President's Report

January 30, 2004

At the Bank

Board Approves Dividend from Fourth Quarter Earnings at 1.45%

At the January 2004 meeting of our Board, the Directors declared a cash dividend at an annualized rate of 1.45 percent based on earnings for the final quarter of 2003. The dividend was distributed to member financial institutions on January 30, 2004. Including the return for the fourth quarter, the annualized dividend paid from 2003 earnings averaged 4.0 percent. As mentioned in the December 2003 President’s Report, if the interest rate environment remains essentially unchanged, we anticipate paying a regular quarterly dividend to stockholders in 2004 below 2.0 percent.

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," adopted by the Board of Directors in December 2003. With these 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.

More specifically, beginning with this month's dividend announcement and for the remainder of 2004, we expect to distribute 50 percent of net income in the form of a regular dividend and to commit the remaining 50 percent towards accelerating the growth of retained earnings. To provide an historical comparison, in 2000 the Bank paid a 6.95 percent annualized dividend, which was a 81.59 percent payout; in 2001 the annualized dividend was 6.29 percent, which was a 80.39 percent payout; and in 2002 the annualized dividend was 4.51 percent, which was a 71.19 percent payout. Below is a chart which recaps this information.

Federal Home Loan Bank of New York Dividends for the Last Four Years



Dividends Paid
(in thousands)

Net Income
(in thousands)













4.51 %



















4-Year totals











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.

The Home Loan Bank of New York Continues to Evolve and Implement Best-in-Class Risk Management

The Federal Home Loan Bank is continuing to seek ways to improve our risk management practices so that we can achieve the best results. To meet this goal, the Bank will from time to time adjust its management structure as well as hire personnel who will add enhanced value to the company. Such changes and additions have been occurring at the Home Loan Bank and will continue to occur.

One of the more significant changes is the recent creation of a new Chief Risk Officer ("CRO") position. The CRO will establish the risk policies and tolerances within the Bank to which all organizational units will adhere. Risk policies and tolerances will be subject to Board approval, and, in select areas, will be the subject of regular Board action. The CRO will also measure and monitor risk levels against established tolerances. The principal areas of the CRO’s focus will include Credit, Market, and Operations risk management.

Filling the role of the CRO is Peter Leung, who started his employment with the Bank on January 20, 2004. Peter has over 19 years of experience in the Federal Home Loan Bank System. His most recent position prior to joining the New York Bank was with the Home Loan Bank of Dallas, where he held the position of Chief Risk Officer from 2001 through this year. Peter also served as Deputy Director, Office of Supervision, at the Federal Housing Finance Board for five years; Associate Director at the Federal Housing Finance Board for six years; Senior Supervisory Analyst at the Office of Thrift Supervision for one year; and Thrift Examiner at the Federal Home Loan Bank of Seattle for almost four years. Peter, who is a Certified Public Accountant, received his MBA in accounting from City University in Seattle, Washington. Peter also received a BA in chemistry from SUNY in Buffalo, New York.

Home Loan Bank Enhances Collateral Reporting Requirements

During January, the Home Loan Bank initiated the conversion of our members' borrowing under the blanket lien collateral category to our enhanced collateral reporting requirements. As stated in a July 23, 2003 general mailing to the members, the new policy requires all members pledging mortgage collateral in the "blanket" collateral category to be placed in either the "listing" or "securities-only" collateral categories. The enhanced reporting requirements are in response to changes in the business and economic environment and will serve to protect shareholders' interests. We expect to have all of our approximately 100 "blanket" category customers converted by April 30, 2004. If you have any questions about the conversion or about this new policy, please contact Marianne Totaro, Senior Vice President, Collateral Services Group, at 201-356-1060.

In Washington

Two Public Interest Directors Appointed By the FHFB

I am pleased to report that on January 23, 2004, the Federal Housing Finance Board appointed Richard S. Mroz to a second term and Anne Evans Estabrook to a first term as public interest Directors on our Board of Directors. Both terms run through December 31, 2006.

Richard S. Mroz, of Haddonfield, New Jersey, is of counsel to the law firm of Stradley Ronon Stevens & Young, LLP. He is co-chairman of the law firm’s Government and Public Affairs Group. He is counsel to the Greater Atlantic City Hotel Motel Association. And for the Home Loan Bank, Mr. Mroz is Chairman of the Board's External Affairs Committee. Mr. Mroz was Chief Counsel to New Jersey Governor Christine Todd Whitman, a cabinet level post, from May 1999 to June 2000. From 1994 to 1998, he was Director of the Authorities Unit in the Office of the Governor, and he was County Counsel in Camden, New Jersey from 1991 to 1994. He has served as New Jersey Counsel to the Delaware River and Bay Authority. Mr. Mroz is a Board Member of the New Jersey Alliance for Action, Past President of the University of Delaware Alumni Association, and he serves as the solicitor to municipal planning boards.

Anne Evans Estabrook, of Cranford, New Jersey, is owner of Elberon Development Co., which, together with affiliated companies, owns approximately 2.2 million square feet of primarily industrial warehouse and manufacturing space. She is currently chairman of the New Jersey Chamber of Commerce and serves on the Governor’s Task Force on Emergency Economic Impact Assessment after the September 11th Terrorist Attack. She previously served as a director on the boards of Summit Bank, United Jersey Bank, Constellation Bancorp, and the National State Bank of Elizabeth. Ms. Estabrook also served as a member of the Lay Board of the Delbarton School in Morristown for 15 years, including five years as chair. She currently is a member of the Board of Trustees of Catholic Community Services and of the Weill Cornell Medical School Board of Overseers, where she serves on the Affiliation Government Relations and Community Affairs Committee.

Mr. Mroz and Ms. Estabrook will be sworn in at the February Board meeting.

Ms. Estabrook will become the fourth new Director to join the Board this year. Sanford A. Belden, President and CEO of Community Bank (DeWitt, NY), José R. González, President and CEO of Banco Santander Puerto Rico (Hato Rey, PR), and Katherine J. Liseno, President and CEO of Metuchen Savings Bank (Metuchen, NJ) were sworn in at our January Board meeting as elected directors to serve on the Board for a three-year term ending December 31, 2006.

We welcome the new Directors to the Board.

FHFB Holding Hearings on FHLBank Board Governance

The Federal Housing Finance Board held its first of two hearings on board governance of the Federal Home Loan Banks on January 23, 2004. A number of industry organizations presented testimony. These industry groups included the National Association of Home Builders, the National Congress for Community Economic Development, the Mortgage Bankers Association, America’s Community Bankers, the Independent Community Bankers of America, the National Association of Realtors, the Credit Union National Association, and the American Bankers Association. A second hearing is tentatively scheduled for February 10 and will serve as a forum for the Home Loan Banks to express their opinions on the matter.

The purpose of these two hearings is to provide members of the Finance Board an opportunity to hear suggestions and gather information concerning possible changes to Finance Board regulations and/or the Federal Home Loan Bank Act that would help the Boards of Directors of the FHLBanks better identify, monitor, and control the risks on their balance sheets. The Finance Board is not looking for "consensus" at this time, but rather is looking for ideas on how best to improve board governance of the FHLBanks.

The Federal Home Loan Bank of New York applauds this inclusive effort and process and looks forward to working with our members, the trade industry groups, the other Home Loan Banks, and the FHFB to identify any needed changes to the governance structure that would help improve the Home Loan Bank System.

I would like to 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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