exv4w1







Exhibit 4.1









CAPITAL PLAN




for the



Federal Home Loan Bank of Dallas



This capital plan is neither an offer to sell or exchange nor a solicitation of an offer to
purchase or exchange any capital stock of the Federal Home Loan Bank of Dallas.




Amended and Revised




April 28, 2011



(Approved
as Amended by Federal Housing Finance Agency on August 5, 2011)



 









 






Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011




Table of Contents




	 	 	 	 	 	 	 
	Section	 	 	 	Page
	Definition of Terms	 	 	4	 
	 
	 	 	 	 	 	 
	Section 1:

	 	Overview
	 	 	5	 
	 
	 	 	 	 	 	 
	1.1

	 	General	 	 	 	 
	1.2

	 	Legal Authorities	 	 	 	 
	1.3

	 	Amendments to the Capital Plan	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2:

	 	Capital Structure
	 	 	5	 
	 
	 	 	 	 	 	 
	2.1

	 	Authorized Class of Capital Stock	 	 	 	 
	2.2

	 	Par Value of Capital Stock	 	 	 	 
	2.3

	 	Ownership of Retained Earnings	 	 	 	 
	2.4

	 	Preference in Liquidation, Consolidation or Merger	 	 	 	 
	2.5

	 	Finance Agency Authority	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3:

	 	Capital Stock 	 	 	6 	 
	 
	 	 	 	 	 	 
	3.1

	 	Purchase of Capital Stock	 	 	 	 
	3.2

	 	Transfers of Capital Stock	 	 	 	 
	3.3

	 	Redemption of Capital Stock	 	 	 	 
	3.4

	 	Repurchase of Capital Stock	 	 	 	 
	3.5

	 	Limitations on Redemption or Repurchase of Capital Stock	 	 	 	 
	3.6

	 	Retirement of Capital Stock	 	 	 	 
	3.7

	 	Dividends on Capital Stock	 	 	 	 
	3.8

	 	Voting Rights	 	 	 	 






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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011




	 	 	 	 	 	 	 

	Section 4:

	 	Minimum Investment Requirements
	 	 	10	 
	 
	 	 	 	 	 	 
	4.1

	 	Membership Investment Requirement	 	 	 	 
	4.2

	 	Activity-Based Investment Requirement	 	 	 	 
	4.3

	 	Periodic Review of Minimum Investment Requirements	 	 	 	 
	4.4

	 	Member Compliance	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5:

	 	Termination of Membership
	 	 	13	 
	 
	 	 	 	 	 	 
	5.1

	 	Voluntary Withdrawal	 	 	 	 
	5.2

	 	Involuntary Termination of Membership	 	 	 	 
	5.3

	 	Termination by Charter Dissolution	 	 	 	 
	5.4

	 	General Membership Termination Provisions	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6:

	 	Capital Structure Conversion
	 	 	15	 
	6.1

	 	Capital Structure Conversion Process	 	 	 	 
	6.2

	 	Transition Procedures	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7:

	 	Capital Plan Reviews
	 	 	18	 
	 
	 	 	 	 	 	 
	7.1

	 	Independent Certified Public Accountant	 	 	 	 
	7.2

	 	Nationally Recognized Statistical Rating Organization	 	 	 	 
	7.3

	 	Good Faith Determination	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8:

	 	Retained Earnings Capital Plan Amendment
	 	 	19	 
	 
	 	 	 	 	 	 
	8.1

	 	Retained Earnings Enhancement Implementation and Definitions	 	 	 	 
	8.2

	 	Establishment of Restricted Retained Earnings	 	 	 	 
	8.3

	 	Limitation on Dividends, Stock Purchase and Stock Redemption	 	 	 	 
	8.4

	 	Termination of Retained Earnings Capital Plan Amendment Obligations	 	 	 	 






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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011




Definition of Terms





	1.	 	Acquired Member Assets (“AMA”) means assets that may be acquired by the Bank
through its members in accordance with the Regulations.
	 
	2.	 	Capital Plan means the plan for a new capital structure as required by Section 6(b)
of the Bank Act, 12 U.S.C. §1426(b).
	 
	3.	 	Class B Stock means capital stock held by members and issued by the Bank pursuant to
the Capital Plan, which will be redeemable by the Bank for cash at Par Value with five years
prior written notice provided by a member to the Bank.
	 
	4.	 	Conversion Date means the date upon which the Bank converts to the new capital
structure described in this Capital Plan and the existing capital stock is exchanged for Class
B Stock.
	 
	5.	 	Excess Stock means that amount of Class B Stock held by a member in excess of the
member’s minimum investment requirement as defined in this Capital Plan.
	 
	6.	 	Minimum Capital Requirement(s) means the amount of capital the Bank is required to
hold in order to comply with all statutory and regulatory capital requirements, or any other
capital requirement that may be imposed on the Bank by the Finance Agency.
	 
	7.	 	Par Value means the par value specified in Section 2.2 of this Capital Plan for shares of Class B Stock issued in accordance with this Capital Plan.
	 
	8.	 	Stock Redemption means redemption of Class B Stock by the Bank pursuant to a stock
redemption notice in accordance with Section 3.3 of the Capital Plan or pursuant to a
withdrawal notice in accordance with Section 5.1 of the Capital Plan.
	 
	9.	 	Stock Repurchase means repurchase of Class B Stock by the Bank at its discretion in
accordance with the Regulations and Section 3.4 of the Capital Plan. The decision to
repurchase Class B Stock rests with the Bank and cannot be compelled by a member.




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	1.	 	Overview
	 
	1.1	 	General
	 
	 	 	Pursuant to the Federal Home Loan Bank Act, as amended (12 U.S.C. §1421, et seq.) (“the
Bank Act”) and the governing Regulations (“Regulations”) of the Federal Housing Finance
Board (“Finance Board”) and / or the Federal Housing Finance Agency or any successor
(“Finance Agency”), the Board of Directors of the Federal Home Loan Bank of Dallas (“the
Bank”) hereby establishes this Capital Plan to provide a new capital structure for the Bank,
and ensure that the Bank is able to comply with its Minimum Capital Requirements at all
times after the Conversion Date. This Capital Plan is designed to facilitate the
continuation of the Bank’s cooperative business model.
	 
	1.2	 	Legal Authorities
	 
	 	 	This document is governed by the Bank Act and the Regulations. Any action designated
by this Capital Plan as being subject to the “discretion” or “sole discretion” of the Bank
or the Board of Directors shall nevertheless be subject to the regulatory oversight of the
Finance Board Agency.
	 
	1.3	 	Amendments to the Capital Plan
	 
	 	 	In accordance with the Regulations, any amendments to this Capital Plan must be
submitted by the Bank’s Board of Directors to the Finance Agency for approval prior to
implementation.
	 
	2.	 	Capital Structure
	 
	2.1	 	Authorized Class of Capital Stock
	 
	 	 	The Board of Directors of the Bank hereby authorizes the issuance of one class of
capital stock to be designated as Class B Stock, which will have a five year redemption
notice period.
	 
	2.2	 	Par Value of Capital Stock
	 
	 	 	All Class B Stock will have a Par Value of $100 per share. All Class B Stock will be
issued, redeemed, repurchased and transferred only at Par Value.
	 
	2.3	 	Ownership of Retained Earnings
	 
	 	 	In accordance with the Bank Act (12 U.S.C. §1426(h)(1)), the retained earnings,
surplus, undivided profits and equity reserves, if any, of the Bank are owned by the holders
of Class B Stock in proportion to each holder’s share of the total outstanding shares of
Class B Stock. Holders of Class B Stock have no right to receive any portion of the
retained earnings, surplus, undivided profits and equity reserves, if any, of the Bank
except through the declaration of a dividend or capital distribution approved by the Board
of Directors, or upon liquidation of the Bank.
	 
	2.4	 	Preference in Liquidation, Consolidation or Merger
	 
	 	 	In the event of liquidation of the Bank, the Board of Directors may authorize the pro
rata distribution of any retained earnings, surplus, undivided profits, and equity reserves
of the Bank, to holders of Class B Stock in proportion to each holder’s share of the total shares of outstanding Class B Stock, provided that all payment obligations to the Bank’s
existing creditors have been fully satisfied, and all Class B Stock has been redeemed at Par
Value.
	 
	 	 	In the event the Bank is merged or consolidated into another Federal Home Loan Bank, the
holders of the outstanding Class B Stock of the Bank will be entitled to the rights and
benefits set forth in any applicable plan of merger and/or terms established or approved by
the Finance





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	Agency. In the event another Federal Home Loan Bank is merged or consolidated into the
Bank, the holders of the outstanding capital stock of the other Federal Home Loan Bank will
be entitled to the rights and benefits set forth in any applicable plan of merger and/or
terms established or approved by the Finance Agency.
	 
	2.5	 	Finance Agency Authority
	 
	 	 	No part of Section 2.4 of this Capital Plan will be construed to limit the authority
granted to the Finance Agency under 12 U.S.C. §1446 to prescribe rules, regulations or
orders governing the liquidation, reorganization or merger of a Federal Home Loan Bank.
	 
	3.	 	Capital Stock
	 
	 	 	All members are required to purchase and redeem capital stock in accordance with the
requirements of the Bank Act, the Regulations and this Capital Plan, and the Bank will not
issue capital stock other than in accordance with the Regulations.
	 
	3.1	 	Purchase of Capital Stock
	 
	 	 	All members are required to purchase Class B Stock as a
condition of membership in accordance with the requirements of
Section 4 of this Capital Plan. The Class B Stock of the Bank may
be issued only to members of the Bank and institutions that have
been approved by the Bank to be members, and may be held only by
members of the Bank, non-member institutions that acquire Class B
Stock by virtue of acquiring member institutions, or by former
members that retain Class B Stock in accordance with this Capital
Plan following termination of membership. The Class B Stock of
the Bank may be traded only between the Bank and its members.
All Class B Stock will be issued in book entry form, and the Bank
will act as its own transfer agent.
	 
	3.2	 	Transfers of Capital Stock
	 
	 	 	In accordance with the Regulations, and only with the prior
approval of the Bank as it deems appropriate, a member may
transfer, at Par Value, any Excess Stock to any other member or
institution that has satisfied all conditions for becoming a
member other than the purchase of the Class B Stock required to
satisfy its minimum investment requirement. All transfers of
Class B Stock will be effective upon being recorded on the
appropriate books and records of the Bank. Approval for all
transfers is subject to the requirement that, following the
transfer, the transferring member would continue to hold
sufficient stock to meet the member’s minimum investment
requirement. Except as provided in Section 5.3 of the Capital
Plan, stock redemption notices will not transfer with Excess
Stock that is transferred.
	 
	3.3	 	Redemption of Capital Stock
	 
	 	 	Subject to the limitations in this Capital Plan, Class B Stock will be redeemable for
cash at Par Value with five (5) years prior written notice provided by the member to the
Bank. A member may request redemption of Class B Stock by providing a written stock
redemption notice to the Bank in accordance with Section 3.3.1 of this Capital Plan
indicating the number of shares of Class B Stock to be redeemed and the date(s) those shares
were issued to the member, or by submitting a membership withdrawal notice in accordance
with Section 5.1 of this Capital Plan. If the redemption notice fails to properly identify
the particular shares to be redeemed, the member shall be deemed to have requested
redemption of the most recently issued shares that are not already subject to a pending
redemption request. The five-year stock redemption notice period will commence upon receipt
by the Bank of the written stock redemption or withdrawal notice. A member may not have
more than one stock redemption or withdrawal notice outstanding at any one time for the same shares of Class B Stock.




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	The Bank will not be obligated to redeem a
member’s Class B Stock other than in
accordance with this Capital Plan. Nothing in
this section will preclude the Bank from
repurchasing Excess Stock in accordance with
Section 3.4 of this Capital Plan, including
Class B Stock for which a stock redemption
notice has been submitted.






	 	3.3.1	 	Notice of Redemption
	 
	 	 	 	Subject to the limitations in this Capital Plan, a member may request
redemption of Class B Stock by submitting five years written notice to the Bank. No
member may have more than one stock redemption notice outstanding for the same
share(s) of Class B Stock. To facilitate this limitation, no member may have one or
more stock redemption notices in effect at any one time that represent an aggregate
amount of Class B Stock that is greater than the total amount of Class B Stock the
member owns. If, subsequent to submitting a stock redemption notice, a member’s
holdings of Class B Stock fall below the amount of Class B Stock subject to
outstanding stock redemption notices, the Bank will automatically reduce the number
of shares of stock subject to stock redemption notices. If a member has more than
one stock redemption notice outstanding, this reduction will be applied first to the
most recently received stock redemption notice unless specified otherwise by the
member in writing within 30 days of the reduction in Class B Stock.
	 
	 	 	 	At the expiration of the five year period following receipt by the Bank of the stock
redemption notice, and subject to the limitations contained in Section 3.5 of this
Capital Plan, the Bank will pay the stated Par Value of the Class B Stock covered by
the stock redemption notice to the member in cash to the extent the Bank determines
that the Class B Stock is Excess Stock, as determined in accordance with the minimum
investment requirements in effect at the end of the redemption notice period.
	 
	 	 	 	Only Class B Stock that is Excess Stock at the expiration of the five year
redemption notice period will be redeemed pursuant to a stock redemption notice. A
stock redemption notice does not constitute a withdrawal notice as described in
Section 5.1 of this Capital Plan. At the expiration of the redemption notice
period, if the amount of Class B Stock subject to the stock redemption notice
exceeds the amount of Excess Stock held by the member, the Bank will redeem Class B
Stock equal to the amount of Excess Stock held by the member, and the stock
redemption notice for the remaining shares of Class B Stock subject to that notice
will be cancelled and a redemption cancellation fee will be assessed in accordance
with Section 3.3.2 of this Capital Plan. Alternatively, within five business days
of the expiration of the redemption notice period, the member may reduce its
activity with the Bank (subject to any applicable prepayment fees) to reduce its
minimum investment requirement and increase its holdings of Excess Stock which would
then be eligible for redemption.
	 
	 	3.3.2	 	Redemption Cancellation Notice
	 
	 	 	 	A member that has previously notified the Bank in writing of its intent to
redeem some or all of its Class B Stock may cancel the stock redemption notice for
all or a portion of the shares of Class B Stock subject to the stock redemption
notice prior to the expiration of the redemption notice period by providing a
written redemption cancellation notice to the Bank. A member may rescind a
redemption cancellation notice by providing written notice to the Bank within 30
days of the original redemption cancellation notice.
	 
	 	 	 	A member that cancels a stock redemption notice more than 30 days after it is
received by the Bank and prior to its expiration will be subject to a redemption
cancellation fee calculated as a percentage of the Par Value of the shares of Class
B Stock subject to the redemption cancellation notice.




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	When a member submits a redemption cancellation notice more than 30 days after the
original redemption notice is received by the Bank but during the first year after
the Bank receives the original stock redemption notice, the redemption cancellation
fee will be 1.0 percent of the Par Value of the shares of Class B Stock subject to
the redemption cancellation notice; the fee during the second year will be 2.0
percent of the Par Value of the shares of Class B Stock subject to the redemption
cancellation notice; the fee during the third year will be 3.0 percent of the Par
Value of the shares of Class B Stock subject to the redemption cancellation notice;
the fee during the fourth year will be 4.0 percent of the Par Value of the shares of
Class B Stock subject to the redemption cancellation notice; and the fee during the
fifth year will be 5.0 percent of the Par Value of the shares of Class B Stock
subject to the redemption cancellation notice.
	 
	 	 	 	The Bank’s Board of Directors may from time to time modify the redemption
cancellation fee to any percentage(s) of the Par Value of the shares of Class B
Stock subject to the redemption cancellation notice that is not less than 0.0
percent and not more than the percentages specified in the preceding paragraph. In
the event the Board of Directors reduces the redemption cancellation fee, the Board
of Directors will also determine whether the reduced fee will apply to cancellation
of previously submitted stock redemption notices as well as those submitted in the
future. Otherwise, the fee in effect at the time the stock redemption notice was
originally received by the Bank will apply to the cancellation of that notice. The
Bank will notify members in writing at least 30 days in advance of any changes in
the redemption cancellation fee. Any change in the redemption cancellation fee will
be applied equally and without discrimination to all members.






	3.4	 	Repurchase of Capital Stock
	 
	 	 	The Bank in its sole discretion may repurchase Excess Stock from time to time without
regard to the five year redemption notice period. Excess Stock repurchases may be initiated
by the Bank or requested by members, and will be subject to the limitations contained in
Section 3.5 of this Capital Plan. The decision to repurchase Excess Stock will rest with
the Bank and cannot be compelled by a member.
	 
	 	 	Upon 15 days written notice, the Bank may initiate the repurchase of any amount of members’
Excess Stock. The Bank will determine the criteria for Excess Stock repurchases from time
to time, and will apply the repurchase criteria equally and without discrimination to all
members. Pursuant to an application submitted by a member to the Bank in writing or in such
other form as the Bank may designate from time to time, the Bank may repurchase Class B
Stock that the Bank determines to be Excess Stock.
	 
	 	 	Unless the Bank is notified by a member otherwise in writing within 30 days of a Class B
Stock repurchase transaction, repurchases of Excess Stock will automatically reduce the
amount of Class B Stock subject to any outstanding stock redemption or withdrawal notices by
the amount of Class B Stock repurchased. If a member has more than one stock redemption and
/ or withdrawal notice outstanding, this reduction will be applied first to the most
recently received stock redemption or withdrawal notice.
	 
	 	 	A member’s submission of a withdrawal notice in accordance with Section 5.1 of this Capital
Plan, or its termination of membership in any other manner, will not, in and of itself,
cause any Class B Stock to be deemed Excess Stock for purposes of this section.
	 
	3.5	 	Limitations on Redemption or Repurchase of Capital Stock



The Bank will not redeem or repurchase Class B Stock without
the prior written approval of the Finance Agency if the Finance
Agency or the Board of Directors has determined that the Bank




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	has incurred, or is likely to incur, losses that result in, or are likely to result in,
charges against the capital of the Bank, as defined in the Regulations. This prohibition
will apply even if a Bank is in compliance with its Minimum Capital Requirements, and will
remain in effect for however long the Bank continues to incur such charges or until the
Finance Agency determines that such charges are not expected to continue.
	 
	 	 	The Bank will not redeem or repurchase Class B Stock if the redemption or repurchase would
cause the Bank to be out of compliance with its Minimum Capital Requirements, or if the
redemption or repurchase would cause the member to be out of compliance with its minimum
investment requirement.
	 
	 	 	In accordance with the Regulations, the Bank’s Board of Directors may suspend redemption of
Class B Stock if the Bank reasonably believes that continued redemption of Class B Stock
would cause the Bank to fail to meet its Minimum Capital Requirements in the future, would
prevent the Bank from maintaining adequate capital against a potential risk that may not be
adequately reflected in its Minimum Capital Requirements, or would otherwise prevent the
Bank from operating in a safe and sound manner.
	 
	 	 	In accordance with the Regulations, the Bank will not repurchase any Class B Stock without
the written consent of the Finance Agency during any period in which the Bank has suspended
redemptions of Class B Stock in accordance with this section. As required by the
Regulations, in the event the Bank suspends Class B Stock redemptions, the Bank will notify
the Finance Agency in writing within two business days of the date of the decision to
suspend redemptions, informing the Finance Agency of the reasons for the suspension and the
Bank’s strategies and time frames for addressing the conditions that led to the suspension.
The Finance Agency may require the Bank to re-institute the redemption of Class B Stock.
	 
	 	 	If at any time the Bank determines that the total amount of Class B Stock subject to
outstanding stock redemption or withdrawal notices with expiration dates within the
following 12 months exceeds the amount of Class B Stock the Bank could redeem and still
comply with its Minimum Capital Requirements, the Bank will determine whether to suspend
redemption and repurchase activities altogether, to fulfill requests for redemption
sequentially in the order in which they were received, to fulfill the requests on a pro rata
basis, or to take other action deemed appropriate by the Bank






	3.6	 	Retirement of Capital Stock
	 
	 	 	All shares of Class B Stock that are acquired by the Bank pursuant to redemption or
repurchase transactions will be retired.
	 
	3.7	 	Dividends on Capital Stock
	 
	 	 	The Board of Directors may declare dividends to be paid on Class B Stock on a quarterly
basis or otherwise as it determines in its discretion. Each member will be entitled to
receive dividends on all Class B Stock held during the applicable period for the period of
time that the member owns the Class B Stock. Dividends are non-cumulative with respect to
payment obligation. A member that has provided a withdrawal notice, or whose membership is
otherwise terminated, will continue to receive dividends on its Class B Stock as long as the
institution or its successor owns Class B Stock.
	 
	 	 	In accordance with the Bank Act and the Regulations, dividends may only be paid from current
earnings or previously retained earnings. In accordance with the Regulations, the Bank’s
Board of Directors may not declare or pay a dividend if the Bank is not in compliance with
its Minimum Capital Requirements or if the Bank would fall below its Minimum Capital
Requirements as a result of the payment of the dividend. Dividend payments may be made in
the form of cash,





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	additional shares of Class B Stock, or a combination thereof as determined by the Bank’s
Board of Directors.
	 
	 	 	Except as otherwise provided herein or by regulation or statute, the Bank’s Board of
Directors has sole discretion to determine the amount, form, frequency and timing of
dividend payments.
	 
	3.8	 	Voting Rights
	 
	 	 	Members’ voting rights are limited to the election of directors as provided by the Bank
Act. The voting rights of holders of the Bank’s Class B Stock are as follows:






	 	3.8.1	 	Allocation of Elected Director Seats and Votes
	 
	 	 	 	In accordance with the Bank Act and the Regulations, the Finance Agency will
annually designate member director seats by state and independent director seats for
at-large election. Each member will be entitled to vote in the election of member
directors representing the state in which the member is located, and in the election
of all independent directors. Each member will be entitled to cast one vote in the
election of member directors and in the election of independent directors for each
share of capital stock that the member was required to hold as of the immediately
preceding December 31, except that no member may cast a number of votes greater than
the average number of shares of capital stock required to be held by all members in
its state as of the preceding December 31. Shares of capital stock held by members
that were Excess Stock as of the preceding December 31 will not convey voting rights
in the election of directors.
	 
	 	3.8.2	 	Initial Election of Directors after Conversion
	 
	 	 	 	In accordance with the Regulations, the number of votes eligible to be cast in
the initial election of directors after the Conversion Date will be based on the
number of shares of capital stock that members were required to hold as of the
immediately preceding December 31. If this Capital Plan was in effect on the
preceding December 31, the minimum investment requirements of this Capital Plan will
be used to determine the number of votes; otherwise, the number of votes will be
determined based on the number of shares required to be held in accordance with the
Regulations in effect prior to the implementation of the Capital Plan.
	 
	 	 	 	If any member’s actual holdings of capital stock were less than the applicable
minimum investment requirement on the preceding December 31, the number of shares
eligible to be voted will be based on the number of shares of capital stock actually
held by that member as of the preceding December 31.






	4.	 	Minimum Investment Requirements
	 
	 	 	The Bank requires all members to purchase Class B Stock of the Bank and to maintain a
minimum investment in Class B Stock equal to the sum of the membership investment
requirement described in Section 4.1 plus the activity-based investment requirement
described in Section 4.2. The Bank’s Board of Directors will periodically review and may
adjust these investment requirements as described in Section 4.3.
	 
	4.1	 	Membership Investment Requirement
	 
	 	 	Beginning on the Conversion Date, each member will be required to maintain at all times
a membership investment requirement equal to 0.25 percent of the member’s total assets as of
the most recent December 31, as reported on the member’s regulatory financial report for
that date, or its audited financial statements for that date if the member does not file
regulatory financial





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	reports, subject to a minimum membership investment requirement of $1,000 and a maximum
membership investment requirement of $25 million.






	 	 	As described in Section 4.3, the Bank’s Board of Directors may from time to time increase or
decrease the membership investment requirement to an amount not less than 0.02 percent of
each member’s total assets nor more than 0.15 percent of each member’s total assets. The
Bank’s Board of Directors may also increase or decrease the maximum membership investment
requirement to an amount not less than $5 million or more than $25 million.
	 
	 	 	The membership investment requirement will be calculated for all members at least annually
during the first calendar quarter of the year, or as soon thereafter as members’ applicable
financial data becomes available. The annual recalculation of membership investment
requirements will become effective on or within 30 days of April 1 of each year. For new
members, the membership investment requirement will be calculated based on the new member’s
total assets as of the end of the most recent calendar quarter for which financial
information is available. Members will be notified in writing of the amount of their
membership investment requirements at least 10 days in advance of the effective date.
	 
	 	 	The Bank may recalculate all members’ membership investment requirements more often than
annually if it deems appropriate, and may recalculate individual members’ membership
investment requirements more often than annually at the member’s request. In each of these
cases, membership investment requirements will be recalculated based on members’ total
assets as of the end of the most recent calendar quarter for which financial data is
available. In addition, after the end of each calendar quarter, at the time the quarterly
financial data used to calculate members’ membership investment requirements becomes
available, the Bank will recalculate the membership investment requirements for institutions
whose membership terminated during the quarter.
	 
	 	 	Notwithstanding any other provision of this Capital Plan, in the event that (a) a receiver
or conservator has been appointed for the member, and (b) the Bank has terminated the
member’s membership, then that member’s membership investment requirement shall be zero.
	 
	4.2	 	Activity-Based Investment Requirement
	 
	 	 	In addition to its membership investment requirement, each member must maintain an
activity-based investment requirement equal to the sum of the advances investment
requirement described in Section 4.2.1 and the AMA investment requirement described in
Section 4.2.2. Each member, former member, or successor to a member with applicable
activity outstanding must comply with the activity-based investment requirement for as long
as the relevant activity remains outstanding, including periods beyond the termination of
the member’s membership in the Bank.
	 
	 	 	The activity-based investment requirement for each member, former member, or successor to a
member will change whenever the institution’s activity with the Bank changes. In addition,
the Bank’s Board of Directors may periodically adjust the activity-based investment
requirements in accordance with Section 4.3 of this Capital Plan.






	 	4.2.1	 	Advances Investment Requirement
	 
	 	 	 	Beginning on the Conversion Date, each member must maintain an activity-based
investment in Class B Stock in an amount equal to 4.25 percent of the outstanding
principal balance of all advances outstanding. The Bank’s Board of Directors may
from time to time increase or decrease the advances-based investment requirement to
an amount not less than 3.0 percent of members’ advances outstanding nor more than
5.0 percent of members’ advances outstanding. The Bank’s Board of Directors may
apply





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	changes to the advances investment requirement only to new advances, or to current
and new advances.
	 
	 	 	 	The advances investment requirement will be calculated daily and each time a member
enters into a new advances transaction. Complying with the advances investment
requirement at the time a new advances transaction is funded will be a condition of
funding the new transaction.
	 
	 	4.2.2	 	Acquired Member Asset (AMA) Investment Requirement
	 
	 	 	 	Beginning on the Conversion Date, each member must maintain an activity-based
investment in Class B Stock in an amount equal to 4.25 percent of the outstanding
principal balance of all Acquired Member Assets (AMA) acquired by the Bank through
the member and currently outstanding on the Bank’s balance sheet. However, this AMA
investment requirement will apply only to AMA acquired pursuant to commitments
executed after the Conversion Date, or AMA acquired pursuant to commitments executed
prior to the Conversion Date that explicitly stipulate that those AMA will be
subject to AMA investment requirements.
	 
	 	 	 	The Bank’s Board of Directors may from time to time increase or decrease the AMA
investment requirement to an amount not less than 0.0 percent of AMA outstanding on
the Bank’s balance sheet nor more than 5.0 percent of AMA outstanding on the Bank’s
balance sheet. At the discretion of the Board of Directors, any reduction in the
AMA investment requirement percentage may be applied only to AMA acquired pursuant
to commitments executed after the reduction becomes effective, or to previously
acquired and new AMA. Any increase in the AMA investment requirement will apply
only to AMA acquired pursuant to commitments executed after the effective date of
the change, or to AMA acquired pursuant to commitments executed prior to the
effective date of such change that explicitly stipulate that those AMA will be
subject to future changes in AMA investment requirements.
	 
	 	 	 	The AMA investment requirement for outstanding AMA will be calculated at least
monthly (and as often as daily at the Bank’s discretion), and for new AMA each time
new AMA are funded. Complying with the AMA investment requirement at the time
applicable AMA transactions are funded will be a condition of funding the new
transactions.






	4.3	 	Periodic Review of Minimum Investment Requirements
	 
	 	 	In accordance with the Bank Act and the Regulations, and to ensure ongoing compliance
with the Bank’s Minimum Capital Requirements, the Bank’s Board of Directors will review the
Bank’s Capital Plan at least annually, or more often as the Board of Directors deems
necessary. As part of this review, the Board of Directors will determine whether changes in
the minimum investment requirements are necessary to ensure that the Bank remains in
compliance with its Minimum Capital Requirements, or are otherwise appropriate. Adjustments
may be made to the specific percentages and the maximum amount for the membership investment
requirement as specified in Section 4.1, and the specific percentages for the activity-based
investment requirements as specified in Section 4.2. Any changes the Bank’s Board of
Directors makes to the minimum investment requirements will be communicated by written
notice (and otherwise as deemed appropriate by the Bank in its sole discretion) to be sent
to Bank members at least 30 days in advance of their effective date.




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Federal Home Loan Bank of Dallas Capital Plan:




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	 	 	Any changes to members’ minimum investment requirement deemed appropriate by the Bank’s
Board of Directors but not authorized by this Capital Plan may be implemented only after the
Finance Board approves an amended Capital Plan reflecting such changes.
	 
	4.4	 	Member Compliance
	 
	 	 	The Bank will monitor the minimum investment requirement of each member on an ongoing
basis to ensure that the member remains in compliance with the applicable requirement. Each
member is required to comply promptly with any adjusted minimum investment requirements
established by the Board of Directors. However, members will be allowed a reasonable time
to comply, not to exceed 30 days from the effective date established by the Board of
Directors for the change in minimum investment requirement. Members may reduce their
outstanding activity with the Bank (subject to any prepayment fees applicable to the
reduction in activity) as an alternative to purchasing additional Class B Stock.
	 
	 	 	To facilitate the sale of additional stock which members are required to purchase as a
result of any changes in their minimum investment requirements, the Bank is authorized to
issue stock in the name of a member and to debit the member’s demand deposit account at the
Bank.
	 
	5.	 	Termination of Membership
	 
	 	 	Membership in the Bank may be terminated through voluntary withdrawal, through
involuntary termination by action of the Bank’s Board of Directors, through acquisition of a
member by another member institution, through acquisition of a member by a non-member
institution, or otherwise through dissolution of a member’s charter.
	 
	5.1	 	Voluntary Withdrawal
	 
	 	 	A member may withdraw from membership in the Bank by providing five years prior written
notice to the Bank. During the five year period following receipt by the Bank of the
member’s withdrawal notice, the member will be entitled to all the benefits and will incur
all the obligations of membership, including the obligation to comply with all minimum
investment requirements throughout the five year period. However, the Bank may limit any
new advances or AMA to terms that would mature on or before the expiration of the withdrawal
notice period. The membership of an institution that has submitted a withdrawal notice will
terminate at the expiration of the five year period following receipt by the Bank of the
withdrawal notice.
	 
	 	 	A withdrawal notice will also constitute a stock redemption notice for the amount of Class B
Stock held by the member at the time the Bank receives the withdrawal notice. At the
expiration of the five year period following receipt by the Bank of the member’s withdrawal
notice, the member’s membership in the Bank will terminate and, subject to the limitations
contained in Section 3.5 of this Capital Plan, the Bank will pay the stated Par Value of the
Class B Stock covered by the withdrawal notice to the member in cash in accordance with the
following conditions.
	 
	 	 	If the withdrawing member has no outstanding advances or AMA that require maintenance of
Class B Stock in accordance with Section 4.2 of this Capital Plan, the Bank will redeem all
of the outstanding Class B Stock subject to the withdrawal notice. If the withdrawing
member has outstanding advances or AMA that require maintenance of Class B Stock in
accordance with Section 4.2 of this Capital Plan, the Bank will redeem all the shares of
Class B Stock subject to the withdrawal notice, except those shares of Class B Stock
required to be held to comply with the activity-based investment requirement related to the
remaining advances and AMA.
	 
	 	 	During the remaining term of advances or AMA outstanding after the termination of
membership, the former member or its successor must continue to comply with any changes in
the activity-





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Federal Home Loan Bank of Dallas Capital Plan:




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	 	 	based investment requirements related to the remaining advances or AMA. If the withdrawing
member holds any Class B Stock subject to a withdrawal notice that cannot be redeemed at the
expiration of the withdrawal notice period because it is required to meet a continuing
activity-based investment requirement, that stock will become redeemable when it is no
longer needed to comply with an activity-based investment requirement.
	 
	 	 	Nothing in this section will preclude the Bank from repurchasing Excess Stock in accordance
with Section 3.4 of this Capital Plan.






	 	5.1.1	 	Automatic Stock Redemption Notice
	 
	 	 	 	If a member has filed a withdrawal notice, that notice will also automatically
constitute a stock redemption notice for any shares of Class B Stock subsequently
acquired, with such automatic redemption notice to be effective and the redemption
notice period to begin on the date any additional Class B Stock is acquired. Such
Class B Stock will be redeemable at the end of its respective redemption notice
period in accordance with Section 3.3.1 or, if such Class B Stock is required to
comply with an ongoing activity-based investment requirement, that Class B Stock
will become redeemable when it is no longer needed to comply with an activity-based
investment requirement.
	 
	 	5.1.2	 	Withdrawal Cancellation Notice
	 
	 	 	 	A member that has previously submitted a withdrawal notice to the Bank in
writing in accordance with Section 5.1 of this Capital Plan may cancel its
withdrawal notice prior to the expiration of the withdrawal notice period by
providing written notice to the Bank. A member may also rescind a withdrawal
cancellation notice by providing written notice to the Bank within 30 days of the
original withdrawal cancellation notice and incur no redemption cancellation fee.
	 
	 	 	 	A withdrawal cancellation notice or withdrawal notice rescission will constitute a
redemption cancellation notice for the amount of Class B Stock subject to redemption
pursuant to the original withdrawal notice. The redemption cancellation fees and
conditions contained in Section 3.3.2 of this Capital Plan will also apply to a
withdrawal cancellation notice. A withdrawal cancellation notice or withdrawal
notice rescission will also cancel without fee any related automatic notices of
redemption created by the original withdrawal notice pursuant to Section 5.1.1 of
this Capital Plan, unless otherwise directed by the member.






	5.2	 	Involuntary Termination of Membership
	 
	 	 	The Bank Act and the Regulations grant the Board of Directors the authority to
terminate an institution’s membership under certain specified conditions. In the event the
Board of Directors terminates a member’s membership, that membership will terminate on the
date the Board of Directors acts to terminate the membership, and the five year stock
redemption notice period will begin on the same date.
	 
	5.3	 	Termination by Charter Dissolution
	 
	 	 	If an institution’s membership terminates by virtue of the dissolution of its charter
either through acquisition by another institution or otherwise, the membership of the
disappearing institution will terminate upon the cancellation of its charter. In the event
of an acquisition of a member, the Class B Stock held by the member will be transferred
automatically to the acquiring institution.
	 
	 	 	If the acquiring institution is a member of the Bank, the acquired Class B Stock may be
applied to the acquiring member’s minimum investment requirement, and any outstanding stock
redemption notices will remain in effect, except that any stock redemption notices related
to a withdrawal





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Federal Home Loan Bank of Dallas Capital Plan:




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	 	 	notice previously submitted by the acquired member may be cancelled without a redemption
cancellation fee at the acquiring member’s request. If the acquiring institution is not a
member of the Bank, and does not apply for membership as provided in the Regulations, the
five year stock redemption notice period will begin on the date the institution’s membership
terminates, or earlier if the Bank has received a withdrawal notice from the disappearing
member.
	 
	5.4	 	General Membership Termination Provisions
	 
	 	 	Upon the termination of an institution’s membership, or upon the conclusion of the
transition period provided in the Regulations for acquiring institutions to make application
for membership in the Bank, the Bank will determine an orderly manner for liquidating all
remaining outstanding indebtedness (including prepayment fees) owed by that member to the
Bank, and settling all other claims against the member. After the expiration of any
redemption notice periods required by this Capital Plan, the Bank will redeem any remaining
Class B Stock in accordance with the provisions of this Capital Plan and applicable Finance
Agency regulations. After all remaining obligations and claims have been extinguished or
settled, the Bank will redeem the remaining shares of Class B Stock.
	 
	 	 	Nothing in this section will preclude the Bank from repurchasing any Excess Stock in
accordance with the provisions of this Capital Plan prior to the expiration of the stock
redemption notice periods, or redeeming Class B Stock in accordance with the provisions of
this Capital Plan prior to the extinguishment or settlement of all obligations and claims
against a member whose membership is being or has been terminated. However, in accordance
with the Regulations and this Capital Plan, the Bank may not redeem or repurchase any Class
B Stock required to support advances or AMA in accordance with Section 4.2 of this Capital
Plan until the respective advances or AMA have been repaid.
	 
	6.	 	Capital Structure Conversion
	 
	 	 	The Conversion Date for this Capital Plan will be not later than 25 months following
Finance Board approval of the Capital Plan.
	 
	6.1	 	Capital Structure Conversion Process






	 	6.1.1	 	Preliminary Estimate of Members’ New Minimum Investment Requirements
	 
	 	 	 	At least 60 days prior to the Conversion Date, the Bank will calculate an
estimate of each member’s new minimum investment requirement, with the membership
investment requirement calculated based on the member’s total assets as of the
immediately preceding December 31 for which financial information is available, and
the activity-based investment requirement calculated based on the member’s
outstanding balances of advances and applicable AMA as of the most recent month end.
The Bank will provide this preliminary minimum investment requirement to each
member by written notice.
	 
	 	6.1.2	 	Member Choice to Opt Out of Capital Plan
	 
	 	 	 	A member that chooses to opt out of this Capital Plan must notify the Bank in
writing at least 30 days prior to the Conversion Date of its decision not to
participate in the capital structure conversion process set forth herein. An opt out
notice will constitute a notice of the member’s intention to withdraw from
membership and must be submitted to the Finance Board as well as the Bank at least
30 days prior to the Conversion Date for this Capital Plan. If the Finance Board and
the Bank receive the opt out notice more than six months prior to the Conversion
Date, the notice will be governed by the six month notification requirement and the
redemption terms in effect prior to the implementation of the Capital Plan. In this
case, the member’s membership will terminate six months from





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	the date the Finance Board receives the opt out / withdrawal notice, and its old
capital stock will be redeemable on that date.
	 
	 	 	 	If the Finance Board and the Bank receive the opt out notice less than six months
but at least 30 days in advance of the Conversion Date, the member’s membership will
terminate and its old capital stock will be redeemable on the Conversion Date.
	 
	 	 	 	If the opt out notice is received less than 30 days prior to the Conversion Date,
the Bank will exchange the member’s existing shares of capital stock for an equal
number of shares of Class B Stock in accordance with Section 6.1.5 of this Capital
Plan; the member’s membership will terminate and its Class B Stock will become
redeemable five years from the date the opt out / withdrawal notice was received. A
member that elects to opt out of the Capital Plan and whose opt out notice is
received less than 30 days prior to the Conversion Date will be required to purchase
additional shares of Class B Stock to comply with the minimum investment
requirements of this Capital Plan and to support any new activity entered into by
the member after the Conversion Date until its membership terminates. Any additional shares of Class B Stock acquired after the Conversion Date by an institution that
elects to opt out of the Capital Plan will be subject to the same terms and
conditions as any other shares of Class B Stock acquired by any member after the
Conversion Date.
	 
	 	 	 	If an institution has withdrawn from membership in the Bank prior to the Conversion
Date (either through the opt out provisions of this Section of the Capital Plan or
otherwise) but still owns capital stock at the Conversion Date related to activity
that remains outstanding, that institution’s existing capital stock will be
converted to Class B Stock on the Conversion Date. The amount of Class B Stock
required to be maintained by that institution while the activity remains outstanding
will be the lesser of the amount of capital stock owned immediately prior to the
conversion date, the amount of capital stock required to be held to support that
activity immediately prior to the conversion date, or the activity-based investment
requirement specified in this Capital Plan.
	 
	 	6.1.3	 	Member Transition Period
	 
	 	 	 	In accordance with the Bank Act and the Regulations, members that joined a
Federal Home Loan Bank after November 12, 1999 must comply with the minimum
investment requirements of the Capital Plan on the Conversion Date. Any institution
that becomes a member of the Bank after the Conversion Date must comply with the
minimum investment requirements of this Capital Plan as of the date on which it
becomes a member of the Bank.
	 
	 	 	 	Members that joined a Federal Home Loan Bank on or before November 12, 1999 and for
which this Capital Plan establishes a higher minimum investment requirement than
under the requirements in effect immediately prior to implementation of this Capital
Plan will have the option to meet the additional minimum investment requirement in
four equal quarterly increments, provided, however, that members must immediately
purchase Class B Stock required to support any change in member activity subsequent
to the Conversion Date. A member must advise the Bank in writing of its intent to
exercise this option at least 30 days prior to the Conversion Date.
	 
	 	 	 	For a member eligible to elect to utilize these transition provisions and that
elects to do so, the Bank will reduce the membership investment requirement during
the first quarter following the Conversion Date by an amount equal to 100 percent of
the amount by which this Capital Plan increases the member’s total minimum
investment requirement; during the second quarter following the Conversion Date, the
Bank will reduce the





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	membership investment requirement by 75 percent of the amount by which the Capital
Plan increases the member’s total minimum investment requirement; during the third
quarter following the Conversion Date, the Bank will reduce the membership
investment requirement by 50 percent of the amount by which the Capital Plan
increases the member’s total minimum investment requirement; and during the fourth
quarter following the Conversion Date, the Bank will reduce the membership
investment requirement by 25 percent of the amount by which the Capital Plan
increases the member’s total minimum investment requirement. At all times beginning
on the Conversion Date, the member must comply with all applicable activity-based
investment requirements.






	 	6.1.4	 	Minimum Investment Requirements on Conversion Date
	 
	 	 	 	Each member’s minimum investment requirement at the opening of business on the
Conversion Date will be calculated as the sum of the membership investment
requirement based on the member’s total assets as of the immediately preceding
December 31 for which the applicable financial information is available (subject to
any applicable transition adjustments as described in Section 6.1.3), and the
application of the relevant activity-based investment requirements to the member’s
outstanding balances of advances and applicable AMA at the close of business on the
business day immediately prior to the Conversion Date.
	 
	 	6.1.5	 	Conversion Date Process
	 
	 	 	 	The following actions, which constitute the Bank’s Plan of Reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, are to be taken in order to implement this Capital
Plan.
	 
	 	 	 	At the opening of business on the Conversion Date, the Bank will:






	 	1.	 	Exchange the member’s existing shares of capital stock for an
equal number of shares of Class B Stock.
	 
	 	2.	 	Advise the member by written or electronic notice the details
of its new minimum investment requirement, including an explicit notation of
the member’s excess or deficit position.
	 
	 	3.	 	A member whose investment in capital stock on the Conversion
Date exceeds the new minimum investment requirement will hold Excess Stock that
the Bank may repurchase in accordance with the provisions of Section 3.4 of
this Capital Plan.
	 
	 	4.	 	A member whose actual holdings of capital stock on the
Conversion Date are less than the minimum investment requirement on the
Conversion Date must purchase sufficient additional Class B Stock to satisfy
the new minimum investment requirement. A member eligible to utilize the
transition provisions of Section 6.1.3 of this Capital Plan and that elects to
do so may purchase the additional shares of Class B Stock in four equal
quarterly installments as described in Section 6.1.3. To facilitate the
purchase of any required additional shares of Class B Stock, the Bank is
authorized to issue Class B Stock in the member’s name and debit the member’s
demand deposit account at the Bank.






	 	6.1.6	 	Post-Conversion Activity-Based Stock Purchases
	 
	 	 	 	Any member that obtains an advance or enters into any AMA transaction subject
to an activity-based investment requirement subsequent to the Conversion Date is
required to comply with the activity-based investment requirement related to that
transaction at the time the transaction occurs.




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	6.2	 	Transition Procedures






	 	6.2.1	 	The Bank’s Transition
	 
	 	 	 	It is the Bank’s intent to be in full compliance with its Minimum Capital
Requirements on the Conversion Date.
	 
	 	6.2.2	 	Member Transition
	 
	 	 	 	For a member eligible to utilize the transition provisions of Section 6.1.3 of
this Capital Plan and that elects to do so, the membership investment requirement
will increase in even increments over four quarterly periods as specified in Section
6.1.3 of this Capital Plan. Additional purchases of Class B Stock required to
maintain compliance with the minimum investment requirements of this Capital Plan
will be made automatically by issuing stock in the member’s name and debiting the
member’s demand deposit account at the Bank.






	7.	 	Capital Plan Reviews






	 	7.1	 	Independent Certified Public Accountant
	 
	 	 	 	PricewaterhouseCoopers (PwC), an independent Certified Public Accounting (CPA)
firm, reviewed the October 22, 2001 draft of this Capital Plan and concluded, to the
extent possible, that the implementation of this Capital Plan would not result in
any write-down of the redeemable stock owned by the Bank’s members. A copy of PwC’s
review has been provided to the Finance Board. The Bank represents that no
substantive modifications have been made to the October 22, 2001 draft in this
Capital Plan that it believes would have an impact on PwC’s conclusion. A letter
from PwC confirming that conclusion for this Capital Plan will be provided following
Finance Board approval of the Capital Plan.
	 
	 	7.2	 	Nationally Recognized Statistical Rating Organization (NRSRO)
	 
	 	 	 	Standard & Poor’s (S&P), a Nationally Recognized Statistical Rating
Organization (NRSRO), reviewed the July 19, 2001 draft of this Capital Plan and
determined, to the extent possible, that the implementation of this Capital Plan
would not have a material effect on the credit rating of the Bank. A copy of S&P’s
review has been provided to the Finance Board with this Capital Plan. The Bank
represents that no substantive modifications have been made to the July 19, 2001
draft in this Capital Plan that it believes would have an impact on the Bank’s
credit rating. A letter from S&P confirming that conclusion for this Capital Plan
will be provided following Finance Board approval of the Capital Plan.
	 
	 	7.3	 	Good Faith Determination
	 
	 	 	 	The Bank has made a good faith determination that this Capital Plan can be
implemented. The Bank has provided evidence of this determination to the
Finance Board.






	8.	 	Retained Earnings Capital Plan Amendment
	 
	8.1	 	Retained Earnings Enhancement Implementation and Definitions






	 	8.1.1	 	Implementation
	 
	 	 	 	The provisions of sections 8.1 through 8.4 shall become effective upon, and
only upon, the occurrence of the Interim Capital Plan Amendment Implementation Date.
Until the Restriction Termination Date, in the event of any conflict between
sections 8.1 through




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





8.4 and the remainder of this Capital Plan, the applicable terms of sections 8.1
through 8.4 shall govern, and shall be interpreted in a manner such that the
restrictions set forth therein are supplementary to, and not in lieu of, the
requirements of the remainder of this Capital Plan.




8.1.2 Definitions Applicable to Section 8 of this Capital Plan




As used in these sections 8.1 through 8.4, the following capitalized terms shall have
the following meanings. Other capitalized terms used but not defined in these sections 8.1
through 8.4 shall have the meanings set forth in the Definition of Terms section just before
section 1 of this Capital Plan.




	 	 	 	Act means the Federal Home Loan Bank Act, as amended as of the Effective
Date.
	 
	 	 	 	Adjustment to Prior Net Income means either an increase, or a decrease, to a
prior calendar quarter’s Quarterly Net Income subsequent to the date on which any
allocation to Restricted Retained Earnings for such calendar quarter was made.
	 
	 	 	 	Agreement means the Joint Capital Enhancement Agreement adopted by the
FHLBanks on the Effective Date and amended on the date on which the FHFA has
approved the Retained Earnings Capital Plan Amendments for all of the FHLBanks that
have issued capital stock pursuant to a capital plan as of the Effective Date.
	 
	 	 	 	Allocation Termination Date means the date the Bank’s obligation to make
allocations to the Restricted Retained Earnings account is terminated permanently.
That date is determined pursuant to section 8.4 of this Capital Plan.
	 
	 	 	 	Automatic Termination Event means (i) a change in the Act, or another
applicable statute, occurring subsequent to the Effective Date, that will have the
effect of creating a new, or higher, assessment or taxation on net income or capital
of the FHLBanks, or (ii) a change in the Act, another applicable statute, or the
Regulations, occurring subsequent to the Effective Date, that will result in a
higher mandatory allocation of an FHLBank’s Quarterly Net Income to any Retained
Earnings account than the annual amount, or total amount, specified in an FHLBank’s
capital plan as in effect immediately prior to the Automatic Termination Event.
	 
	 	 	 	Automatic Termination Event Declaration Date means the date specified in
section 8.4.1.1 or 8.4.1.2 of this Capital Plan.
	 
	 	 	 	Bank’s Total Consolidated Obligations means the daily average carrying value for the
calendar quarter, excluding the impact of fair value adjustments (i.e., fair value
option and hedging adjustments), of the Bank’s portion of outstanding System
Consolidated Obligations for which it is the primary obligor.
	 
	 	 	 	Declaration of Automatic Termination means a signed statement, executed by
officers authorized to sign on behalf of each FHLBank that is a signatory to the
Agreement, in which at least 2/3 of the then existing FHLBanks declare their
concurrence that a specific statutory or regulatory change meets the definition of
an Automatic Termination Event.
	 
	 	 	 	Dividend means a distribution of cash, other property, or stock to a
Stockholder with respect to its holdings of capital stock.




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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	Dividend Restriction Period means any calendar quarter: (i) that includes
the REFCORP Termination Date, or occurs subsequent to the REFCORP Termination Date;
(ii) that occurs prior to an Allocation Termination Date; and (iii) during which the
amount of the Bank’s Restricted Retained Earnings is less than the amount of the
Bank’s RREM. If the amount of the Bank’s Restricted Retained Earnings is at least
equal to the amount of the Bank’s RREM, and subsequently the Bank’s Restricted
Retained Earnings becomes less than its RREM, the Bank shall be deemed to be in a
Dividend Restriction Period (unless an Allocation Termination Date has occurred).
	 
	 	 	 	Effective Date means February 28, 2011.
	 
	 	 	 	GAAP means accounting principles generally accepted in the United States as
in effect from time to time.
	 
	 	 	 	FHLBank means a Federal Home Loan Bank chartered under the Act.
	 
	 	 	 	Interim Capital Plan Amendment Implementation Date means 31 days after the
date by which the Finance Agency approved a capital plan amendment substantially the
same as the Retained Earnings Capital Plan Amendments for all of the FHLBanks that
have issued capital stock pursuant to a capital plan as of the Effective Date.
	 
	 	 	 	Net Loss means that the Quarterly Net Income of the Bank is negative, or
that the annual net income of the Bank calculated on the same basis is negative.
	 
	 	 	 	Quarterly Net Income means the amount of net income of an FHLBank for a
calendar quarter calculated in accordance with GAAP, after deducting the FHLBank’s
required contributions for that quarter to the Affordable Housing Program under
section 10(j) of the Act, as reported in the FHLBank’s quarterly and annual
financial statements filed with the Securities and Exchange Commission.
	 
	 	 	 	REFCORP Termination Date means the last day of the calendar quarter in which
the FHLBanks’ final regular payments are made on obligations to REFCORP in
accordance with Section 997.5 of the Regulations and section 21B(f) of the Act.
	 
	 	 	 	Regular Contribution Amount means the result of (i) 20 percent of Quarterly
Net Income; plus (ii) 20 percent of a positive Adjustment to Prior Net Income for
any prior calendar quarter that includes the REFCORP Termination Date, or occurred
subsequent to the REFCORP Termination Date, to the extent such adjustment has not
yet been made in the current calendar quarter; minus (iii) 20 percent of the
absolute value of a negative Adjustment to Prior Net Income for any prior calendar
quarter that includes the REFCORP Termination Date, or occurred subsequent to the
REFCORP Termination Date, to the extent such adjustment has not yet been made in the
current calendar quarter.
	 
	 	 	 	Regulations mean: (i) the rules and regulations of the Federal Housing
Finance Board (except to the extent that they may be modified, terminated, set aside
or superseded by the Director of the FHFA) in effect on the Effective Date; (ii) the
rules and regulations of the FHFA, as amended from time to time.
	 
	 	 	 	Restricted Retained Earnings means the cumulative amount of Quarterly Net
Income and Adjustments to Prior Net Income allocated to the Bank’s Retained Earnings
account restricted pursuant to the Retained Earnings Capital Plan Amendment, and does not
	 
	 	 	 	





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Federal Home Loan Bank of Dallas Capital Plan:




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	 	 	 	include amounts retained in: (i) any accounts in existence at the Bank on the
Effective Date; or (ii) any other Retained Earnings accounts subject to restrictions
that are not part of the terms of the Retained Earnings Capital Plan Amendment.
	 
	 	 	 	Restricted Retained Earnings Minimum (RREM) means a level of Restricted
Retained Earnings calculated as of the last day of each calendar quarter equal to
one percent of the Bank’s Total Consolidated Obligations.
	 
	 	 	 	Restriction Termination Date means the date the restriction on the Bank
paying Dividends out of the Restricted Retained Earnings account, or otherwise
reallocating funds from the Restricted Retained Earnings account, is terminated
permanently. That date is determined pursuant to section 8.4 of this Capital Plan.
	 
	 	 	 	Retained Earnings means the retained earnings of an FHLBank calculated
pursuant to GAAP.
	 
	 	 	 	Retained Earnings Capital Plan Amendment means the amendment to this Capital
Plan, made a part thereof, adopted effective on the Interim Capital Plan Amendment
Implementation Date adding sections 8.1 through 8.4 to this Capital Plan.
	 
	 	 	 	Special Contribution Amount means the result of: (i) 50 percent of Quarterly
Net Income; plus (ii) 50 percent of a positive Adjustment to Prior Net Income for
any prior calendar quarter that includes the REFCORP Termination Date, or occurred
subsequent to the REFCORP Termination Date, to the extent such adjustment has not
yet been made in the current calendar quarter; minus (iii) 50 percent of the
absolute value of a negative Adjustment to Prior Net Income for any prior calendar
quarter that includes the REFCORP Termination Date, or occurred subsequent to the
REFCORP Termination Date, to the extent such adjustment has not yet been made by the
current calendar quarter.
	 
	 	 	 	Stockholder means: (i) an institution that has been approved for membership
in the Bank, and has purchased capital stock in accordance with the Regulations;
(ii) a former member of the Bank that continues to own capital stock; or (iii) a
successor to an entity that was a member of the Bank that continues to own capital
stock.
	 
	 	 	 	System Consolidated Obligation means any bond, debenture, or note authorized
under the Regulations to be issued jointly by the FHLBanks pursuant to Section 11(a)
of the Act, as amended, or any bond or note previously issued by the Federal Housing
Finance Board on behalf of all FHLBanks pursuant to Section 11(c) of the Act, on
which the FHLBanks are jointly and severally liable, or any other instrument issued
through the Office of Finance, or any successor thereto, under the Act, that is a
joint and several liability of all the FHLBanks.
	 
	 	 	 	Total Capital means Retained Earnings, the amount paid-in for capital stock,
the amount of any general allowance for losses, and the amount of other instruments
that the FHFA has determined to be available to absorb losses incurred by the Bank.






	8.2	 	Establishment of Restricted Retained Earnings






	 	8.2.1	 	Segregation of Account.
	 
	 	 	 	No later than the REFCORP Termination Date, the Bank shall establish an account
in its official books and records in which to allocate its Restricted Retained
Earnings, with such





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	account being segregated on its books and records from the Bank’s Retained Earnings
that are not Restricted Retained Earnings for purposes of tracking the accumulation
of Restricted Retained Earnings and enforcing the restrictions on the use of the
Restricted Retained Earnings imposed in the Retained Earnings Capital Plan
Amendment.






	 	8.2.2	 	Funding of Account.






8.2.2.1 Date on which Allocation Begins




The Bank shall allocate to its Restricted Retained Earnings account an amount at
least equal to the Regular Contribution Amount beginning on the REFCORP Termination
Date. The Bank shall allocate amounts to the Restricted Retained Earnings account
only through contributions from its Quarterly Net Income or Adjustments to Prior Net
Income occurring on or after the REFCORP Termination Date, but nothing in the
Retained Earnings Capital Plan Amendment shall prevent the Bank from allocating a
greater percentage of its Quarterly Net Income or positive Adjustment to Prior Net
Income to its Restricted Retained Earnings account than the percentages set forth in
the Retained Earning Capital Plan Amendment.




8.2.2.2 Ongoing Allocation




During any Dividend Restriction Period that occurs before the Allocation Termination
Date, the Bank shall continue to allocate its Regular Contribution Amount (or when
and if required under subsection 8.2.2.4 below, its Special Contribution Amount) to
its Restricted Retained Earnings account.




8.2.2.3 Treatment of Quarterly Net Losses and Annual Net Losses




In the event the Bank sustains a Net Loss for a calendar quarter, the following
shall apply: (i) to the extent that its cumulative calendar year-to-date net income
is positive at the end of such quarter, the Bank may decrease the amount of its
Restricted Retained Earnings such that the cumulative addition to the Restricted
Retained Earnings account calendar year-to-date at the end of such quarter is equal
to 20 percent of the amount of such cumulative calendar year-to-date net income;
(ii) to the extent that its cumulative calendar year-to-date net income is negative
at the end of such quarter (a) the Bank may decrease the amount of its Restricted
Retained Earnings account such that the cumulative addition calendar year-to-date to
the Restricted Retained Earnings at the end of such quarter is zero, and (b) the
Bank shall apply any remaining portion of the Net Loss for the calendar quarter
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 for the calendar quarter to reduce Restricted Retained
Earnings; and (iii) for any subsequent calendar quarter in the same calendar
year, the Bank may decrease the amount of its quarterly allocation to its Restricted
Retained Earnings account in that subsequent calendar quarter such that the
cumulative addition to the Restricted Retained Earnings account calendar
year-to-date is equal to 20 percent of the amount of such cumulative calendar
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
Restricted Retained Earnings.



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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





8.2.2.4 Funding at the Special Contribution Amount




If during a Dividend Restriction Period, the amount of the Bank’s Restricted
Retained Earnings decreases in any calendar quarter, except as provided in
subsections 8.2.2.3(i) and (ii)(a) above, the Bank shall allocate the Special
Contribution Amount to its Restricted Retained Earnings account beginning at the
following calendar quarter-end (except as provided in the last sentence of this
subsection). Thereafter, the Bank shall continue to allocate the Special
Contribution Amount to its Restricted Retained Earnings account until the cumulative
difference between: (i) the allocations made using the Special Contribution Amount;
and (ii) the allocations that would have been made if the Regular Contribution
Amount applied, is equal to the amount of the prior decrease in the amount of its
Restricted Retained Earnings account arising from the application of subsection
8.2.2.3(ii)(b). If at any calendar quarter-end the allocation of the Special
Contribution Amount would result in a cumulative allocation in excess of such prior
decrease in the amount of Restricted Retained Earnings: (i) the Bank may allocate
such percentage of Quarterly Net Income to the Restricted Retained Earnings account
that shall exactly restore the amount of the prior decrease, plus the amount of the
Regular Contribution Amount for that quarter; and (ii) the Bank in subsequent
quarters shall revert to paying at least the Regular Contribution Amount.




8.2.2.5 Release of Restricted Retained Earnings




If the Bank’s RREM decreases from time to time due to fluctuations in the Bank’s
Total Consolidated Obligations, amounts in the Restricted Retained Earnings account
in excess of 150 percent of the RREM may be released by the Bank from the
restrictions otherwise imposed on such amounts pursuant to the provisions of the
Retained Earnings Capital Plan Amendment, and reallocated to its Retained Earnings
that are not Restricted Retained Earnings. Until the Restriction Termination Date,
the Bank may not otherwise reallocate amounts in its Restricted Retained Earnings
account (provided that a reduction in the Restricted Retained Earnings account
following a Net Loss pursuant to subsection 8.2.2.3 is not a reallocation).




8.2.2.6 No Effect on Rights of Shareholders as Owners of Retained Earnings




In the event of the liquidation of the Bank, or a taking of the Bank’s Retained
Earnings by any future federal action, nothing in the Retained Earnings Capital Plan
Amendment shall change the rights of the holders of the Bank’s Class B stock that
confer ownership of Retained Earnings, including Restricted Retained Earnings, as
granted under section 6(h) of the Act.




	8.3	 	Limitation on Dividends, Stock Purchase and Stock Redemption






	 	8.3.1	 	General Rule on Dividends.
	 
	 	 	 	From the REFCORP Termination Date through the Restriction Termination Date, the
Bank may not pay Dividends, or otherwise reallocate funds (except as expressly
provided in subsection 8.2.2. 5, and further provided that a reduction in the
Restricted Retained Earnings account following a Net Loss pursuant to subsection
8.2.2.3 is not a reallocation), out of Restricted Retained Earnings. During a
Dividend Restriction Period, the Bank may not pay Dividends out of the amount of
Quarterly Net Income required to be allocated to Restricted Retained Earnings.
	 
	 	8.3.2	 	Limitation on Repurchase and Redemption.
	 
	 	 	 	From the REFCORP Termination Date through the Restriction Termination Date, the Bank
shall not engage in a repurchase or redemption transaction if following such





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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





	 	 	 	transaction the Bank’s Total Capital as reported to the FHFA falls below the Bank’s
aggregate paid-in amount of capital stock.






	8.4	 	Termination of Retained Earnings Capital Plan Amendment Obligations






	 	8.4.1	 	Notice of Automatic Termination Event.






8.4.1.1 Action by FHLBanks




If the Bank desires to assert that an Automatic Termination Event has occurred (or
will occur on the effective date of a change in a statute or the Regulations), the
Bank shall provide prompt written notice to all of the other FHLBanks (and provide a
copy to the FHFA) identifying the specific statutory or regulatory change that is
the basis for the assertion. For the purposes of this section, ‘prompt written
notice’ means notice delivered no later than 90 calendar days subsequent to: (1) the
date the specific statutory change takes effect; or (2) the date an interim final
rule or final rule effecting the specific regulatory change is published in the
Federal Register.




If within 60 calendar days of transmission of such written notice to all of the
other FHLBanks, at least 2/3 of the then existing FHLBanks (including the Bank)
execute a Declaration of Automatic Termination concurring that the specific
statutory or regulatory change identified in the written notice constitutes an
Automatic Termination Event, then the Declaration of Automatic Termination shall be
delivered by the Bank to the FHFA within 10 calendar days of the date that the
Declaration of Automatic Termination is executed. After the expiration of a 60
calendar day period that begins when the Declaration of Automatic Termination is
delivered to the FHFA, an Automatic Termination Event Declaration Date shall be
deemed to occur (except as provided in subsection 8.4.1.3.




After the expiration of a 60 calendar day period that begins when the Declaration of
Automatic Termination is delivered to the FHFA by another FHLBank pursuant to the
terms of its capital plan, an Automatic Termination Event Declaration Date shall
also be deemed to occur (except as provided in subsection 8.4.1.3).




If a Declaration of Automatic Termination concurring that the specific statutory or
regulatory change identified in the written notice constitutes an Automatic
Termination Event has not been executed by at least the required 2/3 of the then
existing FHLBanks within 60 calendar days of transmission of such notice to all of
the other FHLBanks, the Bank may request a determination from the FHFA that the
specific statutory or regulatory change constitutes an Automatic Termination Event.
Such request must be filed with the FHFA within 10 calendar days after the
expiration of the 60 calendar day period that begins upon transmission of the
written notice of the basis of the assertion to all of the other FHLBanks.




8.4.1.2 Action by FHFA




The Bank may request a determination from the FHFA that a specific statutory or
regulatory change constitutes an Automatic Termination Event, and may claim that an
Automatic Termination Event has occurred, or will occur, with respect to a specific
statutory or regulatory change only if the Bank has complied with the time
limitations and procedures of subsection 8.4.1.1.




If within 60 calendar days after the Bank delivers such request to the FHFA, or a
similar request is delivered by another FHLBank pursuant to its capital plan, the
FHFA provides the requesting FHLBank with a written determination that a specific
statutory or regulatory change is an Automatic Termination Event, then an Automatic
Termination



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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





Event Declaration Date shall be deemed to occur as of the expiration of such 60
calendar day period (except as provided in subsection 8.4.1.3). The date of such
Automatic Termination Event Declaration Date shall be as of the expiration of such
60 calendar day period (except as provided in subsection 8.4.1.3) no matter on which
day prior to the expiration of the 60 day calendar period the FHFA has provided its
written determination.




If the FHFA fails to make a determination within 60 calendar days after an FHLBank
delivers such request to the FHFA, then an Automatic Termination Event Declaration
Date shall be deemed to occur as of the date of the expiration of such 60 calendar
day period (except as provided in subsection 8.4.1.3); provided, however, that the
FHFA may make a written request for information from that FHLBank, and toll such 60
calendar day period from the date that the FHFA transmits its request until that
FHLBank delivers to the FHFA information responsive to its request.




If within 60 calendar days after that FHLBank delivers to the FHFA a request for
determination that a specific statutory or regulatory change constitutes an
Automatic Termination Event (or such longer period if the 60 calendar day period is
tolled pursuant to the preceding sentence), the FHFA provides that FHLBank with a
written determination that a specific statutory or regulatory change is not an
Automatic Termination Event, then an Automatic Termination Event shall not have
occurred with respect to such change.




8.4.1.3 Proviso as to Occurrence of Automatic Termination Event Declaration Date




In no case under this subsection 8.4.1 may an Automatic Termination Event
Declaration Date be deemed to occur prior to: (1) the date the specific statutory
change takes effect; or (2) the date an interim final rule or final rule effecting
the specific regulatory change is published in the Federal Register.




	 	8.4.2	 	Notice of Voluntary Termination.
	 
	 	 	 	If the FHLBanks terminate the Agreement, then the FHLBanks shall provide written
notice to the FHFA that the FHLBanks have voted to terminate the Agreement.
	 
	 	8.4.3	 	Consequences of an Automatic Termination Event or Vote to Terminate the Agreement.






8.4.3.1 Consequences of Voluntary Termination




In the event the FHLBanks deliver written notice to the FHFA that the FHLBanks have
voted to terminate the Agreement, then without any further action by the Bank or the
FHFA: (i) the date of delivery of such notice shall be an Allocation Termination
Date; and (ii) one year from the date of delivery of such notice shall be a
Restriction Termination Date.




8.4.3.2 Consequences of an Automatic Termination Event Declaration Date




If an Automatic Termination Event Declaration Date has occurred, then without
further action by the Bank or the FHFA: (i) the date of the Automatic Termination
Event Declaration Date shall be an Allocation Termination Date; and (ii) one year
from the date of the Automatic Termination Event Declaration Date shall be a
Restriction Termination Date.



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Federal Home Loan Bank of Dallas Capital Plan:




Amended April 28, 2011





8.4.4.4
Deletion of Operative Provisions of Retained Earnings Capital Plan Amendment




Without any further action by the Bank or the FHFA, on the Restriction Termination
Date, sections 8.1 through 8.4 of this Capital Plan shall be deleted.




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