President's Report

February 27, 2004

At the Bank

The Federal Home Loan Bank of New York’s dividend announcement in January appears to have been a positive factor with regard to advance demand. Average advances increased in January 2004 for the first time since June 2003. The January average was $61.4 billion, up $400 million from December 2003. By month-end, advances had reached $62.7 billion, up almost $1 billion from the end of December.

I appreciate this continuing demonstration by our members of your confidence in the Home Loan Bank as your preferred source of liquidity. Our advance products, combined with the Affordable Housing and Community Investment Programs, are central to helping the FHLBNY fulfill its mission of advancing housing opportunity and local community development by maximizing the capacity of its community-based member-lenders to serve their markets.

I would like to briefly mention another product that has experienced recent growth. Since being launched in April 1999, the Mortgage Partnership Finance® (or MPF®) Program has funded approximately $1.5 billion in mortgage loans, helping more than 12,000 families purchase or lower the cost of their homes. In 2003, with mortgage rates at the lowest levels in 40 years, and despite the run-off from the refinance market, the Bank’s MPF portfolio grew by 68.6%.

Under MPF, members service and manage the credit risks of conforming loans they originate, while the Home Loan Bank handles the interest rate and prepayment risks. The program has been successful because it allocates the risks of mortgage lending between member originators and the Bank in a way that helps lower the cost of funding mortgages, resulting in more efficient management of the risks involved. Through MPF, participants can confidently offer extremely competitive fixed-rate mortgage products, even in this low-interest-rate environment. A significant number of our member-lenders have found MPF to be a great fit for their institutions and an excellent alternative to the secondary market.

For additional information on MPF, please contact your calling officer or Jim Gilmore, Senior Vice President, Banking Services, at (212) 441-6812

In Washington

Director Rick Mroz Testifies at Second Federal
Housing Finance Board (FHFB) Hearing on Governance

On February 10, 2004, during a second hearing on corporate governance held by the FHFB, Board Director Richard S. Mroz, Chairman of the Board's External Affairs Committee, testified on behalf of the Federal Home Loan Bank of New York. Also testifying were board members and executives from the Atlanta, Topeka, Seattle, and San Francisco Home Loan Banks. This hearing was a follow-up to the FHFB's first governance hearing held on January 23, 2004, at which time testimony from trade associations was received. (Please see my January 30, 2004, report.)

The purpose of these hearings was to provide the FHFB with an opportunity to hear suggestions and gather information concerning possible changes to FHFB regulations and/or the Federal Home Loan Bank Act that would help the Boards of Directors of the various HLBanks better identify, monitor, and control risks. The FHFB indicated that it was not looking for a consensus; rather, they were seeking to gather ideas as to how to best improve governance.

Director Mroz indicated in his testimony that the Home Loan Bank System is a government sponsored enterprise owned by 8,100 community lending institutions and that these owners need to be heard from before any formal corporate governance proposal is drafted. If and when a Home Loan Bank system-wide governance proposal begins to take shape, we will take steps to make sure that the views and concerns of our stockholders as well as the industry trade groups are considered.

FHFB Rejects Request for Solicitation of
Department of Justice Opinion on SEC Registration

On February 18, 2004, the FHFB held a hearing to consider a resolution by FHFB Directors Franz Leichter and Allan Mendelowitz to request the opinion of the Department of Justice (DOJ) regarding the authority of the FHFB to require the Home Loan Banks to register their stock with the SEC. The motion was voted down 3 to 2.

During the debate, Director Leichter indicated that a DOJ opinion was needed to clear up the issue of the FHFB's legal authority so the matter of enhanced disclosure could move forward (some commentators on the FHFB's proposal to require voluntary registration at the SEC have questioned the FHFB's authority to promulgate such a requirement). In contrast, FHFB Chairman Korsmo said that he thought such a request would set a counterproductive precedent and corrode the FHFB's oversight authority over the Federal Home Loan Banks.

As you will see in the soon-to-be-released 2003 Annual Report, it has been significantly changed to begin the process of meeting SEC reporting requirements. The annual report will be used in discussions with the staff of the SEC in preparation for the anticipated registration of our stock. We expect our discussions with the SEC to begin shortly after the FHFB finalizes its regulation regarding registration of the stock of the twelve FHLBanks. At this time, we expect that, in the not-too-distant future, the FHFB will enact a regulation formally requiring the FHLBanks to register with the SEC. We will continue to keep you updated with respect to this matter.

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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