A bank that wants to become a member bank must file with the Federal Reserve Bank in whose District it is located an application for stock (or for a deposit, in the case of a mutual savings bank not permitted to own stock) in the Reserve Bank, and for the issuance of the stock. Section 209.2(b) specifies the effective date of issuance and membership for each type of bank. In certain cases, as discussed in section 209.2(b), the Board determines which District a member bank is located in.

Section 209.3 sets out the procedures for cancellation of all of a bank’s Reserve Bank stock in cases of withdrawal from or involuntary termination of membership in the Federal Reserve System, merger into a nonmember bank, ceasing business, or liquidation and specifies the effective date of cancellation. This section also describes the mechanism for exchange of Reserve Bank stock upon merger or change in location and specifies the notice required for voluntary withdrawal from membership.

Section 209.4 outlines the procedure for determining the total amount of a member bank’s subscription for Reserve Bank stock and for adjusting that amount to reflect changes in the member bank’s paid-in capital stock and surplus (as defined in this section) in excess of the carryover amounts. It also sets out the alternative procedures for mutual savings banks, including those not permitted to own stock. This section also deals with payments for subscriptions and cancellations and specifies how accrued dividends are calculated. In any cancellation of Reserve Bank stock, the Reserve Bank may first apply the amount payable to any liability of the bank to the Reserve Bank before paying the remainder to the bank, receiver, or conservator.

A member bank’s holding of Reserve Bank capital stock shall be represented by one or more notations on the Reserve Bank’s books. These books may be kept electronically.