March 26, 2004

The Federal Home Loan Bank of Seattle's Board of Directors has declared a Class B(1) stock dividend at the annualized rate of 4.00 percent for the first quarter of 2004. The Seattle Bank dividend is calculated based on anticipated first-quarter earnings and the value of capital stock outstanding between December 31, 2003 and March 31, 2004. For stock purchased or redeemed during the quarter, the dividend is computed based on the actual number of days that the stock was owned during the first quarter. The dividend will be paid in the form of capital stock, with fractional shares paid in cash and credited to shareholders' demand deposit accounts.

The Seattle Bank will release its first-quarter financial statements in May 2004.

Earnings in the Federal Home Loan Bank system are driven largely by yields on invested capital, and the sustained low interest rate environment of the past two years has resulted in lower asset yield and lower earnings across the system. The Seattle Bank is no exception, and our earnings have continued to be under significant pressure in the first quarter of 2004. Interest rates have fallen, which has resulted in faster recognition of premium expense on mortgage loans and securities, as well as generally lower yields on assets. In addition, new volume in our Mortgage Purchase Program (MPP) has been lower than anticipated in the first quarter. If these trends continue throughout 2004, subsequent quarters paid dividends for the Seattle Bank could be lower than those for the first quarter.

In 2003, the Federal Housing Finance Board, the Seattle Bank's regulator, issued guidance to the Bank System, calling for each bank, at least annually, to assess the adequacy of its retained earnings in light of alternative possible future financial and economic scenarios, including parallel and non-parallel interest-rate shifts, changes in the basis relationship between different yield curves, and changes in the credit quality of an individual bank's assets. Each individual bank's Board of Directors is expected to adopt a retained earnings policy that includes a target level of retained earnings, as well as a plan that will enable the bank to reach that target level of retained earnings.

The Seattle Bank's Board of Directors plans to address the retained earnings issue at its April 6-10 board meeting. If the Board of Directors determines that the Seattle Bank's target level for retained earnings should be increased, future Seattle Bank dividend rates may be lower, depending on the amount of additional retained earnings that are deemed to be required, and the period of time in which the desired level is to be achieved. In 2002, the Board of Directors established a goal of building retained earnings to 2 percent of total capital by the end of 2003. Current retained earnings for the Seattle Bank total $58 million, or 2.4 percent of total capital.

On behalf of the board and management, I would like to thank you for your ongoing partnership with the Seattle Bank. We will continue to work diligently in managing the challenges of this low-interest rate market and helping you build healthy communities and economies.

If you have questions regarding this information, please contact Kelli Bono, Executive Vice President/Chief Financial Officer, at 206.340.8696.

Norman B. Rice
President and Chief Executive Officer

This dividend report contains specific forward-looking statements and estimates regarding the bank¿s first quarter 2004 financial performance. Actual results may differ materially from projected results because of many factors. These factors include, but are not limited to, actual prepayment speeds on mortgage assets, changes in interest rates, changes in projected business volumes, general economic conditions, and regulatory and accounting rule changes. Additional factors are discussed in the Seattle Bank's annual report, available on our web site, www.fhlbsea.com. In addition, the Seattle Bank does not undertake to update any forward-looking statements made in the dividend report.

This Member News contains forward-looking statements regarding events that may impact the bank's future financial performance. Forward-looking statements are subject to known and unknown risks and uncertainties. Actual performance may differ materially from projections because of many factors. Such factors may include, but are not limited to factors that affect the Seattle Bank’s net income, including without limitation demand for advances, business and capital plan adjustments, changes in the bank's management and Board of Directors, regulatory actions or approvals, competitive pressure from other Federal Home Loan Banks and alternative funding sources, accounting adjustments or requirements, interest rate volatility, the bank's ability to maintain adequate capital levels, changes in projected business volumes, our ability to appropriately manage our cost of funds, changes in our membership profile or the withdrawal of one or more large members, the cost-effectiveness of our funding, hedging, and asset-liability management activities, shifts in demand for our products and consolidated obligations, and general economic conditions. Additional factors are discussed in the Seattle Bank's annual report, available at www.fhlbsea.com . The Seattle Bank does not undertake to update any forward-looking statements made in this announcement.