February 10, 2022

To Our Members:

We have remained steadfast in our mission through the ongoing challenges of COVID-19 and an ever-changing economic landscape and I sincerely thank you, our members, for making 2021 a success. As we continued to demonstrate our unwavering commitment to being a reliable and competitive source of funding to our members, we advanced our products to help you invest in your communities. I also want to acknowledge the many of you who helped us better understand where you are in your diversity, equity and inclusion (DEI) journey. Your feedback, through open and candid dialogues with our sales directors and responses from our DEI surveys, provided direction for how we can tailor our products to better meet your needs and the diverse communities you serve. We remain committed to offering a range of community investment products that support diverse and underserved communities throughout Illinois and Wisconsin and the year ahead brings even more opportunity to expand program offerings to you and your partners. I wholeheartedly believe that a positive DEI platform has helped strengthen both our culture and our cooperative, all while helping you achieve your financial and community investment goals. With that, I am pleased to share some of our accomplishments over the last year. 

We expect to report net income of $275 million for 2021 when we file our 2021 Annual Report on Form 10-K with the Securities and Exchange Commission (SEC) next month. Our preliminary and unaudited 2021 financial results and details on our 2021 financial performance are provided at the end of this letter. Based on our preliminary fourth quarter 2021 results, the Board of Directors of FHLBank Chicago declared our Q4 dividend on January 28, 2022 – 5.00% (annualized) for Class B1 activity stock and 2.00% (annualized) for Class B2 membership stock. Dividends will be paid February 15, 2022. A reminder that the net benefit of the higher dividend received on Class B1 activity stock has the effect of lowering your borrowing costs from us, currently estimated at 21.1 bps* interest rate reduction.

Resilient Member Engagement

In 2021, 90% of our members and associate members used at least one of our core product offerings—advances, letters of credit, or Mortgage Partnership Finance^® (MPF^®) Program products—or participated in our competitive Affordable Housing Program (AHP) or Downpayment Plus^® (DPP^®) Programs. We also welcomed 13 new members last year.

Investing in Your Communities

Our community investment products and programs are central to our mission and help you meet your homeownership, affordable housing, economic development and community lending goals. Here is a recap of some of those efforts in 2021.

2021 Financial Highlights

Throughout 2021, we maintained our most important commitment to be a reliable source of liquidity by providing products, services, and solutions to meet your evolving business needs. Selected financial data is below. For more details, please refer to the Condensed Statements of Income and Statements of Condition. The financial results discussed are preliminary and unaudited. We expect to file our 2021 Annual Report on Form 10-K with the Securities and Exchange Commission (SEC) next month. After it is filed, you will be able to access it on fhlbc.com or through the SEC’s reporting website.

Forward-Looking Information: This letter contains forward-looking statements which are based upon our current expectations and speak only as of the date hereof. All statements other than statements of historical fact are “forward-looking statements,” including any projections or guidance of dividends or other financial items; any statements of the plans, strategies, and objectives for future operations; any statements of belief; and any statements of assumptions underlying any of the foregoing. These statements may use forward-looking terms, such as “anticipates,” “believes,” “expects,” “could,” “plans,” “estimates,” “may,” “should,” “will,” or their negatives or other variations on these terms. We caution that, by their nature, forward-looking statements involve risks or uncertainties, that actual results could differ materially from those expressed or implied in these forward-looking statements, and that actual events could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the impact of the COVID-19 pandemic on the global and national economies and on our and our members’ businesses, maintaining compliance with regulatory and statutory requirements (including relating to our dividend payments and retained earnings), any decrease in our levels of business which may negatively impact our results of operations or financial condition, the reliability of our projections, assumptions, and models on future financial performance and condition, instability in the credit and debt markets, economic conditions (including effects on, among other things, mortgage-backed securities), changes in mortgage interest rates and prepayment speeds on mortgage assets, our ability to execute our business model and to pay future dividends (including enhanced dividends on activity stock), our ability to meet required conditions to repurchase or redeem excess capital stock from members, including maintaining compliance with our minimum regulatory capital requirements and determining our financial condition is sound enough to support such repurchases and redemptions, our ability to continue to offer the Reduced Capitalization Advance Program, our ability to implement product enhancements and new products, the impacts of changes to Federal Home Loan Bank membership requirements, capital requirements and guidance, and liquidity requirements and guidance by the Federal Housing Finance Agency, the loss of members through mergers and consolidations, our ability to retain and recruit qualified personnel, our ability to protect the security of our information systems and manage any failures, interruptions, or breaches, uncertainties relating to the phase-out of the London Interbank Offered Rate (LIBOR), and the risk factors set forth in our periodic filings with the Securities and Exchange Commission, which are available on our website at fhlbc.com. We assume no obligation to update any forward-looking statements made in this letter. “Community First,” “Downpayment Plus,” “DPP,” “Mortgage Partnership Finance,” “MPF,” and “MPF Xtra” are registered trademarks of the Federal Home Loan Bank of Chicago.