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Overview
The Bank has expanded its deposit offerings to now include term deposits and
callable deposits. Offerings include maturities ranging from 1 day through 10
years. The Auctions are conducted through the Bank's SecureConnect network. Auction
participants are able to view all auction bids and bid accordingly.
The result is a convenient means for Bank members to invest
their excess liquidity and earn a competitive return. Selected maturity
ranges and terms are offered at each auction. Auctions last for 1 to 2 hours.
The minimum deposit denomination $25,000. For maturities equal to or less
than 35 days, the interest will be paid at maturity. For maturities greater
than 35 days, the interest is paid monthly on the first business day. All
interest payments are deposited into the members interest bearing DDA
account. The auctions are announced via Auction
Schedule and on SecureConnect. The auctions are available ONLY to
customers that are connected to the SecureConnect
network.
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Term Deposit Features
Fixed Rate Deposit: The Bank's fixed rate
deposit is available in terms ranging from 1 day to 10 years. The fixed
rate-fixed term deposit offers a fixed coupon and a fixed maturity. The
fixed rate-fixed term deposit auction provides members with an investment
alternative to the traditional money market options and short term
investments. There's no broker fees. The deposits are withdrawn
from the member's DDA and redeposited at maturity.
Variable Rate Deposit: The Bank's
variable rate deposit offers members an option to invest funds for a specific
term and receive a variable interest rate return. The variable rate
deposit's interest rate will adjust, based on the selected index, such as New
York Fed Effective or one month LIBOR plus the applicable spread. The
variable rate deposit allows members to take advantage of interest rate moves
in the markets over a specific term.
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Callable Deposit Features
- All callable deposits have a fixed coupon, a
stated maturity date, and a call provision that gives the FHLB of Dallas
the right to call the deposit at par (redeem the deposit for cash at its
face value) on any specified call date prior to its stated
maturity date.
- All callable deposits will have an initial call
date. The FHLB of Dallas can not call the deposit before the initial
call date.
- Certain terms and characteristics of the call
feature may differ among deposit structures. These include the length of
time between the settlement date of the deposit and its initial call
date (the lockout period), and the timing and frequency of call dates
after the initial call date. The terms and characteristics of the call
feature for the particular deposit being auctioned will be detailed in
the Callable Deposits section of the Auctions page that is located on
SecureConnect. Actual call dates will be identified in the confirmation.
- The deposit is callable by the Bank at par
(redeemable for cash at its face value). Calls for less than all of the
deposit will not be made. The cash proceeds from the redemption of the
deposit will be credited to the member's demand deposit account on the
date the Bank calls the deposit.
- If a deposit matures or is called on a
non-business day, the principal plus interest due will be credited to
the member's demand deposit account the following business day.
Interest will be calculated through the day preceding the call or
maturity date of the deposit.
- The FHLB of Dallas may, in its sole discretion,
exercise its option to call the deposit on any specified call date, and
will notify the member of its intention to call a deposit no later than
5 business days prior to the call date of the deposit. Notification will
be made by telephone with written notification to follow.
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Callable Deposit Risk
Characteristics
- The member is purchasing an instrument with a
call feature. The call feature allows the FHLB of Dallas to call the
deposit (redeem the deposit for cash at its face value) prior to its
maturity date. The FHLB of Dallas' decision to exercise its option to
call the deposit will depend on several market factors such as the level
of market rates, the shape of the yield curve, and the volatility of
market interest rates.
- Among other factors, it is highly probable that
the market conditions that will affect the Bank's decision to call the
deposit will change subsequent to the settlement date of the deposit.
The FHLB of Dallas will generally initiate a call of the deposit when
market conditions are such that it is in the Bank's best interest to do
so. This means that the actual performance of the callable deposit may
differ substantially from the depositor's expectations. The FHLB of
Dallas makes no representation as to the criteria that it will use to
decide whether to exercise the call option.
- Among the risks posed to investors in callable
deposits is that if interest rates rise, the Bank may not call the
deposit and the investor will be unable to reinvest the funds invested
in the deposit at prevailing interest rates. Conversely, if
interest rates fall, the Bank may call the deposit and the investor may
be forced to reinvest the proceeds of the called deposit at the
prevailing lower interest rates.
- The member should have sufficient knowledge and
experience in financial and business matters to evaluate the call
feature and should consider whether there are any legal restrictions on
purchasing the callable deposit. Members should consult their legal advisors
or regulators to determine the appropriate treatment of the deposit
under any risk-based capital or similar rules.
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Auction Rules
- Individuals committing for deposits on behalf
of auction participants must be authorized signers on the Advances
signature card.
- Only bids submitted by the auction deadline
will be accepted.
- The Bank reserves the right to not allow an
institution to participate in an auction.
- A high demand for deposits during an auction
may result in the sum of the amount of the winning bids exceeding the
amount of deposits being auctioned. If this occurs, the winning bids
will be prioritized based on the lowest rate then time that the bids
were submitted. This process for allocating bids may result in an
institution being awarded fewer deposits than for which they bid.
- Confirmations will be made available following
the results of the auction.
- An institution may submit more than one bid.
However all bids submitted by an institution are final and cannot be
canceled by the auction participant.
- Funds for accepted bids will be debited from
the members' FHLB Dallas' Demand Deposit Account on the day of the
auction.
- If a deposit matures on a non-business day, the
principal plus interest due at maturity will be credited to the member's
demand deposit account the following business day. Interest will
be calculated through the day preceding the maturity date of the
deposit.
- Deposits are not redeemable.
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Auction Schedule
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Auction
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Date
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Time
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Term
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Non-Callable Term Deposit
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Offered every
Wednesday and Friday
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10:00-11:00 a.m.
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1 week, 2 week, 9 month, and 1 year
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Supplemental
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TBD
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10:00-11:00 a.m.
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TBD
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Participation in the auction is through SecureConnect. For information on getting
connected to Secure148Connect, please contact the Bank at 888.720.8585. For
additional information on the auction, please call the Lending &
Marketing Division at 800.442.9841.
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Cumulative Term Deposit
Auction Results to Date
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Auction
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Total Amount of Successful
Bids
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Total Number of
Participating Members
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Non-Callable Deposit
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$28,388,710,000.00
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155
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Callable Deposit
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$31,000,000
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8
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Variable Deposit
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$82,500,000
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4
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© 2006 Federal Home Loan Bank of Dallas. All Rights
Reserved.
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