President's Report

January 15, 2004

At the Bank

Dear Stockholder:

I am pleased to report that the Board of Directors today approved management's recommendation to declare a cash dividend from fourth quarter 2003 earnings, which represents an annualized rate of 1.45%. The dividend will be distributed to member financial institutions on January 30, 2004.

This is the first dividend declared by the Bank under its nine-point "Statement of Principles to Guide Development of the Bank's Retained Earnings Policy," which was adopted by the Board of Directors in December 2003.

With the Principles in place, the parameters for retaining earnings and paying dividends are clear. Our goal is to balance the growth rate of retained earnings and the dividend rate so that members' paid-in capital remains well protected while continuing to earn a reasonable return. Our intention is to accelerate the growth of retained earnings by retaining a greater portion of earnings than we have in the past.

As mentioned in the December President’s Report, if the interest rate environment remains essentially unchanged, we anticipate paying a dividend to stockholders in 2004 that is below 2.0%. At December 31, 2003, the Home Loan Bank had $126 million in retained earnings.

The Board of Directors and the management of the Home Loan Bank are committed to minimizing our costs and risks, maintaining a high-quality investment portfolio, and continuing our vital mission: to advance housing opportunities and local community development by maximizing the capacity of our community-based member lenders to serve their markets.

We will continue to keep you informed of our progress.


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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