Any Bank possessing a state license, must be a member of the fed. In addition, any Bank with a license for transactions within the state may become a member of the fed. All banks-members are required to keep their reserves in their regional reserve Bank. These reserves are not accrued Bank interest.

During the 1970s, the number of member banks declined. By the end of the decade the trend has reached alarming dimensions. Banks exited from membership in the fed, as it meant the diversion of funds in the form of reserves from circulation, whereas reserve requirements for banks operating within the state, were lower, and these funds were profitable. With rising interest rates, loss of benefit of use of reserves become too large for a growing number of banks...
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During the 1970s, the number of member banks declined. By the end of the decade the trend has reached alarming dimensions. Banks exited from membership in the fed, as it meant the diversion of funds in the form of reserves from circulation, whereas reserve requirements for banks operating within the state, were lower, and these funds were profitable. With rising interest rates, loss of benefit of use of reserves become too large for a growing number of banks...