Seattle FHLBank Reports Profit Decline

The Seattle Federal Home Loan Bank has reported a 46% decline in first-quarter profits from those of a year ago as the troubled bank exits the mortgage purchase business and focuses on its advance business."The Seattle bank anticipates a trend of net losses for 2005 and 2006 with the potential for net income in 2007," the government-sponsored enterprise said. The Seattle bank posted $12.3 million in earnings in the first quarter, compared with $23 million in the first quarter of 2004. The bank also reported earnings of $17.5 million in the fourth quarter. Advances increased 11.1% to $16.6 billion in the first quarter from the fourth quarter, and the bank noted that it has filed its initial registration statement with the Securities and Exchange Commission (see item above). However, the bank had $400 million in net unrealized market value losses hanging over its head as of May 31. The bank purchased $49 million in interest-rate exchange agreements in the first quarter to protect itself from further unrealized market value losses. The Seattle Bank has $2.1 billion in capital.