Home-loan bank sees profit plunge

The Federal Home Loan Bank of Seattle reported a 51 percent drop in earnings for the fourth quarter and said it might have some quarterly losses over the next few years as it changes its business plan.

The home-loan bank, one of 12 nationwide that lends money to member banks, yesterday gave its regulator a three-year business and capital-management plan that the Federal Housing Finance Board requested in December.

Last month, former Seattle Mayor Norm Rice retired as president and chief executive of the bank after it posted a 53 percent drop in third-quarter earnings and its regulator increased oversight.

The regulator has not set a timetable to act on the plan, which includes several items already announced, such as cutting bank staff by about 25 percent and hiring outside experts to review the bank's management and organization.

The bank, which lends money at below-market rates to its member banks, also will stop buying mortgages from members for its portfolio.

Its net income for the fourth quarter fell from $34.5 million a year ago to $17.5 million. For the year, earnings were $82.7 million, down 58 percent.

The bank's board has formed a committee of independent directors to review its repurchase in October of home-loan bank stock that had been held by three member institutions whose executives sit on the home-loan bank's board.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com