• March 17, 2021
• Bulletin No: 2021-05

Modification and Extension to Special Advances Offering with Reduced Capital Stock Requirement

The Federal Home Loan Bank of Dallas (Bank) is pleased to announce that our Board of Directors has authorized the Bank to extend and modify the terms of the current special advances offering.

Under the current special advances offering (that is, the offering prior to the modifications discussed in this bulletin), the activity-based capital stock investment requirement has been reduced from 4.1 percent to 2 percent for up to $5 billion of advances that: (i) are funded during the period from August 1, 2020 through June 30, 2021 and (ii) have a maturity of 28 days or greater. This $5 billion special advances offering originally commenced on April 1, 2020 and during the period from that date through July 31, 2020, the reduced activity-based capital stock investment requirement applied to advances that had a maturity of one year or greater.

As modified and extended, the Bank’s activity-based capital stock investment requirement will be reduced from 4.1 percent to 2 percent for advances that: (1) are funded during the period from April 19, 2021 through December 31, 2021 and (2) have a maturity of 32 days or greater. For advances that are funded on or prior to April 18, 2021, the current reduced activity-based capital stock investment requirement will continue to apply to advances that have a maturity of 28 days or greater.

At any time during the period from April 1, 2020 through December 31, 2021, the maximum balance of advances to which the reduced activity-based capital stock investment requirement can be applied is $5 billion. If, at the time of funding an advance that would otherwise be eligible for the reduced capital stock investment requirement, the then outstanding balance of advances made pursuant to this offering totals $5 billion, then the standard capital stock investment requirement of 4.1 percent will apply.

As further described below, the standard capital stock investment requirement of 4.1 percent will continue to apply to all other advances that are funded during this period. All other minimum investment requirements will also continue to apply.

Annual Adjustment to Membership Investment Requirement

Separately, the Bank will implement the annual adjustment to members’ minimum investment requirements on April 19, 2021. This annual adjustment may increase or decrease the amount of capital stock that individual members are required to maintain.

The membership investment requirement percentage for 2021 will remain at 0.04 percent of each member’s total assets as of the most recent year end, subject to a minimum amount of $1,000 and a maximum amount of $7 million. In early April, your institution will receive a separate notification of the new membership investment requirement based on your December 31, 2020 total assets.

The advances-based component of the minimum investment requirement will remain at 4.1 percent of each member’s outstanding advances, except for advances that were funded as part of the Bank’s special advances offering with reduced capital stock requirements during the fourth quarter of 2015 and any advances that are (or were) funded as part of the special advances offering described in this bulletin. In each case, the minimum investment requirement for those advances will remain at 2 percent following the annual adjustment.

New Letter of Credit (LOC) Capital Stock Investment Requirement

In response to a regulatory directive, the Bank will implement an amendment to its Capital Plan on April 19, 2021. The amended Capital Plan provides for the imposition of an activity-based investment requirement ranging from 0.10 percent to 2.0 percent of members’ outstanding letters of credit (the “LC Percentage”), as specified from time to time by the Bank’s Board of Directors. The Board of Directors has established an initial LC Percentage of 0.10 percent which will apply only to letters of credit that are issued or renewed on and after April 19, 2021. The LC Percentage will be applied to the issued amount of the letter of credit rather than, if applicable, the amount of the letter of credit that is used from time to time by your institution during the term of the letter of credit. Further, renewals for this purpose will include amendments that extend the expiration date of the letter of credit.

Class B-2 Stock will be used to meet this new activity-based investment requirement. While there can be no assurances about future dividends or future dividend rates, the target range for quarterly dividends on Class B-2 Stock is currently an annualized rate that approximates the average one-month LIBOR rate for the preceding quarter plus 0.5 – 1.0 percent and recent dividend payments have been at the upper end of this range.

The amended Capital Plan is available on the Bank’s website and the Form 8-K announcing this new investment requirement can be accessed through the Bank’s website by clicking on “About Us,” then “Investor Relations,” and then “SEC” under the heading SEC Filings.

As always, thank you for being a valued member.

Sincerely,