FHLBank-NY Reports Earnings Drop

In a new letter to shareholders, New York Federal Home Loan Bank president Alfred DelliBovi has revealed that losses on the FHLBank's portfolio sales will reduce its retained earnings to $90 million in the third quarter, down from $240 million at the end of the second quarter.The NY FHLBank sold over $1 billion in downgraded manufactured housing bonds for a loss of $183 million, and the new letter discloses another sale, involving $944 million in residential and business securities, which resulted in a $6.6 million loss. "We are nearing the completion of the review of our investment portfolio and expect no further significant issues," the Sept. 30 letter says. The remaining portfolio of mortgage-backed securities and residential asset-backed securities are rated AAA, he added. Following the MH bond sale, Standard & Poor's downgraded the NY bank's AAA credit rating to AA-plus -- but Moody's Investors Service reaffirmed its Aaa rating. "While we are disappointed with S&P's action, we believe Moody's decision to affirm our rating was a positive response to the sale of our uninsured manufactured housing bonds," Mr. DelliBovi said.