July 14, 2017
RE: FHLBNY Capital Plan Revisions – Effective August 1, 2017
On August 1, 2017, the Federal Home Loan Bank of New York (“FHLBNY”) will reduce its Membership Stock Purchase Requirement (“MSPR”), thereby reducing the capital its members hold as owners of the cooperative.
As a member of the FHLBNY, you are required to purchase Membership Capital Stock (“MCS”), which has a par value of $100 per share and does not fluctuate with market conditions. Each year, the FHLBNY calculates your institution’s MSPR, which is currently set at the greater of $1,000 or 15 basis points of your Mortgage-related Assets using year-end financial statements.
Effective August 1, 2017, this requirement will be reduced to the greater of $1,000 or 12.5 basis points (from 15 basis points, a reduction of 17%) of your Mortgage-related Assets based on your year-end financial statements. As a result, your institution’s Overnight Investment Account will be credited with the proceeds of the MCS repurchase.
The FHLBNY’s Board and management team are continually striving to enhance the value of your membership. We believe this reduction in the MSPR is a simple and immediate way to add such value, and we have taken similar actions in the past (i.e., our August 1, 2014 reduction in the MSPR from 20 basis points to 15 basis points). Based on current projections, the upcoming reduction is expected to enable the FHLBNY to pay a higher dividend rate in future quarters while allowing us to remain well-capitalized. In accordance with the FHLBNY’s Strategic Plan, we will continue to look at our capital levels and the capital mix to help ensure that we are effectively managing members’ investment in the cooperative.
Your dividend payment will continue to be based on the combined daily average balance of total shares held (Membership Capital Stock plus Activity-Based Capital Stock). For those members with Activity-Based Capital Stock, purchase requirements with respect to such stock will not change.
A copy of the FHLBNY’s current Capital Plan is available here and on our Investor Relations page. If you have any questions about the Capital Plan or this reduction in the MSPR, please call Adam Goldstein at (212) 441-6703 or your Relationship Manager at (212) 441-6700.
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