Federal Home Loan Bank of Dallas Reports Third Quarter 2022 Operating Results

BY Business Wire | AGENCY | 10/27/22 03:35 PM EDT

DALLAS--(BUSINESS WIRE)-- The Federal Home Loan Bank of Dallas (Bank) today reported net income of $94.7 million for the quarter ended September 30, 2022. In comparison, for the quarters ended June 30, 2022 and September 30, 2021, the Bank reported net income of $65.6 million and $41.3 million, respectively. For the nine months ended September 30, 2022, the Bank reported net income of $201.3 million, as compared to $117.2 million for the nine months ended September 30, 2021.

Total assets at September 30, 2022 were $89.6 billion, compared with $77.7 billion at June 30, 2022 and $63.5 billion at December 31, 2021. The $11.9 billion increase in total assets for the third quarter was primarily attributable to increases in the Bank's advances ($7.8 billion), short-term liquidity holdings ($3.4 billion), long-term investments ($0.3 billion) and mortgage loans held for portfolio ($0.2 billion). The $26.1 billion increase in total assets for the nine months ended September 30, 2022 was attributable primarily to increases in the Bank's advances ($19.6 billion), short-term liquidity holdings ($7.1 billion) and mortgage loans held for portfolio ($0.7 billion), partially offset by a decrease in the Bank's long-term investments ($1.6 billion).

Advances totaled $44.2 billion at September 30, 2022, compared with $36.4 billion at June 30, 2022 and $24.6 billion at December 31, 2021. The Bank's mortgage loans held for portfolio totaled $4.2 billion at September 30, 2022, as compared to $4.0 billion at June 30, 2022 and $3.5 billion at December 31, 2021.

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 $0.3 billion at September 30, 2022, compared to $0.4 billion and $0.6 billion at June 30, 2022 and December 31, 2021, respectively. 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 $14.0 billion at September 30, 2022, as compared to $13.6 billion at June 30, 2022 and $15.3 billion at December 31, 2021. At September 30, 2022, June 30, 2022 and December 31, 2021, 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 September 30, 2022, June 30, 2022 and December 31, 2021, the Bank's short-term liquidity holdings totaled $26.3 billion, $22.9 billion and $19.2 billion, respectively.

The Bank's retained earnings increased to $1.741 billion at September 30, 2022 from $1.657 billion at June 30, 2022 and $1.558 billion at December 31, 2021. On September 27, 2022, a dividend of $10.6 million was paid to the Bank's shareholders.

Additional selected financial data as of and for the quarter ended September 30, 2022 (and, for comparative purposes, as of June 30, 2022 and December 31, 2021 and for the quarters ended June 30, 2022 and September 30, 2021 and the nine months ended September 30, 2021) is set forth below. Further discussion and analysis regarding the Bank's results will be included in its Form 10-Q for the quarter ended September 30, 2022 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.

Federal Home Loan Bank of Dallas

Selected Financial Data

As of and For the Quarter Ended September 30, 2022

(Unaudited, in thousands)

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?

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September 30, 2022

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June 30, 2022

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December 31, 2021

Selected Statement of Condition Data:

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?

?

?

?

?

?

?

?

?

?

?

?

Assets

?

?

?

?

?

?

Investments (1)

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$

40,729,299

?

$

37,053,619

?

$

34,653,202

Advances

?

?

44,238,384

?

?

36,375,762

?

?

24,637,464

Mortgage loans held for portfolio, net

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?

4,240,222

?

?

3,985,872

?

?

3,491,265

Cash and other assets

?

?

342,927

?

?

299,471

?

?

706,445

Total assets

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$

89,550,832

?

$

77,714,724

?

$

63,488,376

?

?

?

?

?

?

?

Liabilities

?

?

?

?

?

?

Consolidated obligations

?

?

?

?

?

?

Discount notes

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$

29,590,696

?

$

29,622,896

?

$

11,003,026

Bonds

?

?

51,838,498

?

?

40,944,088

?

?

44,514,220

Total consolidated obligations

?

?

81,429,194

?

?

70,566,984

?

?

55,517,246

Mandatorily redeemable capital stock

?

?

12,895

?

?

13,698

?

?

6,657

Other liabilities

?

?

3,107,324

?

?

2,501,920

?

?

4,030,782

Total liabilities

?

?

84,549,413

?

?

73,082,602

?

?

59,554,685

Capital

?

?

?

?

?

?

Capital stock ? putable

?

?

3,012,726

?

?

2,798,381

?

?

2,192,504

Retained earnings

?

?

1,741,128

?

?

1,657,025

?

?

1,558,417

Total accumulated other comprehensive income

?

?

247,565

?

?

176,716

?

?

182,770

Total capital

?

?

5,001,419

?

?

4,632,122

?

?

3,933,691

Total liabilities and capital

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$

89,550,832

?

$

77,714,724

?

$

63,488,376

?

?

?

?

?

?

?

Total regulatory capital (2)

?

$

4,766,749

?

$

4,469,104

?

$

3,757,578

?

?

For the

?

For the

?

For the

?

For the

?

For the

?

?

Quarter Ended

?

Quarter Ended

?

Quarter Ended

?

Nine Months Ended

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Nine Months Ended

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?

September 30, 2022

?

June 30, 2022

?

September 30, 2021

?

September 30, 2022

?

September 30, 2021

Selected Statement of Income Data:

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?

?

?

?

?

?

?

?

?

Net interest income (3) (4)

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$

136,097

?

?

$

102,098

?

?

$

67,257

?

$

328,380

?

?

$

198,474

Other income (loss)

?

?

(6,097

)

?

?

(5,712

)

?

?

4,600

?

?

(32,640

)

?

?

8,680

Other expense

?

?

24,804

?

?

?

23,547

?

?

?

26,010

?

?

72,018

?

?

?

76,977

AHP assessment

?

?

10,525

?

?

?

7,288

?

?

?

4,586

?

?

22,382

?

?

?

13,020

Net income

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$

94,671

?

?

$

65,551

?

?

$

41,261

?

$

201,340

?

?

$

117,157

(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)

As of September 30, 2022, June 30, 2022 and December 31, 2021, total regulatory capital represented 5.32 percent, 5.75 percent and 5.92 percent, respectively, of total assets as of those dates.

(3)

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

(4)

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 September 30, 2022, June 30, 2022 and September 30, 2021, fair value hedge ineffectiveness increased net interest income by $3.130 million, $1.409 million and $8.933 million, respectively. During the nine months ended September 30, 2022 and 2021, fair value hedge ineffectiveness increased net interest income by $16.942 million and $22.640 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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