The 12 Federal Home Loan Banks reported combined 2006 earnings of $2.6 billion, up 3% from the previous year, due to a slowdown in member borrowings, declines in their mortgage investments, and a large increase in retained earnings.Member borrowings or advances grew by only 3% last year, to $641 billion, while the FHLBank holdings of residential mortgage loans fell 7% to $98.0 billion, reducing interest income. Under pressure from their regulator, the FHLBanks raised retained earnings by $543 million last year to $3.1 billion as of Dec. 31. Meanwhile, the Federal Home Loans Banks made $295 million in annual contributions to their affordable housing programs as required by law.

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