The Federal Home Loan Bank of New York is concerned it may have to take an impairment charge against $2 billion in private-label MBS and it has reduced the fourth quarter dividend to 1.1%.

The FHLBank has subjected its private-label MBS to a "substantial review," under the "other than temporary impairment" accounting rules that should be completed in late February, according to FHLBank president Alfred DelliBovi.

"Based on our current knowledge, we do not expect to record material impairment charges in relation to our non-agency portfolio," DelliBovi said in a report to shareholders. Once the OTTI review is completed, the board of directors will consider a supplemental dividend. The New York bank paid a 3.5% dividend in the third quarter.

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