James J. Sherman is president and CEO of Brotherhood Credit Union of Lynn, Massachusetts. The credit union became a member of the Federal Home Loan Bank of Boston in 2005.

Steve McHugh (relationship manager for the Federal Home Loan Bank of Boston) came out to visit us back in August 2004 to see if we wanted to become a member of the Federal Home Loan Bank of Boston (the Bank). I had given him a call earlier because it seemed that all the large credit unions had joined the Bank to address their borrowing needs.

Our outside auditor also recommended that we join the Bank, saying we should do so in case we had a liquidity squeeze or loan demand and needed to borrow. So we looked into it in August 2004. We talked with Steve and filled out the application. We dragged our feet a bit on it, but in April 2005 we were approved.

We had also been talking with MassHousing about selling mortgages. They told us about the Bank's Mortgage Partnership Finance program. They said we had to be a member of the Bank to participate in the program. I said, "Well, we're in the process of doing that." So that was another reason why we were interested in joining even though we haven't used the program yet.

In September and October we were doing promotions for auto loans, home-equity loans, and real estate mortgages, so we had a lot of loan demand. We needed more funds and knew that the Bank's advances were available. I gave Steve a call, and he said, "Jim, they're easy to take down," and he gave me the phone numbers to call. I was leaving for vacation on October 18 and called the Bank on October 17.

I asked the Money Desk what I should do. Loughlin Cleary helped me though the process. We borrowed $3 million for 42 days or so. When the loan came due, we paid off a good portion of it and renewed the remainder for another 30 days. It was a very simple process. The people authorized to borrow at our credit union were sitting opposite me when I was taking down the loan. They couldn't believe how simple it was.

The advance helped us with our immediate need for liquidity. As a result, we didn't have to sell any of the government agency bonds we were holding and pay high rates to attract funding. If we didn't have access to Bank advances, we probably would have had to sell some of our bonds - and sold them at a discounted rate. Taking down the advance was convenient and probably the least expensive way to raise funds for the promotions we were doing.

The advance got us over this minor hurdle. I don't anticipate we'll be using more funding in the future, but knowing it is there gives us peace of mind. When we took down the advance it was the first time we had borrowed in about 25 years. We know that if we have a liquidity need now the funding is just a phone call away. We know that if we want to do a loan promotion or if our rates are not competitive on different types of savings products we would be able to get money from the Bank for short or long term. We're not seeking to borrow for the purpose of leveraging. We don't plan on buying investments and playing the interest-rate game. We became a member mainly to cover our short-term liquidity needs.

Brotherhood Credit Union was founded in a synagogue in Lynn, Massachusetts, in 1934 to serve the members of the synagogue. It expanded over the years to include people living in Lynn and the surrounding communities. Our field of membership now is anyone living or working in Essex, Suffolk, Norfolk, and Middlesex counties, though the majority of our members are in Lynn and surrounding communities. Right now we have about $110 million in assets. In the spring we will be opening a branch in Marblehead, which is the first branch we've opened since the credit union was founded.

Being a member of the Bank provides great peace of mind. I think all financial institutions should belong to the Federal Home Loan Bank of Boston. It's like having a home-equity line of credit on your house that allows you to draw funds immediately rather than wait a month for them. If you need liquidity, you can access funding the same day and borrow on your own terms. You can roll it over every night or just take it for a term, as we did. We borrowed for the short term because we knew we had bonds and CDs coming due that would allow us to pay it off by the end of the year.

For more information about Bank products and services, please contact Paul Peduto at 617-292-9762, or call John Baity at 617-292-9710; David Birkins at 617-292-9617; or Steve McHugh at 617-292-9616.

"Mortgage Partnership Finance" and "MPF" are registered trademarks of the Federal Home Loan Bank of Chicago.