FHLB 3Q 08 Earnings Down by 30%

The 12 Federal Home Loan Banks saw combined earnings of $506 million in the third quarter, down 30% from the second quarter, after taking $146 million in charge-offs on private-label mortgage backed securities. The Seattle FHLBank took a $18 million loss for the third quarter after taking a $49.8 million "other than temporary impairment" charge against three private-label MBS. The bank says it only expects to see a $4.9 million principal loss over the life of those three MBS. The 12 FHLBanks held $81.4 billion in private-label MBS as of June 30. FHLBank System Office of Finance said the banks also saw $252 million in "write-offs/ reserves on receivables due from the Lehman Brothers Special Financings unit," which filed for bankruptcy on Oct. 3. It was previous reported that the Atlanta FHLBank is suing LBSF for the return of $179 million in excess collateral and the Pittsburgh FHLBank is suing for the return of $41 million in cash.