President's Report

January 31, 2008

At the Bank

Dividend for the Fourth Quarter of 2007 Declared at 8.40%

I am pleased to report that at their January 17, 2008 meeting, our Board of Directors approved a cash dividend for the fourth quarter of 2007 at the rate of 8.40% (annualized). The Home Loan Bank’s dividend rate for the third quarter was 8.05%. The dollar amount of the fourth quarter dividend was approximately $94 million. The dividend was distributed to member lenders on January 31, 2008.

The average rate for dividends paid on the basis of stock ownership in 2007 was 7.86%, and the total cash dividend paid for these four quarters was approximately $309 million. And for the year, the Bank earned $323.1 million, the highest earnings in the history of the Home Loan Bank, up 13.3% from the $285.2 million earned in 2006.

FHLBNY members have enjoyed a fair return on their investments over the years with a strong dividend of 8.4% in the fourth quarter of 2007. During the past four years, the FHLBNY’s quarterly dividend averaged 5.29%.

Net income for the quarter ended December 31, 2007, was $96.0 million, an increase of 36.7% compared with $70.3 million for the same period in 2006. Net interest income increased $18.6 million, or 14.4%, to $147.8 million for the quarter, up from $129.2 million for the same period in 2006. This increase in net interest income was due primarily to strong advance demand from our community member lenders as well as a favorable funding environment.

At the close of business on December 31, 2007, total assets were $109.7 billion compared to $81.7 billion at year-end 2006. Advances were up to $82.1 billion, compared with $59 billion at year-end 2006, and represented 74.8% of total assets. During the third and fourth quarters of 2007, advances balances increased dramatically as a result of a liquidity shortage that affected the U.S. banking system; during this period, a number of our member lenders looked to the Home Loan Bank for assured, low cost liquidity.

We all know that past performance is never a guarantee of future results. These are very challenging times for our economy and the volatility we are seeing in the credit markets is without precedent. Our earnings are very dependent on the cost of funding our business which in turn is dependent on investors’ appetite for yield and the length of time they are willing to invest. These market conditions are having an effect on all borrowers, including Government Sponsored Enterprises like us. We will continue to work hard to produce good returns for our stockholders. However, the upward dividend trend shown in the preceding graph cannot be counted on in these difficult times.

The Board of Directors ratified the funding of 104 affordable housing projects in the two 2007 Affordable Housing Program (AHP) funding rounds. A total of $42,526,576 was awarded to these projects, and, as a result, 4,970 new affordable housing units will be created in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands. These 104 successful public/private AHP partnerships are expected to generate almost $895 million in total expenditures, producing housing and jobs.

The audit of our 2007 financials is underway, the unaudited statements are subject to change until the audit is completed. Click here to view the unaudited statements.

The Home Loan Bank achieved solid financial results in 2007. The Bank maintained a risk/reward profile that generated 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.

Looking Ahead

We expect that the national economy will continue to experience the fall out and disruption caused by the subprime mortgage fiasco. But during this dark storm, we also expect that there will continue to be a bright, solid sector in the financial service industry: our national network of community bankers. The reason for this strength is simple: time tested traditional banking. Community lenders know their communities, perform due diligence, rigorously underwrite loans, provide suitable home mortgages, and have access to the Federal Home Loan Bank System for reliable liquidity. And to be clear on this point, the Home Loan Banks can tap the credit markets at competitive prices primarily due to the solid mortgages produced by our member community lenders.

The Board and management of the Bank are fully committed to maintaining a strong bank that can meet the liquidity and community investment needs of our members -- in all lending seasons.

In 2008, we will continue to fulfill our public mission of advancing housing opportunity and local community development by maximizing the capacity of our community-based member-lenders to serve their markets.


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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