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May 1, 2008
Dear Seattle Bank Members,
In December 2007, the Federal Home Loan Bank of Seattle requested that the Federal Housing Finance Board remove the restrictions on our payment of dividends to our members and allow the bank to repurchase our members’ excess Class B stock.
On April 24, 2008, the Finance Board informed us of its decision to raise the ceiling on the Seattle Bank’s dividend payments from 50 percent to 75 percent of year-to-date GAAP net income, but not to allow the bank to repurchase excess Class B stock at this time. The Seattle Bank retains the ability to redeem Class B stock following the expiration of the statutory five-year redemption period, and there are no restrictions on our ability to repurchase Class A stock.
The Seattle Bank filed its requests with the Finance Board based on the considerable financial progress our cooperative has made over the past two years. As reported in our 2007 financial results, the Seattle Bank earned $70.7 million in 2007 compared to $25.8 million in 2006 and $1.7 million in 2005. In addition:
- Advances outstanding totaled $45.5 billion at December 31, 2007, increasing year-over-year by 62.8 percent and 30.4 percent, respectively, from 2006 and 2005.
- Total assets were $64.2 billion at December 31, 2007, reflecting year-over-year increases of 20.0 percent and 1.9 percent, respectively, from 2006 and 2005.
- Retained earnings were $148.7 million at December 31, 2007, reflecting year-over-year increases of 61.0 percent and 34.4 percent, respectively, from 2006 and 2005.
We are particularly gratified that throughout the recent credit market crisis, the Seattle Bank has continued to serve as a reliable source of liquidity and funding for our members. At the same time, we have continued to pay a market-rate dividend on our Class A stock and increased the dividend on our Class B stock.
We are encouraged by the Finance Board’s action to raise the ceiling on our dividend payments, but we are obviously disappointed that we will not be able to repurchase your excess Class B stock at this time. Rest assured that, as circumstances warrant, we will resubmit our requests to remove the remaining restriction on our dividend payments and to allow the repurchase of excess Class B stock.
We have made great progress in our business turnaround, and we will continue our efforts to further strengthen our cooperative. We thank you for your business and your continued support.
Sincerely,
Mike C. Daly
Chairman of the Board
Richard M. Riccobono
President and Chief Executive Officer
This Member News includes forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties. Actual performance and future bank actions may differ materially because of many factors. Such factors may include, but are not limited to, business and capital management plan adjustments and amendments, 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 audited 2007 financial statements and related footnotes and other disclosures in the bank’s Form 10-K for the year ended December 31, 2007. The Seattle Bank does not undertake to update any forward-looking statements made in this announcement.
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