Each state member bank must subscribe to capital stock in the Federal Reserve Bank of its District in an amount equal to 6 percent of its combined capital and surplus (excluding retained earnings). However, only 3 percent must be paid in, and the remaining 3 percent is on call. The paid-in portion currently earns an annual dividend of 6 percent.

Benefits of Becoming a State Member Bank

Local, Transparent Relationships

  • Direct access to the Reserve Bank's senior management in Supervision
  • Local decision-making authority for real-time responses to questions, issues, or concerns
  • Ability to provide feedback on examination and supervisory processes to leadership in Supervision
  • Ongoing communications and meetings to discuss local conditions
  • Engagement opportunities with peers, Reserve Bank officers, and industry subject matter experts
  • Voting for directors of Federal Reserve Bank and eligibility to serve as a director

Efficient and Risk-Focused Supervision

  • Supervisory program determined by size, condition, and complexity of the organization
  • Supervisory approach emphasizes controls and risk management in addition to financial performance
  • Supervisory process considers local trends, conditions, and emerging risks
  • Fewer federal supervisors for organizations with a bank holding company structure
  • Generally, no fees for Federal Reserve examinations and application filings

Examiner Expertise

  • Consistent supervisory approach in accordance with regulatory guidance
  • Extremely knowledgeable staff well suited to supervising large, complex, regional, and community banking organizations
  • Local staff serving as Federal Reserve experts across various risk stripes

Preparing to Apply for Membership

Eligibility for Membership

  • A newly organizing state bank (de novo)
  • An existing state nonmember bank
  • An existing national bank that seeks to convert to a state charter and continue as a member bank
  • A thrift or other depository institution converting to a state bank charter and desiring to become a member bank

Application Process

  • Encouraged to contact Reserve Bank staff before submitting an application to discuss process
  • Reserve Bank will determine whether premembership examination is required (see Supervisory letter 15-11/Consumer Affairs letter 15-9)
  • De novo banks must apply directly to the FDIC for deposit insurance and obtain preliminary charter approval from the state banking department before filing an application with the Reserve Bank
  • Online technology that offers an easy, immediate, and secure way to submit applications (FedEZFile)

Federal Reserve Considerations When Reviewing Applications

  • The financial history, condition, and general character of bank management
  • The adequacy of the bank’s capital structure, including nature and condition of its assets, existing and prospective deposit liabilities and other corporate responsibilities, and future earnings prospects (note: A de novo bank must provide projections demonstrating that the initial capitalization is adequate to maintain a leverage ratio of at least 9 percent throughout the first three years of operations)
  • The convenience and needs of the community to be served by the bank
  • The corporate powers are consistent with the purposes of the Federal Reserve Act

Key contacts and resources