Chicago FHLBank: No 3Q Dividend

The Federal Home Loan Bank of Chicago has notified its members that it will not pay a dividend in the third quarter due to declining earnings and a possible loss in the fourth quarter."We expect that certain factors will significantly lower our future net income and we may experience losses in the fourth quarter and 2008," the FHLBank says in a securities filing. In the second quarter, the Chicago bank reported that earnings fell by 55%, to $50 million, compared with the level of a year earlier. The bank incurred a $13 million loss on its $36.4 billion mortgage portfolio, which had boosted earnings by $84 million in the second quarter of 2006. The Chicago bank had been operating for the past three years under a supervisory agreement that was recently replaced with a cease-and-desist order by the Federal Housing Finance Board.