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2004 Press Releases

FOR IMMEDIATE RELEASE

Contact: Terri McKay, 412-288-2830, tmckay@fhlb-pgh.com
       
 
FEDERAL HOME LOAN BANK OF PITTSBURGH ANNOUNCES
FIRST QUARTER RESULTS

PITTSBURGH, May 11, 2004 — The Federal Home Loan Bank of Pittsburgh (FHLBank) today announced first quarter 2004 earnings of $16.5 million, compared to $15.3 million in the first quarter of 2003. Return on equity for the quarter is 2.70 percent, compared to 2.83 percent a year ago.

"Our main business lines — member loans and mortgage acquisition — showed strong customer acceptance and growth, yet our earnings performance continues to be constrained by low interest rates along with higher-cost debt, which matures in large amounts beginning in the third quarter of this year," said James D. Roy, president and chief executive officer. "At the same time, we are heartened to see results from the measures we put into place to limit earnings volatility."

Roy added, "We anticipate improving performance in the third quarter and beyond, due to the roll-off of the debt. However, the brief interest rate downturn in February has prompted another wave of refinancings, which is likely to make the second quarter another difficult one."

Included in the quarter's results are gains of $2.6 million from the sale of municipal securities. Also included are net gains on derivatives and hedging activity of $12.1 million. These gains were partially offset by increased premium amortization of $6.2 million associated with paydowns on mortgage loans.

First Quarter 2004 Highlights

• Loans to members — Loans to members were $38.0 billion at period-end, an increase of 29 percent over first quarter 2003, which was $29.4 billion.
• Acquired Mortgage Assets — Mortgage Partnership Finance® Program loans stood at $8.5 billion at March 31, 2004, up from $7.9 billion at first quarter-end 2003 and $8.1 billion at year-end 2003.
• Retained earnings — The FHLBank added $8.2 million to retained earnings in the first quarter, after paying stockholders $8.2 million at a dividend rate of 1.375 percent annualized. This action increased the retained earnings balance to $51.3 million at March 31, 2004.
• Capital — Total capital at period-end stood at $2.6 billion, or 4.6 percent of assets, which is the same percentage as March 31, 2003.

First Quarter Conference Call

Roy will host the conference call on first quarter earnings on Thursday, May 13, 2004, at 9 a.m. Stockholders will be invited to ask questions; all others may participate in a "listen only" mode. Interested parties may register for the call through the FHLBank's members-only Web site, www.bank4banks.com, or via e-mail to pr@fhlb-pgh.com.

Forward-looking Information

Statements contained in this news release, including statements describing the objectives, projections, estimates or future predictions of the FHLBank may be "forward-looking statements." These statements may use forward-looking terminology, such as "anticipates," "believes," "could," "estimates," "may," "should," "will," or their negatives or other variations on these terms. The FHLBank 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: economic and market conditions; demand for member loans resulting from changes in the FHLBank's member deposit flows and credit demands; volatility of market prices, rates and indices that could affect the value of investments or collateral held by the FHLBank as security for the obligations of FHLBank members and counterparties to interest rate exchange agreements and similar agreements; political events, including legislative, regulatory, judicial or other developments, that affect the FHLBank, its members, its counterparties and/or investors in the consolidated obligations of the FHLBank; competitive forces, including without limitation other sources of funding available to the FHLBank's members, other entities borrowing funds in the capital markets, and the ability to attract and retain skilled individuals as employees of the FHLBank; ability to develop and support technology and information systems, including the Internet, sufficient to manage the risks of the FHLBank's business activities effectively; changes in investor demand for consolidated obligations and/or the terms of interest rate exchange agreements and similar agreements, including changes in the relative attractiveness of consolidated obligations as compared to other investment opportunities; timing and volume of market activity; ability to introduce new FHLBank products and services, and successfully manage the risks associated with those products and services, including new types of collateral securing loans; risk of loss arising from litigation that might be filed against the FHLBank or other FHLBanks; inflation or deflation; and changes in credit ratings and related market pricing associated with the FHLBank's investments.

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The Federal Home Loan Bank of Pittsburgh, with assets of more than
$57 billion, serves approximately 350 financial institution members in Delaware, Pennsylvania and West Virginia and is part of the Federal Home Loan Bank System. The System comprises twelve private cooperatively owned banks that provide wholesale housing finance, community lending and correspondent banking services to member banks, savings institutions, credit unions and insurance companies.