Top FHLB-Des Moines Member Cut Sales

The troubled Federal Home Loan Bank of Des Moines revealed in a securities filing that its largest member, Wells Fargo Bank, N.A, reduced its borrowings and cut its mortgage sales to the FHLBank in recent years.Wells Fargo Bank and its affiliates reduced their advance borrowings from $5.5 billion in 2004 to $700 million in 2005, according to the FHLBank's Securities and Exchange Commission filing. Wells Fargo Bank sold $13.2 billion in mortgage loans to the Des Moines FHLBank in 2003 and only $1.3 billion in 2004. No number was available for 2005. WFB had not responded to a request for comment by deadline. In filing its first financial statement with the SEC, the FHLBank reported earnings of $227.2 million for 2005 -- up nearly 130% from restated 2004 results. However, the FHLBank warns that income recognition was accelerated due to its misapplication of hedge accounting rules, which is expected to reduce income in future periods. Going forward, the Des Moines bank raises concerns that further reductions in its mortgage purchase business could "adversely effect" future operating results, while its ability to increase advances is "constrained." The bank also is dealing with the resignations of top executives and it is recruiting a new president, chief executive officer and chief financial officer.