Advances

12 Months Ended

Dec. 31, 2019

Advances

The Bank offers a wide range of fixed and variable rate advance products with different maturities, interest rates, payment characteristics, and optionality. Fixed rate advances generally have maturities ranging from overnight to 30 years. Variable rate advances generally have maturities ranging from one year to 20 years, where the interest rates reset periodically to a specified interest rate index such as LIBOR, SOFR, or other specified index.

REDEMPTION TERM

The following table summarizes the Bank’s advances outstanding by redemption term (dollars in millions):



	December 31, 2019					December 31, 2018
Redemption Term	Amount			Weighted Average Interest Rate		Amount			Weighted Average Interest Rate
Overdrawn demand deposit accounts	$	1		2.73	%	$	2		3.63	%
Due in one year or less	35,432			1.97		50,561			2.61
Due after one year through two years	21,959			2.23		23,946			2.61
Due after two years through three years	8,693			2.33		17,582			2.73
Due after three years through four years	5,109			2.51		4,091			2.73
Due after four years through five years	5,978			2.17		6,814			2.76
Thereafter	3,013			2.72		3,417			2.96
Total par value	80,185			2.16	%	106,413			2.66	%
Premiums	25					38
Discounts	(6		)			(8		)
Fair value hedging adjustments	156					(120		)
Total	$	80,360				$	106,323

The following table summarizes advances by year of redemption term or next call date for callable advances, and by year of redemption term or next put date for putable advances (dollars in millions):



	Redemption Term or Next Call Date				Redemption Term or Next Put Date
	2019		2018		2019		2018
Overdrawn demand deposit accounts	$	1	$	2	$	1	$	2
Due in one year or less	53,156		77,931		36,278		50,617
Due after one year through two years	11,967		11,087		22,101		24,060
Due after two years through three years	5,427		10,423		8,730		17,628
Due after three years through four years	3,802		2,357		5,004		4,078
Due after four years through five years	3,461		2,444		5,069		6,722
Thereafter	2,371		2,169		3,002		3,306
Total par value	$	80,185	$	106,413	$	80,185	$	106,413

The Bank offers advances to members and eligible housing associates that may be prepaid on pertinent dates (call dates) prior to maturity without incurring prepayment fees (callable advances). Other advances may require a prepayment fee or credit that makes the Bank financially indifferent to the prepayment of the advance. At December 31, 2019 and 2018, the Bank had callable advances outstanding totaling $25.5 billion and $35.6 billion.

The Bank also offers putable advances. With a putable advance, the Bank has the right to terminate the advance from the borrower on predetermined exercise date. Generally these put options are exercised when interest rates increase relative to contractual rates. At December 31, 2019 and 2018, the Bank had putable advances outstanding totaling $1.4 billion and $283 million.

PREPAYMENT FEES

The Bank generally charges a prepayment fee for advances that a borrower elects to terminate prior to the stated maturity or outside of a predetermined call or put date. The fees charged are priced to make the Bank financially indifferent to the prepayment of the advance. For certain advances with symmetrical prepayment features, the Bank may charge the borrower a prepayment fee or pay the borrower a prepayment credit, depending on certain circumstances, such as movements in interest rates, when the advance is prepaid. Prepayment fees and credits are recorded net of fair value hedging adjustments in advance interest income on the Statements of Income. The Bank recorded prepayments fees on advances, net of $9 million, $8 million, and $2 million for the years ended December 31, 2019, 2018, and 2017.

ADVANCE CONCENTRATIONS

The Bank’s advances are concentrated in commercial banks, savings institutions, and insurance companies. At December 31, 2019 and 2018, the Bank had outstanding advances of $25.5 billion and $49.6 billion to Wells Fargo Bank, N.A. who individually held 10 percent or more of the Bank’s advances, which represented 32 percent and 47 percent of the total principal amount of outstanding advances. For information related to the Bank’s credit risk exposure on advances, refer to “Note 10 — Allowance for Credit Losses.”