Seattle FHLBank Reports '05 Profits

The Federal Home Loan Bank of Seattle has posted a $1.7 million profit for 2005 and says it "no longer anticipates a loss in 2006" as the bank continues to recover from a plunge into the mortgage purchase business and rebuilds its advance business.The Seattle bank reported a net loss of $9.1 million loss in the fourth quarter after taking an $11.8 million loss due to restructuring. "We've significantly grown our advance volumes and we have reduced out risk profile, even though we incurred some costs in the process," said Seattle FHLBank president James Gilleran. "Now, we believe we have positioned ourselves to strengthen our earnings growth and our profitability." During 2005, advance borrowing at the FHLBank grew by 44%, to $21.4 billion as of Dec. 30. The bank also reduced its mortgage purchase portfolio by $3.2 billion, to $7.2 billion as of year-end. The Seattle bank is still carrying $360 million in unrealized losses, however, due to mismatches between the cash flows of its short-term and long-term assets and liabilities. These mismatches "will continue to depress earnings in 2006 and to a lesser extent in future years," the bank said.