Federal Home Loan Bank of Dallas Reports Fourth Quarter and Full Year 2020 Operating Results

BY Business Wire | AGENCY | 02/23/21 01:32 PM EST

DALLAS--(BUSINESS WIRE)-- The Federal Home Loan Bank of Dallas (Bank) today reported net income of $32.5 million for the quarter ended December 31, 2020. In comparison, for the quarters ended September 30, 2020 and December 31, 2019, the Bank reported net income of $47.7 million and $61.7 million, respectively. For the year ended December 31, 2020, the Bank reported net income of $198.7 million, as compared to $227.3 million for the year ended December 31, 2019.

Total assets at December 31, 2020 were $64.9 billion, compared with $66.3 billion at September 30, 2020 and $75.4 billion at December 31, 2019. The $1.4 billion decrease in total assets for the fourth quarter was attributable primarily to decreases in the Bank's advances ($1.8 billion), long-term investments ($0.4 billion) and mortgage loans held for portfolio ($0.3 billion), offset by an increase in its short-term liquidity holdings ($1.1 billion). The $10.5 billion decrease in total assets for the year ended December 31, 2020 was attributable primarily to decreases in the Bank's short-term liquidity holdings ($4.8 billion), advances ($4.6 billion), mortgage loans held for portfolio ($0.7 billion) and long-term investments ($0.3 billion).

Advances totaled $32.5 billion at December 31, 2020, compared with $34.3 billion at September 30, 2020 and $37.1 billion at December 31, 2019. The Bank's mortgage loans held for portfolio totaled $3.4 billion at December 31, 2020, as compared to $3.7 billion at September 30, 2020 and $4.1 billion at December 31, 2019.

The carrying value of the Bank's long-term held-to-maturity securities portfolio, which is comprised substantially of U.S. agency residential mortgage-backed securities (MBS), totaled approximately $0.9 billion at December 31, 2020 compared to $1.0 billion at September 30, 2020 and $1.2 billion at December 31, 2019. The carrying value of the Bank's long-term available-for-sale securities portfolio, which is comprised substantially of U.S. agency debentures and U.S. agency commercial MBS, totaled $16.8 billion at December 31, 2020, as compared to $17.1 billion at September 30, 2020 and $16.8 billion at December 31, 2019. At December 31, 2020, September 30, 2020 and December 31, 2019, the Bank also held a $0.1 billion long-term U.S. Treasury Note classified as trading.

The Bank's short-term liquidity holdings are typically comprised of overnight interest-bearing deposits, overnight federal funds sold, overnight reverse repurchase agreements, U.S. Treasury Bills, U.S. Treasury Notes and, from time to time, may also include cash held at the Federal Reserve. At December 31, 2020, September 30, 2020 and December 31, 2019, the Bank's short-term liquidity holdings totaled $11.0 billion, $9.9 billion and $15.8 billion, respectively.

The Bank's retained earnings increased to $1.408 billion at December 31, 2020 from $1.380 billion at September 30, 2020 and $1.233 billion at December 31, 2019. On December 31, 2020, a dividend of $4.3 million was paid to the Bank's shareholders.

Additional selected financial data as of and for the quarter and year ended December 31, 2020 (and, for comparative purposes, as of September 30, 2020 and December 31, 2019, and for the quarters ended September 30, 2020 and December 31, 2019 and the year ended December 31, 2019) is set forth below. Further discussion and analysis regarding the Bank's results will be included in its Form 10-K for the year ended December 31, 2020 to be filed with the Securities and Exchange Commission.

About the Federal Home Loan Bank of Dallas

The Federal Home Loan Bank of Dallas is one of 11 district banks in the FHLBank System, which was created by Congress in 1932. The Bank is a member-owned cooperative that supports housing and community development by providing competitively priced loans (known as advances) and other credit products to approximately 800 members and associated institutions in Arkansas, Louisiana, Mississippi, New Mexico and Texas. For more information, visit the Bank's website at fhlb.com.

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Federal Home Loan Bank of Dallas
Selected Financial Data
As of and For the Quarter and Year Ended December 31, 2020
(Unaudited, in thousands)

?

?

December 31, 2020

?

September 30, 2020

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December 31, 2019

Selected Statement of Condition Data:

?

?

?

?

?

?

?

?

?

?

?

?

?

Assets

?

?

?

?

?

?

Investments (1)

?

$

25,660,696

?

?

$

28,049,888

?

?

$

33,918,055

?

Advances

?

32,478,944

?

?

34,292,478

?

?

37,117,455

?

Mortgage loans held for portfolio, net

?

3,422,686

?

?

3,705,344

?

?

4,075,464

?

Cash and other assets

?

3,350,200

?

?

248,143

?

?

270,631

?

Total assets

?

$

64,912,526

?

?

$

66,295,853

?

?

$

75,381,605

?

?

?

?

?

?

?

?

Liabilities

?

?

?

?

?

?

Consolidated obligations

?

?

?

?

?

?

Discount notes

?

$

22,171,296

?

?

$

26,739,876

?

?

$

34,327,886

?

Bonds

?

37,112,721

?

?

34,099,828

?

?

35,745,827

?

Total consolidated obligations

?

59,284,017

?

?

60,839,704

?

?

70,073,713

?

Mandatorily redeemable capital stock

?

13,864

?

?

13,810

?

?

7,140

?

Other liabilities

?

2,057,760

?

?

1,911,178

?

?

1,502,784

?

Total liabilities

?

61,355,641

?

?

62,764,692

?

?

71,583,637

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Capital

?

?

?

?

?

?

Capital stock ? putable

?

2,101,380

?

?

2,181,608

?

?

2,466,242

?

Retained earnings

?

1,408,245

?

?

1,380,050

?

?

1,232,677

?

Total accumulated other comprehensive income (loss)

?

47,260

?

?

(30,497

)

?

99,049

?

Total capital

?

3,556,885

?

?

3,531,161

?

?

3,797,968

?

Total liabilities and capital

?

$

64,912,526

?

?

$

66,295,853

?

?

$

75,381,605

?

?

?

?

?

?

?

?

Total regulatory capital (2)

?

$

3,523,489

?

?

$

3,575,468

?

?

$

3,706,059

?

?
?

?

?

For the

?

For the

?

For the

?

For the

?

For the

?

?

Quarter Ended

?

Quarter Ended

?

Quarter Ended

?

Year Ended

?

Year Ended

?

?

December 31, 2020

?

September 30, 2020

?

December 31, 2019

?

December 31, 2020

?

December 31, 2019

Selected Statement of Income Data:

?

?

?

?

?

?

?

?

?

?

Net interest income (3) (4)

?

$

74,831

?

?

$

79,457

?

?

$

90,811

?

?

$

309,979

?

?

$

293,175

?

Other income (loss)

?

107

?

?

(708

)

?

2,299

?

?

32,159

?

?

56,320

?

Other expense

?

38,869

?

?

25,731

?

?

24,572

?

?

121,342

?

?

96,965

?

AHP assessment

?

3,607

?

?

5,305

?

?

6,858

?

?

22,087

?

?

25,272

?

Net income

?

$

32,462

?

?

$

47,713

?

?

$

61,680

?

?

$

198,709

?

?

$

227,258

?

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(1)

?

Investments consist of interest-bearing deposits, securities purchased under agreements to resell, federal funds sold, trading securities, available-for-sale securities and held-to-maturity securities.

(2)

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As of December?31, 2020, September?30, 2020 and December?31, 2019, total regulatory capital represented 5.43 percent, 5.39 percent and 4.92 percent, respectively, of total assets as of those dates.

(3)

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Net interest income is net of the provision for mortgage loan losses.

(4)

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The Bank records hedge ineffectiveness associated with fair value hedging relationships in net interest income in accordance with the provisions of ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities." During the quarters ended December?31, 2020, September?30, 2020 and December?31, 2019, fair value hedge ineffectiveness increased net interest income by $7.856 million, $4.629 million and $13.335 million, respectively. During the years ended December?31, 2020 and 2019, fair value hedge ineffectiveness reduced net interest income by $14.982 million and $17.909 million, respectively.

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Source: Federal Home Loan Bank of Dallas

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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