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EX-4.1 - EX-4.1 - Federal Home Loan Bank of Dallas | d83874exv4w1.htm |
EX-10.1 - EX-10.1 - Federal Home Loan Bank of Dallas | d83874exv10w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of Earliest Event Reported): August 5, 2011
Federal Home Loan Bank of Dallas
(Exact name of registrant as specified in its charter)
Federally Chartered Corporation | 000-51405 | 71-6013989 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
||
8500 Freeport Parkway South, Suite 600, Irving, Texas |
75063-2547 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: 214-441-8500 |
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement | ||||||||
Item 3.03 Material Modification to Rights of Security Holders | ||||||||
Item 9.01 Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EX-4.1 | ||||||||
EX-10.1 |
Table of Contents
Item 1.01 Entry into a Material Definitive Agreement.
On February 28, 2011, the Federal Home Loan Bank of Dallas (the Bank) entered into a Joint
Capital Enhancement Agreement (the Original Agreement) with the other 11 Federal Home Loan Banks
(collectively, including the Bank, the FHLBanks). The Original Agreement provides that upon
satisfaction of the FHLBanks obligations to make payments related to the Resolution Funding
Corporation (REFCORP), each FHLBank will, on a quarterly basis, allocate at least 20 percent of
its net income to a separate restricted retained earnings account (RRE Account) to be established
by each FHLBank. The Original Agreement is further described in the Banks Current Report on Form
8-K dated February 28, 2011 and filed with the Securities and Exchange Commission on March 1, 2011.
On August 5, 2011, the Federal Housing Finance Agency (FHFA) certified that the FHLBanks had
fully satisfied their obligations to REFCORP with their July 2011 payments to REFCORP, which were
derived from the FHLBanks second quarter 2011 earnings. Accordingly, the allocations to each FHLBanks RRE Account will begin in the third quarter of
2011.
Effective
August 5, 2011, the FHLBanks amended the Original Agreement (the Amended
Agreement). In addition to certain technical and conforming changes, the Amended Agreement (i)
narrows the definition of an Automatic Termination Event, (ii) includes specific procedures for
determining whether or not an Automatic Termination Event has occurred, and (iii) revises the
permissible alternatives for the disposition of each of the FHLBanks RRE Accounts upon termination
of the Amended Agreement. A brief description of these changes is provided below and is qualified
in its entirety by reference to the Amended Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated herein by reference.
Under the Amended Agreement, the term Automatic Termination Event has been revised to mean (i) a
change in the Federal Home Loan Bank Act of 1932, as amended as of February 28, 2011 (the Act),
or another applicable statute, that will have the effect of creating a new, or higher, assessment
or taxation on the net income or capital of the FHLBanks, or (ii) a change in the Act, another
applicable statute, or the rules and regulations of the Federal Housing Finance Board (FHFB) or
the FHFA that will result in a higher mandatory allocation of an FHLBanks quarterly net income to
any retained earnings account other than the amount specified in an FHLBanks capital plan as in effect immediately
prior to the Automatic Termination Event.
The Amended Agreement provides additional procedures for determining whether an Automatic
Termination Event has occurred. In general, an FHLBank may assert that an Automatic Termination
Event has occurred by providing written notice to all other FHLBanks and to the FHFA. If at least
two-thirds of the then existing FHLBanks agree that an Automatic Termination Event has occurred,
then a Declaration of Automatic Termination will be signed by those FHLBanks and delivered to the
FHFA and, if all requirements are met, an Automatic Termination Event Declaration Date will then
be deemed to occur 60 days after the declaration is delivered to the FHFA. If the asserting
FHLBank does not obtain the concurrence of at least two-thirds of the then existing FHLBanks, the
asserting FHLBank may request a determination from the FHFA. If the FHFA concurs that an Automatic
Termination Event has occurred, or if the FHFA fails to make a determination within 60 days after
the request is delivered to the FHFA (and such period has not been otherwise tolled), then an
Automatic Termination Event Declaration Date will be deemed to occur 60 days after the request was
delivered to the FHFA.
The Amended Agreement prohibits each FHLBank from paying dividends out of its RRE Account. During
a Dividend Restriction Period (as such term is defined in the Amended Agreement), an FHLBank may
not pay dividends out of the amount of its quarterly net income that is required to be allocated to
its RRE Account. With certain exceptions, an FHLBank may not reallocate or otherwise transfer
amounts out of its RRE Account.
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An FHLBanks obligation to make allocations to its RRE Account would terminate on the Automatic
Termination Event Declaration Date, and the restrictions on paying dividends out of its RRE
Account, or otherwise reallocating amounts from its RRE Account, would terminate one year
thereafter.
The Amended Agreement also provides that the FHLBanks may terminate the Amended Agreement by the
affirmative vote of the boards of directors of at least two-thirds of the then existing FHLBanks.
An FHLBanks obligation to make allocations to its RRE Account would terminate on the date written
notice of termination of the Amended Agreement is delivered to the FHFA, and the restrictions on
paying dividends out of its RRE Account, or otherwise reallocating amounts from its RRE Account,
would terminate one year thereafter.
Item 3.03 Material Modification to Rights of Security Holders.
On April 28, 2011, the Banks Board of Directors adopted several amendments to the Banks capital
plan. The Banks capital plan defines the rights of the holders of the Banks Class B Capital
Stock, $100 par value per share (Class B Capital Stock). Pursuant to applicable regulations, the
Bank cannot implement any amendment to its capital plan without FHFA approval. The FHFA approved
the amendments to the Banks capital plan on August 5, 2011. The amendments to the Banks capital
plan were made primarily to incorporate the terms of the Amended Agreement described above and to
modify the permissible ranges for members minimum investment requirements in the Bank.
Pursuant to the terms of the Amended Agreement, the Bank was obligated to amend its capital plan to
incorporate the substantive provisions of that agreement. These provisions have been incorporated
into the Banks capital plan by adding sections 8.1 through 8.4 and are described below.
Consistent with the Amended Agreement, the amended capital plan provides that upon satisfaction of
the FHLBanks obligations to REFCORP, the Bank shall, on a quarterly basis, allocate at least 20
percent of its net income to a newly established RRE Account. The Bank shall build its RRE Account
to an amount equal to one percent of its total outstanding consolidated obligations, which for this
purpose is based on the most recent quarters average carrying value of all consolidated
obligations for which the Bank is the primary obligor, excluding any fair value option and hedging
adjustments (Total Consolidated Obligations).
Also consistent with the Amended Agreement, the amended capital plan provides that any quarterly
net losses of the Bank may be netted against its net income, if any, for other quarters during the
same calendar year to determine the minimum required year-to-date or annual allocation to its RRE
Account. In the event the Bank incurs a net loss for a cumulative year-to-date or annual period,
the Bank may decrease the amount of its RRE Account such that the cumulative year-to-date or annual
addition to its RRE Account is zero and the Bank shall apply any remaining portion of the net loss
first to reduce retained earnings that are not restricted retained earnings until such retained
earnings are reduced to zero, and thereafter may apply any remaining portion of the net loss to
reduce its RRE Account. For any subsequent calendar quarter in the same calendar year, the Bank
may decrease the amount of its quarterly allocation to its RRE Account in that subsequent calendar
quarter such that the cumulative year-to-date addition to the RRE Account is equal to 20 percent of
the amount of such cumulative year-to-date net income. In the event the Bank sustains a net loss
for a calendar year, any such net loss first shall be applied to reduce retained earnings that are
not restricted retained earnings until such retained earnings are reduced to zero, and thereafter
any remaining portion of the net loss for the calendar year may be applied to reduce the Banks RRE
Account. If during a period in which the Banks RRE Account is less than one percent of its Total
Consolidated Obligations, the Bank incurs a net loss for a cumulative year-to-date or annual period
that results in a decrease to the balance of its RRE Account as of the beginning of that calendar
year, the Banks quarterly allocation requirement shall thereafter increase to 50 percent of
quarterly net income until the cumulative difference between the allocations made at the 50 percent
rate and the allocations that would have been made at the regular 20 percent rate is equal to the
amount of the decrease to the balance of its RRE Account at the beginning of that calendar year.
Also consistent with the Amended Agreement, the amended capital plan provides that if the Banks
RRE Account exceeds 1.5 percent of its Total Consolidated Obligations, the Bank may transfer
amounts from its
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RRE Account to its unrestricted retained earnings account, but only to the extent that the balance
of its RRE Account remains at least equal to 1.5 percent of the Banks Total Consolidated
Obligations immediately following such transfer.
Also consistent with the Amended Agreement, the amended capital plan provides that the Bank may not
pay dividends out of its RRE Account, nor may it reallocate or transfer amounts out of its RRE
Account except as described above. In addition, during periods in which the Banks RRE Account is
less than one percent of its Total Consolidated Obligations, the Bank may not pay dividends out of
the amount of its quarterly net income that is required to be allocated to its RRE Account.
Consistent with the Amended Agreement, the capital plan defines Automatic Termination Event to
mean (i) a change in the Act, or another applicable statute, that will have the effect of creating
a new, or higher, assessment or taxation on the net income or capital of the FHLBanks, or (ii) a
change in the Act, another applicable statute, or the rules and regulations of the FHFB or the FHFA
that will result in a higher mandatory allocation of an FHLBanks quarterly net income to any
retained earnings account other than the amount specified in an FHLBanks capital plan as in effect immediately
prior to the Automatic Termination Event.
With regard to determining whether an Automatic Termination Event has occurred, in general, the
Bank (or any other FHLBank) may assert that an Automatic Termination Event has occurred by
providing written notice to all other FHLBanks and to the FHFA. If at least two-thirds of the then
existing FHLBanks agree that an Automatic Termination Event has occurred, then a Declaration of
Automatic Termination will be signed by those FHLBanks and delivered to the FHFA and, if all
requirements are met, an Automatic Termination Event Declaration Date will then be deemed to
occur 60 days after the declaration is delivered to the FHFA. If the asserting FHLBank does not
obtain the concurrence of at least two-thirds of the then existing FHLBanks, the asserting FHLBank
may request a determination from the FHFA. If the FHFA concurs that an Automatic Termination Event
has occurred, or if the FHFA fails to make a determination within 60 days after the request is
delivered to the FHFA (and such period has not been otherwise tolled), then an Automatic
Termination Event Declaration Date will be deemed to occur 60 days after the request was delivered
to the FHFA.
The Banks obligation to make allocations to its RRE Account would terminate on the Automatic
Termination Event Declaration Date, and the restrictions on paying dividends out of its RRE
Account, or otherwise reallocating amounts from its RRE Account, would terminate one year
thereafter.
The FHLBanks may also terminate the Amended Agreement by the affirmative vote of the boards of
directors of at least two-thirds of the then existing FHLBanks. The Banks obligation to make
allocations to its RRE Account would terminate on the date written notice of termination of the
Amended Agreement is delivered to the FHFA, and the restrictions on paying dividends out of its RRE
Account, or otherwise reallocating amounts from its RRE Account, would terminate one year
thereafter.
The operative provisions of sections 8.1 through 8.4 of the capital plan shall be deleted if and
when the Amended Agreement is terminated without any further action by the Bank or the FHFA.
The Bank also amended its capital plan to modify the permissible ranges for members minimum
investment requirements. Under the Banks capital plan, members are required to maintain an
investment in Class B Capital Stock equal to the sum of a membership investment requirement and an
activity-based investment requirement. The Banks capital plan establishes permissible ranges for
each of these investment requirements. The capital plan was amended to adjust the permissible
range for the membership investment requirement from 0.05 percent to 0.30 percent of each members
total assets to a range of 0.02 percent to 0.15 percent of each members total assets (the current
requirement established by the Banks Board of Directors is 0.05 percent of each members total
assets). In addition, the permissible range for the maximum amount of the membership investment
requirement was reduced from a range of $10 million to $50 million to a range of $5 million to $25
million (the current maximum established by the Banks Board of Directors is $10 million).
Further, the permissible range for the advances-based component of the activity-based investment
requirement was expanded from a range of 3.5 percent to 5.0
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percent of members advances outstanding to a range of 3.0 percent to 5.0 percent of members
advances outstanding (the current requirement established by the Banks Board of Directors is 4.1
percent of members advances outstanding).
In addition to the amendments incorporating the substantive provisions of the Amended Agreement and
those relating to members minimum investment requirements, several technical amendments were made
to the Banks capital plan. These amendments include changes to reflect the transfer of regulatory
oversight of the FHLBanks from the FHFB to the FHFA and the addition of the independent director
election process to members voting rights. Further, the capital plan was amended to increase the
flexibility afforded to an existing member that acquires another member to retain or cancel
outstanding stock redemption notices that were created by a membership withdrawal notice previously
submitted by the acquired member.
The foregoing description of the amendments to the Banks capital plan is qualified in its entirety
by reference to the capital plan, as amended, which is filed as Exhibit 4.1 to this Current Report
on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibits
4.1 | Capital Plan for the Federal Home Loan Bank of Dallas, as amended and revised on April 28, 2011 and approved by the Federal Housing Finance Agency on August 5, 2011 | |
10.1 | Joint Capital Enhancement Agreement, as amended effective August 5, 2011 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
Federal Home Loan Bank of Dallas |
||||
August 5, 2011 | By: | /s/ Tom Lewis | ||
Name: | Tom Lewis | |||
Title: | Senior Vice President and Chief Accounting Officer | |||