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Bank Lending TeamsSUMMARYBank lending teams are experienced teams of bankers that service commercial small to mid-market clients, often in metropolitanareas, as part of an ongoing effort to invest in high-growth areas and deliver a broad range of financial products and services to theirclients. These teams reach out directly to their clients and have a certain amount of autonomy and independence to make decisionsin the field quickly without being mired in bureaucracy. Most teams have expertise in small business lending including multifamily andcommercial real estate. Recently, expertise has expanded into structure finance and asset lending. The size of teams can vary greatlyfrom just a few individuals to 15 or 20. The average team consists of 6 to 10 members.PURPOSE» Provide clients with creative structures and highly personalizedservice» Bring business to the clients: moving away from connotations oforder tracking when business comes to the bank» Increase salesPOSITIVES» Business gets done fast (i.e. can close a loan in 30-60 days)» Teams have large amounts of autonomy and independence» Most decision making can be done in the field and at a local salesoffice» Lending teams report directly to senior management» Convenient for the client (i.e. single point of contact)» Teams have experience, depth, breadth of knowledge, and bringstheir relationships with them to their new bankFHLBNY» Break the hierarchical mold and close loans as fast as possible» Operate on service, not price: These teams do not offer the bestrates, but are growing tremendously because small firms wantthings to get done as soon as possible with the fewest amount ofhasslesNEGATIVES» Poaching: Banks are poaching lending teams of other banks. Thiscould cause the biggest institution to win out the business» This model requires a high concentration of small to mid-sizedbusinesses» This model may reach a saturation point» Local and political atmosphere can impact growth of small to midsized urban businesses depending on rules, taxes, and regulationsimposed. This could cap the amount of lending teams needed» Lending teams may have little or any loyalty to their employers25

Consider PartneringWith Your Local Real Estate AgentsThe FHLBNY conducted a survey of members and realtors to discern whethercollaboration could improve between lenders and real estate agents togenerate more referral business.Tips to Gain Realtor Referral BusinessReal estate agents recommended improvement in several areas to helpincrease their loan referrals:» Increase flexibility in mortgage offerings. Have a diverse product suite, as well asthe ability to work with the borrower to find a mutually-acceptable mortgagesolution. Of course, members will need to do so within their establishedcredit/underwriting and risk management guidelines.» Improve speed of pre-approvals/commitments. Implement organizationalchanges that lead to faster communication back to buyers and their real estateagents.» Add availability in the evenings and on weekends. Employ loan originators who areavailable to assist agents and borrowers during non-business hours — times whenagents and borrowers are most likely to be searching for a home.» Communicate change and value to real estate agents. Use on-site visits and othereducational tools to inform potential customers about your mortgage options,especially after organizational improvements or changes have been made.FHLBNY26

CrowdfundingCrowdfunding is the practice of funding a project or venture by raising smallamounts of money from a large number of people, typically using an internet ndingProblemSolvedIdeaFundedAdviceInformation Online Crowdfunding platforms arepositioned at the intersection to ensureinvestors and entrepreneurs collaborateas well as investFHLBNY27

Crowdfunding Has Exploded!In2010There were There were ral Crowdfunding and Real-Estate Crowdfunding platforms arelaunching at a rapid pace.»Experts agree, Crowdfunding is destined to accelerate, with at least 15additional Real-Estate platforms in pre-launch and many more likelyplanned.»New platforms are emerging quickly, particularly sites serving niche markets.In2015There are e Real-EstateCrowdfunding Sites85Are in the USFHLBNY28

MEMBER BORROWING TRENDSFHLBNY

FHLBNY’s MissionTo advance housing opportunity and local community development bymaximizing the capacity of community-based member-lenders to serve their markets.FHLBNY Lines of BusinessThe four business lines help meet Members’ needs & achieve the FHLBNY Mission.Advance Characteristics:TENOR:» Overnight to 30 yearsTERM:» Fixed-Rate, Floating Rate, Callable, Putable, ForwardStarting, or AmortizingPURPOSE:» Liquidity management» Asset/liability management Transactional micro hedges Balance sheet macro hedges» Minimizing liability costs» Wholesale leveraging» Funding retail loan growth» Prefunding branchesFHLBNY30

Advance TrendsThe growth in member balance sheets and the increased focus on interest rate riskare the main drivers behind member funding preferences.Member Advances OutstandingFHLBNY Advances Issued & Still Outstanding 110 34ALL MEMBERS:76% 32 3162% 30 100Thrifts32%,68CommercialBanks46%, 99 28 26InsuranceCompany19%, 6 90 29 24 80Credit Unions3%, 29BILLIONS102Bs0.01%, 20 70% 18 18 16 14 7045% 13 122012 1017% 28% 8 8 8 60 6 4 LLIONS 22FHLBNY 2 02013201412% 69% 46% 215% 4Thru 9/30/156%6% 3 14%6% 4%6% 8%3% 24% 2% 22.1% 2 2 1.6 2 1 1% 4% 1 1 0.60 0.6 1.14%Due in 11 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 YearsYear or Less5 Years &Over31

Advances Outstanding by Type:Our Advance Book is Becoming More DiverseYear-end 2004 through Year-to-date 2015 62 67 59 81100% 103 91 77 67 72 89 97 89 10090% 9080% 8070% 7060% 6050% 50BILLIONSPERCENTAGE BY ADVANCE PRODUCT TYPE 11040% 4030% 3020% 2010%0% Dec-11Dec-12Dec-13Dec-14Sep-15PutableST FixedMT FixedLT FixedFloating RateOvernightRepoCallableFIXCAPOutstanding Amount 032

What is Driving Members’ Need to Borrow?Segmenting our markets to better understand our members’ needs isessential to designing effective products and strategiesUses of FHLBNY Advances»»»»»Liquidity managementAsset/liability management– Transactional micro hedges– Balance sheet macro hedgesWholesale leveragingFunding retail loan growthPrefunding branchesFHLBNY Member SegmentationSIRR Managers9528%Inactive Borrower6018%Leverager103%Types of FHLBNY Advances»Overnight to 30 years»Fixed or floating rate»Amortizing or bullet structure»Forward iquidity Users10029%33

2,000 2,0002,000How Members Use Advances to Fund Their Balance Sheet0024000240 724824 967248 1209672 14412014416819221624026428831233696 168120 192144 216168 240192 264216 288240312264336288360312 36033648Month Month atesFlat Mtg:RatesFlatMtg:RatesDow n 100bpMtg:RatesDow nMtg:Rates100bpDow n 100bpMtg:RatesUp 200bpMtg:RatesUp 200bpUp 200bpMtg:RatesMtg:RatesUp 100bpMtg:RatesUp 100bpUp 100bpMtg:RatesMtg:RatesUp 300bpMtg:RatesUp 300bpUp lanceBalance30 Year FRM Balances in Various Rate 296120144168 192Month2162402642883123363600244872Match FundingIndividual Loans vs. Individual Advances/Deposits96120144168 192Month216240264288312336Pool FundingGroup Loans vs. Group Advances/Deposits(loans typically has similar characteristics i.e. type, collateral & purpose)Advantages» Easy to understand» Easy to track PrepaymentsDisadvantages» Cumbersome portfolio grows » Fund in bulkPredominantly used for Commercial LoansFHLBNYAdvantages» Less tracking requiredDisadvantages» Prepayment assumptions arenot always correctPredominantly used for Residential Loans34360

Prefunding Branch DevelopmentWHAT CAN BE DONE TO REDUCE BRANCHING COSTS?Reduce Operating Construction and Operating Costs» Many institutions are opening smaller branches in aneffort to reduce construction and operating costs.» “New-style” branches— offices that look like retail storesare becoming popular in certain markets.Branch Pre-Funding» An alternative strategy for institutions that are members of the FHLBNY is to useour low-cost advance programs to pre-fund new branches.» Branch pre-funding allows members to obtain wholesale funding atdesired deposit projections rather than waiting for the deposits to materialize.» By borrowing from the FHLBNY you can immediately begin investing themoney that you plan to acquire with your expected new branch deposits.FHLBNY35

Credit ProductsEnhance your strategic flexibility with an FHLBNY credit productOvernight AdvanceFixed-Rate AdvanceFixed-Rate Advance with a LIBOR CapAmortizing AdvanceCallable AdvancePrincipal-Deferred Advance (PDA)Repo AdvancePutable AdvancePutable Advance with Customized StrikeAdjustable Rate Credit (Callable ARCs available as well)Letter of Credit (L/C)/Municipal Letter of Credit (MULOC)FHLBNY36

Fixed-Rate Advance With a LIBOR CapFixed-Rate AdvanceFIXED-RATE ADVANCEWITH A LIBOR CAPLIBOR CapFHLBNYMemberInstitution» The Fixed-Rate with Cap combines a fixed-rate borrowing with an embeddedinterest-rate cap in which the rate remains fixed but may be reduced quarterly if3-Month LIBOR rises above the pre-selected cap (with a floor of zero).» This product provides long-term funding where a member can extend liabilities,lock in spreads and preserve margins.» The feature of the embedded cap will provide additional protection against risingshort-term interest rates by lowering an institution’s cost of funds as rates rise.FHLBNY37

Example: 5 Year Fixed-Rate With Cap 1x MultiplierIn this scenario, the 5-year Fixed-Rate with 1x Cap with a strike of 2.50% would have an initial rate of 1.96%, 17 bps higherthan the regular 5-year bullet advance. This illustration demonstrates that this advance rate would decline in a rising rateenvironment – As indicated below, once 3-Month LIBOR rises and breaches the Cap strike of 2.50% in Q1 of year 4, theFixed-Rate with Cap would reset on quarterly basis, downward a basis point for every basis point 3-Month LIBOR is abovethe cap (floored at zero percent). If 3-Month LIBOR sets below the cap strike, the advance would return to its initial rate of1.96% on the quarterly reset date.3.53 Mo LIBOR Cap3 Mo LIBORRate 1x3PERCENT2.522.50%1.96%1.510.50.32%0Q1Q2Q3Year 1Q4Q1Q2Q3Year 2Q4Q1Q2Q3Year 3Q4Q1Q2Q3Year 4Q4Q1Q2Q3Q4Year 5Scenario as of October 6, 2015FHLBNY38

The Callable AdvanceThe Callable Advance is a Fixed-Rate Advance that gives members the option ofcalling (terminating) the advance on predetermined dates, prior to maturity,without incurring a prepayment fee.BenefitsProduct FeaturesCompetitively pricedMinimum Advance Size: 5 millionFixed-Rate for the life of the advanceMaximum Advance Size: 100 millionNo prepayment fee when called onspecified dateInitial Program Size: 3 billionFinal Maturities Available:3, 5, 7, or 10 yearsBetter cash flow match for fixed-ratemortgages & commercial loans held inportfolioLockout Periods:1, 2, 3, or 5 yearsCall Options:Bermudan (quarterly) orEuropean (one-time)Interest Payment:Quarterly based onActual/360 day countRequired Option Notification:9 business daysTake advantage of downward movementsin interest rates & steep yield curvesGood hedging tool against mortgageprepayment riskWhole loan and security collateral isacceptableFHLBNY39

Community Development ProgramsThe popularity of the CI program has been growing, particularly in the New Jersey region as of late,as Members have placed an emphasis on investing in their communities.TOTAL CI ADVANCES (DAILY AVERAGE)COMMUNITY LENDING PROGRAMSProject specific uses of CIP, UDA & RDA Funds 5,000 4,800Commercial/EconomicDevelopment 4,600Housing 4,400» Equipment Purchase forSmall Business Expansion 4,200 4,000» Debt Refinancing for SmallBusinesses 3,800 3,600 3,200 3,000 2,800 2,60011/8/12 – FHLBNY initiates DisasterRelief Funding program (DRF),designed for Members to assist inrebuilding communities affectedby Superstorm Sandy. FHLBNYallocates 1B in low-cost funding.Program closed 12/31/13. 2,400 2,200» Financing of housingprojects:» Debt Consolidation forSmall Businesses– Property acquisition» Handicapped-AccessibleVans– Permanent financing– Construction» Fire Stations and Trucks– Re-financing» Grocery Stores– Renovation/Rehabilitation» Retail Stores– Home Improvement» Educational Facilities 2,000 1,800» Healthcare Facilities 1,600» Office Buildings 1,400» Daycare Centers 1,200» Origination of single-familymortgages 20155/20156/20157/20158/20159/2015BILLIONS 3,400» Refinancing of single-familymortgagesFHLBNY40

Eligible Uses of Community Lending Program FundsCommunity InvestmentProgram (CIP)» Housing forfamilies/individuals withincomes at 115% or less ofthe area median income» Finance facilities thatbenefit low- and moderateincome households:–Provide services orpermanent jobs forhouseholds with incomesat 80% or less of the areamedian income–Located in neighborhoodswhere at least 51% of thehouseholds have incomesat or below 80% of thearea medianFHLBNYRural DevelopmentAdvance (RDA)» Finance EconomicDevelopment projects thatbenefit individuals orfamilies at or below 115%of the area medianincome–Project being financedmust reside in a location(unit of general localgovernment) with apopulation less than 25,000Urban DevelopmentAdvance (RDA)» Financing for EconomicDevelopment projects thatbenefit individuals orfamilies at or below 100%of the area medianincome–Project being financedmust reside in a location(unit of general localgovernment) with apopulation greater than25,00041

r Dividends Have Been Reliable andExceeded Market Reference RatesFHLBNY Dividend History9.0FHLBNY DividendFHLBNY3 Month LiborFed Funds (Effective Rate)8.07.06.05.04.03.02.01.042

FHLBNY Dividend Returns Have Also ConsistentlyExceeded Those of Other FHLBanksAverage FHLBank Dividend 0%FHLBNY1%2%3%4%5%43

CAUTIONS & CONSIDERATIONSFHLBNY

In General, Members Prefer to MaintainHigher Advance Capacity Levels250100%Collateral Lendable ValueIndebtednessAdvance Capacity90%20080%15060%50%10040%ADVANCE CAPACITYAMOUNT IN 012201320142015*Collateral amounts in billions are after pricing and haircuts.FHLBNY45

FHLBNY Eligible CollateralFHLBNY46

Reduction in the Number of Members on the WatchlistPoints to Improving Financial HealthMembers on Watchlist60Total54CUMEMBERS’ FINANCIAL UPDATEBANKS53 5351504745Earnings: Despite growing loan demand, marginpressure, persists negatively impacting earnings464337373938363534Capital levels: remained strong for the majority ofour members32303024 24 iquidity: On average, loans growing at a slightlyfaster pace than deposits, though membersremain highly liquidAsset quality: steady improvement across theboard ; while credit costs remain elevated actuallosses remain low,102010Q1NUMBER OF MEMBERS4047

FHLBNY Banks’ Credit Rating Trend (1Q2010 – 3Q2015)160LIQUIDITY - 10%1)2)Loans to DepositsLiquid Assets / Liabilities140ASSET QUALITY - 35%Charge Offs / LoansNPLs / Total Loans30-89 PD / Total LoansCAPITAL ADEQUACY - 35%6)7)8)9)Texas RatioLeverage RatioTier 1 RBC RatioTotal RBC RatioEarnings - 20%10)11)12)13)NIMROAROEEfficiencyFHLBNY Credit Score Legend1 - 2Excellent2-3Very Good4-5Average6Special Mention7-10WatchlistFHLBNY120NUMBER OF MEMBERS3)4)5)100806040200 22.01 - 44.01 - 66.01 - 88.01 - 2

fhlbny 2015 federal home loan bank of new york 101 park avenue new york, ny 10178 www.fhlbny.com and its Role in Preparing the Banking Sector for Rising Rates December 2015