COFI Remains Nearly Unchanged

The Eleventh District Federal Home Loan Bank Cost of Funds Index for August stands at 2.693%, virtually unchanged from 2.698% in July. According to the Federal Home Loan Bank of San Francisco, which uses a weighted-average calculation to determine the index, the average total funds for August were $375.6 billion and the total interest expense was $842.7 million. In calculating the total funds, the averages consist of the simple average of the month-end balances for that month and the prior month for total funds, deposit accounts, advances, and other borrowing, according to the FHLBank's website. The total interest expense is derived from interest expense reported on deposit accounts, Federal Home Loan Bank advances, and other borrowings, adjusted for the number of days in the month. Among the factors that could affect future calculations is the failure of Washington Mutual, which was a member of the San Francisco FHLBank. A disclaimer in the COFI announcement said if there is a charter change or merger, the FHLBank might determine that a financial institution no longer qualifies as a COFI reporting member. "The impact of such removals on the COFI will depend entirely on the amount of interest expense and total funds of the entity being removed, and may be significant," the FHLBank said.