Federal Home Loan Bank of Chicago (FHLB Chicago) is a government-sponsored enterprises that provides secured loans and other support services to about 770 members, including commercial banks, credit unions, insurance companies, thrifts, and community development financial institutions throughout Illinois and Wisconsin. It is cooperatively owned by its member institutions, who use advances from the bank to originate residential mortgages, invest in government or mortgage-related securities, and promote affordable housing and community development in their respective communities. FHLB Chicago is one of a dozen federal banks that comprise the Federal Home Loan Bank System that was established by Congress in 1932.
The Federal Home Loan Banks are overseen by the Federal Housing Finance Agency. Other services offered include deposits, wire transfers, and check processing.
Loan demand at the bank has fallen as its members have increased access to other forms of liquidity, such as customer deposits and certain government programs. FHLB Chicago returned to profitability in 2010, however, after posting two consecutive years of losses during the depths of the recession. The bank restructured its balance sheet and focused on investing in less-risky mortgage-backed securities. Income from prepayment fees was also up, as members sought to restructure their portfolios amid low interest rates. (Prepayments from members that were dissolved or merged increased as well.) The unusual level of prepayments declined in 2011, and loan demand continued to be soft, so interest earnings fell that year. As a result, 2011 revenues slipped 18% to $2.2 billion, but the bank remained profitable. FHLB Chicago believes its restructuring efforts and investment activity have led the bank to a position of strength going forward – less
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