President's Report

September 24, 2003

Copy of September 24th Letter Sent to Member Lenders

Dear Stockholder:

In my letter of September 22, I reported that four of the uninsured bonds held by the Federal Home Loan Bank of New York collateralized by manufactured housing receivables had been downgraded from their original AAA ratings. After a review of the manufactured housing portfolio, Bank management determined that all of the uninsured bonds demonstrated deterioration in credit quality. To ensure that there would be no further deterioration, the Bank has now sold this portfolio and has no uninsured exposure to the manufactured housing sector.

The face amount of the securities sold was $1.033 billion. The loss on the sale was approximately $183 million. After taking this sale into consideration, the Bank expects its September 30, 2003, capital to assets ratio will be 4.68%, well above its minimum capital to assets ratio of 4.0%. The Bank also expects its retained earnings will continue to be positive at September 30, 2003.

As a consequence, the Board approved management's recommendation not to pay a dividend to stockholders in October 2003. In addition, the Board approved management’s recommendation to delay the implementation of the Capital Plan, which had been scheduled for October 1, 2003. The new implementation date has not yet been determined.

If you have any questions, please contact Jim Gilmore, Senior Vice President, Banking Services at (212) 441-6812 or me at (212) 441-6801.


Alfred A. DelliBovi
President & CEO

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This report may contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as “projected,” “expects,” “may,” or their negatives or other variations of these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, regulatory and accounting rule adjustments or requirements, changes in interest rates, changes in projected business volumes, changes in prepayment speeds on mortgage assets, the cost of our funding, changes in our membership profile, the withdrawal of one or more large members, competitive pressures, shifts in demand for our products, and general economic conditions. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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