Banks

• The FHLB system is made up of 12 regional Federal Home Loan Banks plus the FHLB Office of Finance, which creates bonds and sells them to investors to raise money for the system. Each of the 12 banks has member institutions within its region, and the system has a combined membership of more than 8,000 institutions. The 12 regional banks are headquartered in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York City, Pittsburgh, San Francisco, Seattle and Topeka.
  
  

Stock Ownership

• Each of the 12 regional banks issues its own stock, and only the member institutions of a particular FHLB can own shares of that bank's stock. The banks can make a couple of exceptions to this ownership restriction. One is for institutions that have canceled their membership but still have loans from the FHLB. In such cases, the FHLB won't let the member institution cash out until its accounts are settled. A second exception is for companies that are not FHLB members themselves but have acquired financial institutions that are members of an FHLB.
  
  

Stock Structure

• The 12 regional banks each maintain a "capital plan" that describes the stock structure and lays out the minimum amount of stock that each member institution must own. The regional banks structure their stock in different ways, subject to approval by the Federal Housing Finance Agency. The Topeka FHLB, for example, has two classes of stock -- Class A and Class B; member institutions must own a minimum amount of Class A stock based on the size of their assets, and a minimum amount of Class B stock based on "activity," or how many transactions it conducts with the regional bank. The San Francisco FHLB, on the other hand, has one class of stock, and each member institution has two minimum-purchase requirements: one based on assets, one based on activity. Whichever minimum is higher, that's how much stock the institution must hold. The regional banks recalculate the member institutions' minimum stock requirements from time to time.
  
  

Investments

• Though the public can't buy FHLB stock, it's still possible to invest in the FHLB system. The system raises money from the bonds sold by the FHLB Office of Finance. According to the office, these bonds are widely available, and investors can buy them either directly from the underwriters through which the office issues the bonds or on the secondary market from just about any securities dealer.