Updated Loan Collateral Margins Starting in 2023

  • January 3, 2023

NOTE: This information is only relevant to most depository member institutions.

In December 2022, we reached out to our depository members regarding important collateral updates coming this year for those institutions who pledge by Qualified Collateral Report (QCR). Today, we are following up on the specifics of those updates and what our members can expect in 2023.

The Federal Home Loan Bank of Chicago (FHLBank Chicago) allows many of our depository members to pledge loan collateral via QCR where members can pledge on a blanket lien without having to list out specific characteristics on each pledged loan.

Increased rate volatility has caused a reduction in the value of loans on our members’ balance sheets, and FHLBank Chicago must consider market values when assessing collateral loan value (CLV) to properly ensure the financial health of our member-owned cooperative. As a result, members pledging via QCR can expect to see higher haircuts (reduced CLV) on their loans pledged via QCR in Q1 2023. Please note – members pledging via listing method will not see their margins change at this time.

The new margins are outlined in the table below. These will take effect on February 3, 2023.

QCR Margin Changes
Asset ClassCurrent RR1-3 QCR MarginsNew RR1-3 QCR MarginsChange
1-4s80%78%-2%
HE64%63%-1%
MF75%73%-2%
CRE75%73%-2%
Farmland65%63%-2%
Business65%63%-2%
1-4 Construction40%40%0%
Other Construction35%35%0%
GGLC83%81%-2%


We urge members to be proactive in evaluating their collateral position and determining if additional collateral needs to be pledged to ensure they remain fully secured. Our teams regularly reviews loan pricing, and changes to these margins may take place based on the markets.

    Questions?

    If you have any questions regarding your institution’s pledged collateral or how we can help you further, please don’t hesitate to reach out to your Sales Director in the coming weeks to assist you in making these determinations. In addition, please read our FAQ for more information

    Contact Us

    Please direct all media inquiries to:

    Casey Reidy 
    Assistant Director, Communications 
    creidy@fhlbc.com
    312.565.5291