FHLBNY Capital Plan Revisions
July 2, 2014
RE: FHLBNY Capital Plan Revisions - Effective August 1, 2014
On August 1, 2014, revisions to the Federal Home Loan Bank of New York’s (“FHLBNY”) Capital Plan (“Plan”) will become effective. The Membership Stock Purchase Requirement is being reduced, and the other changes are intended to update the Plan document.
Membership Stock Purchase Requirement
As a member of the FHLBNY, you are, regardless of your activity with us, required to purchase Membership Stock, which has a par value of $100 per share and does not fluctuate with market conditions. Each year, the FHLBNY calculates your institution’s Membership Stock Purchase Requirement, which is currently set at the greater of $1,000 or 20 basis points of your Mortgage-related Assets using year-end financial statements. Effective August 1, 2014, that requirement will be reduced from 20 basis points to 15 basis points of your Mortgage-related Assets based on your year-end financial statements (the $1,000 minimum will still apply).
The FHLBNY’s Board and management team are continually striving to enhance the value of your membership. We believe this 25% reduction in the Membership Stock Purchase Requirement is a simple and immediate way to add value to your membership. Based on current projections, this reduction in capital stock purchase requirements is expected to enable the FHLBNY to pay a higher dividend rate in future quarters while allowing us to remain well-capitalized.
Your dividend payment will continue to be based on the combined daily average balance of total shares (Membership Capital Stock plus Activity-Based Capital Stock). For those members with Activity-Based Capital Stock, calculations with respect to that portion of your capital requirement will not change.
Modernization of the FHLBNY’s Plan
The Plan, which defines your rights as a FHLBNY shareholder, is also being revised to:
- transfer material pertaining to the definition of the term ‘Mortgage-related Assets’ currently located in Appendix 1 of the Plan to the FHLBNY’s website;
- amend Section 3.2 of the Plan to provide for stockholder voting rights with respect to any proposed mergers between FHLBanks;
- amend Section 7.2.3 to allow the FHLBNY to treat the capital stock of members who voluntarily dissolve or liquidate themselves and whose membership is then terminated by the Board in the same manner as members who are placed into conservatorship or receivership;
- update certain outdated regulatory references where they appear in the Plan; and
- delete material that, due to the passage of time, is no longer relevant.
A copy of the amended Plan that will go into effect on August 1 is available here. If you have any questions about the Plan, please contact Adam Goldstein at (212) 441-6703 or your Calling Officer at (212) 441-6700.