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Fitch Affirms Sr and Upgrades Sub Notes of Nelnet Student Loan Trust 2012-6

NEW YORK–(BUSINESS WIRE)–

Fitch Ratings affirms the senior student loan notes at ‘AAAsf’ and upgrades the subordinate notes to ‘AAsf’ from ‘A+sf’ issued by Nelnet Student Loan Trust 2012-6. The Rating Outlook on all the notes, which is tied to the sovereign rating of the U.S. government, is Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral is comprised of 100% of Federal Family Education Loan Program (FFELP) loans including about 21% of rehabilitated FFELP loans. The credit quality of the trust collateral is high, in Fitch’s opinion, based on the guarantees provided by the transaction’s eligible guarantors and at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED).

Sufficient Credit Enhancement: Cash flows scenarios for the class A and B notes were satisfactory under Fitch’s stresses. Total parity is 101.01% and senior parity is 104.16%. Total credit enhancement (CE) is provided by overcollateralization (OC), excess spread and, for the class A notes, subordination provided by the class B notes. Excess cash may be released from the trust as long as CE OF 1% of the adjusted pool balance or $2 million is maintained.

Liquidity Support: Liquidity support is provided by a reserve account (0.65% of outstanding notes).

Acceptable Servicing Capabilities: Nelnet, Pennsylvania Higher Education Assistance Agency (PHEAA) and EFS are servicers of this trust. In Fitch’s opinion, all servicers are acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, ‘AAAsf’ FFELP ABS ratings will likely move in tandem with the ‘AAA’ U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch’s published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has taken the following rating actions:

Nelnet Student Loan Trust 2012-6:

–Class A affirmed at ‘AAAsf’; Outlook Stable;

–Class B upgraded to ‘AAsf’ from ‘A+sf’; Outlook Stable.

Additional information is available at ‘www.fitchratings.com

Applicable Criteria and Related Research:

–’Global Structured Finance Rating Criteria’ dated Aug. 4, 2014;

–’Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria’ dated June 23, 2014.

–’Nelnet Student Loan Trust 2012-6 (US ABS)’, dated Nov. 30, 2012.

A comparison of the transaction’s RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:

‘Nelnet Student Loan Trust 2012-6 — Appendix’, dated Nov. 30, 2012.

‘Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions’, dated Oct. 31, 2014.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

Nelnet Student Loan Trust 2012-6 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695748

Nelnet Student Loan Trust 2012-6 — Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695791

Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=799248

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=913574

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Security Upgrades & DowngradesFinanceFitch RatingsNelnetstudent loanFFELP
Contact:

Fitch Ratings

Primary Analyst

Victoria Ohorodnyk

Associate Director

+1-212-908-0866

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Tracy Wan

Senior Director

+1-212-908-9171

or

Media Relations

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

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Fitch Affirms Sr and Upgrades Sub Notes of Nelnet Student Loan Trust 2012-6

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Banks get generous to hook clients

Advisers warn mortgage deals offering electronics, cash, furniture may cost people more in long run

Banks are offering cash, TVs and furniture vouchers to entice customers into taking out home loan. Photo / Thinkstock

Banks are offering cash, TVs and furniture vouchers to entice customers into taking out home loans – but experts warn consumers not to be taken in, or it could cost them tens of thousands of dollars.

ASB is offering potential customers a Sony 48-inch TV and PlayStation 4 with new loans of $250,000 or more, while Kiwibank recently offered $2000 cash or a $2500 Freedom Furniture gift card for those willing to transfer their everyday banking and loan to the bank.

ANZ is offering between $1500 and $2000 cash, depending on the loan amount, while Westpac is offering a “healthy cash bonus” with loans worked out with customers “on a case-by-case basis”.

But Karen Tatterson of the Professional Advisers Association said consumers should be wary because there was “no such thing as a free lunch”.

Some people could be tempted by gimmicks and inadvertently sign away tens of thousands of dollars refinancing their loan for a bit of extra cash, she said.

“You have to be very careful your loan isn’t going back to a term that’s longer than you’ve currently got. Banks always write a loan over 30 years, so if you refinance to another bank and you’re 22 years into your home loan, make sure you keep it at the current loan term.

“If you go from a 22 to a 30-year term it could add $20,000 or $30,000 interest to the cost of your loan.”

David Chaston of finance website interest.co.nz said the value of loan incentives depended on how they were used.

“If you’re able to negotiate a good deal with the bank, ignoring the incentive, and then you add the incentive as a bonus you have a very good deal,” he said.

“And you have an even better deal if you can use the cash incentives to pay down your loan.”

Real Estate Institute head Helen O’Sullivan said an increase in marketing activity from banks usually coincided with the spring property uplift, but also warned consumers to be wary of temptation.

“You’ve got to weigh up the value of it with the overall package that is being offered …

“Don’t get blinded to the downside of the financial cost of something because of the excitement of getting a new PlayStation.”

ASB’s head of home lending and small business Vince Clark said the bank’s spring package was in reaction to it being a typically busier season for house sales activity.

Kiwibank spokesman Bruce Thompson said its promotion was designed to keep the bank on mortgage shoppers’ radars.

“It’s a very competitive market and Kiwibank has never taken the approach of sitting back and waiting for the phone to ring.”

ANZ head of mortgages Sarah Berry said the bank had offered cash with home lending since 2012 and the home loan market in New Zealand was very competitive.

Westpac said every customer’s situation was different and the bank worked with them on a case-by-case basis to ensure they have the right solution for their circumstances.

- NZ Herald

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Banks get generous to hook clients

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Shop RTO Website Releases Tips On The Retail Consumer Option Of '90 Days Same As Cash'

Here’s %category%-related post from
cash loan – Yahoo News Search Results:

Use ’90 Days Same As Cash’ wisely

Rent to own avoids the legal obligation of debt as credit is never extended.

Austin, TX (PRWEB) October 31, 2014

Affordable home living website, Shop RTO, explores the different aspects of the ’90 Days Same as Cash’ promotions many retail stores offer. They offer the following explanations and tips to make sure consumers use the option wisely.

Many retailers, rent to own furniture stores and short-term loans offer ’90 days same as cash’. Each are different in the their terms and obligations so consumers must pay close attention to the details of the offer.

If used wisely and for certain circumstances, ’90 days same as cash’ can offer consumers the ability to buy home furnishings or for a loan but experts say to use the option with fiduciary responsibility to maximize its benefits.

The advertised special states if the customer can pay off the item or loan within 90 days then no interest is charged or additional fees. Rent to own furniture stores are one of most popular retailers to offer the special and makes the most sense if shopping under uncertain circumstances.

Most rent to own stores offer the ’90 days’ option and many go even further up to 180 days. If consecutive payments are made within the 90 days then the home furnishing is purchased at the same cost as the cash price.

The rent to own transaction differs greatly from traditional retail because rent to own avoids the legal obligation of debt as credit is never extended in a rent to own agreement. With rent to own, the customer can return the product at any time for any reason without penalty and legal obligation.

If the customer cannot fulfill the payments within the 90 days then rent to own payments are changed according to the customer. The customer can choose lesser amount of payments, lesser number of payments or a combination. Experts always stress with any payment plan that the less payments, the more money is saved.

The fact that payments have already been made guarantees a reasonable final price. Consumer experts advise shoppers make sure the original cash price advertised aligns with the cash price on the market. And, to shop around as cash prices can vary widely amongst different rent to own companies.

The ’90 days same as cash’ retail option is the same premise as rent to own but it is a legally obligated debt the customer must pay. If the customer cannot make the payments within the 90 days then interest is charged and many times higher interest than a credit card, sometimes up to 20-24%. Experts urge consumers to ask what the fees, interest or costs will occur if the ’90 days same as cash’ is not fulfilled.

In retail the ’90 days same as cash’ price is a good deal but are counting on you to not be able to complete the payments which triggers additional fees, penalties and interest. Experts warn consumers to be fully explained each of these factors prior to signing the contract.

’90 days same as cash’ specials are also loans. Those offers are good if the customer is in a bind and is confident the loan will be paid off. Experts warn against the 90 days loans for loans more than $1000. And to ask in full detail and disclosure the terms and fees that are incurred if the loan cannot be paid within those 90 days.

Shop RTO stresses that any ’90 days same as cash’ can be a good option but only with discipline and a financially calculated plan to pay the amount within the 90 days.

About Shop RTO:

ShopRTO.com provides consumers home living and decorating tips and rent to own as a shopping option for affordable home furniture and more.


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Shop RTO Website Releases Tips On The Retail Consumer Option Of '90 Days Same As Cash'

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Fitch Rates Sound Harbor Loan Fund 2014-1 Ltd./LLC

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RAIT Financial Trust Announces Third Quarter 2014 Financial Results

From
cash loan – Yahoo News Search Results:

PHILADELPHIA–(BUSINESS WIRE)–

RAIT Financial Trust (“RAIT”) (RAS) today announced third quarter
2014 financial results.

Financial Performance

Total revenues grew 20.7% to $75.3 million for the quarter ended
September 30, 2014 from $62.4 million for the quarter ended September
30, 2013.

Cash Available for Distribution (“CAD”) per share was $0.00 for the
quarter ended September 30, 2014 as a result of the previously
announced SEC settlement charge pertaining to Taberna Capital
Management of $21.5 million or $0.26 per share.

Dividends

On September 15, 2014, RAIT declared a third quarter 2014 common
dividend of $0.18 per share, representing a 20% increase from the
third quarter 2013 common dividend of $0.15 per common share. The
third quarter common dividend record date was October 7, 2014 and will
be paid on October 31, 2014. RAIT’s board expects to declare a fourth
quarter dividend of at least $0.18 per common share.

CRE Loan Portfolio

Investments in mortgages and loans increased 22.0% to $1.37 billion at
September 30, 2014 from $1.12 billion at December 31, 2013.

RAIT originated $255.8 million of loans during the quarter ended
September 30, 2014 consisting of $102.1 million bridge loans and
$153.7 million conduit loans. RAIT originated $726.5 million of loans
for the nine-month period ended September 30, 2014.

RAIT sold $119.6 million of conduit loans during the quarter ended
September 30, 2014 which generated $3.5 million of fee income.

CRE Property Portfolio

Average effective rent per unit per month in RAIT’s multifamily
portfolio increased 6.6% to $811 for the quarter ended September 30,
2014 from $761 for the quarter ended September 30, 2013.

As of September 30, 2014, RAIT’s investments in real estate increased
39% to $1.4 billion from $1.0 billion at December 31, 2013.

Rental income increased 43% to $41.8 million during the quarter ended
September 30, 2014 from $29.2 million for the quarter ended September
30, 2013 driven largely by the acquisition of 20 properties subsequent
to September 30, 2013 which generated $11.0 million of rental income
during the quarter ended September 30, 2014.

Assets Under Management

Assets under management increased 52% to $5.4 billion at September 30,
2014 from $3.6 billion at December 31, 2013 due primarily to inclusion
of third party retail properties managed by RAIT’s retail-focused
property manager beginning in 2014.

Liquidity

In August 2014, RAIT issued $71.9 million aggregate principal amount
of its 7.125% Senior Notes due 2019 (RFTA) in an underwritten
public offering. RAIT received approximately $69.2 million of net
proceeds.

Scott Schaeffer, RAIT’s Chairman and CEO, said, “We continue executing
on our multi-strategy approach to investing in commercial real-estate.
During the third quarter, gross loan originations increased 53% to
$255.8 million when compared to the third quarter of 2013. Our property
portfolio grew through acquisitions and increasing rents which led to a
43% increase in rental income and a 53% increase in net operating income
since September 30, 2013. As previously announced, we are undertaking to
exit the legacy Taberna business with a goal of completing the process
by December 31, 2014.”

Financial Results

RAIT reported CAD, a non-GAAP financial measure, for the three-month
period ended September 30, 2014 of $(0.4) million, or $0.00 per share –
diluted based on 82.0 million weighted-average shares outstanding –
diluted, as compared to CAD for the three-month period ended September
30, 2013 of $15.9 million, or $0.23 per share – diluted based on 70.2
million weighted-average shares outstanding – diluted. RAIT reported a
net loss allocable to common shares for the three-month period ended
September 30, 2014 of $23.3 million, or $0.28 total loss per share –
diluted based on 82.0 million weighted-average shares outstanding –
diluted, as compared to net loss allocable to common shares for the
three-month period ended September 30, 2013 of $17.1 million, or $0.24
total loss per share – diluted based on 70.2 million weighted-average
shares outstanding – diluted. The third quarter 2014 net loss includes
$10.2 million of unrealized losses relating primarily to non-cash
mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the
associated hedges and the $21.5 million SEC settlement charge pertaining
to Taberna Capital Management. Non-cash mark-to-market gains and losses
are excluded from CAD.

RAIT reported CAD for the nine-month period ended September 30, 2014 of
$36.6 million, or $0.45 per share – diluted based on 81.1 million
weighted-average shares outstanding – diluted, as compared to CAD for
the nine-month period ended September 30, 2013 of $38.7 million, or
$0.58 per share – diluted based on 66.8 million weighted-average shares
outstanding – diluted. RAIT reported a net loss allocable to common
shares for the nine-month period ended September 30, 2014 of $63.5
million, or $0.78 total loss per share – diluted based on 81.1 million
weighted-average shares outstanding – diluted, as compared to net loss
allocable to common shares for the nine-month period ended September 30,
2013 of $173.5 million, or $2.60 total loss per share – diluted based on
66.8 million weighted-average shares outstanding – diluted. The
nine-month period ended September 30, 2014 net loss includes $59.4
million of unrealized losses relating primarily to non-cash
mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the
associated hedges. Non-cash mark-to-market gains and losses are excluded
from CAD.

A reconciliation of RAIT’s reported net income (loss) allocable to
common shares to its CAD is included as Schedule I to this release. A
reconciliation of RAIT’s total shareholders’ equity to its adjusted book
value, a non-GAAP financial measure, is included as Schedule II to this
release. A reconciliation of RAIT’s net income (loss) allocable to
common shares to its funds from operations (“FFO)”, a non-GAAP financial
measure, and adjusted funds from operations (“AFFO”), a non-GAAP
financial measure, is included as Schedule III to this release. These
Schedules also include management’s respective rationales for the
usefulness of each of these non-GAAP financial measures.

 

 

 

 

 

Key Statistics

(Unaudited and dollars in thousands, except per share information)

 

As of or For the Three-Month Periods Ended

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

Financial Statistics:

 

Total revenue

$75,293

$73,256

$67,308

$67,607

$62,395

Earnings (loss) per share – diluted

$(0.28)

$(0.31)

$(0.18)

$(1.90)

$(0.24)

CAD per share, diluted

$0.00(5)

$0.24

$0.22

$0.27

$0.23

Common dividend declared per share

$0.18

$0.18

$0.17

$0.16

$0.15

Assets under management

$5,417,579

$5,266,296

$5,119,805

$3,595,530

$3,567,675

FFO per share, diluted

$(0.17)

$(0.20)

$(0.07)

$(1.74)

$(0.12)

 

Commercial Real Estate (“CRE”) Loan Portfolio:

CRE loans– unpaid principal

$1,369,138

$1,325,748

$1,228,452

$1,115,949

$1,103,272

Non-accrual loans — unpaid principal

$40,741

$30,269

$28,019

$37,073

$45,337

Non-accrual loans as a % of reported loans

3.0%

2.3%

2.3%

3.3%

4.1%

Reserve for losses

$15,662

$15,336

$14,279

$22,955

$23,317

Reserves as a % of non-accrual loans

38.4%

50.7%

51.0%

61.9%

51.4%

Provision for losses

$1,500

$1,000

$1,000

$1,500

$500

 

CRE Property Portfolio:

Reported investments in real estate(1)

$1,400,715

$1,268,769

$1,205,995

$1,004,186

$986,296

Net operating income(1)

$20,932

$19,524

$17,093

$13,919

$13,712

Number of properties owned(1)

80

74

71

62

61

Multifamily units owned(1)

13,516

12,388

12,014

9,372

8,940

Office square feet owned

2,286,284

2,248,321

2,097,022

2,009,852

2,015,524

Retail square feet owned

1,790,969

1,420,909

1,420,909

1,421,059

1,421,059

Land (acres owned)

21.92

21.92

21.92

21.92

21.92

 

Average occupancy data:

Multifamily(1)

92.7%

92.8%

93.3%

92.2%

92.5%

Office

75.0%

74.3%

74.8%

75.6%

74.1%

Retail

73.3%

67.5%

66.6%

69.0%

68.9%

 

Average Effective Rent per Unit/Square Foot (2):

Multifamily (1)(3)

$811

$799

$767

$763

$761

Office (4)

$19.64

$20.10

$18.70

$18.40

$19.45

Retail (4)

$12.68

$12.50

$12.44

$12.11

$12.05

 

(1)

Includes 22 apartment properties owned by RAIT’s consolidated
subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT),
with 6,470 units and a book value of $423.2 million as of September
30, 2014. At September 30, 2014, RAIT owned 28% of IRT’s outstanding
common stock.

(2)

Based on properties owned as of September 30, 2014.

(3)

Average effective rent is rent per unit per month.

(4)

Average effective rent is rent per square foot per year.

(5)

Includes $0.26 SEC settlement charge pertaining to Taberna Capital
Management. Excluding this one-time item CAD per share would have
been $0.26 per common share.

 

Conference Call

All interested parties can listen to the live conference call webcast at
9:00 AM ET on Thursday, October 30, 2014 from the home page of the RAIT
Financial Trust website at www.rait.com
or by dialing 877.703.6109, access code 80662508. For those who are not
available to listen to the live call, the replay will be available
shortly following the live call on RAIT’s website and telephonically
until Thursday, November 6, 2014, by dialing 888.286.8010, access code
88214660.

About RAIT Financial Trust

RAIT Financial Trust is an internally-managed real estate investment
trust that provides debt financing options to owners of commercial real
estate and invests directly into commercial real estate properties
located throughout the United States. In addition, RAIT is an asset and
property manager of real estate-related assets. For more information,
please visit www.rait.com
or call Investor Relations at 215.243.9000.

Forward-Looking Statements

This press release may contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements can generally be identified by our use of
forward-looking terminology such as “may,” “trend”, “will,” “continue,”
“expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward”
or other similar words or terms. Because such statements include risks,
uncertainties and contingencies, actual results may differ materially
from the expectations, intentions, beliefs, plans or predictions of the
future expressed or implied by such forward-looking statements. These
risks, uncertainties and contingencies include, but are not limited to,
the current uncertainty in the global financial markets and the global
economy; the risk that the settlement with the SEC will not be finalized
and/or approved or that any final settlement will have different or
additional material terms, the risk that RAIT will not be able to commit
to or complete exiting the Taberna business, whether RAIT’s actual
business performance, developments and ability to access the capital
markets and economic conditions affecting commercial real estate will
affect RAIT’s ability to realize its ability to pay the fourth quarter
2014 dividend and those disclosed in RAIT’s filings with the Securities
and Exchange Commission. RAIT undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events, except
as may be required by law.

 

 

 

RAIT Financial Trust

Consolidated Statements of Operations

(Dollars in thousands, except share and per share information)

(unaudited)

 

For the Three-Month

For the Nine-Month

Periods Ended

Periods Ended

September 30,

September 30,

Revenues:

2014

 

2013

2014

 

2013

Net interest margin:

 

 

Investment Interest income

$

33,273

$

32,730

$

102,882

$

95,266

Investment Interest expense

 

(7,636)

 

 

(8,235)

 

(22,342)

 

 

(22,996)

Net interest margin

25,637

24,495

80,540

72,270

Rental income

41,814

29,233

116,204

84,260

Fee and other income

 

7,842

 

 

8,667

 

19,113

 

 

22,738

Total revenue

75,293

62,395

215,857

179,268

Expenses:

Interest expense

13,910

10,052

38,756

29,696

Real estate operating expense

20,882

15,521

58,655

44,842

Compensation expense

7,187

6,565

23,118

19,849

General and administrative expense

4,756

3,046

13,239

10,384

Acquisition expense

816

199

1,408

199

Provision for losses

1,500

500

3,500

1,500

Depreciation and amortization expense

 

13,236

 

 

8,784

 

38,719

 

 

25,972

Total expenses

 

62,287

 

 

44,667

 

177,395

 

 

132,442

Operating income

13,006

17,728

38,462

46,826

Other income (expense)

(21,464)

(3,849)

(21,449)

(3,704)

Gains (losses) on assets

25

(191)

(5,350)

30

Gains (losses) on extinguishment of debt

-

-

2,421

-

Change in fair value of financial instruments

 

(10,223)

 

 

(24,659)

 

(59,433)

 

 

(200,436)

Income (loss) before taxes and discontinued operations

(18,656)

(10,971)

(45,349)

(157,284)

Income tax benefit (provision)

 

2,194

 

 

(164)

 

2,454

 

 

470

Net income (loss)

(16,462)

(11,135)

(42,895)

(156,814)

(Income) loss allocated to preferred shares

(7,407)

(6,024)

(20,628)

(16,831)

(Income) loss allocated to noncontrolling interests

 

603

 

 

53

 

20

 

 

130

Net income (loss) allocable to common shares

$

(23,266)

 

$

(17,106)

$

(63,503)

 

$

(173,515)

Earnings (loss) per share—Basic:

Total earnings (loss) per share—Basic

$

(0.28)

 

$

(0.24)

$

(0.78)

 

$

(2.60)

Weighted-average shares outstanding—Basic

 

81,967,806

 

 

70,192,918

 

81,111,796

 

 

66,807,299

Earnings (loss) per share—Diluted:

Total earnings (loss) per share—Diluted

$

(0.28)

 

$

(0.24)

$

(0.78)

 

$

(2.60)

Weighted-average shares outstanding—Diluted

 

81,967,806

 

 

70,192,918

 

81,111,796

 

 

66,807,299

 

 

RAIT Financial Trust

Consolidated Balance Sheets

(Dollars in thousands, except share and per share information)

(unaudited)

 

As of

As of

September 30,

December 31,

2014

 

2013

Assets

Investments in mortgages and loans, at amortized cost:

Commercial mortgages, mezzanine loans, other loans and preferred
equity interests

$

1,369,782

$

1,122,377

Allowance for losses

 

(15,662)

 

 

(22,955)

Total investments in mortgages and loans

1,354,120

1,099,422

Investments in real estate, net of accumulated depreciation of
$155,815 and $127,745, respectively

1,400,715

1,004,186

Investments in securities and security-related receivables, at fair
value

568,279

567,302

Cash and cash equivalents

116,767

88,847

Restricted cash

133,374

121,589

Accrued interest receivable

54,929

48,324

Other assets

78,948

57,081

Deferred financing costs, net of accumulated amortization of $23,830
and $17,768, respectively

25,141

18,932

Intangible assets, net of accumulated amortization of $10,940 and
$4,564, respectively

 

23,944

 

 

21,554

Total assets

$

3,756,217

 

$

3,027,237

 

Liabilities and Equity

Indebtedness:

Recourse indebtedness

$

501,273

$

235,011

Non-recourse indebtedness

 

2,112,044

 

 

1,851,390

Total indebtedness

2,613,317

2,086,401

Accrued interest payable

34,164

26,936

Accounts payable and accrued expenses

58,579

32,447

Derivative liabilities

81,998

113,331

Deferred taxes, borrowers’ escrows and other liabilities

 

132,200

 

 

79,462

Total liabilities

2,920,258

2,338,577

 

Series D Preferred Shares, 4,000,000 shares authorized,
4,000,000 and 2,600,000 shares issued and outstanding

76,176

52,970

Equity:

Preferred shares, $0.01 par value per share, 25,000,000 shares
authorized:

7.75% Series A cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 8,069,288 and 4,760,000 shares
authorized, 4,075,569 and 4,069,288 shares issued and outstanding

41

41

8.375% Series B cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,300,000 shares authorized, 2,288,465
shares issued and outstanding

23

23

8.875% Series C cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 3,600,000 shares authorized, 1,640,100
shares issued and outstanding

17

17

Series E cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,000,000 shares authorized

-

-

Common shares, $0.03 par value per share, 200,000,000 shares
authorized, 82,509,635 and 71,447,437 issued and outstanding,
including 541,575 and 369,500 unvested restricted common share awards

2,474

2,143

Additional paid in capital

2,008,814

1,920,455

Accumulated other comprehensive income (loss)

(43,039)

(63,810)

Retained earnings (deficit)

 

(1,364,168)

 

 

(1,257,306)

Total shareholders’ equity

604,162

601,563

Noncontrolling interests

 

155,621

 

 

34,127

Total equity

 

759,783

 

 

635,690

Total liabilities and equity

$

3,756,217

 

$

3,027,237

 

 

 

 

 

Schedule I

RAIT Financial Trust

Reconciliation of Net income (loss) Allocable to Common Shares and

Cash Available for Distribution (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

For the Three-Month Period
Ended September 30,

 

 

 

For the Nine-Month Period Ended
September 30,

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

Amount

Per Share (2)

Amount

Per Share (3)

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

Cash Available for Distribution:

Net income (loss) allocable to common shares

$(23,266)

$ (0.28)

$(17,106)

$(0.24)

$(63,503)

$ (0.77)

$(173,515)

$(2.60)

Adjustments:

Depreciation and amortization expense

13,236

0.16

8,784

0.13

38,719

0.47

25,972

0.39

Change in fair value of financial instruments

10,223

0.13

24,659

0.35

59,433

0.73

200,436

3.00

(Gains) losses on assets

(25)

0.00

191

0.00

5,350

0.07

(30)

0.00

(Gains) losses on extinguishment of debt

-

-

-

-

(2,421)

(0.03)

-

-

Taberna VIII and Taberna IX securitizations, net effect

(6,975)

(0.09)

(8,176)

(0.12)

(21,063)

(0.26)

(26,178)

(0.39)

Straight-line rental adjustments

(238)

0.00

(428)

(0.01)

(329)

0.00

(1,394)

(0.02)

Share-based compensation

1,148

0.01

1,096

0.02

3,777

0.05

2,562

0.04

Origination fees and other deferred items

5,718

0.07

6,807

0.10

15,450

0.18

9,785

0.15

Provision for losses

1,500

0.02

500

0.01

3,500

0.04

1,500

0.02

Noncontrolling interest effect from certain adjustments

(1,716)

 

(0.02)

 

(405)

 

(0.01)

 

(2,351)

 

(0.03)

 

(414)

 

(0.01)

Cash Available for Distribution

$(395)

 

$0.00

 

$15,922

 

$0.23

 

$36,562

 

$0.45

 

$38,724

 

$0.58

 

(1)

Cash available for distribution, or CAD, is a non-GAAP financial
measure. We believe that CAD provides investors and management with
a meaningful indicator of operating performance. Management also
uses CAD, among other measures, to evaluate profitability and our
board of trustees considers CAD in determining our quarterly cash
dividends. We also believe that CAD is useful because it adjusts for
a variety of noncash items (such as depreciation and amortization,
equity-based compensation, realized gain (loss) on assets, provision
for loan losses and non-cash interest income and expense items).
Furthermore, CAD removes the effect from our consolidation of the
legacy Taberna securitizations.

 

We calculate CAD by subtracting from or adding to net income (loss)
attributable to common shareholders the following items:
depreciation and amortization items including, depreciation and
amortization, straight-line rental income or expense, amortization
of in place leases, amortization of deferred financing costs,
amortization of discount on financings and equity-based
compensation; changes in the fair value of our financial
instruments, including such changes reflected in our consolidated
Taberna securitizations; net interest income from consolidated
Taberna securitizations; realized gain (loss) on assets and other;
provision for loan losses; impairment on depreciable property;
acquisition gains or losses and transaction costs; certain fee
income eliminated in consolidation that is attributable to third
parties and one-time events pursuant to changes in U.S. GAAP and
certain other non-recurring items.

 

CAD should not be considered as an alternative to net income (loss),
determined in accordance with U.S. GAAP, as an indicator of
operating performance. In addition, our methodology for calculating
CAD may differ from the methodologies used by other comparable
companies, including other REITs, when calculating the same or
similar supplemental financial measures and may not be comparable
with these companies. In these Schedules, references to “we”, “us”,
and “our” refer to RAIT Financial Trust and its subsidiaries.

 

(2)

Based on 81,967,806 and 81,111,796 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2014.

 

(3)

Based on 70,192,918 and 66,807,299 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2013.

 

Schedule II

RAIT Financial Trust

Reconciliation of Shareholders’ Equity to Adjusted Book Value (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

As of September 30, 2014

Amount

 

Per Share (2)

 

Total shareholders’ equity

$ 604,162

$ 7.32

Liquidation value of preferred shares characterized as equity(3)

(200,103)

(2.42)

Book value

404,059

4.90

Adjustments:

Taberna VIII and Taberna IX securitizations, net effect

(214,101)

(2.59)

RAIT I and RAIT II derivative liabilities

25,127

0.30

Change in fair value for warrants and investor SARs

6,766

0.08

Accumulated depreciation and amortization

198,901

2.41

Valuation of recurring collateral, property management fees and
other items (4)

88,827

1.08

Total adjustments

$ 105,520

$ 1.28

Adjusted book value

$ 509,579

$ 6.18

 

(1)

Management views adjusted book value as a useful and appropriate
supplement to shareholders’ equity and book value per share. The
measure serves as an additional measure of our value because it
facilitates evaluation of us without the effects of various items
that we are required to record in accordance with GAAP but which
have limited economic impact on our business. Those adjustments
primarily reflect the effect of consolidated securitizations where
we do not currently receive cash flows on our retained interests,
accumulated depreciation and amortization, the valuation of
long-term derivative instruments and a valuation of our recurring
collateral and property management fees. Adjusted book value is a
non-GAAP financial measurement, and does not purport to be an
alternative to reported shareholders’ equity, determined in
accordance with GAAP, as a measure of book value. Adjusted book
value should be reviewed in connection with shareholders’ equity as
set forth in our consolidated balance sheets, to help analyze our
value to investors. Adjusted book value may be defined in various
ways throughout the REIT industry. Investors should consider these
differences when comparing our adjusted book value to that of other
REITs.

 

(2)

Based on 82,509,635 common shares outstanding as of September 30,
2014.

 

(3)

Based on 4,075,569 Series A preferred shares, 2,288,465 Series B
preferred shares, and 1,640,100 Series C preferred shares
outstanding as of September 30, 2014, all of which have a
liquidation preference of $25.00 per share.

 

(4)

Includes the estimated value of the (1) property management and
collateral management fees to be received by RAIT as of September
30, 2014 from RAIT Residential and Urban Retail, and the Taberna I,
Taberna VIII, Taberna IX, RAIT I and RAIT II securitizations and (2)
advisory fees to be received by RAIT from IRT as of September 30,
2014 assuming the full deployment of IRT’s July 2014 common stock
offering. The other item included is the incremental market value of
RAIT’s ownership of 7.3 million shares of IRT common stock over
RAIT’s book value for these shares at September 30, 2014.

 

 

 

 

Schedule III

RAIT Financial Trust

Reconciliation of Net income (loss) Allocable to Common Shares and

Funds From Operations (“FFO”) and

Adjusted Funds From Operations (“AFFO”) (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

For the Three-Month Period
Ended September 30,

 

 

 

For the Nine-Month Period Ended
September 30,

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

 

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

Funds From Operations:

 

 

 

 

Net income (loss) allocable to common shares

$(23,266)

$ (0.28)

$(17,106)

$ (0.24)

$(63,503)

$ (0.78)

$(173,515)

$ (2.60)

Adjustments:

Real estate depreciation and amortization

9,116

0.11

8,517

0.12

27,250

0.34

24,540

0.37

(Gains) losses on the sale of real estate

(2)

 

0.00

 

191

 

0.00

 

319

 

0.00

 

1,517

 

0.02

Funds From Operations

$(14,152)

 

$(0.17)

 

$(8,398)

 

$(0.12)

 

$(35,934)

 

$(0.44)

 

$(147,458)

 

$(2.21)

 

Adjusted Funds From Operations:

Funds From Operations

$(14,152)

$(0.17)

$(8,398)

$(0.12)

$(35,934)

$(0.44)

$(147,458)

$(2.21)

Adjustments:

Change in fair value of financial instruments

10,223

0.12

24,659

0.35

59,433

0.73

200,436

3.00

(Gains) losses on debt extinguishment

-

-

-

-

(2,421)

(0.03)

-

-

Capital expenditures, net of direct financing

(1,754)

(0.02)

(889)

(0.01)

(3,696)

(0.05)

(1,858)

(0.03)

Straight-line rental adjustments

(238)

0.00

(428)

(0.01)

(329)

0.00

(1,394)

(0.02)

Amortization of deferred items and intangible assets

7,394

0.09

6,912

0.10

21,225

0.26

11,312

0.17

Share-based compensation

1,148

 

0.01

 

1,096

 

0.02

 

3,777

 

0.05

 

2,562

 

0.04

Adjusted Funds From Operations

$2,621

 

$0.03

 

$22,952

 

$0.33

 

$42,055

 

$0.52

 

$63,600

 

$0.95

 

(1)

We believe that funds from operations, or FFO, and adjusted funds
from operations, or AFFO, each of which are non-GAAP measures, are
additional appropriate measures of the operating performance of a
REIT and us in particular.

 

We compute FFO in accordance with the standards established by the
National Association of Real Estate Investment Trusts, or NAREIT, as
net income or loss allocated to common shares (computed in
accordance with GAAP), excluding real estate-related depreciation
and amortization expense, gains or losses on sales of real estate
and the cumulative effect of changes in accounting principles.

 

AFFO is a computation made by analysts and investors to measure a
real estate company’s cash flow generated by operations. We
calculate AFFO by adding to or subtracting from FFO: change in fair
value of financial instruments; gains or losses on debt
extinguishment; capital expenditures, net of any direct financing
associated with those capital expenditures; straight-line rental
effects; amortization of various deferred items and intangible
assets; and share-based compensation.

 

Our calculation of AFFO differs from the methodology used for
calculating AFFO by certain other REITs and, accordingly, our AFFO
may not be comparable to AFFO reported by other REITs. Our
management utilizes FFO and AFFO as measures of our operating
performance, and believes they are also useful to investors, because
they facilitate an understanding of our operating performance after
adjustment for certain non-cash items, such as real estate
depreciation, share-based compensation and various other items
required by GAAP that may not necessarily be indicative of current
operating performance and that may not accurately compare our
operating performance between periods. Furthermore, although FFO,
AFFO and other supplemental performance measures are defined in
various ways throughout the REIT industry, we also believe that FFO
and AFFO may provide us and our investors with an additional useful
measure to compare our financial performance to certain other REITs.

 

Neither FFO nor AFFO is equivalent to net income or cash generated
from operating activities determined in accordance with U.S. GAAP.
Furthermore, FFO and AFFO do not represent amounts available for
management’s discretionary use because of needed capital replacement
or expansion, debt service obligations or other commitments or
uncertainties. Neither FFO nor AFFO should be considered as an
alternative to net income as an indicator of our operating
performance or as an alternative to cash flow from operating
activities as a measure of our liquidity.

 

(2)

Based on 81,967,806 and 81,111,796 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2014.

 

(3)

Based on 70,192,918 and 66,807,299 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2013.

FinanceInvestment & Company Information
Contact:
RAIT Financial Trust

Andres Viroslav, 215-243-9000

aviroslav@rait.com

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RAIT Financial Trust Announces Third Quarter 2014 Financial Results

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Loan sharks 'no longer just men threatening violence'

They could be friends down the pub or a mum at a school gate – the truth is more subtle than most people think

Muscle-bound, male, and prone to threats of violence, is the public image of a loan shark.

The truth is more subtle.

Laura Derbyshire, money advice coordinator for Salix Homes, which manages Salford’s 8,000 council homes, says the extent of illegal money lending across the city is ‘huge’.

She said: “It is one of those taboo subjects that people don’t like to talk about. People might not realise they have taken a loan from a loan shark. it could be the mum you talk to at the school gates.

“The biggest impact is on people’s health. They are worrying about the knock on the door. It is so intimidating to not feel safe in your own home.”

“It could be a grandad, the friend down the pub you have known for five years.”

In March this year foster mum, Sandra Dawn Lowe, of Hulme, Manchester, was jailed for three years after being convicted of 16 counts of illegal money lending.

One victim ended up paying back £125,000 over seven years after borrowing £30,000.

Laura Derbyshire from Salix Homes

Special report: Loan sharks poised to strike in run up to Christmas 

Alec McFadden of Salford Credit Union, said: “It is often a middle-aged woman – she will have back up – but she will be the one knocking on the door – offering the loan. There will be no advertising – just word of mouth on who to go to for a loan.”

Ms Derbyshire said: “Loan sharks will threaten to take a victim’s car, take their bank cards and demand the pin number, so when cash is paid into an account they get it first.

“They will say ‘I know where your kids go to school. I know the way they walk home’.

“Because historically people in Salford don’t like to grass, they could be shouldering the burden of a loan shark on their own for a long time.

“A lot of it goes unreported. I think the two recent court cases in 2010 and 2013 involving Salford loan sharks were just the tip of the iceberg.

“The biggest impact is on people’s health. They are worrying about the knock on the door. It is so intimidating to not feel safe in your own home.

“It is a growing industry and more needs to be done to educate people that it is criminal behaviour. We need to start educating people at high school level of the dangers of falling into this cycle.

“The most important thing is to ask for help. If speaking out is going to risk putting one of our tenant’s at harm we would look at moving them.

“We have a specialist money advice team so we can help our tenants find a way out.”

 

Case Study: Loan shark victim left on brink of suicide

Matthew faced a stark choice after two years where his life had been ruled by an illegal money lender.

He sat in his living room with enough painkillers on the arm of his chair to kill himself.

In his hand, was the phone.

“I am so glad I made that call. Without the Illegal Money Lending Team I would not be here today.”

“It was a choice between ending my life and calling for help,” said Matthew.

“I decided I couldn’t leave my family so I called the Illegal Money Lending Team.”

The loan shark who had led him to the brink of suicide was arrested and prosecuted.

Matthew’s slide into despair started with a £20 loan to buy his family food.

It got out of control until he was borrowing £200 every fortnight and paying back £300 – most of his benefits.

The spiral of debt ended with him borrowing £900 and being told he owed £3,000.

In an attempt to shake off the loan shark, he sold his car, went without food, and borrowed £2,000 from family.

The lender turned up at his home after midnight, banging on his door demanding cash, and threatened to put in his windows.

Then he made him sit petrified in the back of a car with ex-boxers either side while he threatened him.

Matthew called the lender ‘Dr Jekyll’ as he seemed helpful at first, having befriended his disabled wife. But he turned vicious when challenged about the payments.

He said: “I am so glad I made that call. Without the Illegal Money Lending Team I would not be here today.

“They never judged me. It was like getting an extra family who looked after me. They were in touch all the time to check I was OK and helped me set my finances straight.

“I cannot stress enough how important it is that anyone in the same situation as me makes the call. It’s best thing I ever did.”

 

Case Study: Elderly disabled couple were ripped off by loan shark

PENSIONERS Bob and Doris turned to a ‘friend’ when they hit severe financial trouble.

They had known Jody since she was 14, and trusted both her and her husband.

Living on disability living allowance benefits, they were struggling to pay bills and other debts.

They borrowed £18,000 from Jody’s husband. He told the couple, from Manchester, that the money was a bank loan he had secured.

But they never saw any paper work, despite asking for it.

The loan went up to £23,000, then £32,000.

Jody’s husband – a loan shark – just told them the bank added interest every April.

Doris went to the post office every Monday and drew out £250 to pay him.

Struggling emotionally with the trap she was in, Doris finally got help and the Illegal Money Lending Team stepped in.

Tragically, Doris was so used to paying out cash she asked her liaison officer how much it would cost for help, and was told it was free.

The loan shark had told Bob – who was very ill – that it didn’t matter who died first, he still wanted his money from the other one.

Investigators found that Doris and Bob had paid the loan shark £27,000 from their benefits over two years.

They visited the loan shark and his wife, and told them if they continued to collect money from the couple they would be arrested.

In 2013, the Birmingham-based Illegal Money Lending Team in England made 100 arrests, which led to 50 prosecutiuons.

It has 30 specialist investigators who move to an area once a suspected illegal money lender is identified.

An estimated 310,000 households in the country are borrowing from illegal money lenders.

The highest interest charged was calculated at 131,000 per cent APR.

Cash obtained by IMLT from loan sharks through Proceeds of Crime Act is ploughed back into campaigns to raise awareness of the issue.

In Salford, a music project was funded with cash confiscated from illegal lenders.

Salford Music Foundation’s song writing competition was one of five projects to receive funding.

The winning song ‘Bite The Hand That Feeds’ by singer/songwriter Dominic Williams was turned into a video to reflect the desperation of victims.

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Loan sharks 'no longer just men threatening violence'

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Fitch Affirms Ratings on Two SLM Student Loan Trusts

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Federal Home Loan Bank of Seattle Announces Third Quarter 2014 Unaudited Preliminary Financial Highlights

Here’s %category%-related post from
cash loan – Yahoo News Search Results:

SEATTLE–(BUSINESS WIRE)–

Today, the Federal Home Loan Bank of Seattle (Seattle Bank) announced
preliminary financial highlights for the three and nine months ended
September 30, 2014, reporting $15.3 million and $40.8 million of net
income, compared to $21.2 million and $47.6 million for the same periods
in 2013, and an increase in its retained earnings balance to $327.2
million as of September 30, 2014, from $287.1 million as of December 31,
2013.

Based on the bank’s third quarter 2014 financial results, the Seattle
Bank’s Board of Directors declared a $0.025 per share cash dividend, to
be paid on October 31, 2014. Dividends will be paid based on
average Class A and Class B stock outstanding during third quarter 2014.
In addition, the bank announced that it will repurchase up to $100
million of excess capital stock during fourth quarter 2014. The Seattle
Bank repurchased $98.5 million and $296.9 million of excess capital
stock during the three and nine months ended September 30, 2014.

“We’re pleased that the Seattle Bank has remained profitable and that it
continues to grow its retained earnings, which is its principal form of
loss-absorbing capital,” stated Seattle Bank President and CEO Michael
L. Wilson. “But advance demand remains tepid, and as a consequence, the
bank continues to rely primarily on investments to drive its net income.
This is one of the reasons that the proposed merger with the Federal
Home Loan Bank of Des Moines is a strategically attractive option for
our members.”

Key features of the Seattle Bank’s operating results for the three and
nine months ended September 30, 2014, included:

Higher net interest income. Net interest income after provision
(benefit) for credit losses for the three and nine months ended
September 30, 2014, increased to $40.5 million and $105.4 million,
from $36.4 million and $105.1 million for the same periods in 2013,
primarily due to increased interest income on investments and lower
cost of funding partially offset by lower interest income on mortgage
loans held for portfolio and advances. The changes in interest income
on investments and advances were primarily yield driven. Additionally,
lower prepayment fees on advances contributed to a decrease in
interest income. The change in interest income on mortgage loans held
for portfolio was primarily driven by the continued decline in the
average balances outstanding during the three- and nine-month periods
ended September 30, 2014, as the remaining mortgage loans in the
portfolio continued to pay down.

Lower non-interest income (loss). Non-interest income (loss)
decreased $5.1 million and $3.0 million for the three and nine months
ended September 30, 2014, compared to previous periods. Non-interest
income (loss) was negatively impacted by higher credit-related losses
on other-than-temporarily impaired private-label mortgage-backed
securities and lower gains on derivative and hedging activities and
early debt extinguishments during the three and nine months ended
September 30, 2014, compared to the previous periods.

Higher other non-interest expense. The Seattle Bank’s other
non-interest expense increased $5.5 million and $4.8 million for the
three and nine months ended September 30, 2014, compared to the same
periods in 2013, due to an increase in compensation and benefits and
other operating expenses. Included in operating expenses for the three
months ended September 30, 2014, is $3.3 million of merger-related
costs. The increase on a year-to-date basis was partially offset by
the impact of a one-time $4.0 million write-off of software during the
second quarter of 2013 without similar activity in 2014.

Other Financial Information

Total assets decreased to $35.0 billion as of September 30, 2014, from
$35.9 billion as of December 31, 2013.

Advances outstanding decreased to $10.2 billion as of September
30, 2014, from $10.9 billion as of December 31, 2013, primarily due to
the maturity of advances with Bank of America, N.A., in the first
quarter of 2014, partially offset by an increase in advances in the
second and third quarters of 2014.

Mandatorily redeemable capital stock decreased by $204.2 million as of
September 30, 2014, compared to December 31, 2013, primarily due to
the Seattle Bank’s repurchases of excess capital stock during the
first three quarters of 2014, partially offset by a redemption request
resulting from a merger between two members.

Accumulated other comprehensive income (loss) improved to a gain of
$23.7 million as of September 30, 2014, from a loss of $71.8 million
as of December 31, 2013, primarily due to improvements in the market
values of the bank’s available-for-sale securities including those
previously determined to be other-than-temporarily impaired.

Total capital increased to $1.2 billion as of September 30, 2014, from
$1.1 billion as of December 31, 2013.

The Seattle Bank paid cash dividends (including interest on
mandatorily redeemable capital stock) totaling $644,000 and $2.0
million during the three and nine months ended September 30, 2014.
During the three months ended September 30, 2013, the Seattle Bank
paid cash dividends of $683,000. No cash dividends were paid during
the first half of 2013.

 

Unaudited Selected Financial Data ($ in thousands)

 

 

Selected Statements of Condition Data

As of September 30, 2014

As of December 31, 2013

Advances

$

10,225,898

$

10,935,294

Investments (1)

22,944,890

22,545,976

Mortgage loans held for portfolio, net

684,935

797,620

Total assets

35,017,001

35,870,314

Consolidated obligations

31,551,587

32,402,896

Mandatorily redeemable capital stock

1,543,500

1,747,690

Total capital stock

858,843

922,977

Retained earnings

327,153

287,090

Accumulated other comprehensive income (loss)

23,668

(71,768

)

Total capital (2)

1,209,664

1,138,299

 

 

 

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

Selected Statements of Income Data

2014

 

 

2013

 

2014

 

 

2013

 

Net interest income

$

40,219

$

35,393

$

105,486

$

104,052

Provision (benefit) for credit losses

(273

)

(989

)

84

 

(1,018

)

Net interest income after provision (benefit) for credit losses

40,492

36,382

105,402

105,070

Non-interest income (loss):

Other-than-temporary impairment credit loss

(1,556

)

(1,495

)

(3,185

)

(1,837

)

Derivatives and hedging activities

175

2,720

2,584

2,730

Other non-interest income (loss) (3)

435

2,879

1,751

3,217

Other non-interest expense

22,474

16,935

61,126

56,293

Total assessments

1,749

 

2,400

 

4,672

 

5,334

 

Net income

$

15,323

 

$

21,151

 

$

40,754

 

$

47,553

 

 

 

 

Selected Performance Measures

As of September 30, 2014

As of December 31, 2013

Regulatory capital (4)

$

2,729,496

$

2,957,757

Risk-based capital surplus (5)

$

1,383,650

$

1,483,070

Regulatory capital-to-assets ratio

7.79

%

8.25

%

Leverage capital-to-assets ratio

11.56

%

12.21

%

Market value of equity (MVE) to par value of capital stock (PVCS)
ratio

114.36

%

107.67

%

Return on PVCS vs. one-month London Interbank Offered Rate (LIBOR) (6):

Return on PVCS

2.12

%

2.26

%

Average annual one-month LIBOR

0.15

%

0.19

%

Core mission activity (CMA) assets to consolidated obligations (7)

41.10

%

41.51

%

 

(1)

 

Consists of securities purchased under agreements to resell, federal
funds sold, available-for-sale securities, and held-to-maturity
securities.

(2)

Excludes mandatorily redeemable capital stock, which totaled $1.5
billion and $1.7 billion as of September 30, 2014 and December 31,
2013.

(3)

Depending upon activity within the period, may include the
following: gain (loss) on sale of available-for-sale or
held-to-maturity securities, gain (loss) on financial instruments
held under fair value option, gain (loss) on early extinguishments
of consolidated obligations, service fees, and other non-interest
income.

(4)

Includes total capital stock, retained earnings, and mandatorily
redeemable capital stock.

(5)

Defined as the excess of the bank’s permanent capital (which
consists of Class B capital stock, including Class B capital stock
classified as mandatorily redeemable, and retained earnings) over
its risk-based capital requirement.

(6)

Return on PVCS is computed as year-to-date net income divided by
year-to-date average PVCS, annualized. Average annual one-month
LIBOR is the year-to-date average one-month LIBOR.

(7)

Defined as advances, acquired member assets (such as mortgage
loans), and certain housing finance agency obligations as a
percentage of consolidated obligations.

The Seattle Bank expects to file its third quarter 2014 quarterly report
on Form 10-Q with the Securities and Exchange Commission (SEC) on or
around November 6, 2014.

Proposed Merger with the Des Moines Bank

On September 25, 2014, the Seattle Bank and the Federal Home Loan Bank
of Des Moines (Des Moines Bank) entered into a definitive agreement to
merge the two banks. Material details of the merger agreement are
included in the banks’ related Form 8-K filings with the SEC. The next
step in the process is for the banks to submit a merger application to
the Federal Housing Finance Agency (FHFA). Following regulatory approval
of the merger application, the Seattle and Des Moines Banks’ members
will receive detailed information about the proposed merger. The
proposed merger must be ratified by the members of both banks through a
voting process that is expected to occur in the first half of 2015.

Consent Arrangement

The Seattle Bank continues to address the requirements of the Consent
Order issued by the FHFA, effective November 22, 2013 (collectively,
with related understandings with the FHFA, the Amended Consent
Arrangement), which superseded the previous Consent Order and related
understandings put in place in October 2010 (2010 Consent Arrangement).
In addition to continued compliance with the terms of the plans and
policies adopted and implemented to address the 2010 Consent
Arrangement, the Amended Consent Arrangement requires development and
implementation of a plan acceptable to the FHFA to increase advances and
other CMA assets as a percentage of the bank’s consolidated obligations,
Board of Directors’ monitoring for compliance with the terms of such
plans and policies, and continued non-objection from the FHFA prior to
repurchasing or redeeming any excess capital stock or paying dividends
on the bank’s capital stock. With FHFA non-objection, the Seattle Bank
has repurchased up to $25 million of excess capital stock on a quarterly
basis since the third quarter of 2012 and paid modest quarterly
dividends to its shareholders based on the bank’s quarterly net income
since July 2013. In addition to the three quarterly repurchases of up to
$25 million of excess capital stock, with FHFA non-objection, during the
first nine months of 2014, the Seattle Bank redeemed an additional
$224.6 million of excess capital stock on which the redemption waiting
periods had been satisfied. The FHFA reviews the bank’s requests to
repurchase and pay dividends on its capital stock on a quarterly basis.

About the Seattle Bank

The Seattle Bank is a financial cooperative that provides liquidity,
funding, and services to enhance the success of its members and support
the availability of affordable homes and economic development in the
communities they serve. The Seattle Bank’s funding and financial
services enable our member institutions to provide their customers with
greater access to mortgages, commercial loans, and funding for
affordable housing and economic development.

The Seattle Bank is one of 12 Federal Home Loan Banks in the United
States. The Seattle Bank serves Alaska, Hawaii, Idaho, Montana, Oregon,
Utah, Washington, and Wyoming, the U.S. territories of American Samoa
and Guam, and the Commonwealth of the Northern Mariana Islands. Members
include commercial banks, credit unions, thrifts, industrial loan
corporations, insurance companies, and non-depository community
development financial institutions.

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including preliminary highlights of financial statements and information
as of and for the three and nine months ended September 30, 2014, and
information regarding a potential merger with the Des Moines Bank.
Forward-looking statements are subject to known and unknown risks and
uncertainties. Actual financial performance and condition for the three
and nine months ended September 30, 2014, and other actions or
transactions, including those relating to the ability of the Seattle
Bank and the Des Moines Bank to obtain FHFA and member approvals
relating to the proposed merger, the completion of the proposed merger,
and the Amended Consent Arrangement and payments of dividends and
repurchases of shares, may differ materially from those expected or
implied in forward-looking statements because of many factors. Such
factors may include, but are not limited to, finalization of the
financial statements, regulatory and legislative actions and approvals
(including those of the FHFA relating to the stock repurchases,
dividends and the proposed merger), the ability to obtain the required
approvals from the banks’ members relating to the proposed merger, the
ability of the parties to complete a transaction pursuant to the terms
of the merger agreement, changes in general economic and market
conditions (including effects on, among other things, U.S. debt
obligations and mortgage-related securities), demand for advances,
changes in the bank’s membership profile or the withdrawal of one or
more large members, shifts in demand for the bank’s products and
consolidated obligations, business and capital plan and policy
adjustments and amendments, competitive pressure from other Federal Home
Loan Banks and alternative funding sources, the Seattle Bank’s ability
to meet adequate capital levels, accounting adjustments or requirements
(including changes in assumptions and estimates used in the bank’s
financial models), interest-rate volatility, changes in projected
business volumes, the bank’s ability to appropriately manage its cost of
funds, changes in the bank’s management and Board of Directors, and
hedging and asset-liability management activities. Additional factors
are discussed in the Seattle Bank’s most recent annual report on Form
10-K, subsequent quarterly reports on Form 10-Q, and other filings made
with the Securities and Exchange Commission. The Seattle Bank does not
undertake to update any forward-looking statements made in this
announcement.

Members of the Seattle Bank will be provided a Disclosure Statement
in connection with the anticipated member vote on the ratification of
the merger agreement. Members are urged to read the Disclosure Statement
carefully when it becomes available.

FinanceInvestment & Company Informationinterest incomeSeattle
Contact:

Federal Home Loan Bank of Seattle

Connie Waks, 206-340-2305

cwaks@fhlbsea.com

Read more:
Federal Home Loan Bank of Seattle Announces Third Quarter 2014 Unaudited Preliminary Financial Highlights

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