The Chicago Federal Home Loan Bank has announced that an analysis of accounting changes and adjustments are expected to result in a $75 million increase to the bank’s cumulative net income from Jan. 1, 2001 to June 30, 2004.

The bank’s retained earnings and regulatory capital as of June 30, 2004, will increase by a corresponding amount. The cumulative changes also will increase the bank’s contribution to its affordable housing program in 2005 by about $6 million.

The bank’s external auditor, PricewaterhouseCoopers, has reviewed the determination and is currently evaluating the changes and their impact on prior period results.

The bank announced in November that it had changed the method it uses to account for the timing of income and expenses related to certain derivative transactions. The vast majority of the changes on the balance sheets involves the reclassification from one capital account (other comprehensive income) to another (retained earnings) and do not reflect changes to the core economic earnings of the bank.

Fully restated, audited financial statements for 2003, which will include financial information for 20001 and 2002, will be issued in the coming weeks, along with third-quarter and year-to-date 2004 financial results. As a result of the decision to restate some prior financial statements, the bank has advised that previously issued financial statements for 2001 and thereafter should not be relied upon.

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