Banking Supervision & Regulation
Becoming a Member Bank of the Federal Reserve System: Questions & Answers
Perspective on the Federal Reserve's Banking Supervision
In the interest of promoting a sound banking and financial system in which the public can place its confidence, the goal of banking supervision at the Federal Reserve Bank of Dallas is to provide competent and fair supervision based on innovative risk-focused processes.
Q. What are the advantages of membership in the Federal Reserve System for a state-chartered bank?
Accessibility/Responsiveness. Our portfolio management philosophy focuses on building relationships to ensure that member bank management has a reliable and knowledgeable contact and direct access to our senior management.
Public Relations Value. Membership conveys an association with the general reputation and public trust the Federal Reserve enjoys as our country's central bank.
Quality Service. This is a priority of the Federal Reserve Bank of Dallas. We continually seek member bank management feedback on the quality and efficiency of the examination and overall supervisory process.
Ownership. Member banks purchase stock in their regional Federal Reserve Bank and, as stockholders, play a role in the election of the Federal Reserve Bank's board of directors.
Q. What institutions are eligible for membership?
Any bank or other incorporated banking institution engaged in similar business may become a member of the Federal Reserve System. National banks are required by law to be members. State-chartered banks may join if they meet certain requirements.
Q. What factors are considered in applications for membership?
- Financial condition
- General character of management
- Capital adequacy
- Convenience and needs of the community
Q. Is there an application fee?
There is no application fee.
Q. Does my application require public notice?
No, that requirement was eliminated in 1998.
Q. How long does it take?
As little as 15 days for well-capitalized institutions, with CAMELS and compliance ratings of 1 or 2, a satisfactory CRA rating and no major unresolved supervisory issues.
Q. Is an examination required?
Not always. The need for an on-site examination depends on each bank's individual circumstances.
Q. Is there an examination fee?
There is no examination fee.
Q. Does Fed membership convey FDIC insurance?
No, a separate application will need to be filed with the FDIC.
Q. Does a national bank converting to a state charter need to reapply for Fed membership?
Yes. Fed membership does not transfer automatically. Stock in the Federal Reserve will also have to be reissued in the name of the new bank.
Q. Are there any conditions of membership?
Member banks are required to purchase Fed stock in accordance with Regulation I (12 CFR 209) and are expected to follow the general safety and soundness guidelines found in Regulation H (12 CFR 208).
Q. Who can I contact for more information and how do I apply?
Contact Robert Mahalik, Examining Officer, phone 214-922-6225.