Earnings were $42 million in 2021, a decline from 2020 performance. This performance reflects the unique challenges of the current economic environment—primarily extremely low interest rates and an unprecedented amount of liquidity in the financial markets due to governmental stimulus actions. After spiking at the onset of the pandemic in early 2020, Advance balances fell below pre-pandemic levels due to increased liquidity and deposit levels at member institutions.
Letters of Credit balances grew $5.8 billion in 2021 to end the year at $34.6 billion as members looked to secure elevated levels of public unit deposits that increased due to pandemic related actions. MPP principal balances declined 21 percent in 2021 to end the year at $7.4 billion due largely to increased refinance activity throughout the year. Additional details about 2021 performance are available in the Performance section beginning on page 9.
Earnings from 2020 resulted in nearly a $31 million set-aside for our Affordable Housing Program (AHP) in 2021. Our Housing and Community Investment (HCI) programs provided a multitude of opportunities for members to help their communities flourish. Through our competitive AHP, $25 million was awarded in 2021 through 31 members, to help create 1,999 units of affordable housing in the Fifth District and elsewhere.
We also reached an important milestone in the Affordable Housing Program this year, as we have officially helped fund more than 100,000 units of housing through AHP funds. To learn about how the AHP has strengthened the resilience of communities throughout Kentucky, Ohio and Tennessee, read more on page 7.
For 2022, members re-elected an incumbent Kentucky Member director and elected a new Kentucky Member director and an Independent director. In Ohio, incumbent Member director Kathleen A. Rogers ran unopposed and was declared elected. In Kentucky, Member director Greg W. Caudill, Director of Farmers National Bank, was re-elected and J. Wade Berry, President & CEO of Farmers Bank and Trust, was newly elected. Danny J. Herron, President and CEO of Habitat for Humanity Nashville and previous FHLB Affordable Housing Advisory Council Chair, was elected as a new Independent director.
Additionally, two Independent directors were appointed to fill unexpired terms. Lewis Diaz, Partner of Dinsmore & Shohl LLP, Covington, Ky., was appointed to serve as Public Interest Independent director. L. Scott Spivey, SVP and CFO of First Student, Cincinnati, was appointed as an Independent director.
James J. Vance, SVP and Co-Chief Investment Officer of Western-Southern Life Assurance Company, was also elected to serve as Board Vice Chair.
We bid farewell to Grady Appleton, April Miller Boise, Charlie Ruma and David Sartore. These Directors brought a variety and depth of specialized skills and experience that were highly valued by the Board. We're grateful for their service and friendship and wish them all the best.
We bid farewell to Grady Appleton, April Miller Boise, Charlie Ruma and David Sartore. These Directors brought a variety and depth of specialized skills and experience that were highly valued by the Board. We're grateful for their service and friendship and wish them all the best.
As we look ahead, we're focused on fortifying ourselves for the future and helping members do the same. This is what strengthening resilience looks like to us. What products, services and education can we offer to help members navigate various economic conditions and other pressing challenges? Our team at the FHLB remains focused on this question and finding innovative ways we can serve you. We know given current economic conditions, the need for our products and services varies from member to member. For some, it may be the FHLB playing an integral role in asset-liability management strategies. For others, it is knowing that when they need same day funding, they have had a vital partner to turn to for nearly 90 years. Born out of the Great Depression, and tested in the Great Recession and COVID pandemic, strengthening your resilience is what our System was created to do and we will continue to answer that call.
Sincerely,
J.Lynn Anderson
Chair, Board of Directors
Andrew S. Howell
President and CEO