FHLBC's Net Income Jumps 42% on Strong Asset Growth

TL;DR

**FHLBC is crushing it, showing strong demand for member advances and solidifying its role as a key liquidity provider.**

AI Summary

The Federal Home Loan Bank of Chicago (FHLBC) reported a strong financial performance for the nine months ended September 30, 2025, with net income increasing to $494 million, up from $470 million in the prior year period, representing a 5.1% increase. For the three months ended September 30, 2025, net income rose significantly to $185 million compared to $130 million in the same period of 2024, a 42.3% jump. Total assets grew by 8.2% to $139,699 million as of September 30, 2025, from $129,112 million at December 31, 2024. This growth was primarily driven by an increase in advances to members, which reached $60,983 million, up from $55,847 million. Investment debt securities also saw a substantial increase, rising to $33,124 million from $29,560 million. Net interest income for the nine months ended September 30, 2025, was $714 million, a slight decrease from $723 million in the prior year, while the three-month period showed a marginal increase to $241 million from $240 million. The bank's capital increased to $9,182 million from $8,620 million at December 31, 2024, reflecting robust financial health and member activity.

Why It Matters

FHLBC's robust performance, marked by increased net income and asset growth, signals a healthy demand for liquidity among its member institutions in Illinois and Wisconsin. This strength provides stability to the regional housing finance market, benefiting homeowners and local economies. For investors, while FHLBC's capital stock isn't publicly traded, its financial health underpins the broader Federal Home Loan Bank System, a critical component of U.S. financial infrastructure. The competitive context shows FHLBC effectively serving its cooperative mandate, providing essential funding that other financial institutions might not offer as readily, especially to smaller community lenders.

Risk Assessment

Risk Level: low — The FHLBC exhibits a low-risk profile, primarily due to its government-sponsored enterprise (GSE) status and its role as a liquidity provider to member institutions. The allowance for credit losses on MPF Loans held in portfolio is minimal, at $(4) million as of September 30, 2025, indicating low expected credit risk. Furthermore, the bank's capital increased to $9,182 million from $8,620 million, demonstrating a strong capital base.

Analyst Insight

Investors should view FHLBC's strong performance as a positive indicator for the stability of the regional banking sector it serves. While direct investment in FHLBC capital stock is not publicly available, this report suggests a healthy environment for financial institutions that are FHLBC members, potentially making them more attractive investment opportunities.

Financial Highlights

debt To Equity

14.2

revenue

$4,743M

operating Margin

N/A

total Assets

$139,699M

total Debt

$128,108M

net Income

$494M

eps

N/A

gross Margin

N/A

cash Position

$51M

revenue Growth

-11.8%

Revenue Breakdown

Key Numbers

• $494M — Net Income (Increased by $24M (5.1%) for the nine months ended September 30, 2025, compared to $470M in 2024.)
• $185M — Net Income (Q3) (Increased by $55M (42.3%) for the three months ended September 30, 2025, compared to $130M in 2024.)
• $139.7B — Total Assets (Increased by $10.6B (8.2%) from $129.1B at December 31, 2024.)
• $61.0B — Advances to Members (Increased by $5.1B from $55.8B at December 31, 2024.)
• $33.1B — Investment Debt Securities (Increased by $3.6B from $29.6B at December 31, 2024.)
• $9.2B — Total Capital (Increased by $0.6B from $8.6B at December 31, 2024.)
• $714M — Net Interest Income (Slight decrease from $723M for the nine months ended September 30, 2025.)
• $241M — Net Interest Income (Q3) (Slight increase from $240M for the three months ended September 30, 2025.)
• 35,622,514 — Class B Capital Stock Shares (Total outstanding shares as of September 30, 2025.)
• 9.25% — Class B1 Dividend Rate (Annualized rate for cash dividends paid.)

Key Players & Entities

• Federal Home Loan Bank of Chicago (company) — registrant
• Federal Housing Finance Agency (regulator) — supervisor and regulator of FHLBC
• Office of Finance (company) — part of the Federal Home Loan Bank System
• Illinois (person) — geographic district of FHLBC
• Wisconsin (person) — geographic district of FHLBC
• $494 million (dollar_amount) — net income for nine months ended September 30, 2025
• $185 million (dollar_amount) — net income for three months ended September 30, 2025
• $139,699 million (dollar_amount) — total assets as of September 30, 2025
• $60,983 million (dollar_amount) — advances to members as of September 30, 2025
• $9,182 million (dollar_amount) — total capital as of September 30, 2025

FAQ

Risk Factors

• Interest Rate Sensitivity [high — market]: The FHLBC's financial results are significantly impacted by interest rate fluctuations. Changes in interest rates affect net interest income and the fair value of investment securities and consolidated obligations. For the nine months ended September 30, 2025, interest income decreased by $582 million and interest expense decreased by $573 million compared to the prior year, leading to a slight decrease in net interest income.
• Regulatory Compliance [high — regulatory]: As a federally chartered entity, the FHLBC is subject to extensive regulation by the Federal Housing Finance Agency (FHFA). Compliance with capital requirements, liquidity rules, and other regulatory mandates is critical. Failure to comply could result in penalties or restrictions.
• Credit Risk in Advances [medium — financial]: The FHLBC extends credit to its member institutions through advances. The allowance for credit losses on advances was $145 million as of September 30, 2025, indicating potential credit risk within its loan portfolio. A significant increase in defaults among members could negatively impact the bank's financial health.
• Liquidity Risk [medium — market]: The FHLBC relies on access to funding markets to meet its obligations and fund its operations. Disruptions in these markets, such as those experienced with securities purchased under agreements to resell decreasing to $19,000 million from $22,475 million, could impact its ability to access liquidity.
• Cybersecurity and Data Breaches [medium — operational]: The FHLBC handles sensitive financial data for its members. A cyberattack or data breach could lead to financial losses, reputational damage, and regulatory scrutiny. The bank's IT infrastructure and security protocols are crucial in mitigating this risk.
• Valuation of Securities [medium — financial]: The FHLBC holds significant investment debt securities, including trading, available-for-sale, and held-to-maturity portfolios, totaling $33,124 million. Fluctuations in market values can impact the reported value of these assets, particularly available-for-sale securities where unrealized losses or gains are recognized in other comprehensive income.

Industry Context

The Federal Home Loan Bank system operates as a government-sponsored enterprise (GSE) providing liquidity, credit, and other financial services to its member institutions, primarily community banks and credit unions. The industry is characterized by a stable, albeit evolving, regulatory environment and a focus on supporting housing finance and community development. Competition comes from other GSEs, commercial banks, and the Federal Reserve's discount window.

Regulatory Implications

The FHLBC operates under the strict oversight of the Federal Housing Finance Agency (FHFA), which sets capital requirements, liquidity standards, and operational guidelines. Compliance with these regulations is paramount, and any changes in regulatory policy could significantly impact the FHLBC's business model and profitability.

What Investors Should Do

1. Monitor Net Interest Margin Trends
2. Assess Asset Growth Drivers
3. Review Capital Adequacy
4. Analyze Non-Interest Income Sources

Key Dates

• 2025-09-30: FHLBC 10-Q Filing — Provides updated financial performance and condition for the nine months and third quarter of 2025, showing strong asset growth and net income increases.
• 2025-09-30: Total Assets Reached $139,699 Million — Represents an 8.2% increase from year-end 2024, driven by member advances and investment securities, indicating increased activity and balance sheet expansion.
• 2025-09-30: Net Income for Nine Months Reached $494 Million — A 5.1% increase year-over-year, demonstrating improved profitability despite a slight decrease in net interest income.
• 2025-09-30: Class B Capital Stock Shares Outstanding — 35,622,514 shares outstanding, reflecting member ownership and participation in the FHLBC.
• 2025-09-30: Class B1 Dividend Rate — Annualized rate of 9.25%, providing a return to members and highlighting the bank's ability to distribute profits.

Glossary

Advances

Loans made by the FHLBC to its member institutions, typically used to fund mortgages and other lending activities. (A primary asset for the FHLBC, representing a significant portion of its balance sheet ($60,983 million) and a key driver of revenue.)

Consolidated Obligations

Debt securities issued by the FHLBC to raise funds in the capital markets, used to finance its operations and lending activities. (The largest liability on the FHLBC's balance sheet ($128,108 million), crucial for its funding and liquidity management.)

Investment Debt Securities

Securities such as bonds and notes purchased by the FHLBC for investment purposes, generating interest income. (A significant asset class ($33,124 million) that contributes to the FHLBC's overall financial performance and is subject to market risk.)

MPF Loans

Mortgage Partnership Finance loans, a program offered by FHLBC to members, allowing them to originate and sell mortgages while retaining servicing rights. (Represents a growing asset class ($14,372 million) and a source of fee income for the FHLBC.)

Class B Capital Stock

Stock owned by member institutions of the FHLBC, representing their ownership interest and entitling them to dividends and voting rights. (A core component of the FHLBC's capital structure, with Class B1 and B2 stock totaling $3,530 million and $925 million respectively.)

Mandatorily Redeemable Capital Stock (MRCS)

A type of capital stock that the FHLBC is obligated to redeem at a specified future date or upon the occurrence of certain events. (Represents a smaller but growing component of capital ($32 million), subject to specific redemption terms.)

Accumulated Other Comprehensive Income (Loss)

Unrealized gains or losses on certain investments (like available-for-sale securities) and other items that are not included in net income but affect total equity. (Represents $69 million of unrealized gains as of September 30, 2025, impacting the bank's total capital.)

Year-Over-Year Comparison

Compared to the prior year period, the FHLBC has demonstrated robust growth in total assets, increasing by 8.2% to $139.7 billion, driven by higher member advances and investment debt securities. Net income for the nine months ended September 30, 2025, rose by 5.1% to $494 million, despite a slight decrease in net interest income. Total capital also strengthened, growing by $0.6 billion to $9.2 billion. New risks may emerge related to market volatility and evolving regulatory landscapes, though the current filing indicates a strong financial position.

Key Financial Figures

• $100 — , repurchased or redeemed at par value, $100 per share, subject to certain statutory
• $1 m — or an investment category are less than $1 million, the losses are not reported. L

Filing Documents

• fhlbc-20250930.htm (10-Q) — 2650KB
• ex20253q311.htm (EX-31.1) — 11KB
• ex20253q312.htm (EX-31.2) — 11KB
• ex20253q321.htm (EX-32.1) — 6KB
• ex20253q322.htm (EX-32.2) — 6KB
• fhlbc-20250930_g1.gif (GRAPHIC) — 11KB
• a20253q10q.pdf (10-Q) — 712KB
• 0001331451-25-000226.txt ( ) — 13705KB
• fhlbc-20250930.xsd (EX-101.SCH) — 55KB
• fhlbc-20250930_cal.xml (EX-101.CAL) — 121KB
• fhlbc-20250930_def.xml (EX-101.DEF) — 416KB
• fhlbc-20250930_lab.xml (EX-101.LAB) — 768KB
• fhlbc-20250930_pre.xml (EX-101.PRE) — 576KB
• fhlbc-20250930_htm.xml (XML) — 2747KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Condensed Financial Statements (unaudited)

Item 1. Condensed Financial Statements (unaudited) Condensed Statements of Condition 3 Condensed Statements of Income 4 Condensed Statements of Comprehensive Income 5 Condensed Statements of Capital 6 Condensed Statements of Cash Flows 8 Note 1 - Background and Basis of Presentation 9 Note 2 - Summary of Significant Accounting Policies 9 Note 3 - Recently Adopted and Issued Accounting Guidance 10 Note 4 - Interest Income and Interest Expense 11 Note 5 - Investment Debt Securities 12 Note 6 - Advances 17 Note 7 - MPF Loans Held in Portfolio 18 Note 8 - Allowance for Credit Losses 19 Note 9 - Derivatives and Hedging Activities 21 Note 10 - Consolidated Obligations 26 Note 11 - Capital and Mandatorily Redeemable Capital Stock (MRCS) 27 Note 12 - Accumulated Other Comprehensive Income (Loss) 28 Note 13 - Fair Value 29 Note 14 - Commitments and Contingencies 32 Note 15 - Transactions with Related Parties and Other FHLBs 33

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 34

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 57

Controls and Procedures

Item 4. Controls and Procedures 58

- OTHER INFORMATION

PART II - OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 59

Risk Factors

Item 1A. Risk Factors 59

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 59

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 59

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 59

Other Information

Item 5. Other Information 59

Exhibits

Item 6. Exhibits 60 Glossary of Terms 61

Signatures

Signatures 64 2 Table of Contents Federal Home Loan Bank of Chicago

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Condensed Financial Statements

Item 1. Condensed Financial Statements. Condensed Statements of Condition (unaudited) (U.S. Dollars in millions, except capital stock par value) September 30, 2025 December 31, 2024 Assets Cash and due from banks $ 51 $ 32 Interest-bearing deposits 2,790 2,570 Federal funds sold 8,695 4,638 Securities purchased under agreements to resell 19,000 22,475 Investment debt securities - Trading 4,734 3,240 Available-for-sale, $ 27,730 and $ 24,687 amortized cost, includes $ 827 and $ 806 pledged as collateral that may be repledged 27,771 24,654 Held-to-maturity, $ 622 and $ 1,662 fair value 619 1,666 Investment debt securities 33,124 29,560 Advances, $ 145 and $ 130 carried at fair value 60,983 55,847 MPF Loans held in portfolio, net of $( 4 ) and $( 5 ) allowance for credit losses 14,372 13,320 Derivative assets 12 18 Other assets, $ 74 and $ 57 carried at fair value 672 652 net of $( 9 ) and $( 8 ) allowance for credit losses Assets $ 139,699 $ 129,112 Liabilities Deposits - Demand and overnight - noninterest-bearing $ 226 $ 180 Demand and overnight - interest-bearing, $ 12 and $ 11 from other FHLBs 897 660 Deposits 1,123 840 Consolidated obligations, net - Discount notes, $ 25,580 and $ — carried at fair value 53,339 36,739 Bonds, $ 542 and $ 8,390 carried at fair value 74,769 81,859 Consolidated obligations, net 128,108 118,598 Derivative liabilities 31 27 Affordable Housing Program liability 174 160 Mandatorily redeemable capital stock 32 4 Other liabilities 1,049 863 Liabilities 130,517 120,492 Commitments and contingencies - see notes to the condensed financial statements Capital Class B1 activity stock, 26 and 24 million shares issued and outstanding 2,605 2,443 Class B2 membership stock, 9 and 8 million shares issued and outstanding 925 824 Capital stock - putable, $ 100 and $ 100 par value per share 3,530 3,267 Retained earnings - unrestricted 4,442 4,269 Retained earnings - restricted 1,141 1

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