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Bulletin No.: 2019-15
July 8, 2019

TO: MEMBERS

SUBJECT: New Feature Available for the FOTO Advance

Beginning Monday, July 8, the Federal Home Loan Bank of Dallas (Bank) will offer an additional feature for the FHLB Dallas Owns the Option (FOTO) advance.

The FOTO advance is a fixed-rate, non-amortizing puttable advance by which a member sells the Bank options to terminate the FOTO advance at specified points in time prior to the stated maturity date. These points in time, or exercise dates, follow a specified lockout period at the beginning of the term during which the Bank cannot terminate the advance. Following the lockout period, the Bank may terminate the advance on quarterly option exercise dates until maturity, as seen in a Bermudan structure. One of the primary member benefits of this advance is the ability to borrow at lower than typical funding rates.

The new "flipper" feature provides members with a floating rate from origination of the advance through the lockout period. If the advance is not canceled at the end of the lockout period, the advance converts (flips) to a pre-determined fixed rate for the duration of the advance. Also, following the lockout period, the Bank owns the option to terminate the advance on a quarterly basis. See the FOTO advance product sheet and white paper for more information.  

To find out if this new advance feature is a good fit for your institution, please contact the Member Services Desk at 844.FHL.BANK (844.345.2265) or contact your Member Sales officer.

Sincerely,

 

Sanjay K. Bhasin
President and Chief Executive Officer