Assessments Final Rule
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FIL-8-2011
February 9, 2011
Final Rule: Deposit Insurance Assessment Base, Assessment Rate Adjustments,
Dividends, Assessment Rates, and Large Bank Pricing Methodology
The FDIC adopted the attached final rule relating to the deposit insurance assessment base,
assessment rate adjustments, deposit insurance assessment rates, dividends, and large bank
pricing methodology. Many of the changes were made as a result of provisions of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) signed into law on
July 21, 2010. A brief summary of the major provisions of the final rule follows. Except for
the future assessment rate schedules, all changes go into effect April 1, 2011.
Deposit Insurance Assessment Base
The base for deposit insurance assessment purposes is defined as average consolidated
total assets during the assessment period less average tangible equity capital during the
assessment period.
Average consolidated total assets are defined in the schedule of quarterly averages in the
Consolidated Reports of Condition and Income (Call Reports), using a daily averaging
method.
o Banks with less than $1 billion in assets (other than newly insured banks) may
report average weekly assets; these banks may opt to report daily averages on
a permanent basis.
Tangible equity capital is defined as Tier 1 capital and will be calculated monthly or, if
the IDI has less than $1 billion in assets, on an end-of-quarter basis.
Institutions that are parents of other insured institutions will report separately from
subsidiary depository institutions.
Banker’s banks and custodial banks may deduct low risk, liquid assets from their
assessment base.
o A banker’s bank for purposes of calculating deposit insurance assessments is
defined as that term is used in 12 U.S.C. 24.
Funds resulting from government capital infusion programs, FDIC stock
ownership, or employee compensation plan stock ownership do not disqualify a
bank from being a banker’s bank
nks and custodial banks may deduct low risk, liquid assets from their
assessment base.
o A banker’s bank for purposes of calculating deposit insurance assessments is
defined as that term is used in 12 U.S.C. 24.
Funds resulting from government capital infusion programs, FDIC stock
ownership, or employee compensation plan stock ownership do not disqualify a
bank from being a banker’s bank.
An institution that meets the definition of banker’s bank is required to certify to
that effect each quarter on its Call Report or Thrift Financial Report (TFR), or any
successor report.
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The assessment base for a banker’s bank excludes the average amount of reserve
balances passed through to the Federal Reserve, the average reserve balances held
at the Federal Reserve for its own account (including balances due from the
Federal Reserve), and the average amount of the institution’s federal funds sold,
but in no case can the amount excluded exceed the sum of the bank’s average
amount of total deposits of commercial banks and other depository institutions in
the United States and the average amount of its federal funds purchased.
o A custodial bank for purposes of calculating deposit insurance assessments is
defined in terms of total fiduciary and custody and safekeeping assets and
revenues.
The assessment base for a custodial bank excludes all 0 percent Basel risk-
weighted assets and 50 percent of 20 percent risk-weighted assets not to exceed
the total transaction account deposits linked to custody and safekeeping and
fiduciary assets.
Assessment Rate Adjustments
Unsecured debt adjustment. All institutions, except new institutions and insured branches
of foreign banks, are potentially subject to a reduction in assessment rates for unsecured
debt.
o The unsecured debt adjustment equals 40 basis points plus the initial base
assessment rate.
o The unsecured debt adjustment is capped at the lesser of 5 basis points or 50
percent of the IDI’s initial base assessment rate
stment. All institutions, except new institutions and insured branches
of foreign banks, are potentially subject to a reduction in assessment rates for unsecured
debt.
o The unsecured debt adjustment equals 40 basis points plus the initial base
assessment rate.
o The unsecured debt adjustment is capped at the lesser of 5 basis points or 50
percent of the IDI’s initial base assessment rate.
o Unsecured debt no longer includes Tier 1 capital.
Brokered deposit adjustment. All small IDIs in Risk Categories II, III, and IV, and all
large IDIs and highly complex IDIs that are less than well capitalized or have a CAMELS
composite rating of 3, 4, or 5, are potentially subject to an increase in assessment rates for
brokered deposits. For purposes of the brokered deposit adjustment, brokered deposits
include all brokered deposits.
o The brokered deposit adjustment is limited to those IDIs in which the ratio of
brokered deposits to domestic deposits is greater than 10 percent.
o The brokered deposit adjustment is calculated by multiplying 25 basis points
by the ratio of the difference between an IDI’s brokered deposits and 10
percent of its deposits to its assessment base.
o The maximum brokered deposit adjustment is 10 basis points.
Depository institution debt adjustment. All IDIs are potentially subject to an increase in
assessment rates for unsecured debt held that is issued by another IDI.
is calculated by multiplying 25 basis points
by the ratio of the difference between an IDI’s brokered deposits and 10
percent of its deposits to its assessment base.
o The maximum brokered deposit adjustment is 10 basis points.
Depository institution debt adjustment. All IDIs are potentially subject to an increase in
assessment rates for unsecured debt held that is issued by another IDI.
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o The depository institution debt adjustment equals 50 basis points of each
dollar of long-term, unsecured debt held as an asset by an IDI when that debt
was issued by another IDI, to the extent that all such debt exceeds 3 percent of
the IDI’s Tier 1 capital.
Assessment Rates and Dividends
The FDIC adopted a new rate schedule effective April 1, 2011.
The FDIC suspended dividends indefinitely; however, in lieu of dividends, and pursuant
to its authority to set risk-based assessments, the FDIC adopted progressively lower
assessment rate schedules that will take effect when the reserve ratio exceeds 1.15
percent, 2 percent, and 2.5 percent.
The following are the rate schedules adopted by the Board:
Initial and Total Base Assessment Rates*
(effective April 1, 2011)
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base
assessment rate
5–9
14
23
35
5–35
Unsecured debt
adjustment**
(4.5)–0
(5)–0
(5)–0
(5)–0
, and 2.5 percent.
The following are the rate schedules adopted by the Board:
Initial and Total Base Assessment Rates*
(effective April 1, 2011)
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base
assessment rate
5–9
14
23
35
5–35
Unsecured debt
adjustment**
(4.5)–0
(5)–0
(5)–0
(5)–0
(5)–0
Brokered deposit
adjustment
……
0–10
0–10
0–10
0–10
TOTAL BASE
ASSESSMENT
RATE
2.5–9
9-24
18-33
30-45
2.5–45
* Total base assessment rates do not include the depository institution debt adjustment.
**The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured
depository institution’s initial base assessment rate; thus for example, an insured depository institution with an
initial base assessment rate of 5 basis points will have a maximum unsecured debt adjustment of 2.5 basis points
and cannot have a total base assessment rate lower than 2.5 basis points.
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Initial and Total Base Assessment Rates*
Once the Reserve Ratio Reaches 1.15 Percent and the Reserve Ratio for the Immediately
Prior Assessment Period Is Less Than 2 Percent
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base
assessment rate
3–7
12
19
30
3–30
Unsecured debt
adjustment**
(3.5)–0
(5)–0
(5)–0
(5)–0
ssessment Rates*
Once the Reserve Ratio Reaches 1.15 Percent and the Reserve Ratio for the Immediately
Prior Assessment Period Is Less Than 2 Percent
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base
assessment rate
3–7
12
19
30
3–30
Unsecured debt
adjustment**
(3.5)–0
(5)–0
(5)–0
(5)–0
(5)–0
Brokered deposit
adjustment
……
0–10
0–10
0–10
0–10
TOTAL BASE
ASSESSMENT
RATE
1.5–7
7-22
14-29
25-40
1.5–40
* Total base assessment rates do not include the depository institution debt adjustment.
**The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured
depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an
initial base assessment rate of 3 basis points will have a maximum unsecured debt adjustment of 1.5 basis points
and cannot have a total base assessment rate lower than 1.5 basis points.
Initial and Total Base Assessment Rates*
If the Reserve Ratio for Prior Assessment Period Is Equal To Or Greater Than 2 Percent
and Less Than 2.5 Percent
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base
assessment rate
2–6
10
17
28
2–28
Unsecured debt
adjustment**
(3)–0
(5)–0
(5)–0
(5)–0
(5)–0
Brokered deposit
adjustment
……
0–10
0–10
0–10
0–10
TOTAL BASE
ASSESSMENT
RATE
1–6
5-20
12-27
23-38
1–38
* Total base assessment rates do not include the depository institution debt adjustment.
** The unsecured debt adjustment could not exceed the lesser of 5 basis points or 50 percent of an insured
depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an
initial assessment rate of 2 basis points will have a maximum unsecured debt adjustment of 1 basis point and
could not have a total base assessment rate lower than 1 basis point.
e unsecured debt adjustment could not exceed the lesser of 5 basis points or 50 percent of an insured
depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an
initial assessment rate of 2 basis points will have a maximum unsecured debt adjustment of 1 basis point and
could not have a total base assessment rate lower than 1 basis point.
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Initial and Total Base Assessment Rates*
If the Reserve Ratio For the Prior Assessment Period is Equal to or Greater than 2.5
Percent
Risk
Category I
Risk
Category
II
Risk
Category
III
Risk
Category
IV
Large and
Highly
Complex
Institutions
Initial base assessment
rate
1–5
9
15
25
1–25
Unsecured debt
adjustment**
(2.5)–0
(4.5)–0
(5)–0
(5)–0
(5)–0
Brokered deposit
adjustment
……
0–10
0–10
0–10
0–10
TOTAL BASE
ASSESSMENT RATE
0.5–5
4.5-19
10–25
20-35
0.5–35
* Total base assessment rates do not include the depository institution debt adjustment.
** The unsecured debt adjustment could not exceed the lesser of 5 basis points or 50 percent of an insured
depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an
initial assessment rate of 1 basis point will have a maximum unsecured debt adjustment of 0.5 basis points and
could not have a total base assessment rate lower than 0.5 basis points.
Large Bank Pricing
Risk categories and the use of long-term debt issuer ratings for large IDIs and large IDIs
that are structurally and operationally complex or that pose unique challenges and risk in
the case of failure (highly complex IDIs) have been eliminated.
A large IDI will continue to be defined as it currently is (generally, an IDI with at least
$10 billion in total assets)
s.
Large Bank Pricing
Risk categories and the use of long-term debt issuer ratings for large IDIs and large IDIs
that are structurally and operationally complex or that pose unique challenges and risk in
the case of failure (highly complex IDIs) have been eliminated.
A large IDI will continue to be defined as it currently is (generally, an IDI with at least
$10 billion in total assets).
In general, a highly complex IDI will be an IDI (other than a credit card bank) with more
than $50 billion in total assets that is controlled by a parent or intermediate parent
company with more than $500 billion in total assets or a processing bank or trust
company with at least $10 billion in total assets.
Scorecards. The FDIC will combine CAMELS ratings and certain financial measures
into two scorecards—one for most large IDIs and another for the remaining large, highly
complex IDIs.
o Each scorecard assesses risk measures to produce two scores—a performance
score and a loss severity score—that will be combined and converted to an
initial assessment rate.
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Performance Score. The performance score measures an IDI’s financial performance
and its ability to withstand stress.
Loss Severity Score. The loss severity score quantifies the relative magnitude of
potential losses to the FDIC in the event of an IDI’s failure.
Total Score. Once the performance and loss severity scores are calculated, these
scores will be converted to a total score.
o The scorecards that will be used for large IDIs and highly complex IDIs are shown in
the tables below.
Large bank adjustment. The FDIC will have the ability to adjust a large IDI’s (or highly
complex IDI’s) total score by a maximum of 15 points, up or down, based upon
significant risk factors that are not captured in the scorecard. The FDIC will use a process
similar to the current large bank adjustment to determine the amount of any adjustments.
o The FDIC will seek comment on updated guidelines on the large bank adjustment
process
the ability to adjust a large IDI’s (or highly
complex IDI’s) total score by a maximum of 15 points, up or down, based upon
significant risk factors that are not captured in the scorecard. The FDIC will use a process
similar to the current large bank adjustment to determine the amount of any adjustments.
o The FDIC will seek comment on updated guidelines on the large bank adjustment
process. The FDIC will not adjust assessment rates until the updated guidelines are
approved by the FDIC Board of Directors.
Initial base assessment rate. A large IDI (or highly complex IDI) with a total score of 30
or less will pay the minimum base assessment rate, and an IDI with a total score of 90 or
more will pay the maximum initial base assessment rate. For total scores between 30 and
90, initial base assessment rates will rise at an increasing rate as the total score increases.
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Scorecard for Large Institutions
Scorecard Measures and Components
Measure
Weights
Component
Weights
P
Performance Score
P.1
Weighted Average CAMELS Rating
100%
30%
P.2
Ability to Withstand Asset-Related Stress:
50%
Tier 1 Leverage Ratio
10%
Concentration Measure
35%
Core Earnings/Average Quarter-End Total Assets*
20%
Credit Quality Measure
35%
P.3
Ability to Withstand Funding-Related Stress:
20%
Core Deposits/Total Liabilities
60%
Balance Sheet Liquidity Ratio
40%
L
Loss Severity Score
L.1
Loss Severity Measure
100%
* Average of five quarter-end total assets (most recent and four prior quarters)
0%
Concentration Measure
35%
Core Earnings/Average Quarter-End Total Assets*
20%
Credit Quality Measure
35%
P.3
Ability to Withstand Funding-Related Stress:
20%
Core Deposits/Total Liabilities
60%
Balance Sheet Liquidity Ratio
40%
L
Loss Severity Score
L.1
Loss Severity Measure
100%
* Average of five quarter-end total assets (most recent and four prior quarters)
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Scorecard for Highly Complex Institutions
Measures and Components
Measure
Weights
Component
Weights
P
Performance Score
P.1
Weighted Average CAMELS Rating
100%
30%
P.2
Ability to Withstand Asset-Related Stress:
50%
Tier 1 Leverage Ratio
10%
Concentration Measure
35%
Core Earnings/Average Quarter-End Total Assets
20%
Credit Quality Measure and Market Risk Measure
35%
P.3
Ability to Withstand Funding-Related Stress:
20%
Core Deposits/Total Liabilities
50%
Balance Sheet Liquidity Ratio
30%
Average Short-Term Funding/Average Total Assets
20%
L
Loss Severity Score
L.1
Loss Severity Measure
100%
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