1326771--3/21/2008--Federal_Home_Loan_Bank_of

related topics

{condition, economic, financial}

{tax, income, asset}

{loan, real, estate}

{investment, property, distribution}

{cost, contract, operation}

{gas, price, oil}

The joint and several liability for Consolidated Obligations could decrease our earnings and ability to extend Mission Asset Activity to members on favorable terms. New or changes in legislation or Finance Board Regulations could increase our operating costs, lower profitability, raise uncertainty among our member stockholders, and reduce Mission Asset Activity and capitalization. Increased competition could decrease the amount of Mission Asset Activity, impair our access to the capital markets, and lower earnings and capitalization. The concentration of Mission Asset Activity and capital among a small number of members could significantly affect our financial condition, pricing of Mission Asset Activity, and profitability. The amount of our retained earnings may be insufficient to preserve a competitive dividend return or protect stockholders capital investment against impairment. Changes in relevant accounting standards, especially SFAS 133 and SFAS 91, could materially increase earnings volatility and consequently reduce the quality of members capital investment, the amount of Mission Asset Activity and the amount of capital. Economic downturns could decrease our Mission Asset Activity and lower our profitability. Changes in interest rates and mortgage prepayment speeds could significantly reduce our ability to pay members a competitive dividend from current earnings. Our spreads on assets to funding costs may narrow because of changes in market conditions and competitive factors, resulting in lower profitability. We are exposed to credit risk that, if realized, could materially and adversely affect our financial condition and results of operations.

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1326771--3/21/2008--Federal_Home_Loan_Bank_of_Cincinnati