Federal Home Loan Bank of Seattle Announces Third-Quarter 2009 Financial Results

SEATTLE--(Business Wire)--
The Federal Home Loan Bank of Seattle (Seattle Bank) today announced unaudited
financial results for the third quarter of 2009. The Seattle Bank reported net
losses of $93.8 million and $144.3 million for the three and nine months ended
September 30, 2009, compared to a net loss of $18.8 million and net income of
$41.8 million for the three and nine months ended September 30, 2008.

The Seattle Bank attributes its third-quarter and year-to-date 2009 net losses
primarily to $130.1 million and $263.5 million of credit-related charges
associated with projected losses on its investments in private-label
mortgage-backed securities. The bank has continued to receive all expected cash
flows from these investments, reflecting, among other things, its senior credit
position and significant credit enhancements on these investments.

"The mark-to-market write-downs we`ve had to take on our private-label
mortgage-backed securities have reduced our GAAP capital, while the projected
credit losses have severely impacted our net income," said Seattle Bank
President and CEO Richard M. Riccobono. "At the same time, we comply with all of
our regulatory capital requirements and our year-to-date net interest income is
strong. Most importantly, we remain focused on our mission of providing
liquidity and funding to the members of the Seattle Bank cooperative in these
difficult economic times."

The Seattle Bank`s third-quarter and year-to-date 2009 net interest income was
$47.9 million and $170.1 million, increasing by $4.7 million and $12.0 million,
respectively, over the same periods in 2008, due primarily to a reduction in the
bank`s funding costs.

As of September 30, 2009, the Seattle Bank had total assets of $54.1 billion,
compared to $58.4 billion as of December 31, 2008. The decrease in total assets
was primarily due to a decline in the bank`s advances. Advances outstanding,
which peaked at $46.3 billion in September 2008 in response to a record demand
for liquidity by the Seattle Bank`s members, declined to $24.9 billion as of
September 30, 2009, due, in part, to reduced demand, as members began to shrink
their asset balances and experience growth in their deposits.

As of September 30, 2009, the Seattle Bank met all of its regulatory capital
requirements, including its risk-based capital requirement. The bank reported a
risk-based capital surplus of $114.9 million as of September 30, 2009, compared
to a risk-based capital deficiency of $159.2 million as of December 31, 2008,
but remains classified as "undercapitalized" by its regulator, the Federal
Housing Finance Agency.

The Seattle Bank held total capital of $927.4 million as of September 30, 2009,
including $1.9 billion of capital stock, $70.2 million of retained earnings, and
an accumulated other comprehensive loss of $995.5 million. This compares to
total capital of $1.8 billion as of December 31, 2008, which included
approximately $1.8 billion of capital stock and an accumulated deficit of $78.9
million. The change in the composition of total capital between these two
periods was primarily due to additional other-than-temporary impairments of the
bank`s private-label mortgage-backed securities and the bank`s adoption of new
accounting rules regarding such securities on January 1, 2009.

The Seattle Bank`s total outstanding capital stock increased by $28.9 million
from December 31, 2008, through September 30, 2009, including capital stock
purchases and transfers by Seattle Bank members. For the three and nine months
ended September 30, 2009, capital stock purchases by new members totaled $1.1
million and $6.0 million and capital stock purchases by existing members totaled
$514,000 and $23.6 million. All stock purchases and transfers were transacted at
a par value of $100 per share.

The Seattle Bank will announce its third-quarter 2009 unaudited financial
results in its Form 10-Q filing with the Securities and Exchange Commission on
or around November 12, 2009.

About the Seattle Bank

The Federal Home Loan Bank of Seattle is a financial cooperative that provides
liquidity, funding, and services to enhance the success of its members and
support the availability of affordable homes and economic development in the
communities they serve. Our funding and financial services enable approximately
380 member institutions to provide their customers with greater access to
mortgages, commercial lending, and affordable housing. The Seattle Bank commits
10 percent of its annual profits to help fund affordable housing and
homeownership.

The Seattle Bank serves eight states, American Samoa, Guam, and the Northern
Mariana Islands. Our members include commercial banks, credit unions, thrifts,
industrial loan corporations, and insurance companies.

The Seattle Bank is one of 12 Federal Home Loan Banks in the United States.
Together, the Federal Home Loan Banks represent one of the country`s largest
private sources of liquidity and funding for community financial institutions,
as well as funding for affordable housing.

This press release contains forward-looking statements. Forward-looking
statements are subject to known and unknown risks and uncertainties. Actual
performance may differ materially from that expected or implied in
forward-looking statements because of many factors. Such factors may include,
but are not limited to, changes in general economic and market conditions
(including effects on, among other things, mortgage-related securities), the
Seattle Bank's ability to meet adequate capital levels, regulatory and
legislative actions and approvals (including those of the Finance Agency),
business and capital plan adjustments and amendments (including regarding a
capital restoration plan), accounting adjustments or requirements (including
changes in assumptions and estimates used in our financial models), demand for
advances, changes in our membership profile or the withdrawal of one or more
large members, shifts in demand for our products and consolidated obligations,
competitive pressure from other Federal Home Loan Banks and alternative funding
sources, interest-rate volatility, changes in projected business volumes, our
ability to appropriately manage our cost of funds, and the cost-effectiveness of
our funding, hedging and asset-liability management activities. Additional
factors are discussed in the Seattle Bank's 2008 annual report on Form 10-K and
subsequent quarterly reports on Form 10-Q filed with the SEC. The Seattle Bank
does not undertake to update any forward-looking statements made in this
announcement.

Federal Home Loan Bank of Seattle
Connie Waks, 206-340-2305
cwaks@fhlbsea.com

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