President's Report

November 30, 2003

At the Home Loan Bank

Your Home Loan Bank continues to work aggressively to develop a risk-based retained earnings policy. The development of this policy is a key part of the foundation for our future business operations, and we are working closely with our Board and our regulator to complete it. The Federal Housing Finance Board (“FHFB”) again emphasized the importance of developing an appropriate retained earnings policy. In a November 4 letter to all the Home Loan Banks, FHFB Chairman John T. Korsmo stressed the importance that the FHFB places on retained earnings and pointed to FHFB Director Allan Mendelowitz’ comment that "…dividends actually paid out should be residual after a set-aside is made for the appropriate level of retained earnings." As mentioned in my October 31, 2003, report, the FHFB has directed each of the 12 Home Loan Banks to have a formal retained earnings policy adopted by March 31, 2004.

The New York Bank has a solid foundation on which to build; even after losses booked in September, the Bank ended the third quarter with $98.2 million in retained earnings. We are working to put a retained earnings policy in place that will serve as the basis for regular and stable dividends. However, in light of the need to build retained earnings, we anticipate future dividends paid by the Home Loan Bank will be at a lower level relative to market rates than the dividends of the recent past. Rest assured that your management and Board are working hard to resume dividend payments as soon as we can, even as we build the Bank's retained earnings. The Board of Directors will take up consideration of a retained earnings policy in December and then consider a dividend in January.

The Bank's advance levels at the end of the third quarter are off the record levels set in the first half of this year, but are up over a billion dollars from a year ago. On September 30, 2003, the Bank had outstanding advances of $68.7 billion on our books, a $5.9 billion decrease from June 30, 2003, but a $1.1 billion year-over-year increase from September 30, 2002. Through our competitive pricing and, innovative products, we look forward to help maximize the capacity of our community-based member-lenders serve their markets.

Seven Community Lenders Join the Home Loan Bank

Since May 2003, seven community member lenders have joined the Home Loan Bank. I am pleased to welcome three members headquartered in New Jersey and four members from New York as the newest stockholders.

The new members in New Jersey are: Advantage Bank, Branchburg; Allegiance Community Bank, South Orange; and interstate Net Bank, Cherry Hill.

The new members in New York are: Empire Corporate Federal Credit Union, Albany; Sunmark Federal Credit Union, Schenectady; The Summit Federal Credit Union, Rochester; and Woori America Bank, New York.

Four Industry Stockholders Elected to the Board of Directors

The votes have been tallied and the results were certified by the members of the FHLBank’s Election Committee for four seats on the Board of the Federal Home Loan Bank of New York. I am pleased to report the following results:

In New York, Kenneth J. Abt, President, CEO, and Vice Chairman of First Federal Savings of Middletown, has been re-elected to the Board; he has served on the Board since January 1998. Ken also served on the Board in 1982-1985. And Sanford A. Belden, President and CEO of Community Bank System, Inc. and its principal banking subsidiary, Community Bank, N.A., DeWitt, was newly elected. Mr. Belden will succeed the late William E. Swan, Chairman, President and CEO of First Niagara Bank, Lockport, who served on the Board from February 2002 until August 2003.

In New Jersey, Katherine J. Liseno, President and CEO of Metuchen Savings Bank, has been newly elected to serve on the Board for a three-year term ending December 31, 2006. She will replace John R. Garbarino, Chairman, President and CEO of OceanFirst Bank, Toms River, who is completing his third term and, therefore, was not eligible to seek re-election.

In Puerto Rico, José R. González, President and CEO of Santander BanCorp and Banco Santander Puerto Rico, San Juan, has been newly elected to serve on the Board for a three-year term ending December 31, 2006. He will replace Salomón Levis, Chairman and CEO of Doral Bank, San Juan, who has served on the Board since January 2001.

Each of the newly elected directors will serve on the Board for three-year terms ending December 31, 2006.

I congratulate Ken on his re-election and Sandy, Kathy, and José on their elections to the Board.

We thank each customer and stockholder for their business.


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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