Federal Home Loan Bank of Seattle Agrees to Consent Order Issued by Federal Housing Finance Agency
News Release: October 25, 2010
Contact: Connie Waks
Today, the Federal Home Loan Bank of Seattle (Seattle Bank) entered into a Stipulation and Consent to the Issuance of a Consent Order with the Federal Housing Finance Agency (Finance Agency). The Stipulation and Consent provides that the Seattle Bank agrees to a Consent Order issued by the Finance Agency, which requires the bank to take certain specified actions related to its business and operations. (The Stipulation and Consent and the Consent Order are collectively referred to as the Consents.) The Consents and related understandings with the Finance Agency constitute the Seattle Bank's capital restoration plan and fulfill the Finance Agency's April 19, 2010, request of the Seattle Bank for a business plan.
The Consents provide that, following a stabilization period (from the date of the
Consent Order through the filing of the Seattle Bank's second quarter 2011 quarterly
report on Form 10-Q with the Securities and Exchange Commission) and once the Seattle
Bank reaches and maintains certain thresholds, the bank may begin repurchasing member
capital stock at par. Further, the Seattle Bank may again be in position to redeem
certain capital stock from members and begin paying dividends once the bank:
- Achieves and maintains certain other financial and operational metrics;
- Remediates certain concerns regarding its oversight and management, asset improvement program, capital adequacy and retained earnings, risk management, compensation practices, examination findings, and information technology; and
- Returns to a "safe and sound" condition as determined by the Finance Agency.
Any stock repurchases and redemptions and dividend payments will be subject to Finance Agency approval.
According to Seattle Bank Chairman William V. Humphreys, “The Seattle Bank regards this agreement with the Finance Agency as a positive step toward achieving our goals of returning to repurchasing and redeeming capital stock and to paying dividends. We look forward to working with the Finance Agency in this regard, and we are eager to begin the work that will bring us to those goals.”
The Seattle Bank will work with the Finance Agency on related plans to achieve the goals and objectives relating to the Consents, and the Seattle Bank’s Board of Directors will monitor the bank’s adherence to the Consents and provide related reports to the Finance Agency as requested.
The Consents will remain in effect until modified or terminated by the Finance Agency. The Finance Agency continues to deem the Seattle Bank "undercapitalized" under the Finance Agency's Prompt Corrective Action rule.
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 370 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 which are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terminology, such as, among others, "expects," "could," "plans," "estimates," "may," "should," "will," or their negatives or other variations on those terms. Forward-looking statements are subject to known and unknown risks and uncertainties. Actual results and actions, including those relating to the Consents and the Seattle Bank's ability to adhere to their requirements, 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), 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, hedging and asset-liability management activities, and accounting adjustments or requirements (including changes in assumptions and estimates used in our financial models). Additional factors are discussed in the Seattle Bank's 2009 annual report on Form 10-K filed with the SEC and subsequent 10-Q filings. The Seattle Bank does not undertake to update any forward-looking statements made in this announcement.