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December 31, 2009
Total borrowings obtained from the Bank, including a member's
unused IDEAL Way line of credit, should not exceed the value
of a member's qualified collateral that has not been pledged
to outside sources. Qualified collateral is computed according
to Appendix
A of this policy.
- A member's ratio of Bank capital stock to advances may
not fall below the amount required under the Federal Home
Loan Bank Act, and the requirements of the Bank's Capital
Plan, as amended from time to time. For the purposes of
this computation, "advances" comprises
all extensions of credit and credit services. If, as a
condition of granting an advance, a member is required
to purchase additional capital stock, the Bank may deduct
the amount of the required stock purchase from the proceeds
of the advance and apply it to the purchase of capital
stock.
- Upon written request by a member and upon approval by
the Bank, a member may redeem capital stock in excess of
the borrowing requirement when advances are paid down to
the required percentage. In addition, the Bank may occasionally
require members to redeem capital stock in excess of the
requirement.
- A member that does not comply with any of its regulatory
capital requirements may be subject to maturity and/or other
borrowing restrictions. Certain restrictions may also apply
to members that are affiliated with a holding company or
other financial institution that is not in compliance with
its regulatory capital requirements.
- The Bank may curtail the availability of advances and
lines of credit without prior notice when the Bank determines
that market or other conditions warrant such restrictions.
The Bank may also change the terms of this policy without
prior notice at any time. In determining the availability
of advances and lines of credit, the Bank will consider
a number of factors, including the Bank's practical funding
constraints, statutory and regulatory restrictions, and
its responsibility to preserve its financial integrity and
long-term viability as a prudent and profitable institution.
- The Bank may determine not to extend new credit to a member
that is insolvent on a tangible equity capital basis. In its sole
discretion, the Bank may renew maturing advances to such
a member. These maturing advances will be renewed only as
overnight Rollover Cash Manager advances. The Bank may require
the repayment of these maturing advances in an expeditious
manner.
A member that is insolvent on a tangible equity capital basis
may not maintain an IDEAL Way line of credit.
For the Bank's purposes, tangible equity capital includes capital
defined in accordance with generally accepted accounting
principles less goodwill and other intangible assets.
In addition, if a member is operating under the control
of its primary federal regulator, the member may be deemed
by the Bank to be insolvent on a tangible equity capital basis.
- A member’s total advances may not exceed 50
percent of the member’s total assets as determined
by the Bank at any time. Members are required to contact
the Bank immediately if advances exceed 50 percent of assets
due to a decline in the member’s assets or for any
other reason.
The Bank’s staff, with the approval of the President,
may grant exceptions to this limitation on a case-by-case
basis when necessary or in the Bank’s interest.
The Bank will consider the following factors in determining
whether a member will be allowed to obtain advances in excess
of 50 percent of assets:
- Whether the member has an NRSRO rating, and if
so, the rating level;
- The quality of the member’s collateral;
- The member’s asset size;
- Asset quality and the level of the loan loss
reserve;
- The level and stability of the member’s capital;
- The level and stability of earnings; and
- Whether the member has support (or risk exposure)
within a holding company structure, or from an affiliate
or a subsidiary.
- A member whose total advances exceed 50 percent of assets will be placed in Category 2 (listing) or if necessary, Category 3 (delivery) collateral status with the Bank. Placing the member in Category 2 (listing) or Category 3 (delivery) status recognizes the increasing importance of collateral at this high level of borrowing.
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