President's Report

January 30, 2007

At the Bank

Dividend for the Fourth Quarter of 2006 Declared at 7.00%

I am pleased to report that at their January 18 meeting, our Board of Directors approved a cash dividend for the fourth quarter of 2006 at the rate of 7.00 percent (annualized). The Home Loan Bank’s dividend rate for the third quarter was 6.25 percent. The dollar amount of the fourth quarter dividend will be approximately $67 million. The dividend will be distributed to member lenders on January 31, 2007.

The average rate for dividends paid on the basis of stock ownership in 2006 was 6.06 percent, and the total cash dividend paid for these four quarters was approximately $230 million compared with $184 million in 2005. And for the year, the Bank earned $285.2 million, the highest in the history of the Home Loan Bank, up 24 percent from the $230.2 million of earnings for 2005.

Net income for the quarter ended December 31, 2006, was $70.3 million, an increase of 25 percent compared with $56.2 million for the same period in 2005. Net interest income increased $25.8 million, or 25 percent, to $129.2 million for the quarter, up from $103.4 million for the same period in 2005. This increase in net interest income is due primarily to better spreads on advances and investments combined with increased earnings on our capital due to higher interest rates.

At the close of business on December 31, 2006, total assets were $81.7 billion, as compared to $85 billion at year-end 2005. Advances were down to $59 billion, compared with $61.9 billion at year-end 2005, and represented 72.20 percent of total assets. The decrease in advances was mainly caused by the merger of former members with institutions out of our District service area.

Investments and short-term money-market instruments declined 3.00 percent to $20.5 billion, compared with $21.2 billion at year-end 2005. MPF member mortgage assets were approximately the same at the end of 2006, $1.5 billion, as compared to year-end 2005.

The Board of Directors ratified the funding of 69 affordable housing projects in the two 2006 Affordable Housing Program (AHP) funding rounds. A total of $23,854,505 was awarded to these projects, and as a result, 3,449 new affordable housing units will be created in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands. These 69 successful public/private AHP partnerships will generate almost $543 million in total expenditures, producing jobs as well as housing.

The audit of our 2006 financials is underway, and the enclosed unaudited statements are subject to change until the audit is completed. A Form 10-K, including the audited financials, will be sent to you after it is filed with the SEC.

The Home Loan Bank achieved solid financial results in 2006. The Bank maintained a risk/reward profile that generates sustainable and consistent earnings. We continued to follow our low-risk, conservative approach to investing while remaining a mission-focused, advances-oriented Home Loan Bank.

James W. Fulmer Sworn In as New Director

At the January Board meeting, James W. Fulmer was sworn in as a newly elected member of the Board. Mr. Fulmer has served as a director of The Bank of Castile since 1988, has been its Chairman since 1992,and is currently its President and CEO. He also has served as a director and President of Tompkins Trustco, Inc., since 2000. Before joining The Bank of Castile, Mr. Fulmer held various executive positions with Fleet Bank of New York (formerly known as Security New York State Corporation and Norstar Bank) for approximately 12 years. Mr. Fulmer has been active in many professional and community service organizations.

We welcome Jim to the Board. We also thank former Director Ken Abt, Chairman, President and CEO, First Federal Savings of Middletown, for his contributions during his many years of service on our Board.

In Washington

FHFB Adopts Interim Rule on Appointed Directors

On January 18, 2007, the Federal Housing Finance Board (FHFB) unanimously adopted an interim final rule that will permit the Federal Home Loan Banks to identify potential Public Interest Directors. These candidates will then be submitted to the FHFB for approval. Ultimately, this action may allow the appointment of the full complement of directors on the 12 local Boards of Directors of the Federal Home Loan Banks.

And with respect to retained earnings requirements, FHFB Chairman Ronald Rosenfeld indicated in December that, while the FHFB will not adopt a rule on retained earnings immediately, the FHFB is in the process of developing a risk-based capital rule. More recently, Chairman Rosenfeld was quoted in the American Banker on January 24: "In relation to advances, clearly … [mortgages and mortgage-backed securities] have a higher degree of risk and should have more capital. The goal is that the banks in the system have adequate retained earnings."

The Federal Home Loan Bank of New York was positioned to quickly meet the earlier proposed retained earnings rule. It is my full expectation that whatever retained earnings policy is finally adopted by the FHFB, the Federal Home Loan Bank of New York will be able to meet the new requirements quickly.

Looking Ahead

The Board and management of the Bank are committed to maintaining a strong bank that can meet the liquidity and community investment needs of our members. It is often noted that we are an "advances bank." I am especially proud that while I have been CEO our advances have increased four-fold. However, we are beginning to see a kind of consolidation among our member banks which causes us to lose portions of the advances book we have carefully built because acquiring banks from outside our district are not permitted to keep membership and their advances at the Federal Home Loan Bank of New York.

We will continue to grow the business we do with the banks, thrifts and credit unions who remain headquartered in New Jersey, New York, Puerto Rico and the United State Virgin Islands. And we will also be seeking new members from the life insurance companies who are based in our district and now find membership attractive because of the new capital plan which became effective one year ago.

In 2006 the Federal Home Loan Bank of New York delivered solid results and kept a low-risk profile. We paid a good dividend and continued to build retained earnings.

We did this with your business and we are grateful for your continued support.

In 2007, we will continue to work to serve our members, fulfill our public mission, meet our stakeholders' needs, and maintain our leadership position among the Home Loan Banks.

Thank 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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