1330399--3/18/2010--Federal_Home_Loan_Bank_of

related topics

{loan, real, estate}

{capital, credit, financial}

{regulation, change, law}

{system, service, information}

{tax, income, asset}

{loss, insurance, financial}

{debt, indebtedness, cash}

{stock, price, share}

{financial, litigation, operation}

The Bank may fail to meet its minimum regulatory capital requirements, or be otherwise designated by the Finance Agency as undercapitalized, which would impact the Bank s ability to conduct business as usual, result in prohibitions on dividends, excess capital stock repurchases and capital stock redemptions and potentially impact the value of Bank membership. The Bank may be limited in its ability to access the capital markets, which could adversely affect the Bank s liquidity. In addition, if the Bank s ability to access the long-term debt markets would be limited, this may have a material adverse effect on its liquidity, results of operations and financial condition, as well as its ability to fund operations, including advances. The Bank invests in MBS. The MBS portfolio shares risks similar to the MPF Program as well as risks unique to MBS investments. The increased risks inherent with these investments have adversely impacted the Bank s profitability and capital position and are likely to continue to do so during 2010. The Bank s financial condition or results of operations may be adversely affected if MBS servicers fail to perform their obligations to service mortgage loans as collateral for MBS. The Bank is subject to credit risk due to default, including failure or ongoing instability of any of the Bank s member, derivative, money market or other counterparties, which could adversely affect its profitability or financial condition. The Bank is subject to legislative and regulatory actions, including a complex body of regulations, including Finance Agency regulations, which may be amended in a manner that may affect the Bank s business, operations and/or financial condition and members investment in the Bank. The Bank is jointly and severally liable for the consolidated obligations of other FHLBanks. Additionally, the Bank may receive from or provide financial assistance to the other FHLBanks. Changes in the Bank s, other FHLBanks or other GSEs credit ratings may adversely affect the Bank s ability to issue consolidated obligations and enter into derivative transactions on acceptable terms. Fluctuating interest rates or the Bank s inability to successfully manage its interest rate risk may adversely affect the Bank s net interest income, overall profitability and the market value of its equity. The loss of significant Bank members or borrowers may have a negative impact on the Bank s loans and capital stock outstanding and could result in lower demand for its products and services, lower dividends paid to members and higher borrowing costs for remaining members, all which may affect the Bank s profitability and financial condition. The Bank faces competition for loans, mortgage loan purchases and access to funding, which could negatively impact earnings. The MPF Program has different risks than those related to the Bank s traditional loan business, which could adversely impact the Bank s profitability. The Bank s Affordable Housing Program and other related community investment programs may be severely affected if the Bank s annual net income is reduced or eliminated. The Bank relies on externally developed models to manage market and other risks, to make business decisions and for financial accounting and reporting purposes. These models are run and maintained by the Bank. In addition, the Bank relies on externally developed models to perform cash flow analysis on MBS to evaluate for OTTI. These models are run and maintained outside of the Bank. In both cases, the Bank s business could be adversely affected if these models fail to produce reliable and useful results. The Bank s business is dependent upon its computer information systems. An inability to process information or implement technological changes, or an interruption in the Bank s systems, may result in lost business. The Bank s accounting policies and methods are fundamental to how the Bank reports its market value of equity, financial condition and results of operations, and they require management to make estimates about matters that are inherently uncertain. The Bank may be adversely affected by litigation. The Bank s controls and procedures may fail or be circumvented, risk management policies and procedures may be inadequate and circumstances beyond the Bank s control could cause unexpected operating losses. In addition, the loss of key employees may have an adverse effect on the Bank s business and operations.

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1330399--3/18/2010--Federal_Home_Loan_Bank_of_Pittsburgh