The Federal Home Loan Bank of Boston (FHLBB) said today its third quarter profit increased to $50 million from $41.3 million in the same period a year ago.

But total assets declined 17.2 percent, to $48.6 billion at the end of the quarter from $58.6 billion at the end of 2010. FHLB said the decline was "principally driven by a decrease in investments and advances."

Investments decreased by $7.2 billion to $19.9 billion, advances by $3 billion, or 10.7 percent, to $25 billion and mortgage loans by $117 million to $3.1 billion between the end of last year and the end of the third quarter.

FHLB said the investment decline "was mainly due to limited investment opportunities providing acceptable risk-adjusted returns during the period."

"Components of the decline included a $6.2 billion decrease in short-term investments and a $1.2 billion decline in agency and FDIC-guaranteed corporate debentures. The par value of private-label mortgage-backed securities declined to $2.6 billion at Sept. 30, 2011, from $3 billion at Dec. 31, 2010, while the carrying value of private-label MBS declined to $1.6 billion at Sept. 30, from $1.9 billion at Dec. 31, 2010. The private-label MBS portfolio balance has declined significantly from its peak par value of $6.4 billion, a level reached in September 2007," the bank said in a statement.

Capital at the end of the quarter was $3.4 billion, a slight increase from $3.3 billion at year-end 2010. Total retained earnings were $336.1 million, an increase of $86.9 million from the end of 2010.

The Federal Home Loan Bank of Boston provides mortgage lending capital to member banks throughout New England.