UPDATE 1-U.S. regulator: FHLB of Seattle 'undercapitalized'

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WASHINGTON Nov 6 (Reuters) - The Federal Housing Finance Agency said on Friday the Federal Home Loan Bank of Seattle remains "undercapitalized," a move that prevents it from paying dividends or repurchasing capital stock.

"I am taking this action today to promote the longer-term financial stability of the Federal Home Loan Bank of Seattle," said Edward DeMarco, acting director of the FHFA.

DeMarco said the FHLB Seattle had met the statutory and regulatory minimum capital requirements for the third quarter but cautioned that it could fall below those requirements in the fourth quarter.

FHFA said it would re-assess the bank's health each quarter, adding that as of the end of the third quarter it had assets of $54.1 billion.

FHFA first considered the FHLB of Seattle 'undercapitalized' in the first quarter, after it

FHLB Seattle is one of 12 regional banks in the Federal Home Loan Bank System

"This action should ultimately benefit all of the Bank's member owners by maintaining their existing capital investments and enhancing the bank's opportunity to strenghthen its financial position," DeMarco said.

(Reporting by Corbett B. Daly; Editing by Leslie Adler and Diane Craft)