ATLANTA, March 24 /PRNewswire/ -- The Federal Housing Finance Board
(Finance Board) has published a proposed rule that would require the Federal
Home Loan Banks (FHLBanks) to maintain a minimum amount of retained earnings,
limit the amount of stock that an FHLBank may allow to remain outstanding
beyond any required minimum investment in the Bank by its members (excess
stock), and impose restrictions on the timing and form of dividend payments by
the FHLBanks.
Under the proposed rule, each FHLBank would be required to hold minimum
retained earnings in an amount equal to $50 million plus one percent of all of
the FHLBank's non-advance assets, calculated each calendar quarter. Until an
FHLBank reached this amount of retained earnings, the proposed rule would
limit dividend payments by the FHLBank to 50 percent of the FHLBank's net
income. The proposal also would prohibit an FHLBank from paying any dividend
without Finance Board approval if, after meeting its retained earnings
requirement, the FHLBank's retained earnings were to fall below its minimum
requirement, until such time as the FHLBank once again meets its minimum
requirement. The Finance Board retains the right under the proposed rule to
impose a higher retained earnings requirement on any FHLBank for safety and
soundness reasons.
Beyond the retained earnings requirements, the proposed rule provides that
an FHLBank may pay dividends based only upon actual net income results for any
calendar quarter. The proposed rule would limit excess stock in any FHLBank to
one percent of that FHLBank's total assets and would prohibit the FHLBanks
from issuing dividends in the form of stock.
Based upon its preliminary analysis and information currently available,
FHLBank Atlanta "the Bank" anticipates that it would be in compliance with the
proposed retained earnings requirement after the completion of two quarters
following the Finance Board's adoption of a final rule. During such time, the
Bank's dividends would be significantly less than those historically paid by
the Bank. Furthermore, future dividend payments after the Bank initially
satisfies the minimum retained earnings requirement may be below historic
levels in order to continue to comply with the proposed rule's minimum
retained earnings requirement.
The proposal requiring dividend payments to be declared and paid based
upon actual net income results may affect the timing of the Bank's dividend
payments. Historically, the Bank declared dividends based upon actual and
estimated results for a particular quarter and paid the dividend on the first
business day following completion of the quarter. The proposed rule may delay
dividend payments until the month following a quarter's end.
Because of the Bank's current policies and procedures with respect to
excess stock, the Bank does not believe that the proposed excess stock
limitations would affect the Bank. Further, the Bank has not paid stock
dividends in recent years and does not believe that the proposed prohibition
on stock dividends would affect the Bank.
The full text of the proposed rule may be found on the Government &
Industry Relations page of the Bank's website at http://www.fhlbatl.com. The proposed
rule is open for public comment through July 13, 2006. Comments may be
provided in writing by e-mail to comments@fhfb.gov, by fax at 202.408.2580, or
by mail or delivery to the Federal Housing Finance Board, Attention: Public
Comments, 1625 Eye Street, N.W., Washington, D.C. 20006. The Bank is preparing
a comment letter on the proposed rule. When complete, the Bank will post its
comments on its website at http://www.fhlbatl.com.
About FHLBank Atlanta
FHLBank Atlanta is a $143 billion financial services organization that
provides low-cost financing, community development grants, and other banking
services to more than 1,200 financial institutions in Alabama, Florida,
Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District
of Columbia. FHLBank Atlanta is one of 12 district banks in the Federal Home
Loan Bank System, which since 1990 has contributed more than $2 billion to
affordable housing development in the United States.
Some of the statements made in this press release may be "forward-looking
statements," which include statements related to the Bank's anticipated
compliance with the proposed retained earnings requirement and other
anticipated effects of the proposed rule, and include other statements with
respect to the Bank's beliefs, plans, objectives, goals, expectations,
anticipations, assumptions, estimates, intentions, and future performance.
These statements involve known and unknown risks, uncertainties, and other
factors, many of which may be beyond the Bank's control, and which may cause
the Bank's actual results, performance, or achievements to be materially
different from future results, performance, or achievements expressed or
implied by the forward-looking statements.
The forward-looking statements may not be realized due to a variety of
factors, including future economic and market conditions; changes in demand
for advances or consolidated obligations; changes in interest rates;
legislative and regulatory changes; the registration process with the SEC;
political, national, and world events; and adverse developments or events
affecting or involving other FHLBanks or the FHLBank System in general.
Additional factors that might cause the Bank's results to differ from these
forward-looking statements are provided in detail in our filings with the
Securities and Exchange Commission, which are available at http://www.sec.gov.
SOURCE Federal Home Loan Bank of Atlanta
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Related links:
http://www.fhlbatl.com
Company News On-Call:
http://www.prnewswire.com/comp/149931.html
CONTACT:
Stella Lang of Federal Home Loan Bank of
Atlanta, +1-404-888-5583, or slang@fhlbatl.com
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