Our commitment to our mission is unwavering through the ongoing challenges of COVID-19 and shifting economic environments. 2021 was a year of building resiliency in the ways we were able to support you, our members. Through your trust, partnership, and engagement, 2021 was a success.
President and CEO, Federal Home Loan Bank of Chicago
Chair of the Board of Directors, Federal Home Loan Bank of Chicago
Vice Chairperson, CNB Bank & Trust, N.A.
Our products, solutions, and services meet the needs of our members and the communities they serve. The value we deliver to our members is—and always will be—the cornerstone of who we are as a cooperative.
Sustainable growth
Exceptional member experience
Diverse team
Reliable solutions
Community and social impact
In the rolling, golden fields of Illinois and Wisconsin live vibrant rural communities. Where friends find togetherness amongst wide open spaces, and strangers come together to lend each other a helping hand. These are communities where our members are making dreams of safe, affordable housing a reality, serving businesses through farm and agricultural lending, and more.
The seasonal rhythms of agriculture require a specialized approach to lending, and the economic needs of rural communities can’t be conflated with those of their urban neighbors. No one knows this better than Stacy J. Moore, President, The Peoples State Bank, in Newton, Illinois, which has remained committed to serving the agricultural community since the bank’s inception in 1875. “Due to the nature of the ag business cycle, the demand for funding can be inconsistent throughout the year,” said Moore. “We experience a great deal of line usage in the spring and summer, with pay-downs beginning after harvest in the fall through the first few months of the following year. This cycle creates short-term funding needs on an inconsistent basis.”
Ready access to short-term fixed-rate advances through FHLBank Chicago has helped The Peoples State Bank continue to serve as a dependable source of financial support for its communities, regardless of seasonal fluctuations.
“The online platform makes the process very efficient for us, and the rates and terms throughout the various rate cycles have been fair and competitive. FHLBank Chicago provides exactly what we hope to provide to our client base: ease of doing business, responsiveness, fair pricing, follow-up, and support.”
Stacy J. Moore, President, The Peoples State Bank, Newton, Illinois
Longer-term funding also comes in handy for agricultural lenders, particularly when it comes to maintaining and growing their customer base. Due to the interest rate environment in fall 2020, First National Bank in Olney in southeastern Illinois faced competition from nonbank lenders for long-term fixed-rate loans. “In order to keep current customers and attract new business, we had to come up with a way to compete,” said Chris Ochs, Financial Analyst, First National Bank in Onley.
Working with FHLBank Chicago’s Sales, Strategy, and Solutions team, First National crafted a strategy of matching longer-term (10- to 20-year) fixed-rate loans with amortizing advances, allowing them to mitigate their interest rate risk by funding long-term assets with long-term liabilities. This approach benefited not only their customers—who were able to borrow at lower rates and for longer fixed terms than First National could otherwise offer—but the bank as well. “We found we were able to offer competitive rates, if not lower than the competition, while earning a profitable margin for the bank,” said Ochs. “We also increased earnings by maximizing our return on FHLBank stock through the higher dividends on activity stock.”
In years marked by the operational challenges and drastic market changes brought on by COVID-19, The Peoples State Bank found the flexibility and reliability of funding through FHLBank Chicago to be especially important. “FHLBank Chicago remained a dependable partner throughout the pandemic-related shutdowns,” said Moore. “In 2020 and 2021, we experienced a surge in residential refinance activity. The volume increased by 300%, and the ability to provide a fixed-rate long-term financing option was essential.”
“For our bank to be successful, our customers have to be successful, and we need to do all we can to support that endeavor,” Moore concluded. “FHLBank Chicago provides the same level of support to us; it’s a partnership that plays a valuable role in our success.”
Each year, FHLBank Chicago contributes 10% of our earnings to affordable housing programs. Our Affordable Housing Program (AHP) allows our members to partner with for- and not-for-profit developers and organizations to create affordable housing opportunities in their communities. For 2021, we were proud to support 51 projects, impacting 2,430 housing units across Illinois and Wisconsin through $30 million in grants.
One of these 2021 AHP projects, The Starr Youth Home, is being facilitated through a partnership between our member, Johnson Financial Group, and their project sponsor, Rawhide Youth Services. Embedded in Johnson Financial Group’s culture is a genuine mission to make communities better. This privately owned, Wisconsin-based company is anchored in a philanthropic spirit, which nicely aligns with Rawhide’s mission to inspire and equip at-risk youth and their families to lead healthy and responsible lives through family-centered care, treatment and education.
We were pleased to connect with Johnson Financial Group and Rawhide Youth Services, to learn about The Starr Youth Home. This newly constructed, 10,000 square-foot home will be specifically designed to increase safety, convenience, and much needed capacity to serve at-risk boys who suffer from severe trauma and abuse. $240,000 will be utilized to build a single site residential facility containing 16 total units. The home will also have designated community space for the residents to come together, feel a sense of support, and build relationships.
View this video to hear how AHP is helping lift up this community in New London, Wisconsin.
Vice President, Community Investment Officer, Federal Home Loan Bank of Chicago
Underneath the towering structures that shape the bustling urban communities across our district, you’ll find melting pots rich with culture and history, where people come together to celebrate their unique differences and find common ground. Our members stand strong in these communities, providing residents with products and lending options that meet their unique needs.
FHLBank Chicago members across Illinois and Wisconsin face similar challenges to meet the unique needs of their customers while navigating regulatory requirements and managing their on-balance-sheet liquidity. Headquartered in Chicago, Northern Trust tailors their wealth management and lending services to each client’s specific needs. But their own needs are equally specific: While asset-driven banks require increased deposits and wholesale borrowings to support increased lending, Northern Trust’s balance sheet is primarily liability-driven, so the main driver of balance sheet changes is client deposits. And because Northern Trust has been designated to be large and complex by the Federal Reserve Banks, it is subject to increased regulatory protocols and must maintain a precise liquidity coverage ratio (LCR).
To maintain a strong liquidity position and risk profile, Northern Trust must find ways to support their lending activity by holding high-quality liquid assets (HQLAs). The loans they provide to their customers can be used as collateral to raise for HQLA purchases, and the converted advances must not fall inside the 30-day-to-maturity window LCR requirement. Since loans are not readily liquid assets, this can be a challenge. Financial institutions face the risk of not being able to raise sufficient funds or maintain collateral to meet balance sheet and contingent liability cash flow obligations when due, whether because of assumed firm-specific or market-wide stress event scenarios.
“Because we face challenges around managing regulatory liquidity requirements, being able to work with FHLBank Chicago to obtain competitively priced and customizable advances is very important to us. They provide solutions that support us in both the day-to-day as well as the long term.”
Susan Swanson, Vice President, Treasury Senior Analyst, Northern Trust in Chicago, Illinois
The structure and pricing of an advance is the key to a great solution. In 2021, FHLBank Chicago’s Sales, Strategy, and Solutions team met with Northern Trust to find out which of the Bank’s variety of products offered the right structure and pricing to meet the member’s specific challenges. “Their team studied the regulations we face and designed a strategy that supports the time frame we needed,” said Swanson. In this case, the strategy relies on 90-day advances that can be repaid at day 60, avoiding the 30-day window. Northern Trust can then prepay the advances when closing and roll-over those terms to a new advance.
When a financial institution is borrowing cash and putting a term transaction on the balance sheet, pricing is critical. In addition to competitive pricing, FHLBank Chicago members who borrow from the Bank have access to activity stock, on which we have paid a higher dividend than membership stock since 2013. This higher dividend has the effect of lowering the overall cost of borrowing. Also, some of Northern Trust’s advances are under FHLBank Chicago’s Reduced Capitalization Advance Program (RCAP), so less capital is required for the advances.
“Northern Trust is thoughtful in maximizing our collateral pledges to find what’s eligible and works closely with FHLBank Chicago to ensure all of those loans can be eligible for pledging purposes for an advance and access to liquid cash,” said Swanson. However, she noted that Northern Trust also needs to consider their long-term funding profile and—looking forward to 2023—net stable funding ratio (NSFR) requirements. By working with members like Northern Trust to offer tools like one-year advances, FHLBank Chicago helps them create and maintain a stable, resilient funding concept to withstand unforeseen stress events.
Swanson has found that conversations among FHLBank Chicago members often yield fresh ideas. Northern Trust is closely involved in FHLBank Chicago’s Member Advisory Committee, which offers Bank members a chance to discuss the advance solutions each institution is using. The Member Advisory Committee is made up of treasury and C-level positions among FHLBank Chicago depository members of various sizes throughout Illinois and Wisconsin. Since its creation in 2012, the Member Advisory Committee has generated enhancements to products and services that benefit member institutions both large and small.
“We sincerely enjoy having the opportunity to hear directly from other bank leadership on the strategies and use cases that are working for them,” said Swanson. “Combined with in-depth capital markets reports and value-added presentations from industry experts, these conversations help drive new ideas and next steps to improve our institution’s funding strategy.”
Throughout 2021, FHLBank Chicago members were faced with persistent market volatility and challenges as they navigated a turbulent year. When unpredictability is abundant, membership in FHLBank Chicago becomes even more valuable through our ability to offer flexible and customized solutions. This is especially relevant with our insurance company members.
“Our team at FHLBank Chicago understands the balance our insurance company members must have in their short and long-term planning and goals,” said Roger Platt, Managing Director, Institutional Sales, FHLBank Chicago. “Throughout the year, we worked with our insurance company members to provide unique analysis of their situations tied to customized strategies to navigate the market now and whatever we may face down the road.”
Insurance companies must find cost-effective ways to stay competitive in order to pass along personalized solutions to their own customers. When economic strains are being felt in our District, FHLBank Chicago serves as a trusted advisor to our members by helping them create sustainable approaches to maintaining their balance sheets through our FHLBank Chicago products and services.
Since 2019, FHLBank Chicago saw a 25% growth in insurance company membership, which includes several prominent organizations in urban city centers in Illinois and Wisconsin.
“The growth in membership is a credit to our Bank’s endless efforts to converse with members, analyze their situations, and adjust product offerings to fit their personalized needs. At a time when people in our District are facing fluctuating liquidity amongst other challenges, it’s vital for us to help our members offer the best possible products to their clients.”
Raj Misra, Senior Director, Institutional Sales, FHLBank Chicago
In addition to offering customized strategies and solutions, the Federal Home Loan Banks host an annual Insurance Conference, specifically designed for key decision makers and prominent voices in the insurance industry. The 2022 FHLBank Insurance Conference is being held on June 21 and 22 in Chicago. At year-end 2021, FHLBank Chicago insurance company members had $13.5 billion advances outstanding.
Senior Vice President, Managing Director, Member Strategy and Solutions, Federal Home Loan Bank of Chicago
Under the vast blue skies of our Northwoods communities, you’ll find residents with deep cultural roots. In this serene locale, its tight-knit community uplifts and supports their neighbors, making it a warm place for all to visit or call home. Our members are supporting economic development through small business lending and helping these communities grow and thrive.
Dave Evans Transports, Inc. has a renowned reputation in Superior, Wisconsin of offering a high quality work environment that drives the local economy and gives back to local non-profit organizations in Douglas County of northern Wisconsin. With a mission to create prosperity for their customers and commitment to their community, the National Bank of Commerce saw an opportunity to help the small business continue to make a lasting, positive impact for years to come through FHLBank Chicago’s Community Small Business Advance.
“Dave Evans Transports, Inc. was thrilled to be provided a below market fixed interest rate with an extended maturity,” said Dave Strum, Vice President, Senior Commercial Banker, National Bank of Commerce. “The Community Small Business Advance is helping control interest expense for an extended time period, which provides the company the flexibility to improve operational cash flows and engage in capital expenditures to improve future operations.”
First introduced in July 2018, FHLBank Chicago’s Community Small Business Advance allows our members to support their local economies by offering advances that are priced below market rates with extended fixed period financing to small-business customers in income-eligible communities in Illinois and Wisconsin. In 2021, FHLBank Chicago members had $34 million in community small business advances outstanding.
The ability to offer solutions to funding and liquidity needs helps lenders like the National Bank of Commerce pass along competitive funding to their community. In return, businesses like Dave Evans Transports, Inc. have the ability to offer it’s more than 50 employees competitive wages, full benefit packages, and a high quality work environment.
“This is the first opportunity the National Bank of Commerce has had to use the Community Small Business Advance, and we will use continue to do so when we are able in the future. The program allows our community bank to be more competitive, which ultimately keeps more local money in the community we serve and helps other businesses be more profitable."
Dave Strum, Vice President, Senior Commercial Banker, National Bank of Commerce
As we close out 2021, another year affected by the COVID-19 pandemic, we take time to reflect on the impact of “staying home," and how it relates to our work in affordable housing. We know that lower income households have been disproportionately impacted by the lack of a stable place to call home during this pandemic. This has caused ripples through our economy, as well as our healthcare and education systems, as individuals and families struggle to stay healthy and navigate the hurdles of this uncertain time. Our work as affordable housing and economic development advocates has never been more important than it is today.
Community Investment Advisory Council Chair, Executive Director, Springfield Housing Authority
Community Investment Advisory Council Vice Chair, Director of Real Estate Development, Movin' Out, Inc.
View Our Full ReportAs you walk down the small town main streets of Illinois and Wisconsin, the warm glow of the red brick buildings and friendly smiles of neighbors welcome you in. These are communities where our members are providing solutions to their residents and making dreams of homeownership a reality.
In recent years, Bay Bank of Green Bay, Wisconsin, has leaned even further into its mission as a local source of financial services and access to capital for tribal communities and small businesses. Founded and wholly owned by the Oneida Nation, Bay Bank is the only financial institution in the greater Green Bay area to offer the U.S. Department of Housing and Urban Development Section 184 Indian Home Loan Guarantee Program, which provides low down payments and flexible underwriting for American Indian homebuyers. “Historically, it has been more difficult to gain homeownership in tribal communities,” said Nathan King, Vice President, Bay Bank. “The Section 184 loan program is designed to break down some of those barriers.”
By pairing Section 184 loans with the Federal Home Loan Bank of Chicago’s Downpayment Plus® (DPP®) Program, Bay Bank has leveled even more obstacles to homeownership. DPP is FHLBank Chicago’s down payment assistance grant program, which is available to all members to support mortgage lending to low- and moderate-income households.
“Once you’re over the hurdle of getting the loan, the next hurdle is making the down payment. The down payment for a Section 184 loan is 2.25%, so the $6,000 DPP grant is amazing, because that covers almost all costs plus the borrower’s contribution. People’s faces when you tell them they qualify for that—it’s sheer relief. They take a deep breath and say, 'This is possible. It’s my dream come true. I can do this.'”
Tanya Krueger, Vice President, Bay Bank
From 2016 to 2021, Bay Bank provided its customers with 62 DPP grants. Of those, 58 were to first-time homebuyers and 54 were to tribal members. Eight grants were for homes on tribal trust land, including four in 2021 alone. “It’s significant that we’ve been able to use DPP funds even for tribal trust properties, because the paperwork for those loans is more complex,” said Krueger. “The title work comes from the Bureau of Indian Affairs, and you need to get a land lease from the tribe.”
In 2021, Bay Bank furthered its mission by opening a new branch in Menominee County—the only full-service bank in that county, as well as the first bank for the Menominee Indian Tribe of Wisconsin. Bay Bank invested in local relationships by hiring staff from the Menominee community who would know their customers and understand their needs. “Menominee County is designated as a Persistent Poverty County by the CDFI Fund,” said King. “Given our mission, we felt it would be a good geographical expansion that would allow us to provide financial services and access to capital for another tribal community—and an important part of that will be access to mortgages.”
Throughout 2021, 175 members disbursed $19.5 million in DPP grants in support of 3,365 homebuyers in their communities to assist with down payment and closing costs for eligible households.
With a philosophy of “people helping people,” NuMark Credit Union has been serving members in the southwest suburbs of Chicago since 1954. "NuMark Credit Union's mission of working to enrich the financial lives of our members is a commitment to our communities as well," said Debbie Reed, Chief Financial Officer, NuMark Credit Union. "By partnering with FHLBank Chicago, NuMark has been able to cultivate stronger relationships with community organizations like the Warrenville Park District."
Warrenville is a small town (with a population of just over 13,000) nestled amid the busy suburbs of DuPage County. Its park district, established in 1964, is dedicated to providing affordable exercise, recreational, social, and outdoor activities to all residents—from summer camps for kids to day trips for older adults, from kayaking to jiujitsu, from a community garden to open gym.
Access to FHLBank Chicago public unit deposit (PUD) letters of credit (LOCs) has helped NuMark secure a deposit relationship with Warrenville Park District, with very competitive pricing, according to NuMark Executive Vice President, Bernie Niewoehner. “Prior to the FHLBank Chicago PUD LOC, it was a condition that we pledge government-backed securities as collateral for the deposits, which required ongoing market-value reporting and the occasional need to swap collateral as balances increased in order to remain compliant,” said Niewoehner. “By utilizing the FHLBank Chicago PUD LOC program, we not only eliminated those administrative burdens, but we were also able to make the collateralized funds available to grant more loans within our communities.”
NuMark’s relationship with the Warrenville Park District has also opened up an array of sponsorship opportunities in the community, Niewoehner noted, “We have participated in all of the park district’s major events: Art on the Prairie, Firecracker 5K, Summer Daze, Fall Fest, and their annual Holly Days event, as well as sponsoring various athletic leagues throughout the year.”
Vice President, Director, Diversity, Equity, and Inclusion, Federal Home Loan Bank of Chicago
We are evolving. Our new visual identity is inspired by the communities you serve. Our four new values—Bold, Committed, Connected, and Trusted—are a guide for how we work together as a team to best serve you. Our vision is driven by our dedication to efficiently deliver value to you and create positive change in your communities with our commitment to diversity, equity, and inclusion.
We have always been committed to creating positive change at FHLBank Chicago and for the diverse communities our members serve. But to foster real change, we recognized the need to move from passive to engaged – focusing on how we could adjust our mindsets to make actionable, lasting impact.
In 2021, we focused on behavior change as a step to pushing ourselves beyond learning and towards the outcomes that make a demonstrable difference in inclusion. On this path toward creating a more diverse, equitable and inclusive culture, 94.5% of our employees achieved a Bank-wide goal to demonstrate a behavioral change in their own lives.
Our employee-led Diversity Digests sessions were one way our staff could learn from their peers and take those learnings to implement behavior change in their own lives. There were 45 employee-led sessions, with 53 different speakers that included:
an exploration of the Native American Districts, being an introvert, supplier diversity, and growing up in Poland. Encouraging behavior change for employees brought about promising steps in thinking about how to improve our business from the lessons
learned:
“As a result of our behavior change, we have become more deliberate and intentional to promote diversity, equity, and inclusion across all facets of our business, including employee engagement, business supplier diversity, and in our products, services, and community outreach.”
Leslie Drish, Vice President, Director, Diversity, Equity, and Inclusion
Executive Vice President, Group Head, People, Culture, and Communications, Federal Home Loan Bank of Chicago
The below financials are selected year-end 2021 highlights. For complete year-end 2021 financials, select one of the buttons below.
| Assets | Liabilities | Capital | Net Income | |
|---|---|---|---|---|
| 2021 | $96,954 | $90,202 | $6,752 | $275 |
| 2020 | $100,356 | $94,067 | $6,289 | $374 |
| 2019 | $99,827 | $94,373 | $5,454 | $300 |
Dollars in millions | For the years ended December 31
Dollars in billions | For the years ended December 31 | Advances and MPF Loans are outstanding on balance sheet; Letters of Credit are outstanding off balance sheet
Regulatory/ Voluntary | 2021 Beneficiaries | 2021 Dollars (originated) | |
|---|---|---|---|
| Community Development Advance | R | 3 (t) | $62,050,000 |
| Community Housing Advance | R | 514 (u) | $83,720,000 |
| Community Development/Housing Advance | R | 2 (t) | $430,000 |
| Community Small Business Advance | V | 20 (t) | $10,820,000 |
| Community First® Fundi* | V | 0 | $0 |
(t) transactions | (u) housing units
* While there were no new Community First Fund partners named or commitments made during 2021, the Community First Fund is a revolving loan fund with eight current partners and $45.75 million funded as of year-end 2021.
Regulatory/ Voluntary | 2021 Beneficiaries | 2021 Dollars (committed) | |
|---|---|---|---|
| Affordable Housing Program (AHP) General Fund | R | 2,430 (u) | $30,380,000 |
| Downpayment Plus (DPP®) Program* | R & V | 3,272 (u) | $18,900,000 |
| Downpayment Plus Advantage® (DPP Advantage®) | R & V | 93 (u) | $560,000 |
| Community First Capacity-Building i^ | V | 6 | $300,000 |
| Community First Awards i | V | 4 | $40,000 |
| Community First Disaster Relief i | V | 0 | $0 |
(u) housing units | (i) beneficiaries are grants | (ii) beneficiaries are partners | (^) awarded
* DPP includes approximately $4.6 million in voluntary funds for 2021 and $16.2 million cumulative since 2017.
The financial highlights should be read in conjunction with the audited financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” all of which is included in our 2021 Form 10‑K that was filed with the SEC on March 10, 2022.
