FHLB Plunges Into The Red For FourthQuarter
SEATTLE - (03/07/06) The Federal Home Loan Bank ofSeattle, which is struggling to shed underwater assets, reported a$9.1 million loss for the fourth quarter of fiscal 2005, pushingdown fiscal year earnings to just $1.7 million. The FHLB realizedlosses of $6.4 million on the retirement of $236 million oflong-term, high-cost debt, and losses of $5.4 million on thepremature termination of leases. The debt retirement helped theSeattle bank to trim the unrealized losses on its investmentportfolio to $360 million at year-end, down from paper losses of$400 million at the end of the third quarter. The Seattle bank alsocontinued to wind down its secondary mortgage market program,called Mortgage Purchase Program, by selling 16% of the portfolio,or $1.4 billion, to $7.2 billion at year-end. The shedding of itssecondary mortgage market program was part of a unprecedentedsupervisory agreement the Seattle bank signed with federalregulators last year that requires it to exit the secondarymortgage market, ban all early redemption of stock, halt alldividend payments on stock for three years, and refocus itsbusiness on providing low-cost advances to help finance mortgagelending by participating financial institutions. The Seattle FHLBis owned by 375 financial institutions in the northwest, including79 credit unions.