President's Report

October 3, 2006

At the Bank

Federal Home Loan Bank of New York Upgraded by S&P to "AAA"

I am pleased to begin this month’s Report with mention of an important achievement. On September 21, 2006, Standard & Poor's (S&P) upgraded the credit rating of the Federal Home Loan Bank of New York on our long-term counterparty credit rating from "AA+" to "AAA."

S&P had lowered our long-term counterparty credit rating in September 2003 in the wake of the loss taken by the FHLBNY on the sale of approximately $1 billion of securities that were collateralized by manufactured housing receivables.

S&P's decision to upgrade the FHLBNY is a positive recognition of our strategy to rebuild retained earnings, to continue and maintain a low-risk profile, and to focus on the core business: advance lending. We are appreciative of S&P for recognizing the FHLBNY's efforts to regain an AAA long-term credit rating. I would like to express my gratitude to the Board, senior management, and employees at the FHLBNY whose combined efforts have resulted in regaining the AAA rating.

Advances Averaged $69 Billion

Advances averaged $69 billion in August, up $200 million from July. We ended the month at $68.8 billion. There was little change in the mix of advances compared to July. With the merger of some of our former members with institutions out of our district service area complete, and others paying down short-term advances, we will experience a decrease in advances as this year progresses. In fact, on September 12 advances were at $66.5 billion.

Through our competitive pricing, innovative products, and exceptional service, we look forward to providing you sustained performance and greater value for your investment in the Bank.

2006 FHLBNY Board of Directors Ballots in the Mail

On Monday, October 2, 2006, election ballots were mailed to the Chief Executive Officers of all eligible New Jersey and New York shareholder institutions participating in the 2006 election of Federal Home Loan Bank directors. One seat from New Jersey and two seats from New York are up for election this year. Each of the individuals elected will serve a three-year term starting on January 1, 2007.

Because there was just one nominee from the Commonwealth of Puerto Rico and the U.S. Virgin Islands region, Mr. José Ramon González, President and CEO of FHLBNY member Banco Santander Puerto Rico, San Juan, Puerto Rico, has been deemed eligible to serve as a Director of the FHLBNY and, as such, the FHLBNY has declared him elected to serve as a Director for a second three-year term commencing January 1, 2007.

The deadline for receiving voting ballots for the 2006 FHLBNY Director elections is November 2, 2006, at 5:00 p.m. Please be sure to return your ballot to:

FHLBNY Director Elections
Federal Home Loan Bank of New York
101 Park Avenue
New York, NY 10178-0599

If you have any questions, please call Barbara Sperrazza, Corporate Secretary, at (212) 441-6819.

FHLBNY Hosts Community Lending Forums and Honors 18 Member Banks for "Pioneering" The First Home Clubsm

The Home Loan Bank is midway through holding a series of housing and community lending forums. These forums are excellent opportunities for our member lenders and community groups to learn about our flexible community investment products and to network with housing industry practitioners. There is much to learn from previous successful partnerships. Through our Community Lending Programs, we have provided over $1 billion in low-cost loans to fund 246 local housing and economic development projects. And since 1990, through our Affordable Housing Program, we have helped to create 34,000 new homes for families and individuals with low incomes. Earlier this year, half-day meetings focusing on housing and community lending were held in Puerto Rico, Oneonta, and New York City. Over 70 members and community organizations participated in these forums. The next forum will held on October 23 at the Seaview Marriott in Galloway, New Jersey. Contact your Home Loan Bank calling officer for further details on this upcoming community investment forum.

A key product that fosters "Building Communities Together" is the Home Loan Bank's First Home Clubsm, a program that provides matching grant dollars for saving for down-payment and closing-cost assistance for income-qualified first-time homebuyers. Two thousand and six marks the tenth anniversary of the First Home Club. To celebrate this ten-year anniversary, the Bank is presenting special recognition "Pioneer" awards to member banks that signed up for the First Home Club in 1996. The First Home Club Pioneer recipients are being honored at each of the community investment forums. They are, from New Jersey: Commerce Bank, North; Kearny Federal Savings Bank; Magyar Bank; OceanFirst Bank; and The Provident Bank. From New York: Abacus Federal Savings Bank; Astoria Federal Savings and Loan Association; Chemung Canal Trust Company; First Niagara Bank; HSBC Bank USA, National Association; Manufacturers and Traders Trust Company (or M&T Bank); Medina Savings and Loan Association; North Fork Bank; Ontario National Bank; Provident Bank; The Bank of Castile; The Dime Savings Bank of Williamsburgh; and Ulster Savings Bank.

The First Home Club program has helped 2,369 families realize their dream of owning their first home. An additional 3,000 families are enrolled in the program through the 18 participating First Home Club members.

Four Community Lenders Join the Federal Home Loan Bank

Four community member lenders recently joined the Home Loan Bank. I am pleased to welcome two members headquartered in New Jersey and two members headquartered in New York to the FHLBNY.

The new members in New Jersey are: Indus American Bank, Iselin, and United Teletech Financial Federal Credit Union, Tinton Falls.

The new members in New York are: Bethpage Federal Credit Union, Bethpage, and LibertyPointe Bank, New York.

In Washington

FHLB Stakeholders Weigh In on FDIC Proposal to Consider Assessment on Advances

In July 2006, the FDIC published a proposed regulation to create a new risk-based deposit insurance assessment system. The proposal was issued in accordance with the Federal Deposit Insurance Reform Act of 2005, which mandates that final regulations implementing such a system be issued by November 5, 2006.

As part of this proposal, the FDIC requested comments on whether advances should be defined as "volatile" liabilities and accordingly, included in a new assessment scheme. Frankly, from any objective analysis, advances are not "volatile" liabilities and, therefore, should not be included in the new assessment plan. This view is shared by a significant number of stakeholders in the Home Loan Bank System. With the close of the comment period on September 22, 2006, the FDIC received 641 comments. The overwhelming majority of the comments were from Home Loan Bank stakeholders. And of this majority, 47 were from members of the Home Loan Bank of New York. I would like to thank all those who wrote to the FDIC on this proposal.

I would also like to thank each stockholder for your 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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