President's Report

May 2, 2006

At the Bank

Federal Home Loan Bank of New York Declares a 5.25% Dividend for the First Quarter of 2006

I am pleased to report that our Board of Directors approved a dividend for the first quarter of 2006 at a rate of 5.25% (annualized). The Federal Home Loan Bank of New York’s (FHLBNY) dividend rate for the fourth quarter of 2005 was 5.11%. The dollar amount of the first quarter dividend will be approximately $47 million. The cash dividend was distributed to members on April 28, 2006.

The dividend reflects the New York Home Loan Bank’s low-risk profile and conservative investment strategy. It represents a payout of approximately 75% of net income for the quarter. Retained earnings as of March 31, 2006, after the dividend payment, will be approximately $256 million. The Bank plans to continue to build retained earnings at a measured pace to ensure future regulatory compliance and to provide additional protection for the capital of our stockholders.

The national trade press continues to cover the Federal Housing Finance Board (FHFB) proposed regulation that would primarily establish a minimum retained earnings requirement and limit the amount of excess stock that a FHLBank could hold. The FHLBNY, as outlined in earlier communications, expects to meet the proposed retained earnings target well before the minimum retained earnings rule becomes effective and, consequently, sees no impact upon our dividend or our operations.

Advances Averaged $62.3 Billion

For the month of March, advances averaged $62.3 billion. Although this is down $700 million from February, the average is $1.9 billion above our 2006 Business Plan. The FHLBNY closed the month at $62.5 billion. Members continued to take advantage of the FHLBNY’s ongoing specials, the most popular of which include the ability to use qualified mortgage collateral to obtain Repo pricing on Convertible Advances. Combined with the option to choose a settlement date within the month, this special offers maximum flexibility. In March, nine members transacted $1.3 billion of the special offer. In addition, members took advantage of the flatness of the interest rate yield curve and lengthened Fixed-Rate borrowings in the 1-5 year sector by $173 million.

Repo Advance Redesign

We redesigned the Repo Advance so that members will no longer need to pledge specific securities for specific Repo Advances. Instead, eligible securities collateral will be pooled and members will be able to borrow against the pool of securities. This change allows members to access the lower rate for Repo Advances collateralized with AAA-rated-agency or non-agency securities.

Bank Launches Program-Specific Lending

Our Community Lending Program (CLP) features below-market advance rates to help members by providing a continuous source of low-cost funds, enhancing CRA performance, adding to profitability, and improving community relations. In addition to submitting Community Investment Program (CIP), Rural Development Advance (RDA), and Urban Development Advance (UDA) applications on a project-specific basis, members may now apply for a Program-Specific commitment that will operate similarly to a pre-approved line of credit. These targeted lending programs can include CIP-eligible multi-family or single-family residential lending or RDA/UDA-eligible commercial, industrial and small-business lending. Program-Specific commitments allow a member to submit one application for a number of projects rather than submitting multiple applications on a project-by-project basis.

Should you have any questions on how the FHLBNY can help with these programs, please contact Joseph Gallo, Vice President and Director of Community Investment, at (212) 441 6851.

In Washington

FHFB Adopts Proposed Rule on Director Election Process

On April 12, 2006, the FHFB proposed a rule that, if enacted, would allow the Board of Directors of each of the Home Loan Banks to become more involved in the director election process. The proposal would permit -- but not require -- each Board to conduct an annual self-assessment to identify the skills and experience that would strengthen the Board. The Home Loan Bank could then include a statement of these needs with the election notice and call for nominations sent to members at the beginning of the election process. The proposal would also allow each FHLBank to include this information in each ballot package and, as part of the information included about each nominee, would also permit a brief description of the nominee's skills and experience.

The proposed rule was published in the Federal Register on April 18. Comments from the public are due back to the FHFB by June 2. The FHLBNY's comments are currently in the process of being prepared. I would also anticipate that the national and state financial services trade groups will comment on the proposal.

The governance of the Bank is a significant responsibility. Our 300 member lenders from New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands provide a deep pool of skilled, knowledgeable, talented, and experienced potential Board Members. This in turn means that, over the years, the Directors on our Board have been exceptionally qualified to fully execute their duties, and they have helped keep the Bank focused on its mission of advancing housing opportunity and local community development by maximizing the capacity of its community-based member lenders to serve their markets.

We value your loyalty to the FHLBNY, and we respect your commitment to your customers. We are profoundly grateful for the opportunity to serve you.


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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