8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 26, 2009

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
(Exact name of registrant as specified in its charter)

Federally chartered corporation	000-51398	94-6000630
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS EmployerIdentification No.)

600 California Street
San Francisco, CA 94108
(Address of principal executive offices, including zip code)

(415) 616-1000
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 26, 2009, the Federal Home Loan Bank of San Francisco (the "Bank") issued a press release announcing its operating highlights for the year ended December 31, 2008 and the fourth quarter 2008. A copy of the press release is included as Exhibit 99.1 to this report. Also on February 26, 2009, the Bank issued a member communication regarding the Bank's operating highlights for 2008 and the fourth quarter 2008 and posted on its website a "Q&A" that discusses issues relating to the Bank's operating results for 2008 and the fourth quarter 2008, including the "other-than-temporary impairment" charge taken by the Bank in the fourth quarter of 2008, copies of which are included as Exhibit 99.2 and 99.3 to this report, respectively. The information contained in Exhibits 99.1, 99.2and 99.3 are being furnished pursuant to Item 2.02 of this Current Report on Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amende d (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(c)	Exhibits
	99.1	Press Release, dated February 26, 2009, issued by the Federal Home Loan Bank of San Francisco
	99.2	Special Attention Bulletin No. 1318 (Operating Highlights for 2008 and Fourth Quarter 2008) dated February 26, 2009, issued by the Federal Home Loan Bank of San Francisco
	99.3	Q&A Operating Results for 2008 and Fourth Quarter 2008

Signature(s)

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Federal Home Loan Bank of San Francisco
Date:  February 27, 2009	By:               /s/ Lisa B. MacMillen
	Lisa B. MacMillen        Executive Vice President and Chief Operating Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release, dated February 26, 2009, issued by the Federal Home Loan Bank of San Francisco
99.2	Special Attention Bulletin No. 1318 (Operating Highlights for 2008 and Fourth Quarter 2008) dated February 26, 2009, issued by the Federal Home Loan Bank of San Francisco
99.3	Q&A Operating Results for 2008 and Fourth Quarter 2008

EX-99.1

Exhibit 99.1

Federal Home Loan Bank of San Francisco Announces Operating Highlights

Reports Full Year 2008 Net Income of $461 Million, Fourth Quarter Net Loss of $103 Million, OTTI Charge of $590 Million

San Francisco, February 26, 2009 - The Federal Home Loan Bank of San Francisco today announced its 2008 operating highlights. These highlights have been prepared from unaudited financial information for the year ended December 31, 2008, and are subject to change. For the year ended 2008, net income was $461 million, compared with net income of $652 million for 2007. For the fourth quarter of 2008, the Bank had a net loss of $103 million, compared with net income of $231 million for the fourth quarter of 2007. For both the full year and the fourth quarter, net interest income increased and other income decreased relative to the year-earlier periods. The decreases in other income were chiefly due to an other-than-temporary impairment (OTTI) charge related to the Bank's non-agency mortgage-backed securities (MBS).

"The Federal Home Loan Bank of San Francisco continued to fulfill its mission of meeting member liquidity needs throughout 2008," said Dean Schultz, the Bank's president and chief executive officer. "Despite the challenging economic environment, in 2008 we continued to raise funds in the capital markets, provide liquidity to members, manage the credit risk of advances by adapting our credit and collateral terms to current market conditions, and take other actions to maintain the Bank's long-term financial strength."

Net interest income for 2008 was $1.4 billion, up from $931 million for 2007. Net interest income for the fourth quarter of 2008 was $468 million, up from $267 million for the fourth quarter of 2007. The increases in net interest income were primarily driven by a higher net interest spread on the Bank's mortgage portfolio (MBS and mortgage loans), as well as higher average advances and investment balances.

Other income for 2008 was a net loss of $690 million, compared to a net gain of $55 million for 2007. The loss in 2008 was primarily due to an OTTI charge of $590 million recorded in the fourth quarter of 2008 related to the Bank's non-agency MBS and to net interest expense on derivative instruments used in economic hedges of $120 million in 2008, compared to $4 million in 2007. Net gains associated with financial instruments carried at fair value were $889 million for 2008, which were almost completely offset by net losses on derivatives and hedged items of $888 million for 2008. Net gains associated with derivatives and hedged items were $56 million for 2007.

Other income for the fourth quarter of 2008 was a net loss of $575 million compared to a net gain of $75 million for the fourth quarter of 2007. The loss was primarily due to the $590 million OTTI charge described above and to net interest expense on derivative instruments used in economic hedges of $135 million for the fourth quarter of 2008, compared to net interest income on derivative instruments used in economic hedges of $12 million for the fourth quarter of 2007. These declines were partially offset by net gains associated with financial instruments carried at fair value of $744 million, partially offset by net losses associated with derivatives and hedged items of $609 million for the fourth quarter of 2008. Net gains associated with derivatives and hedged items were $62 million for the fourth quarter of 2007.

Based on analyses and reviews of the Bank's non-agency MBS, the Bank determined that 15 of its non-agency MBS with a carrying value of $1.5 billion were other-than-temporarily impaired at December 31, 2008, because the Bank determined that it was probable that it would not collect all of the contractual amounts due on each of the securities. The estimated economic loss on these securities as of December 31, 2008, is $27 million. Because the fair values of non-agency MBS have declined dramatically in today's illiquid MBS market, the difference between the carrying value of $1.5 billion on the affected securities and the fair value of those securities determined as of December 31, 2008, is $590 million, far in excess of the estimated economic loss. The Bank has both the ability and intent to hold these securities to maturity and expects to recover the majority of the amount written down as the difference between the estimated economic loss and the OTTI charge is expected to be accreted to interest income, u sing the level-yield method, over the remaining life of the securities.

On January 8, 2009, the Bank notified members that it was likely to incur an OTTI charge in connection with some of its MBS holdings as of December 31, 2008 and that, as a result, the Bank would not pay a dividend for the fourth quarter of 2008 and would not repurchase excess capital stock on January 31, 2009.

"We are very concerned about the effect of these actions on our members," said Dean Schultz, "but we believe they were in the best interests of the Bank and our members given the effect of the OTTI accounting rules. Because of current market uncertainty and the possibility of future OTTI charges, it is essential that we continue building retained earnings and that we preserve our capital. We will continue to monitor the condition of our MBS portfolio, our overall financial performance, and developments in the financial and housing markets as the basis for determining the status of dividends and capital stock repurchases in future quarters."

As of December 31, 2008, the Bank was in compliance with all of its regulatory capital requirements. The Bank's total capital-to-assets ratio was 4.21%, exceeding the 4.00% requirement, and its risk-based capital was $13.5 billion, well in excess of its $8.6 billion requirement.

The Bank's dividend rate for 2008 was 3.93%, compared to 5.20% for 2007. The 2008 dividend rate was lower than the rate for 2007 because the Bank did not pay a dividend for the fourth quarter of 2008 in anticipation of a potential OTTI charge. The OTTI charge incurred in the fourth quarter was partially offset by the increase in net interest income in 2008, which was primarily driven by a higher net interest spread on the Bank's mortgage portfolio (MBS and mortgage loans), as well as higher average advances and investment balances.

Total assets decreased to $321.2 billion at yearend 2008 from $322.4 billion at yearend 2007. Advances outstanding were $235.7 billion at December 31, 2008, compared to $251.0 billion at December 31, 2007. In total, 113 institutions decreased their advances during 2008, while 213 institutions increased their advances. In addition, Federal funds sold decreased to $9.4 billion from $11.7 billion and held-to-maturity securities decreased to $51.2 billion from $53.2 billion, while cash and due from banks increased to $19.6 billion from $5 million. The increase in cash and due from banks primarily reflects an increase in cash held at the Federal Reserve Bank of San Francisco (FRBSF), reflecting the Bank's objective to strengthen its liquidity position during 2008. While cash held at the FRBSF does not earn any interest, the opportunity cost of uninvested funds at the FRBSF was negligible because the Federal funds effective rate was near 0% in December 2008.

Financial Highlights (Unaudited)
(Dollars in millions)

Selected Balance Sheet   Items at Year End	Dec. 31,       2008			Dec. 31,       2007		Percent Change
Total Assets1	$321,244			$322,446		__			%
Advances	235,664			251,034		(6			)
Held-to-Maturity Securities2	51,205			53,175		(4			)
Federal Funds Sold	9,431			11,680		(19			)
Consolidated Obligations:
Bonds	213,114			225,328		(5			)
Discount Notes	91,819			78,368		17
Mandatorily Redeemable
Capital Stock3	3,747			229		1,536
Capital Stock - Class B -
Putable3	9,616			13,403		(28			)
Total Capital3	9,785			13,627		(28			)
		Three Months Ended								Twelve Months Ended
Operating Results		Dec. 31,       2008			Dec. 31,       2007			Percent Change				Dec. 31,       2008		Dec. 31,       2007		Percent Change
Net Interest Income		$468			$267			75			%	$1,431		$931		54	%
Other (Loss)/Income		(575	)		75			(867			)	(690	)	55		(1,355	)
Other Expense		34			27			26				112		98		14
Assessments		(38	)		84			(145			)	168		236		(29	)
Net Income		$(103	)		$231			(145			)%	$461		$652		(29	)%
Other Data
Net Interest Margin4		0.58	%		0.34		%	71			%	0.44	%	0.36	%	22	%
Operating Expenses as a
Percent of Average Assets		0.04			0.03			33				0.03		0.03		__
Return on Assets		(0.13	)		0.29			(145			)	0.14		0.25		(44	)
Return on Equity		(3.99	)		7.02			(157			)	3.54		5.80		(39	)
Annualized Dividend Rate		__			5.43			__				3.93		5.20		(24	)
Dividend Payout Ratio5		__			75.16			__				114.32		87.14		31
Capital to Assets Ratio1, 6		4.21			4.30			(2			)	4.21		4.30		(2	)
Duration Gap (in months)7		3			2			50				3		2		50

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 has 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 negotiable held-to-maturity certificates of deposit from "interest-bearing deposits in banks" to "held-to-maturity securities."
³     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. In accordance with SFAS 150, the Bank reclassified the capital stock of these institutions from Class B capital stock to mandatorily redeemable capital stock (a liability).
⁴     Net interest margin is net interest income (annualized) divided by average interest-earning assets.
⁵     This ratio is calculated as dividends per share divided by net income per share. Earnings available for dividends exclude the effects of SFAS 133 and SFAS 159 unless there is a cumulative net loss.
⁶     This ratio is based on regulatory capital, which includes mandatorily redeemable capital stock (which is classified as a liability).
⁷     Duration gap is the difference between the estimated durations (market value sensitivity) of assets and liabilities (including the impact of interest rate exchange agreements) and reflects the extent to which estimated maturity and repricing cash flows for assets and liabilities are matched.

Five Quarter Financial Highlights
(Unaudited)
(Dollars in millions)

	Dec. 31,       2008		Sept. 30,       2008		June 30,       2008		Mar. 31,       2008		Dec. 31,       2007
Selected Balance Sheet   Items at Period End
Total Assets1	$321,244		$341,429		$328,474		$332,480		$322,446
Advances	235,664		263,045		246,008		248,425		251,034
Held-to-Maturity Securities2	51,205		53,830		60,484		57,905		53,175
Federal Funds Sold	9,431		16,360		16,052		19,623		11,680
Consolidated Obligations:
Bonds	213,114		235,290		233,510		228,750		225,328
Discount Notes	91,819		87,455		77,753		84,872		78,368
Mandatorily Redeemable
Capital Stock3	3,747		3,898		189		213		229
Capital Stock - Class B -
Putable3	9,616		10,614		13,763		14,049		13,403
Total Capital3	9,785		10,892		14,066		14,339		13,627
Quarterly Operating Results
Net Interest Income	$468		$393		$338		$232		$267
Other (Loss)/Income	(575	)	(225	)	(10	)	120		75
Other Expense	34		29		24		25		27
Assessments	(38	)	38		81		87		84
Net Income	$(103	)	$101		$223		$240		$231
Other Data
Net Interest Margin4	0.58	%	0.48	%	0.42	%	0.29	%	0.34	%
Operating Expenses as a
Percent of Average Assets	0.04		0.03		0.02		0.03		0.03
Return on Assets	(0.13	)	0.12		0.27		0.29		0.29
Return on Equity	(3.99	)	2.96		6.37		6.94		7.02
Annualized Dividend Rate	__		3.85		6.19		5.73		5.43
Dividend Payout Ratio5	__		125.29		93.69		79.28		75.16
Capital to Assets Ratio1, 6	4.21		4.33		4.34		4.38		4.30
Duration Gap (in months)7	3		2		3		4		2

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 has 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 negotiable held-to-maturity certificates of deposit from "interest-bearing deposits in banks" to "held-to-maturity securities."
³     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. In accordance with SFAS 150, the Bank reclassified the capital stock of these institutions from Class B capital stock to mandatorily redeemable capital stock (a liability).
⁴     Net interest margin is net interest income (annualized) divided by average interest-earning assets.
⁵     This ratio is calculated as dividends per share divided by net income per share. Earnings available for dividends exclude the effects of SFAS 133 and SFAS 159 unless there is a cumulative net loss.
⁶     This ratio is based on regulatory capital, which includes mandatorily redeemable capital stock (which is classified as a liability).
⁷     Duration gap is the difference between the estimated durations (market value sensitivity) of assets and liabilities (including the impact of interest rate exchange agreements) and reflects the extent to which estimated maturity and repricing cash flows for assets and liabilities are matched.

Federal Home Loan Bank of San Francisco

The Federal Home Loan Bank of San Francisco delivers low-cost funding and other services that help member financial institutions make home mortgage loans to people of all income levels and provide credit that supports neighborhoods and communities. The Bank also funds community investment programs that help members create affordable housing and promote community economic development. The Bank's members-its shareholders and customers-are commercial banks, credit unions, savings institutions, thrift and loans, and insurance companies headquartered in Arizona, California, and Nevada.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements related to the Bank's dividend rates. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as "estimated," "intent," "expects," "will," "should," "likely," and "would," or their negatives or other variations on these terms. The Bank cautions that by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the effects of SF AS 91, SFAS 133, and SFAS 159, and the Bank's ability to pay dividends out of retained earnings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

###

Contact:

Amy Stewart, (415) 616-2605
stewarta@fhlbsf.com

EX-99.2

Exhibit 99.2

February 26, 2009
Bulletin No. 1318

Operating Highlights for 2008
and Fourth Quarter 2008

Dear Chief Executive Officer:

Today the Federal Home Loan Bank of San Francisco is announcing operating highlights for 2008 and the fourth quarter of 2008. While the highlights have been prepared from unaudited financial information and are subject to change, we believe it is important to provide you with this information now, rather than waiting until the publication of the Bank's 2008 Form 10-K. As you will see from the highlights, the Bank had a net loss of $103 million for the fourth quarter, primarily because of an other-than-temporary impairment (OTTI) charge of $590 million related to the Bank's non-agency mortgage-backed securities (MBS).

Ongoing stresses in the credit markets, substantial declines in real estate values, and increasing weakness in the U.S. economy are continuing to affect the loan collateral underlying the Bank's non-agency MBS. As a result, the Bank has determined that 15 of its non-agency MBS securities are other-than-temporarily impaired. The estimated economic loss on these securities as of December 31, 2008, is $27 million. Because the fair values of non-agency MBS have declined dramatically in today's illiquid MBS market, the $590 million OTTI charge, which reflects the difference between the carrying value of the affected securities before the write-down and the fair value of those securities as of December 31, 2008, is more than 20 times greater than the $27 million estimated economic loss.

The Bank has both the ability and intent to hold these securities to maturity and expects to recover the majority of the amount written down as the difference between the estimated economic loss and the OTTI charge is accreted to interest income over the remaining life of the securities.

As you know, in anticipation of a potential OTTI charge, the Bank did not pay a dividend for the fourth quarter of 2008 and did not repurchase excess capital stock on January 31, 2009. We are very concerned about the impact of these actions on you, but we believe they were in the best interests of the Bank and our members given the effect of the OTTI accounting rules. Because of current market uncertainty and the possibility of future OTTI charges, it is essential that we continue building retained earnings and that we preserve our capital. We will continue to monitor the condition of our MBS portfolio, our overall financial performance and retained earnings, and developments in the financial and housing markets as the basis for determining the status of dividends and capital stock repurchases in future quarters.

For a fuller explanation of the Bank's operating results and the other issues mentioned here, please review the Bank's earnings release and the Q&A that is available on the Bank's website.

Despite severe dislocations in the credit and housing markets, in 2008 we continued to raise funds in the capital markets, provide liquidity to members, manage the credit risk of advances by adapting our credit and collateral terms to current market conditions, and take other actions to maintain the Bank's long-term financial strength. We appreciate your understanding of the difficulties we all face in these challenging times. We remain committed, as always, to meeting your funding needs while preserving the Bank's safety and soundness and protecting our members' collective investment in the Bank.

Sincerely,

/s/ Dean Schultz

Dean Schultz
President and Chief Executive Officer

cc: Chief Financial Officer

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This bulletin contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as "estimated," "intent," "expects," "potential," "possibility," and "will," or their negatives or other variations on these terms. The Bank cautions that by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the changes in federal laws and regulations. We undertake no obligation to revise or update pu blicly any forward-looking statements for any reason.

EX-99.3

Exhibit 99.3

Q&A
Operating Highlights for 2008 and Fourth Quarter 2008
February 26, 2009

The Federal Home Loan Bank of San Francisco announced its operating highlights for 2008 and the fourth quarter of 2008 on February 26, 2009. The highlights were prepared from unaudited financial information for the year ended December 31, 2008, and are subject to change. This Q&A discusses issues relating to the Bank's operating highlights, including the "other-than-temporary impairment" charge in the fourth quarter of 2008.

1.     Why did the Federal Home Loan Bank of San Francisco experience a loss in the fourth quarter of 2008?

The Bank's net income for 2008 was $461 million. For the fourth quarter of 2008, the Bank had a net loss of $103 million. The fourth quarter loss was chiefly due to an other-than-temporary impairment (OTTI) charge of $590 million related to the Bank's non-agency mortgage-backed securities (MBS).

Based on analyses and reviews of the Bank's non-agency MBS, the Bank determined that 15 of its non-agency MBS with a carrying value of $1.5 billion were other-than-temporarily impaired at December 31, 2008, because the Bank determined that it was probable that it would not collect all of the contractual amounts due on each of the securities. The estimated economic loss on these securities as of December 31, 2008, is $27 million. Because the fair values of non-agency MBS have declined dramatically in today's illiquid MBS market, as of December 31, 2008, the difference between the carrying value of the affected securities before the write-down and the fair value of those securities as of December 31, 2008, is $590 million, far in excess of the estimated economic loss. The Bank has both the ability and intent to hold these securities to maturity and expects to recover the majority of the amount written down as the difference between the estimated economic loss and the OTTI charge is accreted to interest inco me, using the level-yield method, over the remaining life of the securities.

2.     What is OTTI?

OTTI, which stands for other-than-temporary impairment, is an accounting term. Under U.S. GAAP (generally accepted accounting principles), a company must evaluate its securities portfolio to determine whether any of the securities are other-than-temporarily impaired. If the company determines that it does not expect to collect all of the contractual amounts due on an individual security over the life of the security, the company must mark the security down from its carrying value to its current fair value, even if the company intends to hold the security to maturity.

An OTTI loss must be booked during the period that the security is determined to be other-than-temporarily impaired, even if the estimated economic loss is not expected to be incurred for some time, even years later.

The amount of the OTTI charge for an individual security is not the amount of the estimated economic loss. Instead, the charge equals the difference between the carrying amount of the security and its current fair value. The fair value is generally related to the value of the security in the current market, even if the security is to be held to maturity.

Once the security is marked to fair value, any increase in fair value in future periods does not increase the carrying value of the security or increase Bank income. Instead, the difference between the OTTI charge and the estimated economic loss on the security is accreted (added) to interest income over the remaining life of the security.

In today's inactive MBS market, the fair values of non-agency MBS have declined dramatically. In the case of the Bank's securities, the OTTI charge on the affected securities ($590 million) is more than 20 times the estimated economic loss on these securities ($27 million) as of December 31, 2008.

The fact that the decline in the fair value of these MBS is so much greater than the estimated economic loss on the securities demonstrates the problem with using fair value accounting for MBS for which there is virtually no market. This is the main reason that the FHLBanks and many other financial institutions are asking the FASB to re-visit its OTTI accounting standard for held-to-maturity securities.

3.     Will the Bank recover any of these fair value losses in the future?

We have the ability and the intent to hold our MBS investments to maturity.

We expect to recover most of the amount written down as the difference between the OTTI charge and the estimated economic loss is accreted to interest income over the remaining life of the securities. We began accreting the difference between the OTTI charge ($590 million) and the estimated economic loss ($27 million) on the affected securities to interest income in January 2009.

4.     If OTTI is determined, does it affect individual securities or the entire portfolio?

Each security is evaluated for OTTI and only those securities that are determined to be other-than-temporarily impaired are marked to fair value.

5.     Does the Bank expect to have more OTTI charges in future quarters?

It is not possible to predict whether we will have more OTTI charges in the future, since that will depend on many factors, including economic, financial market, and housing market conditions and the performance of the mortgages underlying our MBS.

6.     Is the Bank meeting all of its regulatory capital requirements?

As of December 31, 2008, we were in compliance with all of our regulatory capital requirements. Our total capital-to-assets ratio was 4.21%, exceeding the 4.00% requirement, and our risk-based capital was $13.5 billion, well in excess of the $8.6 billion requirement.

7.     Does the Bank expect to pay a dividend for the first quarter of 2009 and for subsequent quarters in 2009?

The Bank's Board of Directors will continue to monitor the Bank's MBS portfolio, the Bank's overall financial performance and retained earnings, and developments in the financial markets as the basis for determining the status of dividend payments in future quarters.

8.     When will the Bank start repurchasing excess capital stock again? Is the Bank accepting repurchase requests now, for repurchase on April 30, 2009?

The Bank's Board of Directors plans to make the stock repurchase decision on a quarter-by-quarter basis. The Board has not made a decision regarding the repurchase of stock on April 30. Members may want to submit their repurchase requests as usual during the first quarter, even though no decision has been made yet.

9.     Can excess Bank capital stock be used to support new advances?

Yes, a member may use its excess capital stock to support new advances as long as the member has sufficient collateral borrowing capacity and will not exceed its financing availability.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This Q&A contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements related to the Bank's dividend rates. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as "probable," "would," "estimated," "intends," "expects," "will," "may," or their negatives or other variations on these terms. The Bank cautions that by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the effects of SFAS 91, SFA S 133, and SFAS 159, and the Bank's ability to pay dividends out of retained earnings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.