President's Report

December 31, 2004

At the Bank

I want to express my personal appreciation to each stockholder for the business done with us during 2004. The Home Loan Bank team has worked hard to provide quality service, and we look forward to maintaining that high level of performance in 2005. We are here to help our members play a key role in the delivery of housing and community finance.

Member Demand for Advances Remains Strong at $66.6 Billion

Throughout the year, business with our member lenders was strong. In November, advances averaged $65.7 billion. We closed this month at $66.6 billion. Again this month, the Bank offered additional LIBOR-based, adjustable-rate specials that continued to be well subscribed by members. Growth was also seen in advances with maturity terms of a year or longer. As a cooperative, we look forward to continuing to be able to provide our member community lenders with low-cost liquidity.

1Linksm Continues to Add Value to Members

In order to increase the ease with which members can access our credit products, new features were added to 1Link during 2004 enabling our members to process short-term advances through this secure, Internet-based banking system. We also began to offer a discounted rate on all OLOC transactions processed through 1Link. A record high of $1.2 billion in transactions was processed through 1Link in a single day.

Over 95% of our membership is using 1Link today. Contact your Calling Officer for more information about 1Link and the efficiencies and cost savings it can bring to your institution.

2005 -- Looking Ahead

In 2004 we achieved financial stability through a low-risk, conservative approach to investing. Advance demand was strong. And retained earnings increased more than 50% from the 2003 year-end balance and are currently expected to soon reach the minimum level established under the Bank’s Retained Earnings Policy. (Please see my November 30, 2004, report for additional details). The Bank’s strengthened foundation should help to put us on a solid footing with respect to the various changes affecting the Federal Home Loan Banks that are expected to occur in 2005.

One significant change that 2005 will bring was set in motion in the middle of 2004 with the issuance of a regulation by the Federal Housing Finance Board (“FHFB”) requiring the registration of the stock of each of the FHLBanks with the U.S. Securities and Exchange Commission (“SEC”) by the end of August 2005. We have just submitted our initial filing with the SEC.

Another change currently projected for 2005 will involve the exchange of our members’ capital stock as required by the provisions of the Gramm-Leach-Bliley Act. This exchange, which will require the approval of the FHFB, will take place after registration of our stock with the SEC is completed. I expect the capital exchange to occur in the second half of 2005.

Yet another significant matter to keep in mind is that legislation might be enacted by Congress that could change how the housing-related Government Sponsored Enterprises (which include the Home Loan Banks) are regulated and supervised. How this will ultimately turn out is up to Congress and the Administration. In any event, we will need to be prepared to react swiftly to any proposals that are made and changes that might occur in order to help ensure that this Home Loan Bank remains in a position to support our 300 member lenders in their work of providing home mortgages and other financial services to the communities we jointly serve.

In Washington

Ronald Rosenfeld Sworn in as
Chairman of the Federal Housing Finance Board

On December 15, 2004, Ronald A. Rosenfeld was sworn in as a member and Chairman of the Federal Housing Finance Board. He succeeds Alicia R. Castaneda as Chairman. He also fills a vacant director’s position, bringing the FHFB to its full five-member complement. (By statute, the FHFB is composed of four members appointed by the President, of which no more than two may be from the same political party, plus the Secretary of the Department of Housing and Urban Development.) Ms. Castaneda will remain as a director.

During the swearing-in ceremony, Chairman Rosenfeld stated that he takes “seriously this obligation as Chairman to encourage the safe and sound operation of [the Federal Home Loan Banks] and to create policies that are in the best interest of the public and the homebuyer.” He also lauded Director Castaneda for her service since she became Chairman on April 11, 2004.

President George W. Bush announced Chairman Rosenfeld’s appointment and designation as Chairman on December 14. As a recess appointment, his term will run through the completion of the first session of the next Congress.

From July 2001, the Chairman served as President of Ginnie Mae. Before arriving at HUD, he was Secretary of Commerce in the State of Oklahoma, serving under Governor Frank Keating from 1995 through 1998.

Before that, Chairman Rosenfeld served in two Departments under President George H.W. Bush. From 1992 to 1993, he was Deputy Assistant Secretary for Corporate Finance at the Department of the Treasury. From 1989 to 1991, he held three posts at HUD: General Deputy Assistant Secretary for Housing-Federal Housing Commissioner, Acting Deputy Assistant Secretary for Multi-Family Housing, and Deputy Assistant Secretary for Single-Family Housing.

Prior to 1989, Chairman Rosenfeld worked exclusively in the private sector. From 1982 to 1988, he was Executive Vice President of Prescott, Ball & Turben, Inc., a Cleveland-based subsidiary of Kemper Financial Corporation.

Federal Home Loan Bank Directorships

As we went to press with this report, the FHFB announced term extensions for those appointed Directors of Home Loan Banks whose terms expire at the end 2004. In particular, on December 30, the FHFB authorized those appointed Directors to continue to serve to June 30, 2005, or until the FHFB either reappoints or appoints a successor director. This enables Michael Horn, an appointed Director and a Partner of McCarter & English, to remain on the New York Board of Directors until late June or the FHFB takes further action.

In closing, we value your loyalty to the Home Loan Bank and we respect your commitment to your customers. And we are profoundly grateful for the opportunity to serve you.

Finally, all of us at the Home Loan Bank wish you and yours the very best in 2005!


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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