Home Loan Bank System Posts a Decline in Earnings

WASHINGTON - Earnings of the 12 Federal Loan banks were off $169 million during the nine months ended Sept. 30, amid slack loan demand by thrifts and banks.

The Home Loan banks earned $949 million, versus $1.118 billion in the first nine months of 1990, said the Federal Housing Finance Board, which regulates the network of mortgage liquidity providers.

The drop raises pressure on the Home Loan banks to cut expenses by consolidating. It also increases pressure to recruit new members to pump up demand for the banks' core product - loans. Some of the banks are banking at the prospect of being merged out of existence.

Assets Reach $160 Billion

The data showed that the Home Loan Bank System's assets rose $6.8 billion, to $160.4 billion, in September. Assets grew chiefly because investments in the federal funds market, retail repurchase agreements, and mortgage backed securities rose $11.3 billion in September, to $76.1 billion. Loans to members continued to slide.

The members' borrowings, known as advances, dropped to $84 billion during September. The decline - $6.2 billion in one month - reduced advances to their lowest level since 1985.

The Home Loan banks signed up 56 commercial bank and credit union members in September. Total membership grew by five, to 2,996, reflecting the departure of 51 thrift members that either failed or were bought or merged.

New Members

In all, 396 commercial banks and credit unions have joined the system since Congress expanded membership rules. Borrowings by these members totaled $2.4 billion in September.

Separately, the New York State Banking Department recently authorized state-chartered commercial banks to join the Federal Home Loan Bank of New York without obtaining prior approval from regulators.

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