Capital Stock Requirements
Members purchase stock in proportion to their borrowings from FHLBank Boston (activity-based stock) and levels of certain assets (membership stock). FHLBank Boston's stock investment requirements are as follows:
Membership Stock Investment Requirements (MSIR)
Activity-Based Stock Investment Requirements (ABSIR)
- 3.00% of the principal balance of advances with original maturities of 1 day
- 4.00% of the principal balance of advances with original maturities of 2 days or longer
- 0.00% of principal balance
Letters of Credit
- 0.25% of the amount of the letter of credit
Mortgage Parntership Finance Program®*/Acquired Member Assets
Effective November 2, 2009, the Bank adjusted to zero percent (0%) the ABSIR for certain loans that members sell to the Bank under the Mortgage Partnership Finance (MPF®) Program. There is no ABSIR for loans members sell to the Bank under master commitments entered into on or after Monday, November 2, 2009.
The ABSIR percentage is set as of the date a loan is funded and remains fixed for the life of the loan. Therefore, a member would not be required to purchase additional activity-based stock for a given loan, even if the ABSIR is subsequently adjusted by the Bank. The Bank's board of directors reserves the right to change the ABSIR for loans originated pursuant to master commitments executed on or after the effective date of the change to a level of up to 6.00% of the unpaid principal balance of each loan originated under such master commitments.
The Bank retains the right to establish set limits on the total dollar amount of new master commitments that a single member may open. Since the inception of the Bank's capital plan in April 2004, the following ABSIRs have been established for MPF loans originated under master commitments executed during the stated periods:
- April 19, 2008 through November 1, 2009: 4.50%
- October 16, 2004 through April 18, 2008: 0.00%
- Prior to October 16, 2004: 4.50%
Delivery Commitment for Acquired Member Assets
For delivery commitments issued to a member for Acquired Member Assets to be held on the Bank's balance sheet, there is no ABSIR.
Excess stock is the amount of stock by which a member's total capital stock balance exceeds its total stock investment requirement (TSIR), which is the sum of its MSIR and ABSIR. Excess stock can arise from a decrease in the MSIR, as calculated annually, or from a decrease in the ABSIR, such as due to a maturity or early termination of an advance or letter of credit.
Excess Stock Repurchase
On a daily basis, FHLBank Boston will calculate a member's excess stock that exceeds the lesser of:
- 10% of the member's TSIR, or
- $10 million.
If a member's excess stock balance exceeds the lesser of these numbers by $100,000 or more, the Bank will repurchase this excess stock amount at the beginning of the next business day so that the member's remaining excess stock is equal to this lesser amount.
FHLBank Boston retains the authority to suspend daily excess stock repurchases at any time from any shareholder, or all shareholders, at its sole discretion and without prior notice. This discretion would most likely be exercised in the following cases:
- The shareholder's financial condition or collateral position is such that the Bank deems it necessary to retain excess stock to fully secure its exposure to the shareholder; or
- to meet liquidity or capital management needs of the Bank.
For excess stock that is not automatically repurchased, a member may request a repurchase by the Bank at any time by completing the Excess Stock Repurchase Request form and return it to firstname.lastname@example.org. Requests submitted by 2:00 p.m. on a business day will generally be processed the same day while requests received after 2:00 p.m. may be processed the following business day. Proceeds from the repurchase will be credited to the member's IDEAL Way Account. FHLBank Boston may suspend or terminate daily repurchases of excess stock at any time without prior notice, subject to our Capital Plan and legal and regulatory requirements.
Capital Stock Additional Information
Please note that a capital stock repurchase request is different from a capital stock redemption request. A capital stock repurchase request is honored at the sole discretion of the Bank, and thus, avoids the five-year delay in processing that is associated with a capital stock redemption request, which must be processed by the Bank five years after the request, provided that the Bank would continue to meet all of its minimum capital requirements and was not otherwise restricted from processing stock redemption requests by its regulator and subject to other restrictions set forth in our Capital Plan and applicable laws and regulations.
For details about FHLBank Boston stock, see our Capital Plan. Please note that all outstanding capital stock is Class B Stock. The par value of each share of Class B Stock is $100. All stock is issued, redeemed, repurchased and transferred only at par value.
*"Mortgage Partnership Finance," and "MPF" are registered trademarks of the Federal Home Loan Bank of Chicago.