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Office of Finance Announces First Quarter 2008 Preliminary Combined Operating Highlights for the Federal Home Loan Banks

The Office of Finance is pleased to announce first quarter 2008 preliminary combined operating highlights for the Federal Home Loan Banks. These highlights have been prepared from the unaudited financial information of each FHLBank and are subject to change. Current financial reports and other SEC filings for individual FHLBanks can be obtained by searching the EDGAR database.

Balance Sheet Highlights

Combined total assets were $1.323 trillion at March 31, 2008, an increase of 4.0% from $1.272 trillion at year-end 2007. Advances (secured loans to members) increased 4.3% to $913 billion and represented 69.0% of total assets. Investments rose 4.8% to $311 billion and member mortgage assets, at $91 billion, were down 0.9% from year-end 2007. Consolidated obligations outstanding were $1.217 trillion at March 31, 2008, an increase of 3.3% from $1.179 trillion at year-end 2007. Total consolidated obligations outstanding at March 31, 2008 consisted of discount notes ($394 billion) and bonds ($823 billion), an increase of 4.6% and 2.6%, respectively, from year-end.

The principal investments of the FHLBanks are mortgage-backed securities, overnight and term Federal funds sold, commercial paper and GSE securities. Approximately 99% of the GSE securities, commercial paper, and mortgage-backed securities (MBS) were rated AAA/Aaa or the short-term equivalent at March 31, 2008. Less than one percent of total investment securities were rated below investment grade at March 31, 2008.

FHLBank mortgage purchases are restricted to fixed-rate mortgage loans with maturities ranging from 5 years to 30 years. The weighted average FICO® score and loan-to-value ratio (LTV) recorded at origination for loans held in portfolio at March 31, 2008 was 738 with a 67% LTV for the Mortgage Partnership Finance® Program and 748 with a 69% LTV for the Mortgage Purchase Programs (MPPs). Each FHLBank believes it has limited exposure to subprime loans due to its business model, conservative policies pertaining to advances collateral and investments, and low credit risk due to the design of its mortgage loan program(s).

Operating and Capital Results

Combined net income for first quarter 2008 was $697 million, a 12.2% increase from the $621 million recorded the previous year. Combined net income was reduced by the FHLBank of Chicago’s net loss of $78 million, which includes an other-than-temporary impairment loss of $33 million on certain private-issue MBS primarily collateralized by first lien mortgages to subprime borrowers. For additional information, please visit the FHLBank of Chicago web site (www.fhlbc.com). The remaining FHLBanks do not expect to record any material other-than-temporary impairment charges as of March 31, 2008. Each FHLBank actively monitors the credit quality of its MBS and do not expect any further material credit losses on these investments at this time. However, if delinquency and/or loss rates on mortgages and/or home equity loans continue to increase, and/or there is a rapid decline in residential real estate values, some FHLBanks could experience reduced yields or losses on these investment securities. Total combined capital was $56 billion at March 31, 2008, a 4.2% increase from December 31, 2007. The FHLBanks contributed $89 million in first quarter 2008 to the Affordable Housing Program, an increase of 27.1% from the same period one year ago, reflecting the increase in net income.

Due to the ongoing interest in FHLBank lending and collateral policies, we have added additional information to the Office of Finance web site. This document is formatted as a series of questions and answers, and the link can be found under “Frequently Asked Questions” on the main web page.

About the FHLBanks

The primary purpose of the FHLBanks is to ensure the flow of credit and other services for housing and community development to member financial institutions. This liquidity serves the public by enhancing the availability of residential mortgage and community investment funds. As cooperatives, the FHLBanks seek to maintain a balance between their public policy mission and their obligation to provide adequate returns on the capital supplied by members. The FHLBanks achieve this balance by delivering low-cost financing, and providing members a viable alternative to the secondary mortgage market via the mortgage loan programs, while paying a dividend. The FHLBanks also help members with other local housing and community development needs through self-funded affordable housing programs.

The First Quarter 2008 Combined Financial Report for the FHLBanks is expected to be filed with the Federal Housing Finance Board and available on the Office of Finance web site on May 14, 2008.

The FHLBanks have delivered innovation and service to the U.S. housing market for over 75 years, and currently have approximately 8,100 members in all 50 states, American Samoa, Guam, Puerto Rico, and the Northern Mariana and U.S. Virgin Islands. Please contact Mike Ciota at 703-467-3608 (ciota@fhlb-of.com) for additional information.