CHICAGO – The Federal Home Loan Bank of Chicago, which is in merger talks with the FHLB of Dallas, yesterday said it will not pay members a third quarter dividend because of the supervisory agreement entered into last month with regulators.
In a letter to members Tuesday, the Chicago Bank said preliminary operating results for the third quarter show positive earnings, but the board decided to forego a dividend payment for the quarter in recognition of projected earnings pressure in the fourth quarter and in 2008.
The Bank paid a dividend of 2.80% for the second quarter. The Chicago Bank is suffering declining earnings, which prompted Federal Housing Finance Board to bar the bank’s payment of dividends and redemption of member shares without prior approval.
The Chicago Bank, saddled with some $34 billion of home loans purchased under its secondary market program, announced earlier it is negotiating a merger with the Dallas Bank. The Chicago Bank has 850 members, including 135 credit unions.
