Next-day Stock Exchange Process Coming Soon
February 1, 2019
Under FHLBank Topeka’s Capital Plan, we require members to purchase stock equal to 4.5% of outstanding advances. Once a member’s advance holdings exceed amounts supported by Class A membership stock, they purchase and hold Class B activity stock to support the additional balances. Conversely, when advance balances are reduced and stock balances are not adjusted, the Class B stock exceeds the 4.5% requirement.
For the past few years, we’ve followed a weekly schedule of exchanging Excess Class B Common Stock of amounts greater than $50,000 for Class A Common Stock each Wednesday. The timing of the exchanges was more related to processes performed by FHLBank to facilitate the exchange and not clearly tied to the paydown of advances and resulting excess stock position.
In order to more closely tie our members’ outstanding stock to their advance balances and to allow us to better manage our capital position, we are instituting next-day stock exchanges effective Feb. 11, 2019. This does not mean you will have daily stock activity. A daily exchange will happen the following morning only when you pay off an advance or receive a stock dividend. The exchanges will continue to be subject to the $50,000 threshold for Excess Class B Common Stock. Your institution's stock contact will receive an official notice from our stock system on Feb. 4, 2019.
Thank you for your partnership. If you have any questions on the upcoming change to the frequency of excess stock exchanges, please contact Lending at 800.809.2733.