The Federal Home Loan Banks reported that their combined net income in the second quarter increased 56% from a year earlier to $1.12 billion.
Results at the 12 regional banks benefited from $979 million of net gains on derivative contracts and hedging activities, compared with $364 million of such gains in the year-earlier quarter. But results were hurt by $437 million of write-downs in the value of private-label mortgage securities, ones that aren't backed by the government. Heavy losses on such securities have depleted the capital of some of the home-loan banks over the past year.
The banks' combined capital, on the basis of generally accepted accounting principles, was $45.9 billion as of June 30, down 11% from Dec. 31, 2008. The Federal Housing Finance Agency, which regulates the home-loan banks, recently found that the Federal Home Loan Bank of Seattle is "undercapitalized." The Seattle bank is to present a plan to increase its capital later this month. The Seattle bank and several others have had to cancel or reduce dividends and restrict repurchases of stock in an effort to shore up capital.
Results at the 12 regional banks benefited from $979 million of net gains on derivative contracts and hedging activities, compared with $364 million of such gains in the year-earlier quarter. But results were hurt by $437 million of write-downs in the value of private-label mortgage securities, ones that aren't backed by the government. Heavy losses on such securities have depleted the capital of some of the home-loan banks over the past year.
The banks' combined capital, on the basis of generally accepted accounting principles, was $45.9 billion as of June 30, down 11% from Dec. 31, 2008. The Federal Housing Finance Agency, which regulates the home-loan banks, recently found that the Federal Home Loan Bank of Seattle is "undercapitalized." The Seattle bank is to present a plan to increase its capital later this month. The Seattle bank and several others have had to cancel or reduce dividends and restrict repurchases of stock in an effort to shore up capital.
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