Overnight Advance Simplifies Short-Term Borrowing Process

On Tuesday, September 7, 2010, the Federal Home Loan Bank of New York (FHLBNY) redesigned its overnight borrowing program.  The new Overnight Advance replaced the existing Overnight Repricing Advance Program (ORAP) and its associated companion products, the Overnight Line of Credit (OLOC), OLOC Plus, OLOC Companion, and OLOC Companion Plus.

This change greatly simplifies the overnight borrowing process. Every member has the opportunity to use the Overnight Advance as a quick source of liquidity for their everyday borrowing needs. The new product carries no administrative cost and offers several benefits over the existing ORAP lines:

  • It permits a member to borrow overnight up to its maximum borrowing capacity at the FHLBNY.* Members will no longer be restricted to the previous borrowing limits of 10% (OLOC) or up to 20% (OLOC Plus) of total assets.
  • Access fees have been eliminated. The Overnight Advance has no set-up fee or annual renewal fee — a savings of at least $1,000.
  • All members will automatically receive the same low rate for overnight borrowings. Members who previously did not participate in ORAP can now save as much as 65 bps by using the Overnight Advance instead of the Variable-Rate Advance.

Requesting the Overnight Advance remains straightforward. As always, you can use 1Linksm, the FHLBNY’s secure online banking system, to transact your borrowing online. 1Link borrowers receive an additional 4 bp discount on the Overnight Advance, as compared with telephone transactions. You may also contact a Calling Officer or one of our Credit Service Representatives at (212) 441-6600 to request an Overnight Advance, just as you would any other borrowing.

Furthermore, the Overnight Advance provides an opportunity for members to easily test their borrowing capacity with the FHLBNY as part of their contingency funding plans. As we have heard many times during member visits this year, Federal regulators are mandating that financial institutions not only have access to alternative funding sources, but also test them at least annually. With the Overnight Advance, members can test their borrowing capacity with the FHLBNY for one day at a minimal cost, providing assurance to the regulators that they are in compliance with current liquidity advisories.

The Overnight Advance is a reliable and flexible form of short-term funding, with additional benefits not previously available under the ORAP. For more information about the Overnight Advance and how it can be used to help meet your institution’s short-term liquidity needs, contact your Calling Officer at (212) 441-6700.

*The same collateral and credit rules that govern the FHLBNY’s advances program will apply to the product.

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