Assessments; Forms, Instructions, and Reports

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 304 and 327

RIN 3064-AB45

Assessments; Forms, Instructions, and Reports

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Board of Directors (Board) of the Federal Deposit

Insurance Corporation (FDIC) is proposing to amend its regulation on

assessments to provide for the quarterly collection of assessments by

means of FDIC-originated direct debits through the Automated Clearing

House (ACH) network, based on invoices prepared by the FDIC using data

reported by insured institutions in their quarterly reports of

condition. The FDIC believes that the proposed amendments would result

in a more efficient collection process, to the benefit of the deposit

insurance funds and insured institutions, and would reduce the

regulatory burden on insured institutions. The Board is further

proposing to amend the assessments regulation to clarify the obligation

of acquiring institutions to pay assessments on deposits assumed from

institutions terminating their insured status; to delete from the

assessments regulation the existing references to experience factors,

which are not available for use after 1994; and to include such

amendments to the FDIC's regulation on forms as are necessitated by the

proposed changes to the assessments regulation.

DATES: Written comments must be received by the FDIC on or before

August 9, 1994.

ADDRESSES: Written comments shall be addressed to the Office of the

Executive Secretary, Federal Deposit Insurance Corporation, 550--17th

Street, NW., Washington, DC 20429. Comments may be hand-delivered to

room F-400, 1776 F Street, NW., Washington, DC 20429, on business days

between 8:30 a.m. and 5 p.m. (FAX number: (202) 898-3838). Comments

will be available for inspection in room 7118, 550--17th Street, NW.,

Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Connie Brindle, Chief, Assessment

Operations Section, Division of Finance, (703) 516-5553, or Martha

Coulter, Counsel, (202) 898-7348, regarding the collection improvement

proposal; William Farrell, Chief, Assessment Management Section,

Division of Finance, (703) 516-5546, or Jules Bernard, Counsel, (202)

898-3731, regarding assessment obligations of acquiring institutions;

Federal Deposit Insurance Corporation, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Collection Improvement Proposal

A. Existing Statutory and Regulatory Provisions

Section 7(c) of the Federal Deposit Insurance Act (FDI Act), 12

U.S.C. 1817(c), requires that each insured depository institution pay a

semiannual assessment to the FDIC. Payment of the assessment is to be

made in the manner and at the time(s) prescribed by the Board. Each

institution is to file a certified statement in such form and

containing such information as the FDIC requires. An officer of the

institution must certify that the statement is true, correct, and

complete, and in accordance with the statute and related regulations.

At present, the FDIC's assessment regulations, which are based on a

prior version of section 7 of the FDI Act, require the payment of

assessments twice a year. The amount of the semiannual payment is

computed by the institution. The computation, and the resulting

assessment amount, is shown on the certified statement filed by the

institution, which is accompanied by a check for the full amount of the

assessment. The payment must be postmarked no later than January 31 for

the first semiannual period of the year (January through June), and

July 31 for the second semiannual period (July through December).

B. Purpose of the Proposal

The FDIC believes that the existing assessment collection process

can be improved substantially by utilizing an electronic payment

process, to the benefit of insured depository institutions and the

federal deposit insurance funds. Because the existing process is paper-

based, it is more time consuming and less efficient--both for insured

institutions and for the FDIC--than an improved collection process

making fuller use of advanced payment technology.

The proposed rule introduces a more efficient collection process

using the Automated Clearing House (ACH) network. Funds for assessment

payments would be directly debited by the FDIC from accounts designated

by insured depository institutions for that purpose. This procedure

would substantially improve the efficiency of the collection process,

in such ways as eliminating paperwork costs and allowing the FDIC to

monitor assessment receipts electronically.

In connection with this improvement in the collection process, the

FDIC believes that it is highly desirable to reduce the regulatory

burden imposed on insured depository institutions by shifting to the

FDIC the responsibility of computing each institution's assessment. To

facilitate this process, the FDIC is also proposing a move to quarterly

assessment payments. The FDIC believes that this change would have

other benefits as well, both for the FDIC and for insured institutions.

A quarterly-payment schedule is a straightforward means of

minimizing inefficiencies in the assessment collection process that

would not be addressed by other elements of the proposal. For example,

it would simplify the assessment computation by basing each quarterly

installment on one quarterly report of condition rather than two. It

would also resolve a timing problem resulting from a statutory

requirement. Under section 7(a) of the FDI Act, 12 U.S.C. 1817(a), the

certified statements filed by each institution for a particular

semiannual assessment period must be based on the two reports of

condition\1\ to be filed by the institution for the prior semiannual

period. The report dates set pursuant to section 7(a) are March 31,

June 30, September 30, and December 31. The June 30 and December 31

report dates precede by only one day the beginning of the semiannual

assessment periods for which they provide the basis for assessment

computation. As a result, the report data needed by the institution for

its assessment computation are not complete until the beginning of the

semiannual period, and are not required to be submitted by the

institution until the end of the first month of the semiannual period.

If, as under the existing collection process, the payment due date

falls early within the semiannual period, it is necessary for each

institution to compute its own assessment, since there is not

sufficient time before the due date for the FDIC to receive the

relevant report data from the institution and to prepare and edit an

assessment statement based on the data. Under the existing collection

process, any subsequent amendment of the reported data on which the

assessment is based can potentially--and often does--necessitate

recalculation of the institution's assessment.

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\1\For banks, the report of condition is called the Report of

Income and Condition; for thrift institutions, the Thrift Financial

Report; and for insured branches of foreign banks, the Report of

Assets and Liabilities of U.S. Branches and Agencies of Foreign

Banks.

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A possible solution to this timing problem would be to move the

semiannual assessment due date to a later date during the semiannual

period, for example to the end of the first quarter of the period (that

is, to March 31 and September 30). This would be preferable to the

existing system in that it would provide the additional time necessary

for the FDIC to receive the requisite data from insured institutions

and to initiate a direct debit for the assessment amount due. However,

it would not permit other improvements that would result from the

quarterly-collection proposal, such as simplifying the assessment

computation, reducing the data-refinement and billing-adjustment

complications associated with semiannual collection, and eliminating

the risk of nonpayment for insurance coverage provided for some portion

of the assessment period in the case of an institution that fails prior

to the payment due date. Thus, the FDIC believes that the quarterly-

collection proposal is preferable to delayed semiannual collection.

Under the quarterly-collection proposal, institutions would be

invoiced for an initial quarterly payment for the first quarter of each

semiannual assessment period (for example, the period beginning January

1) approximately one month before the beginning of the period (in this

example, on November 30), based on the report-of-condition data for the

first quarter of the preceding semiannual period (in this example,

September 30). Although the due date for this first quarterly payment

(December 30) would fall approximately one month earlier than the due

date for the semiannual payment required under the existing

regulations, the quarterly payment would be for only a portion (roughly

one-half, assuming minimal changes in the rate of deposit growth across

quarters) of the full semiannual assessment amount. The balance of the

semiannual assessment--based on the report of condition for the last

day of the second quarter of the prior semiannual period (in the above

example, December 31)--would be due approximately 3 months into the

semiannual period (March 30), about two months later than the existing

single semiannual payment date (January 31).

Based on FDIC estimates, the proposed quarterly-payment plan should

not result in a material financial loss either to the FDIC or to

insured depository institutions.

It is currently anticipated that, if adopted, the proposal would be

implemented for the semiannual assessment period beginning July 1,

1995.

C. Additional Description of the Proposal

1. Quarterly Invoices.

Under the proposal, the FDIC would provide to each insured

depository institution a quarterly invoice based on the quarterly

report of condition most recently due from the institution. In

addition, the invoice would reflect adjustments from previous quarters,

such as adjustments resulting from amendments to earlier reports of

condition or from assessment audits by the FDIC.

The invoices would be provided no later than 30 days before the due

date of the quarterly assessment payment. As the following table

indicates, first-quarter invoices would be distributed by the preceding

November 30 for the period beginning January 1, and by the preceding

May 30 for the period beginning July 1. The respective payment

dates2 for these invoices would be December 30 and June 30.

Second-quarter invoices would be distributed by February 28 for the

then-current semiannual period, with a payment (debit) date of March

30, and by August 30 for the then-current semiannual period, with a

payment date of September 30.

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\2\Under the proposal, if a specified payment date falls on a

day that is not a business day, the payment date becomes the

previous business day.

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Report of

Semiannual assessment Invoice Payment condition

period covered Quarter date date used for

preparation

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Jan.-June............. 1 Nov. 30 Dec. 30 Sept. 30.

2 Feb. 28 Mar. 30 Dec. 31.

July-Dec.............. 1 May 30 June 30 Mar. 31.

2 Aug. 30 Sept. 30 June 30.

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The proposal would eliminate the existing process of averaging the

two assessment bases derived from the two quarterly reports of

condition for the preceding semiannual period. Instead, as indicated

above, each quarterly payment would be based separately on the single

most recent report of condition. For institutions whose deposits are

increasing, this change could result in slightly lower payments in

earlier quarters and higher payments in later quarters, while the

converse would apply to an institution whose deposits are decreasing.

On the whole, however, whether on an institution-by-institution or

industry-wide basis, elimination of averaging is expected to simplify

the assessment process without having a significant impact on the

amount of assessments paid.

2. Assessment Computation Review Procedure.

The assessment-base data reflected on an institution's quarterly

invoices would be copied from data reported by the institution in its

reports of condition. Given the source of the data and the mechanical

nature of the assessment computation, it is anticipated that there

would be only limited occasion for institutions to disagree with the

invoices. However, a procedure for resolving any such disagreements is

included in the proposal.

The new procedure would apply only to disagreements expressly

identified in Sec. 327.3(h) of the proposed regulation, such as where

the institution believes the rate multiplier applied by the FDIC is

inconsistent with the assessment risk classification assigned to the

institution for the semiannual period for which the payment is due. The

new procedure would not apply to disputes regarding the appropriateness

of the assessment risk classification assigned to the institution; such

disputes would continue to be covered by the risk classification review

procedure in the existing regulations.

Under the proposed new procedure, the period within which an

institution could file a request for revision of an invoice would

generally terminate 60 days from the date of the invoice. However,

where the revision would result from an institution-initiated amendment

to its report of condition, the filing deadline for the request for

revision would be 60 days from the date on which such amendment is

filed. Such amendment of the report of condition would not

automatically trigger an assessment adjustment. Instead, institutions

would need to utilize the new procedure to provide notice to the FDIC

of the requested revision resulting from the amendment.

3. Certified Statements

Under the proposed rule, institutions would no longer be required

to compute their assessments. However, pursuant to section 7(c) of the

FDI Act, each institution would still be required to file a semiannual

certified statement. For the proposed system, the FDIC would provide a

certified statement form reflecting both first- and second-quarter

invoice data. The form would show a semiannual assessment amount based

on the two quarterly reports of condition on which, by statute, the

certified statement is to be based. Each institution would be required

to certify its agreement with the assessment computation shown on the

form as received from the FDIC or, alternatively, its agreement with

that computation as amended in a manner specified by the institution.

In connection with amendment of the assessments regulation, the

certified-statement element of the proposal includes incidental

amendments to part 304 of the FDIC's regulations (``Forms,

Instructions, and Reports'') (12 CFR part 304), for such purposes as

revising the description of the certified statement forms in

Sec. 304.3.

4. Designated Deposit Account

A necessary component of the proposed direct-debit payment system

is the designation by each insured institution of a deposit account to

be debited by the FDIC. Under the proposal, each institution would be

required to give timely notice to the FDIC of the account designated by

the institution for that purpose. In addition, each institution would

be required to take any action necessary to enable the FDIC to direct-

debit assessment payments from the account, and to ensure that the

account has sufficient funds to cover the assessment amount on the FDIC

invoice. Failure on the part of the institution to take any such action

or to provide sufficient funding in the designated account would be

deemed to constitute nonpayment.

5. Semiannual Notice of Assessment Risk Classification

Under the proposal, the date of the notice of an institution's

assessment risk classification currently described in Sec. 327.3(e)

would be changed to coincide with the date of the first-quarterly

invoice. The FDIC believes that combining the notice and the invoice

would result in operational efficiencies both for the FDIC and for

insured depository institutions.

Comment was requested by the FDIC on a similar operational change

in connection with an assessment rulemaking proceeding last year. The

change on which comment was sought at that time was the consolidation

of the assessment rate notice and the certified statement form in a

single mailing. A consolidated mailing was supported by each of the six

comment letters that addressed it. See 58 FR 34357, 34365 (June 25,

1993).

6. Payment of Interest on Overpayments and Underpayments.

Under Sec. 327.7 of the existing assessments regulations, the FDIC

pays interest to insured institutions for any timely overpayments of

assessments, from the time the assessment is due until the date a

refund or credit is given for the overpayment amount. Similarly,

institutions are required to pay interest on underpayments from the

assessment due date to the date of payment of the shortfall.

Because of inefficiencies inherent in the existing paper-based

system, and in the semiannual collection procedure that allows very

little time for the refinement of report-of-condition data before it is

used in assessment computations, it typically takes in excess of three

to five months from the assessment due date to identify, verify, and

pay or collect overpayment or underpayment amounts resulting from

miscomputations or similar errors.

The proposed rule contemplates a ``rolling'' correction process in

which any necessary adjustments in the assessment amount are made on a

quarterly basis. Under this proposal, the FDIC would pay or collect

interest on overpayments and underpayments, respectively, on a full-

quarter basis. Interest would be due for the period beginning the day

after the payment date on which the institution overpaid or underpaid

and ending on the payment date for the quarterly invoice reflecting the

corresponding adjustment. Thus, even if an underpayment were identified

early in the quarter, the FDIC would not collect the balance due until

the next quarterly assessment payment date, and would impose interest

for the entire quarter. The converse would apply to overpayments; that

is, the amount of the overpayment, together with interest through the

next assessment payment date, would be credited to the institution on

the invoice for the next quarterly payment after the overpayment is

discovered.

The FDIC believes that this approach would not have a detrimental

impact on insured institutions. Significantly, approximately 75 percent

of incorrect assessment payments result from errors made by

institutions in filling out their certified statement forms. Such

errors would be virtually eliminated under the proposed procedure.

Moreover, it is anticipated that any remaining adjustments would be

processed more quickly, and that institutions would actually pay less

interest from underpayment errors--and would receive credit for

overpayments more quickly--than under the existing arrangement.

7. Fail-Safe Payment Plan

Because the proposed payment procedure relies on computerized

systems, it seems prudent to provide for a back-up plan to be triggered

in the event of a system failure or similar but less global

circumstances. The fail-safe plan incorporated into the proposed rule

provides that any institution that does not receive its quarterly

assessment invoice by the beginning of the month in which payment is

due is to promptly notify the FDIC. It is anticipated that, in most

cases, the FDIC would provide a duplicate invoice to the institution.

However, in the event that could not be done, the institution would, as

a preliminary matter, make its quarterly payment in the amount shown on

its assessment invoice for the preceding quarter. Any necessary

adjustments to that payment would be reflected on the next quarterly

invoice.

II. Mergers Resulting in the Termination of Insured Status

A. Assessment Base Adjustments

Proposed Sec. 327.6(a) sets forth the rules for computing

institutions' assessment bases when one institution (a seller)

transfers its deposits to one or more other institutions (buyers), and

then goes out of business. Transactions of this kind (transfers) can

take many forms: they include statutory mergers, consolidations,

statutory assumptions, and contractual arrangements in which buyers

purchase assets and assume deposits from a seller. Proposed

Sec. 327.6(a) would cover all such cases. But it would not cover cases

where the seller continues to survive (such as cases in which a seller

only sells some but not all of its branches). Nor would it cover cases

in which buyers assume deposits from the receivership for a failed

institution.

Sometimes the buyers complete a transfer (or related series of

transfers) in the first quarter of a semiannual period (January through

March, or July through September). In that case, the buyers assume all

the seller's deposits before the end of the quarter. The buyers report

the transferred deposits in their first-quarter reports of condition.

Under the proposed rule, the second-quarter payments made by the buyers

would be based (in part) on the transferred deposits.

But many transfers take place in the second quarter of a semiannual

period (April through June, or October through December). A seller

still has deposits at the end of the first quarter, and reports the

deposits in its first-quarter report of condition. Under the proposed

quarterly-payment schedule described herein, an institution continuing

in business would make a second-quarter payment based on these

deposits, and that payment would represent an installment on the

assessment for the upcoming semiannual period.

However, where a seller has gone out of business before the start

of the upcoming semiannual period, there may be a risk that neither the

seller nor the buyers would pay any assessments on these deposits under

the proposed quarterly-payment plan. The buyers would not have included

these deposits in their first-quarter reports of condition, and would

not have counted the deposits in their first-quarter assessment bases.

The net effect could be that neither the seller nor the buyers would

compensate the FDIC for insuring these deposits.

Proposed Sec. 327.6(a) would clarify the assessment obligation for

these transfers. Section 7 of the FDI Act says the FDIC must base an

institution's assessment on the probability that the appropriate

deposit insurance fund will incur a loss with respect to the

institution. Section 7 further specifies that the FDIC must take into

account the likely amount of any such loss. 12 U.S.C. 1817(b)(1).

Accordingly, proposed Sec. 327.6(a) would call for the buyers--the

institutions that would present a continuing insurance risk to the FDIC

for the deposits--to pay assessments that reflect that risk.

Proposed Sec. 327.6(a) would achieve this goal by adjusting the

buyers' assessment bases upward. The proposed rule would call for each

buyer's assessment base to be increased by that buyer's ``pro rata

share'' of the seller's first-quarter assessment base: that is, by the

ratio of the deposits that the buyer assumes from the seller to the

seller's total quarter-end deposits. The proposed regulation would

correspondingly reduce the seller's assessment base.3

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\3\This latter provision may seem superfluous. In virtually all

such cases the seller would cease to exist before the end of the

transfer period. Sometimes, however, a related series of transfers

could extend beyond the end of a semiannual period. In that case,

the seller would still be in existence at the start of the following

period. The seller would make a second-quarter payment based on its

first-quarter assessment base. Absent this latter provision, the

FDIC would in effect be assessing the same deposits twice.

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This formula is designed to be relatively simple, and to be

satisfactory for most cases. A seller generally transfers all its

deposits at the same time, even when several buyers assume the

deposits. In a few cases, a seller may transfer its deposits to several

buyers over an interval: but even then, the interval tends to be short,

and the seller tends to decline in size (if it changes in size at all).

The formula would function properly under these conditions.

But the formula would not, on its own, accommodate cases in which a

seller's volume of deposits increases between the end of the quarter

and the date of the transfer. In that event, the buyers would assume

more deposits than the seller reported in its report of condition. The

formula would cause the buyers' collective assessment bases to increase

by an amount greater than the seller's quarter-end assessment base.

Proposed Sec. 327.6(a) addresses this difficulty by putting a cap

on the aggregate amount by which the buyers' assessment bases could be

increased. The FDIC considers that it would be justified in collecting

an aggregate assessment based on the seller's quarter-end assessment

base, because the seller itself would pay such an assessment if the

seller remained in existence. But, by the same token, the FDIC would

not be justified in collecting an aggregate assessment based on a

higher amount.

Nor would the formula, on its own, accommodate more elaborate

deposit-transfer arrangements. For example, a buyer may be acting

merely as an intermediary, or a transfer may be only incidental to

other mergers or deposit-assumptions. In such cases, the formula might

not accurately reflect the likely amount of the loss that the buyer--or

the other institutions--ultimately pose to their insurance funds in the

upcoming period.

The FDIC does not believe it is possible to foresee all the special

situations that might arise in complex cases. Proposed Sec. 327.6(a)

accordingly would give the FDIC a limited flexibility to adjust a

buyer's or seller's assessment base. The proposed rule would specify

that the FDIC may use this authority only to bring an institution's

assessment base into line with the true magnitude of the likely amount

of the loss that the institution poses for the upcoming quarter--that

is, with the institution's true deposit-base at the beginning of that

quarter.

It must be emphasized that proposed Sec. 327.6(a) would only apply

to institutions that participate directly in a transfer (or related

series of such transactions), or that participate in transactions

directly related to such a transaction (for example, an institution

that assumes deposits from a buyer). Furthermore, the authority would

not mean that the FDIC could consider other risk factors--ones

unrelated to the volume of deposits transferred--in determining the

likely amount of the loss.

B. Examples

The following examples apply the proposed rule. For the sake of

convenience, amounts in the examples are rounded to the nearest

million.

Example 1--Partial transfer of deposits; transferor remains in

business. Institution A reported $100 million worth of deposits in

its report of condition as of December 31. On January 15,

Institution B agrees to acquire a branch office of Institution A

that held $5 million worth of deposits reported in Institution A's

December 31 report of condition. Institution A continues to be an

insured institution. Institution A's February 28 assessment invoice

that will be collected on March 30 will be based on the reported

$100 million worth of deposits, in accordance with normal

processing.

Institution A remains responsible for the assessment liability

on January 1 based on the December 31 report of condition. The

February invoice represents the second installment payment of the

January through June semiannual assessment period. The FDIC expects

that Institutions A and B may well have dealt with any question of

allocating the cost of the assessment premium. But Institution A

must still make the payment to the FDIC.

Example 2--Partial transfer of deposits; transferor remains in

business. Institution A reported $100 million worth of deposits in

its report of condition as of September 30. On October 1,

Institution B agrees to acquire a branch office of Institution A

that held $10 million worth of deposits reported in Institution A's

September 30 report of condition. Institution A continues to be an

insured institution. Institution A's November 30 assessment invoice

that will be collected on December 30 will be based on the $100

million worth of deposits, in accordance with normal processing.

Institution A remains responsible for the assessment liability

established on October 1 based on the September 30 report of

condition. The November invoice represents the first installment

payment for the next semiannual assessment period (January through

June). The FDIC expects that Institutions A and B may well have

dealt with any question of allocating the assessment premium. But

Institution A must still make the assessment payment to the FDIC.

Example 3--Transfer of deposits; transferor ceases to exist.

Institution A reported $100 million worth of deposits in its report

of condition as of September 30. Its assessment base (deposits less

deductions) is $90 million. On October 15, Institution A transfers

all its deposits to Institution B and goes out of business.

Institution A has only $98 million in deposits at the time of the

transfer. The FDIC will increase Institution B's September 30

assessment base to reflect its pro rata share of Institution A's

assessment base. That is, Institution B's assessment base will be

increased by $88 million, determined as follows: $98 million

deposits acquired divided by $100 million deposits reported by

Institution A on its September 30 report of condition multiplied by

$90 million assessment base (98/100 x $90 million), or $88

million. Institution B would receive credit for any assessment

payments attributable to the transferred deposits that have already

been made by Institution A.

Institution B's payment represents the first installment for the

January through June assessment period. The FDIC considers that the

deposits transferred in bulk to Institution B continue to pose a

risk to the insurance fund. Accordingly, it is appropriate to adjust

Institution B's assessment base to reflect that risk.

Example 4--Multiple transfers of deposits; transferor ceases to

exist. Institution A reported $100 million worth of deposits in its

report of condition as of September 30; its assessment base is $90

million. On October 15 it transfers $33 million of its deposits in

bulk to Institution B. Institution A then shrinks in size from $67

million to $50 million, and on November 30 transfers all its

remaining deposits to Institution C. The FDIC will increase the

September assessment bases of Institutions B and C by $30 million

and $45 million, respectively. The supporting calculation shows:

Institution B--$33 million in deposits acquired by Institution B

divided by $100 million deposits reported by Institution A on the

September report of condition multiplied by $90 million assessment

base of Institution A determined from the report of condition based

on September 30 report of condition; Institution C--$50 million in

deposits acquired from Institution A divided by $100 million

deposits reported by Institution A's September report of condition

multiplied by the $90 million assessment base of Institution A

determined from its report of condition.

The FDIC believes that the pro rata methodology presented

properly reflects the continued risk to the insurance fund presented

by the deposits transferred in bulk from Institution A to

Institutions B and C. The insurance fund will bear the cost of

deposits that are not transferred in bulk.

Example 5--Multiple transfers of deposits; transferor ceases to

exist. The circumstances presented in Example 4 remain constant for

this example, except that the deposits acquired by Institutions B

and C are $50 million and $60 million, respectively. In this

situation, the total deposits transferred exceed the deposits

reported in Institution A's September 30 report of condition. In

this case, each institution's pro rata share will be determined by

dividing the acquiring institution's acquired deposits by the total

deposits transferred in bulk from the disappearing institution in

that quarter. Thus, the September 30 assessment base of Institution

B would be increased by $41 million ($50 million deposits acquired

divided by $110 million total deposits transferred by Institution A

during that quarter multiplied by the $90 million of Institution A's

assessment base) and Institution C's September 30 assessment base

will be increased by $49 million ($60 million deposits acquired

divided by $110 million total deposits transferred during that

quarter multiplied by the $90 million assessment base of Institution

A).

Example 6--Resolution of a failed institution. Institution A

reported $100 million worth of deposits in its September 30 report

of condition. Institution A fails and is placed into receivership

effective October 1. The resolution of Institution A on October 1

includes the transfer of all deposits to Institution B. The

resolution of Institution A has presumptively taken into account the

assessment amount that would have been invoiced by the FDIC on

November 30 and collected on December 30. Institution B does not owe

any additional assessment for the deposits acquired from Institution

A.

The FDIC believes that the final resolution of the assets and

liabilities of the failed Institution A included and satisfied the

assessment amount to be invoiced and paid on the assessment base

determined from the September 30 report of condition.

C. Reports

The existing rule requires the seller to file a final certified

statement and gives the buyer the option--but does not impose the

duty--of making the filing on behalf of the seller. The proposed rule

would do away with final certified statements in the case of transfers,

on the ground that final certified statements would not be needed in

the new assessment plan. As a collateral but incidental matter, the

proposed rule would formally eliminate Form 6420/11.

Under the proposed rule, in order to determine the buyer's first-

quarter assessment base for use in computing its second-quarter

assessment payment, the FDIC would need to know the amount of deposits

that the buyer has assumed. The FDIC does not believe, however, that it

is necessary to set forth a formal reporting requirement in the

proposed regulation. The FDIC expects that the existing reports that

buyers must make to their primary supervisors would serve this purpose.

An institution's second-quarter payment would be due--in full, and

computed with reference to the institution's assessment base as

determined pursuant to proposed Sec. 327.6(a)(2)--on the regularly-

scheduled payment date. An institution that underpaid this assessment

would have to pay interest on the shortfall at the rate prescribed by

proposed Sec. 327.7 (``Payment of interest on assessment underpayments

and overpayments''). Accordingly, a buyer might well find it convenient

to estimate the deposits it planned to assume, and to relay the

estimate to the FDIC. If the payment exceeded the amount properly due,

the buyer would be entitled to an adjustment on its next payment for

the excess amount so paid (plus interest).

If the FDIC were to receive the estimates early enough, it could

use the information when preparing the invoice for the buyer's second-

quarter payment. If not, the FDIC could either send out a supplemental

invoice as soon as practicable reflecting the amendments to the buyer's

assessment base, or could make an appropriate adjustment to the buyer's

next assessment payment.

III. Deletion of References to Experience Factors

The FDIC's assessments regulations currently permit the use of

``experience factors'' in the computation of an institution's

assessment base, for the purpose of quantifying unposted debits and

credits. However, under the existing regulations, the use of experience

factors will no longer be permitted for assessments due after 1994.

Accordingly, the FDIC proposes to delete all references to experience

factors from the regulations.

IV. Paperwork Reduction Act

The proposed rule contains a revision to an existing collection of

information. The revision has been submitted to the Office of

Management and Budget (OMB) for review and approval pursuant to the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). Comments

regarding the accuracy of the burden estimate, and suggestions for

reducing the burden, should be addressed to the Office of Management

and Budget, Paperwork Reduction Project (3064-0057), Washington, DC

20503, with copies of such comments sent to Steven F. Hanft, Assistant

Executive Secretary (Administration), Federal Deposit Insurance

Corporation, room F-400, 550 17th St., NW., Washington, DC 20429.

At present, each insured depository institution is required to

compute its own semiannual assessment. Under the proposed rule,

assessments would be computed by the FDIC using information reported by

the institution in its quarterly reports of condition. The institution

would be required to certify its agreement with the assessment

computation shown on the certified statement form as received from the

FDIC or, alternatively, its agreement with that computation as amended

in a manner specified by the institution. It is expected that, prior to

certification, an institution would compare the information on the form

with its own records--which it collects and maintains for purposes of

filing its reports of condition--and, if necessary, indicate any

amendments. This process should constitute a substantially smaller

burden for the institution than preparing and reporting its own

assessment computation. The requirements concerning the certified

statement are found in Sec. 327.2 of the proposed rule.

The estimated annual reporting burden for the collection of

information requirement in this proposed rule is summarized as follows:

Approximate Number of Respondents: 13,400.

Number of Responses per Respondent: 2.

Total Approximate Annual Responses: 26,800.

Average Time per Response: 30 minutes.

Total Average Annual Burden Hours: 13,400.

V. Regulatory Flexibility Act

The Board hereby certifies that the proposed rule would not have a

significant economic impact on a substantial number of small entities

within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.).

Under the proposal, the FDIC would compute the assessment payments

due from each depository institution, a task currently required of the

institution. Thus, the proposal would reduce an existing burden.

Moreover, to the extent any burden would remain, the FDIC believes that

it would be proportionate to the size of the institution and,

accordingly, that the proposal would not have a disparate impact of the

nature contemplated by the Regulatory Flexibility Act.

VI. Request for Public Comment

The Board hereby requests comment on all aspects of the proposed

rule. The Board particularly invites comment on the proposal to collect

assessments by means of direct debits initiated by the FDIC and on the

impact of the quarterly collection of assessments on insured depository

institutions. Interested persons are invited to submit written comment

during a 60-day comment period.

Comments are not requested in this proceeding as to what measure--

whether total deposits or another measure--should be used as a basis

for determining an institution's assessment base. The Board expects to

seek public comment on that subject in the near future, in a separate

proceeding.

List of Subjects

12 CFR Part 304

Bank deposit insurance, Banks, banking, Freedom of information,

Reporting and recordkeeping requirements.

12 CFR Part 327

Assessments, Bank deposit insurance, Financing corporation, Savings

associations.

For the reasons stated in the preamble, the Board proposes to amend

12 CFR parts 304 and 327 as follows:

PART 304--FORMS, INSTRUCTIONS AND REPORTS

1. The authority citation for part 304 continues to read as

follows:

Authority: 5 U.S.C. 552; 12 U.S.C. 1817, 1818, 1819, 1820;

Public Law 102-242, 105 Stat. 2251 (12 U.S.C. 1817 note).

2. Section 304.3 is revised to read as follows:

Sec. 304.3 Certified statements.

The certified statements required to be filed by insured depository

institutions under the provisions of section 7 of the Federal Deposit

Insurance Act as amended (12 U.S.C. 1817) shall be filed in accordance

with part 327 of this chapter. The applicable forms are as follows:

(a) Form 6420/07: Certified Statement. Form 6420/07 shows the

computation of the semiannual assessment due to the Corporation from an

insured depository institution. As provided for in part 327 of this

chapter, the form will be furnished to insured depository institutions

by the Corporation twice each calendar year and the completed statement

must be returned to the Corporation by each institution, except that

newly insured institutions must submit their first certified statement

on Form 6420/10.

(b) Form 6420/10: First Certified Statement. Form 6420/10 shows the

computation of the semiannual assessment due to the Corporation from an

institution in the first semiannual period after the semiannual period

during which the institution becomes an insured depository institution,

as provided for in part 327 of this chapter.

Appendix A to Part 304--[Amended]

3. Appendix A to part 304 is amended by removing the entries for

FDIC 6400/01, Consolidated Statement Amending Certified Statements, and

FDIC 6420/11, Final Certified Statement.

PART 327--ASSESSMENTS

1. The table of contents for part 327 is revised to read as

follows:

Subpart A--In General

Sec.

327.1 Purpose and scope.

327.2 Certified statements.

327.3 Payment of semiannual assessments.

327.4 Annual assessment rate.

327.5 Assessment base.

327.6 Termination of insurance: Assessments, certified statements,

and notices to depositors.

327.7 Payment of interest on assessment underpayments and

overpayments.

327.8 Definitions.

327.9 Assessment rate schedules.

Subpart B--Insured Depository Institutions Participating in Section

5(d)(3) Transactions

327.31 Scope.

327.32 Computation and payment of assessment.

2. The authority citation for part 327 continues to read as

follows:

Authority: 12 U.S.C. 1441, 1441b, 1817-1819.

3. Section 327.2 is revised to read as follows:

Sec. 327.2 Certified statements.

(a) Required. Each insured depository institution shall file a

certified statement during each semiannual period.

(b) Time of filing. Certified statements for any semiannual period

must be filed no later than the second-quarterly payment date specified

in Sec. 327.3(d)(2). Certified statements postmarked on or before such

date are deemed to be timely filed.

(c) Form. The Corporation will provide to each insured depository

institution a certified statement form showing the amount and

computation of the institution's semiannual assessment. The president

of the insured depository institution, or such other officer as the

institution's board of directors or trustees may designate, shall

review the information shown on the form.

(d) Certification--(1) Form accepted. If such officer agrees that

to the best of his or her knowledge and belief the information shown on

the certified statement form is true, correct and complete and in

accordance with the Federal Deposit Insurance Act and the regulations

issued thereunder, the officer shall so certify.

(2) Form amended--(i) In general. If such officer determines that

to the best of his or her knowledge and belief the information shown on

the certified statement form is not true, correct and complete and in

accordance with the Federal Deposit Insurance Act and the regulations

issued thereunder, the officer shall make such amendments to the

information as he or she believes necessary. The officer shall certify

that to the best of his or her knowledge and belief the information

shown on the form, as so amended, is true, correct and complete and in

accordance with the Federal Deposit Insurance Act and the regulations

issued thereunder.

(ii) Request for revision. The certification and filing of an

amended form under paragraph (d)(2) of this section does not constitute

a request for revision by the Corporation of the information shown on

the form. Any such request to the Corporation for revision of the

information shown on the form shall be submitted separately from the

certified statement and in accordance with the provisions of

Sec. 327.3(h).

(iii) Rate multiplier. The rate multiplier shown on the certified

statement form shall be amended only if it is inconsistent with the

assessment risk classification assigned to the institution in writing

by the Corporation for the current semiannual period pursuant to

Sec. 327.4(a). Agreement with the rate multiplier shall not be deemed

to constitute agreement with the assessment risk classification

assigned.

Sec. 327.5 [Removed]

3a. Section 327.5 is removed.

Secs. 327.3 and 327.4 [Redesignated as Secs. 327.4 and 327.5]

4. Sections 327.3 and 327.4 are redesignated as Secs. 327.4 and

327.5, respectively, and a new Sec. 327.3 is added to read as follows:

Sec. 327.3 Payment of semiannual assessments.

(a) Required--(1) In general. Except as provided in paragraph (b)

of this section, each insured depository institution shall pay to the

Corporation, in two quarterly payments, a semiannual assessment

determined in accordance with this part 327.

(2) Notice of designated deposit account. For the purpose of making

such payments, each insured depository institution shall designate a

deposit account for direct debit by the Corporation. No later than 30

days prior to the next payment date specified in paragraphs (c)(2) and

(d)(2) of this section, each institution shall provide written notice

to the Corporation of the account designated, including all information

and authorizations needed by the Corporation for direct debit of the

account. After the initial notice of the designated account, no further

notice is required unless the institution designates a different

account for assessment debit by the Corporation, in which case the

requirements of the preceding sentence apply.

(b) Newly insured institutions. A newly insured institution shall

not be required to pay an assessment for the semiannual period during

which it becomes an insured institution. For the semiannual period

following the period during which it becomes an insured institution, it

shall pay its full semiannual assessment at the time and in the manner

provided for in paragraph (d) of this section, in an amount that is the

product of its assessment base for the prior semiannual period, as

provided for in Sec. 327.5(c), multiplied by one-half of the annual

assessment rate corresponding to the assessment risk classification

assigned to the institution pursuant to Sec. 327.4(a). For the purpose

of making such payment, the institution shall provide to the

Corporation no later than the payment date specified in paragraph

(d)(2) of this section the notice required by paragraph (a)(2) of this

section.

(c) First-quarterly payment--(1) Invoice. No later than 30 days

prior to the payment date specified in paragraph (c)(2) of this

section, the Corporation will provide to each insured depository

institution an invoice showing the amount of the assessment payment due

from the institution for the first quarter of the upcoming semiannual

period, and the computation of that amount. Subject to paragraph (g) of

this section and to subpart B of this part, the invoiced amount shall

be the product of the following: The assessment base of the institution

for the preceding September 30 (for the semiannual period beginning the

following January 1) or March 31 (for the semiannual period beginning

the following July 1) computed in accordance with Sec. 327.5;

multiplied by one-quarter of the annual assessment rate corresponding

to the assessment risk classification assigned to the institution

pursuant to Sec. 327.4(a).

(2) Payment date and manner. On December 30 (for the semiannual

period beginning the following January 1) and on June 30 (for the

semiannual period beginning the following July 1), the Corporation will

cause the amount stated in the applicable invoice to be directly

debited from the deposit account designated by the insured depository

institution for that purpose.

(d) Second-quarterly payment--(1) Invoice. No later than 30 days

prior to the payment date specified in paragraph (d)(2) of this

section, the Corporation will provide to each insured depository

institution an invoice showing the amount of the assessment payment due

from the institution for the second quarter of that semiannual period,

and the computation of that amount. Subject to paragraph (g) of this

section and to subpart B of this part, the invoiced amount shall be the

product of the following: The assessment base of the institution for

the preceding December 31 (for the semiannual period beginning the

following January 1) or June 30 (for the semiannual period beginning

the following July 1) computed in accordance with Sec. 327.5;

multiplied by one-quarter of the annual assessment rate corresponding

to the assessment risk classification assigned to the institution

pursuant to Sec. 327.4(a).

(2) Payment date and manner. On March 30 (for the semiannual period

beginning the preceding January 1) and on September 30 (for the

semiannual period beginning the preceding July 1), the Corporation will

cause the amount stated in the applicable invoice to be directly

debited from the deposit account designated by the insured depository

institution for that purpose.

(e) Necessary action, sufficient funding by institution. Each

insured depository institution shall take all actions necessary to

allow the Corporation to debit assessments from the institution's

designated deposit account and, prior to each payment date indicated in

paragraphs (c)(2) and (d)(2) of this section, shall ensure that funds

in an amount at least equal to the invoiced amount are available in the

designated account for direct debit by the Corporation. Failure to take

any such action or to provide such funding of the account shall be

deemed to constitute nonpayment of the assessment.

(f) Business days. If a payment date specified in paragraph (c) or

(d) of this section falls on a day that is not a business day, the

applicable date shall be the previous business day.

(g) Payment adjustments in succeeding quarters. The quarterly

assessment invoices provided by the Corporation may reflect adjustments

resulting from such factors as amendments to prior quarterly reports of

condition, retroactive revision of an institution's assessment risk

classification, and revisions of assessment computations for prior

quarters.

(h) Request for revision of computation of quarterly assessment

payment--(1) In general. An institution may submit a request for

revision of the computation of the institution's quarterly assessment

payment as shown on the quarterly invoice. Such revision may be

requested in the following circumstances:

(i) The institution disagrees with the computation of the

assessment base as stated on the invoice;

(ii) The institution determines that the rate multiplier applied by

the Corporation is inconsistent with the assessment risk classification

assigned to the institution in writing by the Corporation for the

semiannual period for which the payment is due; or

(iii) The institution believes that the invoice does not fully or

accurately reflect adjustments provided for in paragraph (g) of this

section.

(2) Inapplicability. This paragraph (h) is not applicable to

requests for review of an institution's assessment risk classification,

which are covered by Sec. 327.4(d).

(3) Requirements. Any such request for revision must be submitted

within 60 days of the date of the quarterly assessment invoice for

which revision is requested, except that requests for revision

resulting from detection by the institution of an error or omission for

which the institution files an amendment to its quarterly report of

condition must be submitted within 60 days of the filing date of the

amendment to the quarterly report of condition. The request for

revision shall be submitted to the Chief of the Assessment Operations

Section, and shall provide documentation sufficient to support the

revision sought by the institution. If additional information is

requested by the Corporation, such information shall be provided by the

institution within 21 days of the date of the Corporation's request for

additional information. Any institution submitting a timely request for

revision will receive written notice from the Corporation regarding the

outcome of its request. Upon completion of a review, the Chief

Financial Officer (or his or her designee) shall make a determination

as to whether the requested revision is warranted and shall promptly

notify the institution in writing of the determination.

(i) Assessment notice not received. Any institution that has not

received an assessment invoice for any quarterly payment by the

fifteenth day of the month in which the quarterly payment is due shall

promptly notify the Corporation. Failure to provide prompt notice to

the Corporation shall not affect the institution's obligation to make

full and timely assessment payment. Unless otherwise directed by the

Corporation, the institution shall preliminarily pay the amount shown

on its assessment invoice for the preceding quarter, subject to

subsequent correction.

5. Newly designated Sec. 327.4 is amended by revising the section

heading; removing paragraphs (a) through (c); redesignating paragraphs

(d), (f), and (g) as new paragraphs (g), (c), and (d), respectively;

removing the heading of paragraph (e); redesignating paragraphs (e)(1)

and (e)(2) as new paragraphs (a) and (b), respectively, and revising

them; revising newly designated paragraph (g); and redesignating

paragraphs (h) and (i) as new paragraphs (f) and (e), respectively, to

read as follows:

Sec. 327.4 Annual assessment rate.

(a) Assessment risk classification. For the purpose of determining

the annual assessment rate for BIF members under Sec. 327.9(a), and the

annual assessment rate for SAIF members under Sec. 327.9(c), each

insured depository institution will be assigned an ``assessment risk

classification''. Notice of the assessment risk classification

applicable to a particular semiannual period will be provided to the

institution with the first-quarterly invoice provided pursuant to

Sec. 327.3(c)(2). Each institution's assessment risk classification,

which will be composed of a group and a subgroup assignment, will be

based on the following capital and supervisory factors:

(1) Capital factors. Institutions will be assigned to one of the

following three capital groups on the basis of data reported in the

institution's Report of Income and Condition, Report of Assets and

Liabilities of U.S. Branches and Agencies of Foreign Banks, or Thrift

Financial Report containing the necessary capital data, for the report

date that is closest to the last day of the seventh month preceding the

current semiannual period.

(i) Well capitalized. For assessment risk classification purposes,

the short-form designation for this group is ``1''.

(A) Except as provided in paragraph (a)(1)(i)(B) of this section,

this group consists of institutions satisfying each of the following

capital ratio standards: Total risk-based ratio, 10.0 percent or

greater; Tier 1 risk-based ratio, 6.0 percent or greater; and Tier 1

leverage ratio, 5.0 percent or greater. New insured depository

institutions coming into existence after the report date specified in

paragraph (a)(1) of this section will be included in this group for the

first semiannual period for which they are required to pay assessments.

(B) For purposes of assessment risk classification, an insured

branch of a foreign bank will be deemed to be ``well capitalized'' if

the insured branch maintains the pledge of assets required under 12 CFR

346.19, and maintains the eligible assets prescribed under 12 CFR

346.20 at 108 percent or more of the average book value of the insured

branch's third-party liabilities for the quarter ending on the report

date specified in paragraph (a)(1) of this section.

(ii) Adequately capitalized. For assessment risk classification

purposes, the short-form designation for this group is ``2''.

(A) Except as provided in (a)(1)(ii)(B) of this section, this group

consists of institutions that do not satisfy the standards of ``well

capitalized'' under this paragraph but which satisfy each of the

following capital ratio standards: Total risk-based ratio, 8.0 percent

or greater; Tier 1 risk-based ratio, 4.0 percent or greater; and Tier 1

leverage ratio, 4.0 percent or greater.

(B) For purposes of assessment risk classification, an insured

branch of a foreign bank will be deemed to be ``adequately

capitalized'' if the insured branch:

(1) Maintains the pledge of assets required under 12 CFR 346.19;

(2) Maintains the eligible assets prescribed under 12 CFR 346.20 at

106 percent or more of the average book value of the insured branch's

third-party liabilities for the quarter ending on the report date

specified in paragraph (a)(1) of this section; and

(3) Does not meet the definition of a well capitalized insured

branch of a foreign bank.

(iii) Undercapitalized. For assessment risk classification

purposes, the short-form designation for this group is ``3''. This

group consists of institutions that do not qualify as either ``well

capitalized'' or ``adequately capitalized'' under paragraphs (a)(1) (i)

and (ii) of this section.

(2) Supervisory risk factors. Within its capital group, each

institution will be assigned to one of three subgroups based on the

Corporation's consideration of supervisory evaluations provided by the

institution's primary federal regulator. The supervisory evaluations

include the results of examination findings by the primary federal

regulator, as well as other information the primary federal regulator

determines to be relevant. In addition, the Corporation will take into

consideration such other information (such as state examination

findings, if appropriate) as it determines to be relevant to the

institution's financial condition and the risk posed to the BIF or

SAIF. Authority to set dates applicable to the determination of

supervisory subgroup assignments is delegated to the Corporation's

Director of the Division of Supervision (or his or her designee). The

three supervisory subgroups are:

(i) Subgroup ``A''. This subgroup consists of financially sound

institutions with only a few minor weaknesses;

(ii) Subgroup ``B''. This subgroup consists of institutions that

demonstrate weaknesses which, if not corrected, could result in

significant deterioration of the institution and increased risk of loss

to the BIF or SAIF; and

(iii) Subgroup ``C''. This subgroup consists of institutions that

pose a substantial probability of loss to the BIF or SAIF unless

effective corrective action is taken.

(b) Payment of assessment at rate assigned. Institutions shall make

timely payment of assessments based on the assessment risk

classification assigned in the notice provided to the institution

pursuant to paragraph (a) of this section. Timely payment is required

notwithstanding any request for review filed pursuant to paragraph (d)

of this section. An institution for which the assessment risk

classification cannot be determined prior to an invoice date specified

in Sec. 327.3 (c)(1) or (d)(1) shall preliminarily pay on that invoice

at the assessment rate applicable to the classification designated

``2A'' in the appropriate rate schedule set forth in Sec. 327.9. If

such institution is subsequently assigned for that semiannual period an

assessment risk classification other than that designated as ``2A'', or

if the classification assigned to an institution in the notice is

subsequently changed, any excess assessment paid by the institution

will be credited by the Corporation, with interest, and any additional

assessment owed shall be paid by the institution, with interest, in the

next quarterly assessment payment after such subsequent assignment or

change. Interest payable under this paragraph shall be determined in

accordance with Sec. 327.7.

* * * * *

(g) Lifeline accounts. Notwithstanding any other provision of this

part 327, the portion of an institution's assessment base that is

attributable to deposits in lifeline accounts pursuant to the Bank

Enterprise Act, 12 U.S.C. 1834, will be assessed at such rate as may be

established by the Corporation pursuant to 12 U.S.C. 1834 and section

7(b)(2)(H) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.

1817(b)(2)(H).

6. Newly designated Sec. 327.5 is amended by revising the section

heading, removing paragraph (a), redesignating paragraphs (b) and (c)

as new paragraphs (a) and (b), respectively, revising newly designated

paragraph (a) introductory text, revising newly designated paragraphs

(b)(1) introductory text and (b)(1)(ii), removing newly designated

paragraphs (b)(1)(iii) and (b)(1)(iv), and adding a new paragraph (c),

to read as follows:

Sec. 327.5 Assessment base.

(a) Computation of assessment base. Except as provided in paragraph

(c) of this section, the assessment base of an insured depository

institution for any date on which the institution is required to file a

quarterly report of condition shall be computed by:

* * * * *

(b) Methods of reporting unposted credits and unposted debits--(1)

Unposted credits. Each insured depository institution shall report

unposted credits in quarterly reports of condition for addition to the

assessment base in the following manner:

* * * * *

(ii) If the institution's records show the total actual amount of

unposted credits but do not segregate the amount as stated in paragraph

(b)(1)(i) of this section, the institution must report the total actual

amount of the unposted credits for addition to time and savings

deposits.

* * * * *

(c) Newly insured institutions. In the case of a newly insured

institution, the assessment base for the last date for which insured

depository institutions are required to file quarterly reports of

condition within the semiannual period in which the newly insured

institution became an insured institution shall be deemed to be its

assessment base for that semiannual period. If the institution has not

filed such a report by the due date for such reports from insured

depository institutions, it shall promptly provide to the Corporation

such information as the Corporation may require to prepare the

certified statement form for the institution for the current semiannual

period.

7. Section 327.6 is amended by revising the section heading and

paragraph (a) to read as follows:

Sec. 327.6 Termination of insurance: Assessments, certified

statements, and notices to depositors.

(a) Deposit transfers--(1) Assessment base computation. If a

deposit-transfer transaction occurs at any time in the second quarter

of the transfer period--

(i) Each acquiring institution's assessment base for the first

quarter of the transfer period (as computed pursuant to Sec. 327.5)

shall be increased by an amount equal to such institution's pro rata

share of the transferring institution's assessment base for such first

quarter; and

(ii) The transferring institution's assessment base for such first

quarter shall be reduced by an amount equal to the following product:

the transferring institution's assessment base for that quarter;

multiplied by the sum of the pro rata shares of all acquiring

institutions participating in deposit-transfer transactions occurring

during the second quarter of the transfer period.

(2) For purposes of paragraph (a)(1) of this section, the phrase

``pro rata share'' means a fraction the numerator of which is the

deposits assumed by an acquiring institution from the transferring

institution during the second quarter of the transfer period, and the

denominator of which is the total deposits of the transferring

institution as required to be reported in the quarterly report of

condition for the first quarter of the transfer period.

(3) Other assessment-base adjustments--(i) In general. The

Corporation may in its discretion make such adjustments to the

assessment base of an institution participating in a deposit-transfer

transaction, or in a related transaction, as may be necessary properly

to reflect the likely amount of the loss presented by the institution

to its insurance fund.

(ii) Limitation on adjustments. The total amount by which the

Corporation may increase the assessment bases of acquiring or other

institutions under paragraph (a)(2)(i) of this section shall not

exceed, in the aggregate, the transferring institution's assessment

base as reported in its quarterly report of condition for the first

quarter of the transfer period.

* * * * *

8. Section 327.7 is amended by revising the section heading and

paragraph (a), to read as follows:

Sec. 327.7 Payment of interest on assessment underpayments and

overpayments.

(a) Payment of interest--(1) Payment by institutions. Each insured

depository institution shall pay interest to the Corporation on any

underpayment of the institution's assessment.

(2) Payment by Corporation. The Corporation will pay interest to an

insured depository institution on any overpayment by the institution of

its assessment.

(3) Accrual of interest. Interest shall accrue under this section

from the day following the due date, as provided for in Sec. 327.3(c)

and (d), of the quarterly assessment amount that was overpaid or

underpaid, through the payment date applicable to the quarterly

assessment invoice on which adjustment is made by the Corporation for

the underpayment or overpayment, provided, however, that interest shall

not begin to accrue on any overpayment until the day following the date

such overpayment was received by the Corporation.

* * * * *

9. Section 327.8 is amended by revising paragraph (d)(2) and by

adding a new paragraph (h), to read as follows:

Sec. 327.8 Definitions.

* * * * *

(d) * * *

(2) Current semiannual period. The term current semiannual period

means, with respect to a certified statement or an assessment, the

semiannual period within which such certified statement is required to

be filed or for which such assessment is required to be paid.

* * * * *

(h) As used in Sec. 327.6, the following terms are given the

following meanings:

(1) Acquiring institution. The term acquiring institution means an

insured depository institution that assumes some or all of the deposits

of a transferring institution in a particular deposit-transfer

transaction.

(2) Transferring institution. The term transferring institution

means an insured depository institution the deposits of which are

assumed by an acquiring institution in a particular deposit-transfer

transaction.

(3) Deposit-transfer transaction. The term deposit-transfer

transaction means the assumption by one insured depository institution

of another insured depository institution's liability for deposits,

whether by way of merger, consolidation, or other statutory assumption,

or pursuant to contract, when the transferring institution's status as

an insured institution has terminated or is expected to terminate

either as a result of the particular deposit-transfer transaction or as

a result of a related series of such transactions. The term deposit-

transfer transaction does not refer to the assumption of liability for

deposits from the estate of a failed institution.

(4) Transfer period. The term transfer period means the semiannual

period, consisting of two calendar quarters, during which a deposit-

transfer transaction occurs.

Secs. 327.11 and 327.12 [Removed]

10. Sections 327.11 and 327.12 are removed.

Sec. 327.13 [Redesignated as Sec. 327.9]

11. Section 327.13 is redesignated as Sec. 327.9, transferred to

subpart A, and amended by revising the section heading, removing

paragraphs (a) and (b), redesignating paragraphs (c) and (d) as new

paragraphs (a) and (b), respectively, revising newly designated

paragraph (a), amending newly designated paragraph (b) by removing the

word ``assessment'' in the first sentence, and adding a new paragraph

(c) to read as follows:

Sec. 327.9 Assessment rate schedules.

(a) BIF members. Subject to Sec. 327.4(c), the annual assessment

rate for each BIF member other than a bank specified in Sec. 327.31(a)

shall be the rate designated in the following rate schedule applicable

to the assessment risk classification assigned by the Corporation under

Sec. 327.4(a) to that BIF member (the schedule utilizes the group and

subgroup designations specified in Sec. 327.4(a)):

Schedule

------------------------------------------------------------------------

Supervisory subgroup

Capital group -----------------------------

A B C

------------------------------------------------------------------------

1......................................... 23 26 29

2......................................... 26 29 30

3......................................... 29 30 31

------------------------------------------------------------------------

* * * * *

(c) SAIF members. Subject to Sec. 327.4(c), the annual assessment

rate for each SAIF member shall be the rate designated in the following

schedule applicable to the assessment risk classification assigned by

the Corporation under Sec. 327.4(a) to that SAIF member (the schedule

utilizes the group and subgroup designations specified in

Sec. 327.4(a).):

Schedule

------------------------------------------------------------------------

Supervisory subgroup

Capital group -----------------------------

A B C

------------------------------------------------------------------------

1......................................... 23 26 29

2......................................... 26 29 30

3......................................... 29 30 31

------------------------------------------------------------------------

Secs. 327.21-327.24 [Removed]

12. Sections 327.21, 327.22, 327.23, and 327.24 are removed.

Sec. 327.32 [Amended]

13. Section 327.32 is amended by removing paragraph (a) and

redesignating paragraphs (b) and (c) as new paragraphs (a) and (b),

respectively.

Sec. 327.33 [Removed]

14. Section 327.33 is removed.

15. Part 327 is amended by removing subparts B and C, redesignating

subpart D as new subpart B, and in the list below, for each section in

subpart A and newly designated subpart B, remove the reference

indicated in the middle column everywhere it appears and add the

reference indicated in the right column:

------------------------------------------------------------------------

Section Remove Add

------------------------------------------------------------------------

327.4(c)............... 327.13(c)(2)........... 327.9(a).

327.23(d)(2)........... 327.9(c).

327.4(d)............... (e)(1)................. (a).

327.4(e)............... (e)(1)................. (a).

327.5(a)(1)(i)......... (c)(1)................. (b)(1).

327.5(a)(1)(ii)........ (c)(1)................. (b)(1).

327.5(a)(2)(iii)....... (b)(1)(i).............. (a)(1)(i).

(c)(2)................. (b)(2).

327.5(a)(2)(iv)........ (b)(1)(ii)............. (a)(1)(ii).

(c)(2)................. (b)(2).

327.5(b)(2)............ (c)(1)................. (b)(1).

327.31(a).............. Subpart D.............. Subpart B.

327.31(b).............. Subpart D.............. Subpart B.

327.32(a)(1)(i)........ (b)(2)(i).............. (a)(2)(i).

(b)(2)(ii)............. (a)(2)(ii).

327.3.................. 327.4.

Subpart D.............. Subpart B.

327.32(a)(2)(i)........ (b)(l)(i).............. (a)(l)(i).

Subpart C.............. Subpart A.

327.32(a)(2)(ii)....... (b)(1)(i).............. (a)(1)(i).

Subpart B.............. Subpart A.

327.32(a)(3)........... (b)(3)(iii)............ (a)(3)(iii).

(b)(3)(i).............. (a)(3)(i).

(b)(3)(ii)............. (a)(3)(ii).

327.32(a)(4)........... (b)(3)(i).............. (a)(3)(i).

(b)(4)(ii)............. (a)(4)(ii).

327.32(a)(5)........... (b)(4)................. (a)(4).

327.32(b).............. Subpart D.............. Subpart B.

Subpart B.............. Subpart A.

------------------------------------------------------------------------

By order of the Board of Directors.

Dated at Washington, DC, this 24th day of May, 1994.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 94-13368 Filed 6-9-94; 8:45 am]

BILLING CODE 6714-01-P