WASHINGTON — The Federal Home Loan Bank of Seattle entered into a consent order with the Federal Housing Finance Agency late Monday that requires the bank to take certain steps to improve its capital position and its business and operations.
Simultaneously, the bank announced that Richard M. Riccobono, its president and chief executive, had resigned. The bank's board appointed Steven R. Horton as acting president and CEO, effective immediately.
In a press release, the bank did not offer a reason for Riccobono's departure, but praised him as a "strong advocate for the Federal Home Loan Bank System and the Seattle Bank cooprative during what has been a very challenging time for our economy and our industry."
Horton has served as the bank's senior vice president and chief operating officer since May 2009. Previously, he has served in several other leadership roles at the bank.
The Seattle Home Loan Bank has been under a regulatory cloud since at least November of last year, when the Finance Agency declared it "undercapitalized" and banned it from redeeming its stock.
Under the consent order, the Finance Agency continues to consider the Seattle bank undercapitalized, but will allow it to begin repurchasing member capital stock starting in the third quarter of next year if it reaches and maintains certain financial thresholds. The bank will be allowed to pay dividends once it additionally "remediates certain concerns regarding its oversight and management, asset improvement program, capital adequacy and retained earnings," the bank said. The FHFA said it would allow it to redeem stock and pay dividends only if it considers the bank in safe and sound condition. Any stock repurchases and redemptions and dividend payments will be subject to Finance Agency approval.
"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 dividend," said William V. Humphreys, the bank's chairman, in the press release. "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."