Expander Advance is an Advance in which the member receives from the FHLB a one-time option to increase the Advance balance at the original interest rate for the remaining term of the Advance.
A typical structure would allow the member to increase up to twice the original amount of the Advance on a predetermined option date with proper notification, as further defined in the Expander Application form:
- Minimum transaction size of $5.0 million with $500,000 increments due to limitations on hedge funding availability.
- An Expander Advance from the FHLB is effectively the FHLB’s sale of an option to the member that allows the member, on the option date (with proper notification), to increase the dollar amount of the Advance for its remaining life.
Maturity
Maturity terms are subject to the availability of comparable term financing to the FHLB.
Rate
The rate is fixed for the life of the Advance.
Accrual Basis
Actual / 360 day basis
Interest is Paid
Interest is payable on the quarterly anniversary dates and at maturity or prepayment dates by automatic debit from the member’s DDA.
Principal is Paid
At maturity
Principal Prepayment Policy
An Expander Advance may be prepaid in whole only, subject to a termination fee that would make the FHLB economically indifferent to prepayment of the outstanding balance, i.e. the FHLB’s hedge-unwind cost plus the present value of foregone profit on the Advance as further defined in the Expander Application form.
Submission of Application
An Expander Advance Application and a pre-execution Market Valuation Disclosure Form is required for each borrowing.
To learn more about our Advance products, contact Credit Operations at 800-828-4191.