Advance Products

    The Seattle Bank offers advance products in terms from overnight to 30 years and in fixed or variable rates, allowing you to choose the amount, structure, and terms to fit your institution’s needs. Our advance products represent a wide range of solutions, including: liquidity management, competitive marginal costs of funding, and matched funding of specific asset classes.

    In addition to the advance products listed below, the Seattle Bank offers reduced-rate advances through its Community Investment Program (CIP) and Economic Development Fund (EDF) CIP/EDF.

    Advance Products Overview (pdf)

    Fixed-Rate Advances

    Short-Term, Fixed-Rate/Cash Management Advance (CMA)
    For short-term needs, members use our CMA and short-term fixed rate advances for immediate access to short-term funds. Our CMA is structured as a revolving, open-note program, the CMA is fast and reliable, and there are no commitment fees or line charges. With our CMA, you can obtain funding from your cooperative, rather than your competition. Our 7-day and 14-day advances allow members to quickly access their credit facility for very short-term needs.

    Intermediate-Term, Fixed-Rate Advance / Auction Advance
    Some of our most requested advances, intermediate-term, fixed-rate advances are frequently used to supplement retail deposits and manage risk that comes with rate-sensitive investment and lending activities. Members get same-day access to funds with terms from 28 days to one year. Auction rates are available for 28, 63, 91, and 182 days.

    Long-Term, Fixed-Rate Advance (Bullets)
    Tailored to meet a wide range of asset/liability management needs, our long-term, fixed rate advance help you more effectively manage long-term portfolio risks and obtain funding for your fixed-rate loans and investments. Funds are available the same day with terms from one to 30 years.

    Amortizing Advance
    With the amortizing advance, you can reduce the principal level of your liabilities in tandem with your funded assets. Available the same day, this flexible advance offers straight-line or customized amortization schedules with terms from two to 30 years. The amortizing advance is particularly useful for match funding principal reductions of funded assets, including mortgages and mortgage-backed securities.

    • For more information about this advance product, read "Amortizing Advances" in the September 2005 issue of What Counts.

    Symmetrical Prepayment Advance
    The Symmetrical Prepayment Advance allows a borrower to prepay the advance—and realize a gain—if interest rates rise to levels greater than those that existed when the advance was originated. This advance allows the borrower to monetize the value of a market movement in rates in exchange for a slightly higher advance rate. Funds are available same day, with terms ranging from one to 30 years. The minimum advance balance is $5.0 million (per note), and prepayment is available daily, subject to advance notice.

    • For more information about this advance product, read the associated funding strategy.

    Forward Settling Advance
    Forward Settling Advances are advances in which a member hedges future rate volatility by locking in current interest rates, without taking settlement of the advance until some designated point in the future. Funds are available same day, with terms ranging from one to 30 years, or longer. The minimum advance balance is $1.0 million (per note), and prepayment is available daily, one business day after settlement of funds, subject to advance notice.

    • For more information about this advance product, read the associated funding strategy.
    Adjustable-Rate Advances

    A reliable way to manage interest rate risk, this advance offers favorable pricing that can be used for adjustable-rate loans, lines of credit, or investments. Members receive same-day access with terms generally ranging from one to five years. Adjustable-rate advances allow you to fund an asset with a long-term liability, while obtaining repayment flexibility and preserving rate sensitivity.

    Choice Advances

    A Choice Advance is a floating-rate, fixed-term advance, competitively priced based on the Seattle Bank’s short-term cost of funds. A Choice Advance has the added benefit of being prepayable without fee prior to the contractual maturity of the advance, subject to several requirements.

    • For more information about this advance product, read the associated funding strategy.
    Structured Advances

    Putable Advance
    This fixed-rate advance offers a lower rate in exchange for selling the option to terminate on a designated date and after a specified lockout period. Funds are available the next day, and lockout periods vary from three months to five years. Putable advances are offered regularly and are posted on the Rates page.

    Knockout Advance
    This type of putable advance is canceled immediately in the event LIBOR exceeds a pre-specified strike price on set future dates. The knockout advance pre-determines the assignment of a specific underlying option (LIBOR) to the Seattle Bank’s option to cancel the loan.

    Capped Floater Advance
    A Capped Floater Advance is an adjustable-rate advance that is capped at a pre-determined strike price. The funding structure plays a useful role in the management of interest rate risk and match funding of capped, variable rate loans held in portfolio. The Capped Floater Advance allows you to benefit from lower borrowing costs should interest rates decline, while offering protection against a significant increase in interest rates.

    To learn more about this advance structure:

    Floating-to-Fixed Convertible (FFC) Advance
    A blend of an adjustable-rate advance and a putable advance, the FFC Advance starts out with a floating rate, which “flips” to a fixed rate of interest, unless the Seattle Bank exercises its option to cancel the facility. As a balance sheet management tool, the FFC Advance offers sub-LIBOR, floating-rate funding in exchange for selling the Seattle Bank the right to convert the facility to a fixed rate on a pre-determined date.

    To learn more about this advance structure:

    Floored Floater Advance
    The Floored Floater Advance is an adjustable rate source of funding that contains a contractual feature that allows the borrower to purchase an interest rate floor that is based on a benchmark index such as three-month LIBOR. If rates decline below a pre-specified strike date, the borrower will benefit via i) a lower funding index, and ii) monetization of the interest rate floor as it moves further into an "in-the-money" position. This advance can provide interest rate risk protection for asset-sensitive balance sheets and also contain exposure to falling rates.

    To learn more about this advance structure:

    Returnable or "Prepayable Loan" Advance
    This fixed-rate bullet advance gives the borrower the right to "return" or "prepay" the advance to the Seattle Bank on pre-determined dates without a prepayment penalty. The cost of purchasing the option is reflected in a coupon rate of interest that is higher than that of a standard fixed-rate advance. Use this structure to fund specific assets not subject to prepayment penalty, as well as for loan and investment portfolio management and for liquidity and balance sheet management.

    To learn more about this advance structure:

    Contact a member of the Seattle Bank's business development team to find out how we can help to meet your funding needs.