FOR IMMEDIATE RELEASE

Contact:
Corporate Communications
Federal Home Loan Bank of Dallas
(214) 441-8445
www.fhlb.com

FHLBank Dallas Announces Third Quarter Dividend

DALLAS, TEXAS, September 29, 2006 – The Board of Directors of the Federal Home Loan Bank of Dallas (“Bank”) has declared a dividend in the form of capital stock for the third quarter of 2006 at an annualized rate of 4.91 percent, which equates to the average effective federal funds rate for the second quarter of 2006. The third quarter dividend, applied to average capital stock held during the period from April 1, 2006 through June 30, 2006 and based upon operating results for that same period, will be paid on September 29, 2006.

As previously announced, effective with the third quarter 2006 dividend, the Bank changed its dividend declaration and payment process in a manner that conforms with the timing provisions of the Federal Housing Finance Board’s proposed regulation entitled “Excess Stock Restrictions and Retained Earnings Requirements for the Federal Home Loan Banks.” Among other things, the proposed regulation would require Federal Home Loan Banks to declare and pay dividends only after the close of the calendar quarter to which the dividend pertains and the earnings for that quarter have been calculated. 

The Bank will repurchase on October 31, 2006 the portion of members’ excess stock identified as surplus stock as of that date as provided for in the Bank’s Member Products and Credit Policy. Surplus stock is currently defined as the amount of capital stock held by a member that exceeds 110 percent of its minimum investment requirement. A member’s surplus stock will not be repurchased if the amount of surplus stock is $250,000 or less.

The Federal Home Loan Bank of Dallas is one of 12 district banks in the FHLBank System created by Congress in 1932. The Bank, with total assets of $57.3 billion as of June 30, 2006, is a member-owned cooperative that supports housing and community development through low-cost funding and other credit products provided to more than 900 members and associated institutions in Arkansas, Louisiana, Mississippi, New Mexico and Texas. For more information, visit the Bank’s website at www.fhlb.com.

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