Advance Product Portfolio Changes

last updated on Wednesday, June 28, 2023 in Business News

Federal Home Loan Bank of Des Moines will launch TWO new advance products on October 10, 2023¹ to replace the current Overnight/Fed Funds Credit Line Advance. These new advance products will continue to provide members with the same access to fast and reliable overnight funding, but with more options to meet the unique funding needs of our members.

Advance Product Changes FAQ

Product Features

Implementation Timeline

The implementation timeline below outlines how the current Overnight/Fed Funds Credit Line Advance product will transition over the next several months.

July 5: Transition Phase Begins 

Members with outstanding Overnight/Fed Funds Advances will receive a new advance confirmation adding a maturity date of 10/10/2023, to represent the end of the product’s availability.

July 5 - October 6: Overnight/Fed Funds Advance Transitions Issued with Maturity Date

Any new Overnight/Fed Funds Advance transactions issued between July 5 – October 6, 2023 will have a maturity date of 10/10/2023.

• To opt-out of migrating an existing Overnight/Fed Funds Advance to the new Daily Reset Advance, pay off your Overnight/Fed Funds Advance by October 6, 2023.
• NO MEMBER ACTION IS REQUIRED: Members may elect to opt-out of the new Daily Reset Advance by paying off their Overnight/Fed Funds Advance before October 10.

October 10:  Launch of New Advance Products 

• The current Overnight/Fed Funds Credit Line Advance will no longer be issued 
• Outstanding balances of Overnight/Fed Funds Advances will migrate into a Daily Reset Advance with a maturity date of January 8, 2024 (90 days from 10/10)
• Members have a final chance to opt-out of migrating into the Daily Reset Advance by calling the Money Desk to settle their outstanding Overnight advance balance
• eAdvantage enhancements are live

eAdvantage Enhancements

Along with the advance product portfolio changes, we are improving eAdvantage so members can more efficiently complete advance transactions online.

¹On October 6, 2022, Members were notified that these advance product changes would be implemented on July 5, 2023. FHLB Des Moines has pushed back the implementation date to October 10, 2023 to align with all system changes. ²Members were also previously notified that this advance product would be called the, “Credit Line Advance.” FHLB Des Moines has decided to formally name this new advance product the, “Daily Reset Advance” to more align with the terms of the advance product.

Advance Product Portfolio Changes: Frequently Asked Questions

General FAQ

• Does this product change impact the way I can request an advance?

  No.  Members will be able to take down advances through eAdvantage or by calling the money desk directly.  In October, eAdvantage improvements will increase the transaction amount limit to $250 million for advances less than one year. 

• What is the biggest difference between my current Overnight Advance product and the Daily Reset Advance product?

  The only difference is that the new Daily Reset Advance will have a stated 90-day maturity date.  All of the other logistics will remain the same.

• Are there any additional information or documentation requirements to use these new products?

  No. 

One-Day Advance FAQ

• How is the rate on the One-Day Advance established?

  The rate will be set at the beginning of the day and can/will fluctuate throughout the business day, but not typically.  The advance will be priced at execution and have a maturity of one day.

• What are my options the next day?

  Members will have the option to paydown the advance or take down either another One-Day Advance or execute the Daily Reset Advance.

• If I take down a one-day advance, when is repayment expected?

  Similar to our current practice, the advance will mature the next morning, but the members will have all day to fund the advance before an overdraft fee is applied. 

• Is there a minimum amount for the one-day advance?

  Yes.  The minimum amount is $100,000.

Daily-Reset Advance FAQ

• Since this advance has a 90-day maturity, if I choose to pay off the advance prior to the stated maturity date of 90 days, is there a prepayment fee?

  No.  Members have the option to pay off the advance without incurring a prepayment fee at any time prior to maturity. 

• What happens if I increase the advance amount prior to the cessation of the 90-day maturity? Does this adjust the maturity date?

  No. If a member increases the advance amount at any time prior to the maturity date, the advance will retain the initial 90-day maturity date assigned when the Daily-Reset Advance was first taken down. The advance will close at the 90-day maturity or once the balance is reduced to zero, whichever comes first.

• How is the rate of the Daily Reset Advance established?

  The rate will be established at the beginning of the day and will not fluctuate.  It will typically be priced higher than a true One-Day Advance. 

• Does the Daily Reset Advance require a periodic clean-up period?

  No.  At the end of the 90 days on the initial maturity date, if a member wants to continue to roll the advance, they must call the money desk or log into eAdvantage and execute a new advance.  A new confirm will be generated reflecting the new 90-day maturity date.  The member is not required to take the balance down to zero or wait a day to renew the advance. 

• Is there a minimum amount for the Daily Reset Advance?

  No. There is no minimum amount. 

• What are some examples of the Daily Reset Advance?

  Scenario No. 1 

  

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  Scenario No. 2 

  

1. Advances