Seattle Bank Announces First Quarter 2008 Financial Results

2008-05-10 00:17:07 -

- Federal Home Loan Bank of Seattle Connie Waks, 206-340-2305 cwaks@fhlbsea.com The Federal Home Loan Bank of Seattle (Seattle Bank) today announced financial results for the first quarter of 2008 and the filing of its first-quarter 2008 Form 10-Q with the Securities and Exchange Commission (SEC). The Seattle Bank reported $31.5 million of net income for the first quarter of 2008, compared to $10.6 million for the first quarter of 2007.

The Seattle Bank attributes the growth in its first-quarter 2008 net income primarily to an increase in net interest income from advances. A significant increase in average advances outstanding from the first quarter of 2007 more than offset the negative effects of a declining interest-rate environment on advance and investment yields. Advance prepayments and capital stock purchases in 2008 and the positive effects of debt and investment restructuring activities in 2007 further increased earnings.

"With the volatility in the credit markets and declining interest-rate environment, Seattle Bank members continue to rely on their cooperative for liquidity and cost-effective funding," said Seattle Bank President and CEO Richard M. Riccobono. "We actively manage our balance sheet to meet our members' funding needs, and we are very pleased that as we have worked to fulfill our mission, we have also significantly improved earnings for the cooperative."

The Seattle Bank used a portion of its advance prepayment fees to retire $10.1 billion of high-cost debt during the first-quarter of 2008. The bank expects that this action will favorably affect its net income going forward.

Key Factors

Advances outstanding were $37.7 billion as of March 31, 2008, compared to $45.5 billion as of December 31, 2007, and $25.7 billion as of March 31, 2007. Prevailing market conditions supported a strong demand for advances, and with the exception of a $7.5 billion advance prepayment, first-quarter 2008 advance levels were essentially unchanged from December 31, 2007. Advance balances vary from time to time as a result of changes in market conditions, member demand, and other factors.

First-quarter 2008 net interest income was $64.8 million, an increase of 127.5 percent compared to $28.5 million for the first quarter of 2007. While net interest income from advances increased, net interest income from investments declined.

Other Highlights

-- Retained earnings as of March 31, 2008, increased to $171.9 million, compared to $148.7 million as of December 31, 2007, and $100.8 million as of March 31, 2007.

-- Total assets as of March 31, 2008, increased to $68.8 billion, compared to $64.2 billion as of December 31, 2007, and $56.5 billion as of March 31, 2007.

-- With total regulatory capital at $2.8 billion, the bank's capital-to-assets ratio was 4.13 percent as of March 31, 2008, exceeding all regulatory capital requirements.

On April 25, 2008, the Seattle Bank announced a $.35 dividend on average Class B stock outstanding during first-quarter 2008 and a $.80 per share dividend on average Class A stock outstanding during first-quarter 2008.

SEC Form 10-Q for Quarter Ended March 31, 2008

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 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, demand for advances, business and capital plan adjustments and amendments, changes in the bank's management and Board of Directors, regulatory actions or approvals, competitive pressure from other Federal Home Loan Banks and alternative funding sources, accounting adjustments or requirements, interest-rate volatility, the bank's ability to maintain adequate capital levels, changes in projected business volumes, our ability to appropriately manage our cost of funds, changes in our membership profile or the withdrawal of one or more large members, the cost-effectiveness of our funding, hedging and asset-liability management activities, shifts in demand for our products and consolidated obligations, and general economic conditions. Additional factors are discussed in the Seattle Bank's first-quarter 2008 Form 10-Q filing and its 2007 Form 10-K filing with the SEC, which are available on the Seattle Bank's Web site at www.fhlbsea.com. The Seattle Bank does not undertake to update any forward-looking statements made in this announcement.

FHLBank Reports $31.5 Million of Net Income