President's Report

August 8, 2005

At the Bank

Board Approves Second Quarter Dividend of 5.0%

At the regular meeting on July 21, our Board of Directors declared a dividend for the second quarter of 2005 at the rate of 5% (annualized). The dividend was distributed to our members on July 29. The dollar amount paid was approximately $46 million.

This second quarter dividend of 5% represents a fair return on our members’ investment in the Home Loan Bank. It represents a payout of 81% of core earnings for the quarter. Retained earnings as of June 30, 2005, after the dividend payment, will be approximately $225 million. The Bank intends to build retained earnings during 2006 to approximately $245 million, the approximate December 2002 level. Our success at achieving and maintaining this level of retained earnings reflects the Bank's conservative financial management practices.

Average advances for June were $63.6 billion. This is a $700 million decrease from May’s average. Six members participated in the June Convertible Advance Special Offering and borrowed a total of $500 million. We closed the month of June at $64.6 billion.

Information on two new, exciting product developments has been sent to you via broadcast fax and the HLB Advantage. First, we launched the Fed Funds Floating Rate Advance on June 1. This product was met with strong demand from members with new loans at over $300 million today. This product has helped fulfill members' short-term borrowing needs (3 months to 1 year). Second, the Bank announced that it would expand members’ Overnight Line of Credit (OLOC) from the lower of 5% of assets or $50 million to the lower of 10% of assets or $100 million (assuming the member has enough collateral to support this expanded line of credit). If you would like to learn more about these offerings, please contact our Bank's Calling Officers at (212) 441-6700. Through our competitive pricing, innovative product offerings, and exceptional service, we look forward to providing you with sustained performance and greater value for your investment in the Bank.

FHLBNY Moves to Meet End-of-August SEC Registration Date

As mentioned in my report on June 30, the Home Loan Bank filed Form 10 with the SEC on June 30. The Bank’s Form 10 is available at the EDGAR portion of the SEC’s web site at

We are continuing to work diligently with the SEC to complete this registration process. As required by FHFB regulation, we are working towards an effective date on or before August 29, 2005. This will enable a seamless exchange of capital under our new capital structure required by the Gramm-Leach-Bliley Act.

Once the SEC registration is complete, we will be required to meet the SEC’s Regulation FD (Fair Disclosure). This of course means that our future communications will conform to regulation FD and all other SEC regulations.

In Washington

Senate Banking Committee Approves GSE Regulatory Relief Bill

On July 28, 2005, the Senate Banking Committee approved, on a party line vote (11-9), S. 190, the "Federal Housing Enterprise Regulatory Reform Act of 2005." The debate at the hearing focused on the portfolio limitations and affordable housing programs for Fannie Mae and Freddie Mac. At the Senate hearing, the Federal Home Loan Banks were mentioned as positive examples both in terms of having a regulator that works well and in terms of running effective affordable housing programs. S. 190, as adopted by the Senate Committee, does treat the Home Loan Bank System fairly. Like H.R. 1461 as adopted in the House Financial Services Committee on May 25, S. 190 would create a single independent regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, but allow the Bank System to continue our important mission of providing liquidity to our 8,100 community member lenders. Future action on this bill remains unclear. As indicated by the party line vote, the Senators on the Democratic side, including Charles Schumer (D-NY) and Jon Corzine (D-NJ), oppose the bill as adopted by the Committee primarily because of the lack of an affordable housing program and the imposition of portfolio caps. The Democrats were joined by Republican Senators Bennett and Bunning who also voiced similar concerns about the bill, but they did not want to stop its progress at this point.

The companion bill in the House of Representatives, H.R. 1461, the “Federal Housing Finance Reform Act of 2005,” was curiously referred to the House Committee on the Judiciary in July. At the writing of this report, the House has slated no further action on this measure.

We will keep you up to date on any major developments on both measures as they happen.

In closing, I would like to thank you, our members, for using our products and services to help you meet the credit needs of your communities. Your lending efforts give families and individuals the opportunity to achieve their dreams of homeownership and to create safer, stronger, and more prosperous 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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