2009 News Releases

    Federal Home Loan Bank of Seattle Announces First Quarter 2009 Financial Results

    News Release: May 20, 2009
    Contact: Connie Waks
    206.340.2305

    Seattle – Today, the Federal Home Loan Bank of Seattle (Seattle Bank) filed its first quarter 2009 Form 10-Q with the Securities and Exchange Commission (SEC). The Seattle Bank reported a net loss of $16.2 million for the three months ended March 31, 2009, a decrease of $47.7 million from net income of $31.5 million for the same period in 2008. The Seattle Bank attributes this decrease primarily to $71.7 million of other-than-temporary-impairment (OTTI) credit-related charges on held-to-maturity, private-label mortgage-backed securities.

    In addition, the Seattle Bank reported retained earnings of $198.3 million and an accumulated other comprehensive loss of $1.1 billion as of March 31, 2009, compared to an accumulated deficit of $78.9 million and an accumulated other comprehensive loss of $2.9 million as of December 31, 2008. The increase in the bank’s retained earnings and accumulated other comprehensive loss reflects the adoption of recent guidance from the Financial Accounting Standards Board (FASB) regarding the recognition and presentation of OTTI of private-label mortgage-backed securities.

    “Our first quarter 2009 results reflect the distress in the mortgage markets and its impact on the fair value of the private-label mortgage-backed securities we hold,” said Seattle Bank President and CEO Richard M. Riccobono. “While our adoption of new accounting guidance has limited, to some extent, our realized loss on these assets, it continues to adversely affect our GAAP capital. Barring an increase in expected credit losses, however, the other comprehensive loss should amortize back to GAAP capital over the life of the securities.”

    The increase in the Seattle Bank’s retained earnings resulted in an increase in regulatory capital, to $3.0 billion as of March 31, 2009, compared to $2.7 billion as of December 31, 2008. The bank’s accumulated other comprehensive loss resulted in a decrease in GAAP capital, to $960.6 million as of March 31, 2009, compared to $1.8 billion as of December 31, 2008.

    Other Financial Highlights

    • The Seattle Bank had $31.8 billion of advances outstanding as of March 31, 2009, compared to $36.9 billion of advances outstanding as of December 31, 2008. The decrease in advances outstanding primarily resulted from prepayments of $2.9 billion in advances and maturing advances, reflecting generally lower advance activity across the Seattle Bank’s membership.
    • Net interest income was $74.4 million for the three months ended March 31, 2009, compared to $64.8 million for the three months ended March 31, 2008. The increase in net interest income was due primarily to a significant decline in short-term interest rates, which resulted in a larger decrease in the bank’s total interest expense than in its total interest income.
    • Total assets declined to $56.9 billion as of March 31, 2009 from $58.4 billion as of December 31, 2008, primarily as a result of the decrease in advances outstanding, partially offset by increased short-term investments.
    • As of March 31, 2009, the Seattle Bank had a total capital-to-assets ratio of 5.2 percent and a leverage ratio of 7.7 percent and remains in compliance with both of these regulatory capital requirements.
    • As a result of the distressed prices of certain of the bank’s held-to-maturity private-label mortgage-backed securities, the Seattle Bank had a risk-based capital deficiency of $466.7 million as of March 31, 2009. Under Federal Housing Finance Agency regulation, a Federal Home Loan Bank may not redeem or repurchase capital stock or pay dividends on its stock while a capital deficiency exists.
    Please refer to the Seattle Bank’s First Quarter 2009 Form 10-Q filing with the SEC for additional information.

    About the Seattle Bank
    The Federal Home Loan Bank of Seattle is a financial cooperative that provides liquidity, funding, and services to enhance the success of its members and support the availability of affordable homes and economic development in the communities they serve. Our funding and financial services enable approximately 380 member institutions to provide their customers with greater access to mortgages, commercial lending, and affordable housing. The Seattle Bank commits 10 percent of its annual profits to help fund affordable housing and homeownership.

    The Seattle Bank serves eight states, American Samoa, Guam, and the Northern Mariana Islands. Our members include commercial banks, credit unions, thrifts, industrial loan corporations, and insurance companies.

    The Seattle Bank is one of 12 Federal Home Loan Banks in the United States. Together, the Federal Home Loan Banks represent one of the country’s largest private sources of liquidity and funding for community financial institutions, as well as funding for affordable housing.

    This press release contains forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties. Actual performance may differ materially from that expected or implied in forward-looking statements because of many factors. Such factors may include, but are not limited to, changes in general economic and market conditions (including effects on, among other things, mortgage-related securities), the Seattle Bank's ability to meet adequate capital levels, regulatory and legislative actions and approvals (including those of the Finance Agency), accounting adjustments or requirements (including changes in assumptions and estimates used in our financial models), business and capital plan adjustments and amendments, demand for advances, changes in the bank's management and Board of Directors, competitive pressure from other Federal Home Loan Banks and alternative funding sources, interest-rate volatility, shifts in demand for our products and consolidated obligations, changes in projected business volumes, our ability to appropriately manage our cost of funds, the cost-effectiveness of our funding, changes in our membership profile or the withdrawal of one or more large members, and hedging and asset-liability management activities. Additional factors are discussed in the Seattle Bank's 2008 annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC. The Seattle Bank does not undertake to update any forward-looking statements made in this announcement.


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