The Membership Application
The membership process includes the filing of a membership application. However, before the application is submitted, we analyze the bank's condition. To the extent possible, we rely on recent examinations to gain an understanding of the bank and its operations. This review is always supplemented by an on-site visit. Depending on the bank's profile and its examination cycle, our on-site presence may take the form of a targeted or full-scope examination.
Factors Considered in a Membership Application
- Financial condition, including capital adequacy and future earnings prospects
- General character of management
- Record in meeting the convenience and needs of the community
- Consistency of existing corporate powers with the Federal Reserve Act
Membership requires the purchase of Federal Reserve Bank stock equal to 3 percent of the member bank's capital stock and surplus accounts. This stock earns an annual dividend of 6 percent.
We encourage all banks that are considering membership to contact the Reserve Bank early in their deliberations. In this way, banks can make a more informed decision on the benefits of membership, and any potential hurdles can be identified early in the process.