President's Report

June 30, 2004

At the Bank

Advances Averages $64.3 Billion

In May, advances averaged $64.3 billion, up $2.2 billion from April. Month-end advances totaled $64.7 billion. Some of the growth in advance business experienced in the past few months has been caused by member lenders locking in low-cost wholesale funding before the Fed raises interest rates. Members also took advantage of two special offerings during the month: three-year Adjustable Rate Credit (ARC) at one month LIBOR flat and 28-month ARC at one month LIBOR flat.

HLB Municipal Letter of Credit ("MULOC") Approved in New York and New Jersey

I am pleased to report that now there is an alternative to pledging securities to collateralize municipal deposits. With a new rule issued on May 3, the New Jersey Department of Banking and Insurance joined New York in making AAA-rated Municipal Letters of Credit issued by the Home Loan Bank eligible forms of collateral for deposits by units of local government. If you would like more information about how you can use MULOCs to simplify your operations, please call Adam Goldstein, Vice President and Director Sales, at (212) 441-6703.

Nominations Open for 2004 Election of Directors of the Home Loan Bank

On June 21, nomination certificates and related information relating to the 2004 Director election process were mailed to all eligible stockholders in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands. Two seats in New Jersey and two seats in New York are up for election this year. Each of the individuals elected will serve a three-year term starting on January 1, 2005. The deadline to return your nomination certificates to the FHLBNY is 5:00 p.m. on July 21, 2004.

In Washington

FHFB Enacts Regulation Requiring SEC Registration by Summer of 2005

A rule requiring the Federal Home Loan Banks to register with the Securities and Exchange Commission (SEC) was adopted on June 23, 2004 by unanimous vote of the Federal Housing Finance Board (FHFB). The rule requires each of the Home Loan Banks to submit to the SEC a registration statement for a class of securities by June 30, 2005, with registration to become fully effective by August 29, 2005. The FHFB noted that these dates might be extended if it determines that good cause exists.

FHFB Chairman Alicia Castaneda noted: "Given the size, growth and complexity of the Federal Home Loan Banks it is simply a priority to move toward improved disclosures that provide more information to member financial institutions, the public, and investors."

Chairman Castaneda also said the need for Federal Home Loan Banks to provide disclosures to the SEC had increased particularly in light of developments with the other Government Sponsored Enterprises (GSEs). Fannie Mae last year registered its equity with the SEC, and Freddie Mac has agreed to do so at a future date. The Chairman stated: "Federal Home Loan Bank disclosures should be fully comparable to other entities in the market - both GSEs and other large financial institutions - and these disclosures must be accepted as comparable by investors."

America’s Community Bankers (ACB) had previously filed a legal analysis with the FHFB that challenged the legal authority of the agency to require registration with the SEC. ACB supports greater transparency, but suggested that enhanced disclosure be made with the FHFB.

Diane Casey-Landry, the president of ACB, said her group is digesting the rule and “will take the time to review what they have done and will make a determination of action once we are through.”

Here at the FHLBNY, we have been working for more than a year to improve the style and timing of our disclosures of financial information in anticipation of SEC registration. We have been part of a Task Force of Home Loan Banks that has had extensive discussions with SEC staff about the unique features of our cooperative Bank System that do not easily fit into the SEC's requirements (which were generally designed to cover traditional public companies). We have also sought to identify regulatory interpretations previously issued by our regulator, the Federal Housing Finance Board, which may not fit, or would conflict, with SEC procedures and regulatory interpretations. For their part, the SEC staff has indicated their willingness to provide certain accommodations to the registering Home Loan Banks in view of the distinctive nature and status of the Bank System.

With regard to the foregoing, all of the details have not yet been worked out, and discussions continue. However, we believe it is fair to say that, as result of registration with the SEC, some of our disclosures will remain the same and others will be modified. For example, you can expect to see equity on our financial statements labeled as "putable" to reflect the fact that our members can redeem their stock; and our disclosures will be more lengthy with additional historical data for comparison to current results. Other changes could be more significant.

However, we do not anticipate any obstacles that cannot be overcome, and we believe that we will continue to be able to serve the needs of our members during and after the transition to SEC registration.

The Home Loan Bank team wants to thank you for your use of our products and services to expand the availability of mortgage credit, to compete effectively in your market, and to promote strong communities.


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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