FEDERAL HOME LOAN BANK OF SAN FRANCISCO 2006 EXECUTIVE INCENTIVE PLAN

EXHIBIT 10.5

FEDERAL HOME LOAN BANK OF SAN FRANCISCO

2006 EXECUTIVE INCENTIVE PLAN

PLAN PURPOSE

To optimize the Bank’s performance in accomplishing Board approved goals and objectives.

PLAN OBJECTIVES

To motivate key executives to exceed Bank and individual goals and objectives which directly support the business plan and long-term strategic plan. Attract and retain outstanding executives by providing a competitive total compensation program, including incentive award opportunity.

ELIGIBILITY

Participants are key executives whose performance has a major impact on the Bank’s success. 2006 Participants are the incumbents in the Bank’s officer positions, including:

Participants must be employed by the Bank when payment is disbursed to be eligible for an incentive award for the current plan year. Employees who participate in other incentive plans are not eligible to participate in this plan. Participants hired, promoted, or who have a leave of absence during the plan year are eligible to participate on a pro-rata basis. Participants hired or promoted on or after October 1^st will not be eligible to participate during the current plan year.

INCENTIVE GOALS, WEIGHTS, AND MEASURES

Incentive Goals

The incentive goals are based on the primary objectives set forth in the Bank’s 2006 plan. For each participant there are two Bank goals, and one to three individual goals. The individual goals directly support the Bank-wide goals.

The two Bank goals for 2006 are as follows:

The Board of Directors will also determine whether or not to allocate a discretionary amount/pool of dollars to the incentive compensation payouts.

Actual achievement of Bank goals one (1) and two (2) are subject to adjustment for changes resulting from movements in interest rates, changes in financial strategies or policies, any significant change in Bank membership, as well as other factors determined by the Board.

Incentive Goal Weights

The Bank and individual goals are weighted. For the Executive Vice President and Senior Vice Presidents, greater weight is given to the Bank goals, since these officers have a greater impact on total Bank performance.

Incentive Goal Achievement Measures

The plan rewards levels of goal achievement, as follows:

The 2006 goals/discretionary pool weights and measures are:

Achievement levels can not exceed 250% for each market penetration goal segment or for the participant’s individual goals. And, the aggregate achievement levels for each plan goal/objective (dividend potential, market penetration, overall bank-wide performance, and individual goals) can not exceed 200%.

Award Determination

Awards will be based on success in achieving the key business goals. In the case of the three Bank goals and objectives, the same achievement measures apply to all participants. At yearend, accomplishments will be assessed and a percent of achievement will be determined for each goal and objective.

For each goal and objective, the percent of achievement (subject to limits) will be multiplied by the appropriate weights. The weighted achievements will then be added to determine the total weighted achievement. The basis for award opportunity is total weighted achievement that can not exceed 200%. Performance from 75-99% (threshold level) is below the target achievement level and therefore will result in an award less than the target award. No awards will be paid for performance between 0-74%.

Award Opportunity

The Board of Directors has the discretion to approve awards for achievement below 75% total weighted achievement. And, the President and the Board of Directors have full discretion to modify any and all incentive payments.

Award Ranges as a Percent of Base Salary

Example of How Award Is Calculated for a Vice President

APPROVAL OF INCENTIVE AWARDS

All recommended incentive awards must be approved by the President and the Board of Directors prior to payment. Award recommendations are presented to the Board of Directors at the January 2007 Board meeting.

PLAN ADMINISTRATION AND IMPLEMENTATION

The President is responsible for overseeing the administration and interpretation of the Plan.