(Bloomberg) -- Outstanding loans by Federal Home Loan Banks to financial institutions surged to a record $1 trillion during March’s banking crisis, even as the pace slowed at the end of the month. 

The loans, which are known as advances, jumped 28% at the end of the first quarter from the close of 2022, the FHLB Office of Finance said on Friday. The increase was “driven by continued demand by depository members for liquidity,” according to a statement.  

Despite reaching an all-time high, the figure is below what some analysts had anticipated. It’s a signal that lenders’ rush to get cash to pay fleeing depositors might have faded, and that the worst of the stress in March may have abated. The data reflects lending as of March’s end, so the uptick in home loan bank financing sparked by the shaky status of First Republic Bank isn’t reflected.

Lending from the home loan banks had steadily risen over the course of 2022. Rising interest rates forced banks to seek out cash to pay back depositors moving their funds around. But FHLB lending spiked in March as Silicon Valley Bank and Signature Bank collapsed. 

The home loan banks, which issue debt collectively, issued a record $304 billion in debt the week after the two banks were closed by regulators. Borrowing has subsided from that peak, but still remains historically elevated. 

The FHLBs were created in the Great Depression to boost mortgage lending. The system is now known as the “lender of next-to-last resort” — a play on the nickname for the Federal Reserve’s discount window that underscores the lenders’ roles as places that banks go to get cash fast.

Total loans to the banks and insurers, which can also access the home loan banks, rose to $1.04 trillion in the first quarter, up from $819 billion the prior quarter, according to the FHLB system. It’s a record high, without adjusting for inflation. The prior record was $1 trillion, reached in the third quarter of 2008.

(Updates with loan detail starting in third paragraph.)

©2023 Bloomberg L.P.