SEATTLE – The Federal Home Loan Bank of Seattle reported that the diminishing value of its mortgage backed securities holdings pushed it back into the red for the third quarter, to the tune of $18.8 million.
That compares to net income of $26.9 million for the third quarter last year.
The Seattle Bank attributes the decrease in its third quarter net income primarily to a $49.8 million other-than-temporary impairment charge on three private-label mortgage-backed securities that are classified as held-to-maturity.
In addition, the bank reported a $4.2 million net loss on the termination of derivatives contracts with Lehman Brothers Special Financing and $2.5 million of net realized losses on the early retirement of high cost debt during the third quarter of 2008.
The Seattle Bank was last in the red in 2006, which prompted federal regulators to put it under a supervisory agreement that limited dividends and required it to divest its secondary mortgage market portfolio of loans.
