Federal Home Loan Bank of Atlanta Announces Third Quarter 2009 Operating Highlights

Federal Home Loan Bank of Atlanta Announces Third Quarter 2009 Operating
Highlights

ATLANTA, Oct. 29 /PRNewswire/ -- Federal Home Loan Bank of Atlanta (the Bank)
today released preliminary operating results for the quarter ended Sept. 30,
2009. These results have been prepared from unaudited financial statements.

The Bank reported net income of approximately $11.1 million for the third
quarter of 2009, an increase of approximately $57.2 million or 124.1 percent,
from a net loss of approximately $46.1 million for the third quarter of 2008.
The increase in net income was due primarily to an approximately $169.9
million decrease in other expense as compared to the third quarter of 2008,
which had increased last year primarily as a result of the establishment of an
approximately $170.5 million reserve for possible credit loss on amounts due
from Lehman Brothers Special Financing (LBSF). The Bank also experienced an
approximately $89.6 million increase in net gains on derivatives and hedging
activities for the third quarter of 2009 as compared to the third quarter of
2008. The Bank's net gains (losses) on derivatives and hedging activities for
the third quarter of 2009 were approximately $44.3 million and approximately
$(45.3) million for the third quarter of 2008.

The increase in net income was partially offset by an approximately $135.2
million decrease in net interest income, and an approximately $40.6 million
increase in net impairment losses recognized in earnings related to the Bank's
portfolio of private-label mortgage-backed securities (MBS). The decrease in
net interest income was due primarily to accelerated amortization on advances
that were prepaid as well as a decrease in interest rates and interest-earning
assets on the Bank's balance sheet.

The Bank recognized a total other-than-temporary impairment (OTTI) loss of
approximately $104.8 million and $1.2 billion related to its private-label MBS
investment portfolio for the third quarter and first nine months of 2009,
respectively. The credit related portion of the OTTI loss was approximately
$128.0 million and $263.1 million for the third quarter and first nine months
of 2009, respectively, and is recognized in the Bank's earnings. This portion
of the OTTI loss was due to forecasted further declines in home prices,
increases in delinquencies, default rates, and projected losses on home
mortgage loans, and decreases in the prepayments of such home mortgage loans,
and actual deterioration in the performance of the loans underlying the Bank's
private-label mortgage-backed securities portfolio. The noncredit portion of
approximately $(23.2) million and $943.4 million for the third quarter and
first nine months of 2009, respectively, is recorded as a component of other
comprehensive loss.

"This quarter's performance reflects the potential for future credit losses
associated with the Bank's private-label mortgage-backed securities and slower
borrowing demand as members benefit from increased deposits and access to
other liquidity sources," said Richard A. Dorfman, the Bank's President and
Chief Executive Officer. "However, the Bank's capital position and retained
earnings will help us manage operations while credit markets stabilize and the
economy improves."

As of Sept. 30, 2009, the Bank had total assets of approximately $163.4
billion, a decrease of approximately $45.2 billion, or 21.7 percent, from Dec.
31, 2008. This decrease was due primarily to a decrease in advances and
held-to-maturity securities during the period. Advances decreased due to
regularly-scheduled repayments, prepayments as a result of member failures,
and a decrease in demand for new advances resulting from members' increased
deposit balances, slower loan growth, and access to alternative sources of
funding. Held-to-maturity securities decreased during the period primarily due
to principal repayments and maturities, continued decline in new purchases of
MBS by the Bank, and other-than-temporary impairment losses.

The Bank's retained earnings balance was approximately $798.9 million as of
Sept. 30, 2009, an increase of approximately $364.0 million, or 83.7 percent,
from Dec. 31, 2008. The increase in retained earnings was due to an
approximately $178.5 million increase upon the adoption of new accounting
guidance related to the determination of the OTTI loss on certain debt
securities, including the Bank's private-label MBS, and the recording of
approximately $201.3 million in net income for the first nine months of 2009.
These increases were partially offset by the payment during the third quarter
of 2009 of approximately $15.8 million in dividends for the second quarter of
2009.
The Bank's third quarter 2009 performance resulted in an annualized return on
equity (ROE) of approximately 0.55 percent as compared to an approximately
negative 2.13 percent for the third quarter of 2008. This increase in ROE is
due primarily to the increase in net income and a decrease in average capital,
resulting primarily from the increase in accumulated other comprehensive loss
during the period related to noncredit portion of the Bank's OTTI loss
described above. The ROE spread to average three-month LIBOR increased
between the periods, equaling approximately 0.14 percent for the third quarter
of 2009 as compared to an approximately negative 5.04 percent for the third
quarter of 2008. The increase in this spread was due primarily to the
increase in ROE and a decrease in three-month LIBOR.
The Bank expects to file its full financial report on Form 10-Q in
mid-November.

About the Federal Home Loan Bank of Atlanta

FHLBank Atlanta offers competitively-priced financing, community development
grants, and other banking services to help more than 1,200 member financial
institutions make affordable home mortgages and provide economic development
credit to neighborhoods and communities. The Bank's members -- its
shareholders and customers -- are commercial banks, credit unions, savings
institutions, and insurance companies headquartered in Alabama, Florida,
Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District
of Columbia. FHLBank Atlanta is one of 12 district banks in the Federal Home
Loan Bank System, which since 1990 has contributed more than $3.6 billion to
the Affordable Housing Program.

For more information visit our website at www.fhlbatl.com.

Some of the statements made in this announcement are "forward-looking
statements," which include statements with respect to the Bank's beliefs,
plans, objectives, goals, expectations, anticipations, assumptions, estimates,
intentions, and future performance, and involve known and unknown risks,
uncertainties and other factors, many of which may be beyond the Bank's
control, and which may cause the Bank's actual results, performance or
achievements to be materially different from the future results, performance
or achievements expressed or implied by the forward-looking statements.

The forward-looking statements may not be realized due to a variety of
factors, including, without limitation: legislative and regulatory actions,
changes or approvals; future economic and market conditions (including the
housing market and the market for mortgage-backed securities); changes in
demand for advances or consolidated obligations of the Bank and/or the FHLBank
System; changes in interest rates and prepayment speeds, default rates,
delinquencies and losses on mortgage-backed securities; political, national
and world events; and adverse developments or events affecting or involving
other Federal Home Loan Banks or the FHLBank System in general. Additional
factors that might cause the Bank's results to differ from these
forward-looking statements are provided in detail in our filings with the
Securities and Exchange Commission, which are available at www.sec.gov.

New factors may emerge from time to time, and it is not possible for us to
predict the nature, or assess the potential impact, of each new factor on our
business and financial condition. Given these uncertainties, we caution you
not to place undue reliance on forward-looking statements. These statements
speak only as of the date that they are made, and the Bank has no obligation
and does not undertake to publicly update, revise or correct any of the
forward-looking statements after the date of this announcement, or after the
respective dates on which such statements otherwise are made, whether as a
result of new information, future events or otherwise, except as may be
required by law.

SOURCE Federal Home Loan Bank of Atlanta

Sharon Cook, Federal Home Loan Bank of Atlanta, +1-404-888-8173,
scook@fhlbatl.com