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2005 Press Release

FOR IMMEDIATE RELEASE

Contact:
Terri McKay, FHLBank of Pittsburgh: 412-288-2830; cell: 412-523-8511

FEDERAL HOME LOAN BANK OF PITTSBURGH TO RESTATE EARNINGS TO CORRECT FAS 133 ACCOUNTING

PITTSBURGH, August 25, 2005 — The FHLBank of Pittsburgh announced today it will restate its financial results for the years 2001 through 2004, and the first quarter of 2005, primarily to correct errors related to the application of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), on certain economically effective hedging relationships. In light of this announcement, investors and others should no longer rely on the FHLBank's previously released financial statements for the periods being restated.

For known items, management anticipates the cumulative impact of the restatement will be an approximate $21 million decrease in retained earnings as of June 30, 2005, before assessments for the Affordable Housing Program and REFCORP. The FHLBank is continuing its review of several additional FAS 133-related issues, the outcome of which could result in a material change to this estimate. Effects on previously reported net income of individual periods will be significant, but management does not expect the restatement to adversely affect 2005 full-year earnings.

"The need for this restatement came about through the SEC registration process. The purpose of the restatement is to correct errors and ensure that we have properly and precisely applied the FAS 133 accounting rules, which are exceedingly complex," said James D. Roy, President and CEO.

The FHLBank misapplied FAS 133 accounting rules for certain derivatives used to hedge its mortgage portfolio and incorrectly used the "short-cut" method of accounting as provided for under FAS 133 for certain hedging relationships. Going forward, the FHLBank intends to increase its use of more traditional, non-derivative-based hedging and funding strategies for the mortgage portfolio.

The restatement amounts for each quarterly and annual period subject to restatement are not known at this time, nor can the impact on the FHLBank's Affordable Housing Program and REFCORP assessments be determined at this time. As of March 31, 2005, the last date of FHLBank financial statements, the FHLBank's retained earnings prior to the impact of any restatements were approximately $116 million and total capital was approximately $2.6 billion.

The FHLBank is withdrawing its registration statement with the Securities and Exchange Commission. Upon completion of the restatement, currently expected to take a minimum of three months, the FHLBank will move toward completing SEC registration.

Background information
The need for restatement results from the incorrect application of hedge accounting under FAS 133 and the resultant loss of hedge accounting treatment in two areas: mortgage portfolio hedges and certain hedges for which the FHLBank applied the "short-cut" treatment.

The FHLBank's mortgage portfolio hedging strategy has had the economic effect of converting fixed-rate assets into variable rate for a significant portion of their remaining life, a technique referred to as "partial-term hedging." From an accounting standpoint, both the derivative hedges and the underlying assets were being marked-to-market through the income statement. The economic performance of these hedging activities has been highly satisfactory and consistent with expectations; nevertheless, the specific techniques applied do not satisfy the requirements for hedge accounting treatment under FAS 133. These derivative positions must be marked-to-market, but the underlying changes in fair value of the mortgage portfolio do not qualify for the same treatment, giving rise to the need to restate previous financial results.

The second area for which hedge accounting will no longer be applied to certain hedging relationships pertains to the use of the "short-cut" method of hedge accounting. The "short-cut" method of accounting as provided for under FAS 133 allows the assumption that the change in fair value of a hedged item exactly offsets the change in value of the related derivative. These instruments, for which the FHLBank should have used the "long-haul" method but instead designated under the "short-cut" method, either do not qualify for hedge accounting or have deficiencies in certain documentation and reporting requirements, even though the hedges were highly effective. The "long-haul" method of accounting requires the calculation of the changes in fair value of the derivative and the hedged items independently.

Statements contained in this release, including statements describing the objectives, projections, estimates or future predictions in the FHLBank's operations, may be forward-looking statements. These statements may be identified by the use of forward-looking terminology such as anticipates, believes, could, estimate, may, should and will, or their negatives or other variations on these terms. By their nature, forward-looking statements involve risk or uncertainty, and actual results could differ materially from those expressed or implied, or could affect the extent to which a particular objective, projection, estimate or prediction is realized.

With assets of approximately $60 billion, the FHLBank of Pittsburgh is a government-sponsored enterprise that uses private capital to provide a steady stream of low-cost funding to nearly 340 member financial institutions in Delaware, Pennsylvania and West Virginia. Created by Congress in 1932 to support housing finance, the FHLBanks' mission in more recent years has been expanded to include financing for business startup and expansion and a variety of community and economic development needs.