Financial Highlights

1. As permitted by FASB Staff Position No. FIN 39-1, Amendment of FASB Interpretation No. 39 (FSP FIN 39-1), effective January 1, 2008, the Bank changed its accounting policy to offset fair value amounts for cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparty. The Bank recognized the effects of applying FSP FIN 39-1 as a change in accounting principle through retrospective application for all prior periods presented.
2. During 2008, on a retrospective basis, the Bank reclassified its investments in certain held-to-maturity negotiable certificates of deposit from "interest-bearing deposits in banks" to "held-to-maturity securities." Includes $307, $43, $580, $1,236, and $242, at December 31, 2008, 2007, 2006, 2005, and 2004, respectively, pledged as collateral that may be repledged.
3. As provided by the Federal Home Loan Bank Act of 1932, as amended, or regulations governing the operations of the Federal Home Loan Banks (FHLBanks), all of the FHLBanks have joint and several liability for FHLBank consolidated obligations, which are backed only by the financial resources of the FHLBanks. The joint and several liability regulation authorizes the Federal Housing Finance Agency to require any FHLBank to repay all or a portion of the principal or interest on consolidated obligations for which another FHLBank is the primary obligor. The Bank has never been asked or required to repay the principal or interest on any consolidated obligation on behalf of another FHLBank, and as of December 31, 2008, and through the date of this report, does not believe that it is probable that it will be asked to do so. The par amount of the outstanding consolidated obligations of all 12 FHLBanks was as follows:
   
   

   Yearend	Par amount
   2008	$1,251,542
   2007	1,189,706
   2006	951,990
   2005	937,460
   2004	869,242

   
   
4. During 2008, several members merged with nonmember institutions or were placed into receivership, including two large members, IndyMac Bank, F.S.B., and Washington Mutual Bank, which were placed into receivership. In accordance with SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS 150), the Bank reclassified the capital stock of these institutions from Class B capital stock to mandatorily redeemable capital stock (a liability).
5. Net interest margin is net interest income divided by average interest-earning assets.
6. The dividend benchmark is calculated as the combined average of (i) the daily average of the overnight Federal funds effective rate and (ii) the four-year moving average of the U.S. Treasury note yield (calculated as the average of the three-year and five-year U.S. Treasury note yields).
7. This ratio is calculated as dividends per share divided by net income per share. Dividends are based on earnings excluding the effects of Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities; SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities; and SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140 (together referred to as "SFAS 133") and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115 (SFAS 159). As a result, the dividend payout ratio may vary from the ratio referenced in the Bank’s Retained Earnings and Dividend Policy depending on the effects of SFAS 133 and SFAS 159.
8. This ratio is based on regulatory capital, which includes mandatorily redeemable capital stock (which is classified as a liability).