Secondary Market Brings Primary Woes AtFHLB

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PITTSBURGH - (06/12/06) – The Federal Home Loan Bank ofPittsburgh said Friday it continues to shed its secondary marketrole, as related hedging activities drove down first quarterearnings by 32% to $49.7 million, compared to the same period lastyear. The Pittsburgh Bank reported it sold down 10% of the mortgageloans it had been holding in portfolio since a year ago and endedthe first quarter with $95.2 million of mortgages held as part ofits Mortgage Partnership Finance Program. At the same, thePittsburgh Bank said it has recommitted itself to providinglow-cost financing for its 335 bank and credit union members. Loansto members more than doubled in the first quarter to $527 million.The Pittsburgh Bank, like several other of the FHLBs, has struggledwith the financing of its secondary mortgage market program asinterest rates have risen over the past two years. Several of theFHLBs have decided to exit the secondary mortgage marketaltogether. The Pittsburgh Bank ended the first quarter with $73billion in assets.

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