Earnings Halved at FHLB Chicago

CHICAGO – The Federal Home Loan Bank of Chicago, which is negotiating a merger with the FHLB Dallas, reported Friday net income for its second quarter declined by 50% to $27 million, from $54 million for the same quarter last year. The major cause of the decline in earnings was a $97 million loss in the value of its trading securities. The Chicago Bank, which also is trimming its troubled secondary mortgage market program, known as Mortgage Partnership Finance, also booked a $4 million charge to reduce its workforce in the second quarter. The FHLB reported a $1.4 billion loss of the $37 billion mortgage portfolio it holds under the program. The Chicago Bank is facing the elimination of two of its top three customers, LaSalle Bank and MidAmerica Bank, which both are being acquired by larger banks. For the first two quarters the Chicago Bank reported a halving in earnings to $50 million, from $110 million for the first half last year. The Bank announced Thursday it is negotiating with the Dallas Bank to combine the two FHLBs.