 2023, when turmoil in the banking system resulted in the collapse of institutions like California’s Silicon Valley Bank and New York’s Signature Bank.

Total FHLB advances outstanding were $827 ...