[Federal Register Volume 59, Number 111 (Friday, June 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13368]
[[Page Unknown]]
[Federal Register: June 10, 1994]
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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