Federal Home Loan Bank of Seattle late Monday announced a fourth-quarter loss of $241.2 million and a full-year net loss of $199.4 million, compared with a net income of $18.6 million and $70.7 million in the fourth quarter and full-year 2007. Private-label mortgage-backed securities drove $304.2 million in charges for the year. These “other-than-temporary” charges, although somewhat offset by $178.6 million in net interest income for 2008, exhausted the $148.7 million the bank held in retained earnings as of Dec. 31, 2007. “The Seattle Bank’s financial results reflect the effects of mark-to-market accounting treatment for private-label mortgage-backed securities that are other-than-temporarily impaired,” bank officials said in a statement. Bank president and CEO Richard Riccobono in mid-January distributed a letter to the bank’s members acknowledging the bank would likely report a failure to meet risk-based capital minimums as of Dec. 31. The overall tone of the memo was one of regret, as Riccobono wrote he believed the way risk-based capital is currently calculated “significantly overstates our market risk,” given the state of the financial market and the bank’s nearly $2.8 billion in permanent capital. The bank on Monday reported that as of Dec. 31, it had a total capital-to-assets ratio of 4.6 percent and a leverage ratio of 6.8 percent, remaining in compliance with both requirements. But the distressed prices of some of Seattle Bank’s held-to-maturity MBS resulted in a risk-based capital deficiency as of Feb. 28. Federal regulations prevent any FHLB that fails to meet capital requirements from declaring a dividend or redeeming (repurchasing) capital stock. “We are more than disappointed by these results, particularly in light of the significant gains we have made over the past several years,” Riccobono said in a statement. “I want to stress, however, that even in this very challenging time for our industry and our economy, we continue to fulfill our mission by serving as a steady source of liquidity and funding for the members of the Seattle Bank cooperative.” Write to Diana Golobay at [email protected].