FHLBs' Combined Earnings for Quarter Come in at $552 Million

The 12 Federal Home Loan Banks recorded combined earnings of $552 million for the fourth quarter, compared to a $715 million loss during the same period a year ago. Only two of the FHLBanks took losses for the quarter, Seattle with an $18 million loss and Pittsburgh with a $5 million loss. Despite the improvement, many of the FHLBanks suffered continuing losses on their investments in private-label mortgage-backed securities. Falling demand for advances also hurt earnings. The fourth-quarter credit-related losses on private-label MBS totaled $436 million, compared to a $1.8 billion loss in the same quarter in 2008. Advance borrowing from the FHLBs by member banks and thrifts fell 32% during 2009 to $631 billion, as banks cut back on lending and on relied on deposits for funding. The level of advances is now "comparable to the precredit crisis level of $640 billion at the end of the second quarter of 2007," the FHLB Office of Finance said. For calendar year 2009, the FHLBanks generated combined annual earnings of $1.9 billion, compared to $1.2 billion in the previous year. Four FHLBanks posted losses for the year: Boston ($187), Seattle ($162 million), Chicago ($65 million) and Pittsburgh ($37 million).