Membership Application Process: Overview
An application for membership may be filed by any of the following: 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; or a thrift or other depository institution converting to a state bank charter and desirous of membership. When it reviews an application for membership, the Federal Reserve considers the following factors:
- the financial history and condition of the applying bank and the general character of its management;
- the adequacy of the bank's capital structure taking into account the character and condition of its assets, its existing and prospective deposit liabilities and other corporate responsibilities and its 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; and
- whether its corporate powers are consistent with the purposes of the Federal Reserve Act, that is, whether the institution is primarily engaged in the business of banking.
Before submitting a membership application, we encourage applicants to contact Reserve Bank staff so that we may determine whether a pre-membership examination of the applying institution is necessary. The examination may be waived depending on the recency of the latest examination by the current supervisor, the rating assigned, and the size of the institution. If the applying institution is a de novo bank, it should obtain preliminary charter approval from the state banking department before filing a final application with the Reserve Bank.
Please note that Reserve Bank staff is available to provide guidance and assistance prior to submission of an application, and that an application may be filed in draft form. The draft application process is useful to facilitate the identification of any potential stumbling blocks and to initiate a dialogue that often leads to the successful resolution of any existing issues.
Reserve Bank staff also would be pleased to arrange meetings with bank officers, directors, organizers, or advisers, to discuss Federal Reserve membership. In the event that you have any questions regarding the membership process, please contact:
Robert Augusta, Jr., Vice President, Regional
and Specialty Supervision
Robert.Augusta@bos.frb.org
