[Federal Register Volume 60, Number 189 (Friday, September 29, 1995)]
[Rules and Regulations]
[Pages 50400-50409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24245]



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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 327

RIN 3064-AB65


Assessments

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending 
its regulation on assessments in several ways.
    First, the FDIC is delaying the regular payment date for the first 
quarterly assessment payment that insured institutions must make for 
the first semiannual period of each year (first payment). The first 
payment has been due on December 30 of the prior year. The FDIC is 
changing the regular payment date to the January 2 (or the first 
business day thereafter). But at the same time, the FDIC is giving 
insured institutions the option of making the first payment on December 
30 (or the prior business day). The FDIC's purpose in making this pair 
of changes is to relieve certain institutions of the regulatory burden 
of having to make an extra assessment payment in 1995, while at the 
same time affording flexibility to other institutions to make such a 
payment if they should so desire.
    Second, the FDIC is giving insured institutions the option of 
paying double the amount of any quarterly payment, when the payment is 
made on a payment date (regular or alternate, as the case may be) that 
comes before the start of the quarter to which the payment pertains--
i.e., on the March, June, September, and December payment dates. The 
FDIC is adopting this change in response to a suggestion made by a 
commenter. The FDIC believes the change will promote greater 
flexibility in the assessment procedures.
    Third, the FDIC is replacing the interest rate to be applied to 
underpayments and overpayments of assessments with a new, more 
sensitive rate derived from the 3-month Treasury bill discount rate. 
Rates set under the prior standard have rapidly become obsolete in 
volatile interest-rate markets; the new standard is more sensitive to 
current market conditions.
    Finally, the FDIC is shortening the timetable for announcing a 
change in the assessment rate from 45 days to 15 days prior to the 
invoice date. This change enables the FDIC to use the most up-to-date 
information available for computing assessments, thereby benefiting 
both the FDIC and the depository institutions.

EFFECTIVE DATE: This rule is effective September 29, 1995, except the 
amendments to Sec. 327.7 are effective October 30, 1995.

FOR FURTHER INFORMATION CONTACT: Allan Long, Assistant Director, 
Treasury Branch, Division of Finance (703) 516-5559; Claude A. Rollin, 
Senior Counsel, 

[[Page 50401]]
Legal Division (202) 898-3985; or Jules Bernard, Counsel, Legal 
Division, (202) 898-3731; Federal Deposit Insurance Corporation, 
Washington, D. C. 20429.

SUPPLEMENTARY INFORMATION:

A. Background

1. The payment schedule

    On December 20, 1994, the FDIC adopted a new quarterly-collection 
procedure for collecting deposit insurance assessments. See 59 FR 67153 
(December 29, 1994). The quarterly-collection procedure became 
effective April 1, 1995: it applies to the second semiannual assessment 
period of 1995 (beginning July 1, 1995) and thereafter.
    The quarterly-collection procedure calls for the FDIC to collect 
assessment payments four times a year, by means of FDIC-originated 
direct debits through the Automated Clearing House network. Prior to 
the final rule adopted here, each payment to be made for a calendar 
quarter was due just prior to the start of that quarter.1 The 
payment for the first calendar quarter of a year (first payment)--the 
initial payment for the first semiannual period of the year--was due on 
the prior December 30. The other regular payment dates followed suit. 
The second-quarter payment was due on March 30. The payment for the 
third quarter--the initial payment for the second semiannual period of 
the year--was due on June 30. And the payment for the fourth quarter 
was due on September 30. (In every case, if the scheduled payment date 
fell on a holiday or a weekend, the payment was to be made by the 
previous business day.)

    \1\ Thirty days before each regular payment date, the FDIC 
provides to each institution an invoice showing the amount that the 
institution must pay. The FDIC prepares the invoice from data that 
the institution has reported in its report of condition for the 
previous quarter. See 12 CFR 327.3(c) & (d).
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    The FDIC published the quarterly-collection procedure as a proposed 
rule before adopting it. See 59 FR 29965 (June 10, 1994). The FDIC 
received 51 comment letters on the proposal.
    Two commenters pointed out that the quarterly-collection procedure 
would produce the so-called ``5 in 95'' anomaly. That is, institutions 
would pay their full semiannual assessment for the first semiannual 
period in 1995 in January, in accordance with the assessment 
regulations then in effect. Institutions would also pay both quarterly 
payments for the second semiannual period in 1995 (one at the end of 
June; the other at the end of September). Then institutions would make 
one more payment in 1995: the first payment for 1996. In effect, in 
1995 they would pay assessments for 5 quarters.
    The two commenters asked the FDIC to move the payment date for the 
first payment for 1996 from December 30, 1995, to January, 1996. In 
response, the FDIC looked into the issue further.
    The FDIC concluded, as a result of its inquiry, that the ``5 in 
95'' anomaly would have an adverse effect on relatively few 
institutions. The FDIC therefore decided to retain the December payment 
date. The FDIC recognized that the December 1995 payment date could 
present a one-time problem for some institutions. But the FDIC 
concluded that this situation was simply a by-product of the shift from 
a semiannual to a quarterly collection procedure, and would not involve 
an ``extra'' assessment payment. The FDIC further observed that this 
timing issue would adversely affect only institutions that use cash-
basis accounting. Finally, the FDIC pointed out that the commenters' 
recommended solution--moving the December payment date to January--
would not cure the problem if adopted only for a single year: the 
problem would recur in 1996. Curing the problem would require a 
permanent change in the December payment date. When the FDIC adopted 
the regulation in final form, the FDIC retained the December 30 payment 
date. See 59 FR 67153, 67157 ( December 29, 1994).
    Shortly after adopting the quarterly-collection procedure, however, 
the FDIC began to receive information suggesting that more institutions 
would be adversely affected by the December payment date than was 
initially thought. Moreover, the Independent Bankers Association of 
America (IBAA) issued a letter to the FDIC requesting the FDIC to 
reconsider the issue in light of the December payment date's effect on 
cash-basis institutions. The FDIC's Board of Directors viewed the 
IBAA's request as a ``petition for the amendment of a regulation'' 
within the meaning of the FDIC's policy statement ``Development and 
Review of FDIC Rules and Regulations,'' 2 FED. DEPOSIT INS. CORP. LAWS, 
REGULATIONS, RELATED ACTS 5057 (1984). The FDIC therefore proposed the 
rule that is here adopted in final form. 60 FR 40776 (August 10, 1995).
    The final rule moves the regular payment date for the first payment 
from December 30 of the prior year (or the preceding business day) to 
January 2 (or the next business day) of the current year. The final 
rule does not change the other regular payment dates.

2. Doubled Payments

    Prior to the final rule adopted here, the FDIC's regulations did 
not provide a standard method for institutions to pay amounts other 
than the regular quarterly payments.
    The final rule gives each institution the option of paying double 
the amount of a quarterly payment, if the payment is made on a payment 
date (regular or alternate, as the case may be) that comes prior to the 
start of the calendar quarter for which it is due. The final rule 
specifies the methodology for making doubled payments.

3. Interest on Underpaid and Overpaid Assessments

    The FDIC pays interest on amounts that insured institutions overpay 
on their assessments, and charges interest on amounts by which insured 
institutions underpay their assessments. The interest rate has been the 
same in either case: namely, the United States Treasury Department's 
current value of funds rate which is issued under the Treasury Fiscal 
Requirements Manual (TFRM rate) and published in the Federal Register. 
See 12 CFR 327.7(b).2

    \2\ The Treasury Fiscal Requirements Manual is now called the 
Treasury Financial Manual.
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    The TFRM rate is based on aged data, however, and quickly becomes 
obsolete in volatile interest-rate markets. For example, the rate set 
for January through June, 1995, was based on the average rate data from 
October, 1993, through September, 1994. The practical consequence is 
that the TFRM rate for the January-to-June period in 1995 was 3% per 
annum, when the actual market rate at that time was over 5% per annum.
    The FDIC is replacing the TFRM rate with a rate keyed to the 3-
month Treasury bill discount rate. The new rate takes effect on January 
1, 1996.

4. The Assessment-Schedule Notice

    Under the FDIC's regulations, the semiannual assessment rate 
schedule is announced in advance, along with the amount and basis for 
any adjustment to the rate schedule. Prior to the final rule adopted 
here, the announcement was to be made 45 days prior to the invoice 
date--that is, the date on which the FDIC issues assessment invoice 
notices to institutions--for the first quarter of the semiannual period 
to which the adjusted assessment schedule applies. 12 CFR 
327.9(b)(3)(ii).
    The final rule reduces the advance-notice period to 15 days. 

[[Page 50402]]


B. The Final Rule

1. Payment Dates for First Payments

a. The Regular Payment Date
    The final rule delays the first payment's regular payment date from 
December 30 of the prior year to January 2 of the current year (or, if 
January 2 is a holiday or weekend, the first business day thereafter). 
Every institution will ordinarily make its first payment on that date. 
In this regard, the final rule adopts the rule as proposed.
    The final rule is designed to protect cash-basis institutions 
against the adverse consequences of having to make an extra assessment 
payment during 1995. The remedy is necessarily a continuing one. 
Accordingly, the FDIC has changed the payment date permanently.
    The FDIC believes that the delay in the payment date confers a 
financial benefit to institutions, because they may earn additional 
interest on the funds they retain for the additional time. The FDIC 
does not consider that it is appropriate to give a benefit of this kind 
to some institutions but not others, however. Accordingly, the FDIC is 
changing the payment date for all institutions, not just for cash-basis 
institutions.
    The FDIC further believes that most institutions have already 
prepared to comply with the direct-debit procedures, and will suffer no 
procedural disadvantage from the delayed payment date. The FDIC will 
therefore follow the same procedures as before in collecting the first 
payment.
b. The Alternate Payment Date
    The FDIC recognizes, however, that some institutions may prefer the 
existing payment schedule, notwithstanding the fact that they will be 
making five payments during 1995. The final rule accommodates these 
institutions. The final rule provides that an institution may elect to 
pay its first payment for any year on an alternate payment date during 
the prior December. The final rule adopts the rule as proposed in this 
regard.
    The alternate payment date is December 30 of the prior year (or, if 
December 30 is a holiday or a weekend, the preceding business day). The 
FDIC will collect payments made on that date by electronically debiting 
institutions' accounts, just as the FDIC collects other quarterly 
assessment payments.
    In order to elect the December date, an institution must file a 
certification to that effect by the preceding November 1. The election 
is effective with respect to the first payment for the upcoming year, 
and remains in effect until terminated.
    The institution must complete a pre-printed form supplied by the 
FDIC to make the certification. The form will be available from the 
FDIC's Division of Finance. The institution's chief financial officer, 
or an officer designated by the institution's board of directors, must 
sign the form. An electing institution must certify that it will pay 
its first assessment on the alternate payment date.
    An institution may terminate its election of the December date in 
the same way as it makes the election: By certifying that it is 
terminating the election for an upcoming year. As in the case of the 
original election, the institution must use a pre-printed form supplied 
by the FDIC to make the certification, and must file the form by 
November 1 of the prior year. The institution will then revert to the 
regular payment schedule for the upcoming year and for all future 
years.
    An institution that terminates an election may make a new election 
at any time.
    The rule as proposed called for institutions to follow these 
procedures. The final rule adopts the rule as proposed in this regard.
    The FDIC will not pay interest on payments made prior to the 
regular payment date. If an institution elects the alternate payment 
date, or otherwise pays an assessment before the regular payment date 
for that payment, the FDIC will not pay interest on the amount that is 
ordinarily to be paid on the regular payment date.
    Of course, it is possible for an institution that makes its payment 
on the alternate payment date to pay an excess amount. The FDIC will 
pay interest on the excess amount, but not on the amount due for the 
quarterly payment. Furthermore, the FDIC will only pay such interest to 
the same extent as if the institution had made the excess payment on 
the regular payment date: That is, interest will not begin to run until 
the day after the regular payment date. Conversely, if an institution 
elects the alternate payment date, and underpays the amount due, the 
FDIC will only charge interest on the amount of the underpayment 
beginning on the day after the regular payment date.
    The proposed rule said that the FDIC would charge and pay interest 
in the manner described here. The final rule adopts the proposed rule 
in the regard.
    The FDIC believes that it is appropriate to allow the alternate 
payment option for two reasons. The FDIC recognizes that institutions 
that keep their books on an accrual basis are not materially harmed by 
having to pay five quarters' worth of assessments in 1995. (By the same 
token, these institutions are not materially harmed by delaying the 
payment date from December to January.) Some of these institutions may 
prefer to pay some or all of their first semiannual assessments on the 
alternate payment date for their own business reasons. The FDIC further 
recognizes that institutions may have arranged their affairs in the 
expectation that the first payment for 1996 will be due in 1995. The 
FDIC is providing the option of paying on the alternate payment date in 
order to enable these institutions to avoid unnecessary disruption and 
financial disadvantage.

2. Doubled Payments

    The proposed rule said that, when an institution elects the 
alternate payment date for the first payment, the institution may 
further elect to pay either the amount of the first payment or twice 
that amount. The final rule retains this point.
    One commenter suggested, however, that some institutions may want 
to make a doubled payment at the start of the second semiannual 
assessment period as well as at the start of the first one. The final 
rule accommodates this suggestion.
    The final rule says that, whenever an institution makes a payment 
on a payment date (regular or alternate, as the case may be) that comes 
before the start of the quarter for which the payment is due, the 
institution may make a doubled payment. In other words, institutions 
may make doubled payments on March 30, June 30, September 30, and 
December 30.
    The doubled-payment election would remain in effect from year to 
year until terminated, but only for the selected payment date. If an 
institution wished to make doubled payments for a second payment date, 
the institution would file another election with respect to the second 
date.
    The procedure enables institutions to make doubled payments at the 
start of either or both semiannual periods, as they choose. The 
procedure further gives an institution with a fiscal year that starts 
at the beginning of the second or fourth calendar quarter the option of 
making a doubled payment prior to that calendar quarter.
    The FDIC recognizes that cash-basis institutions may have fiscal 
years that do not coincide with the calendar year. The FDIC is adopting 
this option to give such institutions (and others) the flexibility to 
schedule their payments as they see fit for their own financial 
purposes. 

[[Page 50403]]

    A doubled payment represents an approximation of the amount due for 
two quarterly payments. The approximation is not intended to be exact. 
Growing institutions will ordinarily owe an additional amount on the 
next quarterly payment date; shrinking institutions will ordinarily 
receive a credit.
    Doubled payments are not regarded as ``overpayments.'' The FDIC 
will not pay interest on the extra amount so paid.
    The final rule differs from the proposed rule in that the procedure 
for electing the doubled-payment option is split off from the procedure 
for electing the alternate payment date. But the two procedures are 
substantially alike.
    An institution that wishes to pay a doubled amount must file a 
certification to that effect prior to the relevant regular payment 
date. For the first payment, the certification must be filed by the 
preceding November 1 (the same date as that for filing the 
certification for the alternate payment date). For the other quarterly 
payments, the certification must be filed by the first day of the month 
prior to the relevant regular payment date: i.e., February 1, May 1, 
August 1, and November 1, respectively. The doubled-payment election is 
effective with respect to the payment made on the relevant payment date 
and to all payment dates thereafter, until terminated.
    The institution must complete a pre-printed form supplied by the 
FDIC to make the certification. The form will be available from the 
FDIC's Division of Finance. The institution's chief financial officer, 
or an officer designated by the institution's board of directors, must 
sign the form. An electing institution must certify that it will pay 
the doubled amount on the relevant payment date.
    An institution may terminate its election of the doubled-payment 
option by certifying that it is terminating the election as of a 
particular payment date. The institution must use a pre-printed form 
supplied by the FDIC to make the certification, and must file the form 
by the prior February 1, May 1, August 1, or November 1, as 
appropriate. The institution will then pay the regular amount on the 
relevant payment date and thereafter.
    An institution that terminates the doubled-payment election may 
make a new election at any time. The new election is subject to the 
same deadline.

3. Interest on Underpaid and Overpaid Assessments

    The FDIC is replacing the interest rate that is applied to 
underpaid assessments and overpaid assessments. The previous rate was 
the TFRM rate (which is now 5.00% per annum), which is compounded 
annually. The FDIC is replacing this rate with a more market-sensitive 
rate: the coupon equivalent rate set on the 3-month Treasury bill at 
the last auction held by the U.S. Treasury Department before the start 
of each quarter. Interest will be compounded as of the first day of 
each subsequent quarter. Currently, this rate is 5.51% per annum (see 
below). The final rule adopts the rule as proposed in this regard.
    Interest begins to run on the day after the regular payment date 
and continues to run through the day on which the debt is paid. 12 CFR 
327.7(a)(3). The final rule changes the regular payment date for the 
first payment for 1996 to January 2. Accordingly, interest on any 
overpayments or underpayments due on that date will begin to run on 
January 3 (even if an institution has elected the alternate payment 
date).
    The next payment date is March 29 (March 30 being a Saturday). The 
FDIC will ordinarily collect or repay the full amount of the January 
overpayment or underpayment (plus interest) on that date by adjusting 
the payment then due. Accordingly, interest on the January overpayment 
or underpayment will run through March 29.
    The initial interest rate is the rate for the quarter for which 
(but not generally in which) the payment will be made. The payment date 
for the first quarter of 1996 is January 2, which falls within that 
quarter. But the payment dates for the second, third, and fourth 
calendar quarters are March 30, June 30, and September 30, respectively 
(and if the regular payment date falls on a weekend or holiday, the 
payment date is the preceding business day). Each of these payment 
dates falls in the quarter preceding the quarter for which the payment 
is due. Nevertheless, the initial interest rates on any underpayments 
or overpayments of payments due on these dates are the rates for the 
second, third, and fourth quarters, respectively.
    The final rule differs slightly from the proposed rule in setting 
the interval during which the appropriate interest rate will be 
applied. The proposed rule reset the rate at the end of each calendar 
quarter, thereby introducing needless complexity, especially when the 
payment date came after the end of the calendar quarter. The final rule 
uses the quarterly-collection cycle to set the structure for resetting 
the rate. The FDIC is making this change in order to simplify and 
clarify the interest-rate procedure.
    Under the final rule, the initial interest rate on an overpayment 
or underpayment applies to the amount in question beginning on the day 
after the regular payment date (but not the alternate payment date) and 
ending on the next regular payment date (but not the alternate payment 
date). The FDIC resets the rate on the day following that next regular 
payment date. If any portion of the overpayment or underpayment 
(including interest) remains outstanding at that time, the FDIC applies 
the new rate to the outstanding amount through the following regular 
payment date (or until the overpayment or underpayment is discharged, 
whichever comes first).
    If the rate had been in effect for the third quarter in 1995, the 
FDIC would have computed interest on an overpayment or underpayment of 
an amount due for that quarter as follows:

    The FDIC would have based the rate on the average rate for the 
3-month Treasury bill set at the June 26, 1995, auction (settling on 
June 29, 1995). On a bank discount rate basis (360-day year with no 
compounding), the auction resulted in a 5.35% average rate. This 
converts to a coupon equivalent rate of 5.51% according to the 
United States Treasury Department.
    June 30 is the payment date. On the following day (July 1) the 
FDIC would have begun to apply the 5.51% rate to overpayments or 
underpayments collected on June 30. The outstanding amount would 
ordinarily be repaid on the next collection day, which falls on 
September 29 (September 30 being a Saturday).
    A $1 million overpayment collected on June 30 and refunded on 
September 29 would have generated 91 days of interest: (91/366) X 
.0551 X $1,000,000 = $13,699.73.3

    \3\ The third calendar quarter in 1995 falls within the leap-
year cycle that begins on March 1, 1995, and ends on February 29, 
1996.

    The FDIC is adopting the three-month Treasury rate because it is a 
published rate that more closely (but not necessarily exactly) 
approximates the market value of funds both for the institution and for 
the FDIC. If an institution overpays its assessment, the FDIC will 
return to the institution the benefit that the institution would have 
been able to obtain by investing the excess amount. Conversely, if an 
institution underpays its assessment, the institution will have to 
restore to its fund--the Bank Insurance Fund (BIF) or the Savings 
Association Insurance Fund (SAIF)--the economic value of the interest 
that the fund would otherwise have earned.
    The FDIC will apply the new rate (and the quarterly compounding) 
prospectively, not retroactively. The FDIC will apply the new rate to 
quarterly payments due for the first quarter of 1996 and thereafter, 
and to 

[[Page 50404]]
any outstanding amounts owed to or by the FDIC on and after January 1, 
1996. For amounts owed to or by the FDIC during intervals prior to 
January 1, 1996, the FDIC will continue to apply the then-current TFRM 
rate (and the annual compounding) for those intervals.

4. The Assessment-Schedule Notice

    The FDIC's assessment regulation specifies that the FDIC must 
announce in advance the semiannual assessment rate schedule for BIF 
members, together with the amount and basis for any adjustment to the 
rate schedule. The FDIC must make the announcement 45 days before the 
invoice date for the first payment of the semiannual period. 12 CFR 
327.9(b)(3)(ii).
    The FDIC is amending this provision by reducing the advance-notice 
period to 15 days. The amendment was not proposed for comment, and is 
unrelated to the other amendments made by the final rule. The primary 
reason for this technical amendment is to enable the FDIC to use more 
current financial information to determine the assessment rate schedule 
for the upcoming semiannual period.
    Under the final rule, the announcement date for the first 
semiannual period moves from October 16 to November 15. The 
announcement date for the second semiannual period moves from April 15 
to May 15.
    When the FDIC adopted the 45-day advance notice period, the FDIC's 
primary concern was to assure that there would be ample time after the 
time the Board established an assessment rate schedule for the staff to 
provide and issue assessment invoices to insured institutions. When the 
Board issued the proposed and final rules on the BIF assessment 
regulation it assumed the invoice preparation process would take up to 
45 days.
    The FDIC's operating systems have improved, however. The FDIC now 
believes that the invoice preparation process can be completed within a 
15-day period. Reducing the advance-notice period from 45 days to 15 
days would create an opportunity for the FDIC to utilize additional 
information as it becomes available during the intervening 30 days. 
This information would include, but would not be limited to, the 
following:
     Updated fund balance information, which is calculated 
monthly.
     Updated market information, including financial-market 
data and economic conditions.
     Call Report data that reflect current revisions and 
corrections and, therefore, are more complete.
    A shortening of the timetable for announcing a change in assessment 
rates from 45 days to 15 days would provide the FDIC with additional 
information that could be used to determine the appropriate assessment 
rates for the upcoming semiannual assessment period. The FDIC could 
utilize the relevant information to arrive at a more informed judgment 
of the assessment rates necessary to maintain the BIF reserve ratio at 
the statutorily mandated Designated Reserve Ratio, and to set the 
``adjustment factor'' for changes in the assessment rate schedule.
    It must be recognized that the institutions themselves will still 
have 45 days' notice from the time the FDIC notifies them of the 
assessment rate schedule to the time the payment is due. 12 CFR 327.3. 
For example, the announcement notice for the payment due on January 1, 
will be provided no later than November 15.

C. Summary of Comments

    The FDIC's Board of Directors received comments for a period of 30 
days. The Board considered that the shorter comment period was 
necessary in order to implement the proposal within the available time-
frame.
    The FDIC received 15 comments on the proposed rule: eight from 
banks; five from bankers' associations; and two from bank holding 
companies.

1. Payment Dates for First Payments

a. The Regular Payment Date
    Seven banks, all five bankers' associations, and one holding 
company explicitly supported the January payment date.
    The remaining bank supported it implicitly. The bank did not 
address the January payment date. Instead, the bank called for 
equivalent changes to be made to the other payment dates: it said that 
the payment dates for the second, third, and fourth calendar quarters 
should each be moved to the start of those quarters. The FDIC believes 
that a change of this kind raises questions of its own that would need 
to be the subject of public comment. Accordingly, the FDIC is not 
adopting the suggestion at this time, but is taking the issue under 
advisement.
    The other holding company did not expressly comment on this matter. 
The holding company did not object to the January payment date. The 
holding company merely noted that it would probably elect the alternate 
payment date for its subsidiaries.
b. The Alternate Payment Date
    Five banks, all five bankers' associations, and one bank holding 
company explicitly supported the proposal to allow institutions to make 
their first payments on the alternate payment date.
    The bank holding company observed that it would have to file a 
certification for each of its insured institutions. The holding company 
did not ask the FDIC to alter the proposal on this point, and the FDIC 
has not done so. Nevertheless, the FDIC will take under advisement the 
issue of allowing bank holding companies to file the necessary 
certifications on behalf of their banking subsidiaries.
    One bankers' association remarked that the term ``prepayment''--
which was used in the proposed rule--might lead to adverse tax 
consequences, and suggested labeling the earlier payment as an 
``alternate payment.'' The FDIC has adopted this suggestion.
    One bank objected to the alternate payment date. The bank said it 
could not see why any financial institution would avail itself of the 
option. The bank further declared that banks would be required to 
choose the option, and the FDIC would be required to keep track of the 
choices, as well as contend with two payment schedules. The bank 
declared that the option would thereby create unnecessary work for both 
regulators and regulated institutions--and could even lead to the 
alternate payment date eventually becoming required once more. The FDIC 
does not consider, however, that the alternate payment date creates 
excessive work either for itself or for insured institutions. The FDIC 
further believes that many institutions may well take advantage of the 
alternate payment date, and that the benefits of this option far 
outweigh its costs.
    Two banks and one holding company did not address this issue.
    One bank and one bank holding company said the election should 
remain in effect until revoked. The rule as proposed so provided; the 
final rule does so as well.

2. Doubled Payments

    Four banks, three bankers' associations, and one bank holding 
company expressly supported the doubled-payment option.
    One bankers' association asked the FDIC to make the doubled-payment 
option available to institutions that make their first quarterly 
payment on the regular January payment date, and not merely to those 
that elect the alternate December payment date. The FDIC has considered 
this matter and has concluded that few or no institutions would want to 
make a doubled payment after the beginning of a calendar quarter. 

[[Page 50405]]
Accordingly, the FDIC believes that it is sufficient to offer the 
doubled-payment option for the December payment date.
    The same bankers' association suggested that the FDIC should offer 
the doubled-payment option for payments due in the second semiannual 
period too. The FDIC has adopted and expanded upon this suggestion, by 
making the doubled-payment option available on all payment dates 
(including the alternate payment date) that occur before the start of 
the quarter to which the payment applies.
    The other commenters did not focus on the doubled-payment issue.

3. Interest on Underpaid and Overpaid Assessments

    None of the commenters objected to the FDIC's proposal to cease 
using the TFRM rate.
    Five banks, two bankers' associations, and one bank holding company 
supported the FDIC's proposal to use the coupon equivalent rate on the 
3-month Treasury bill.
    Two banks, two bankers' associations, and one bank holding company 
did not address this point.
    One banker's association said that an appropriate interest rate 
should meet three criteria:

--The rate should have a neutral impact on business decisions;
--The rate should be reasonably stable; and
--The rate should be publicly available.

    The FDIC considers that the rate adopted in this final rule--
namely, the coupon equivalent rate set on the 3-month Treasury bill at 
the last auction held by the U.S. Treasury Department before the start 
of each quarter--meets these criteria.
    The bankers' association called upon the FDIC to use the Federal 
Funds rate averaged over the quarter of the overpayments and 
underpayments; one bank also called on the FDIC to adopt the Federal 
Funds rate. The bank said that the Federal Funds rate was the rate it 
would have received on the funds but for the overcharge. The bankers' 
association likewise said that the Federal Funds rate represents the 
true alternative cost of funds to insured institutions. The FDIC 
considers, however, that it is more appropriate to use the rate set at 
the Treasury auction because the FDIC invests its funds with the 
Treasury Department, and not in the Federal Funds market.
    The bankers' association pointed out that any mechanism for 
selecting a rate that is based on a single date can be subject to 
volatility. The bankers' association suggested that, as an alternative, 
the FDIC should consider using an average of the rates set in the last 
four weekly Treasury auctions prior to the start of a quarter. The 
bankers' association said the one-month average would produce a more 
stable, yet still current, market rate. The FDIC considers, however, 
that it is more appropriate to use the rate generated in the most 
recent Treasury auction because that rate more closely represents the 
rate in effect at the time the FDIC collects the overpayment or 
underpayment.

4. The Assessment-Schedule Notice

    The FDIC did not ask for comments on this amendment.

D. Effect on the Insurance Funds

1. Payment Dates for First Payments

a. The Regular Payment Date
    The shift in the payment date for first payments is not expected to 
have any substantial adverse impact on the insurance funds.
    In the case of the BIF, the maximum amount of the interest foregone 
as a result of delaying the collection is not expected to exceed 
$600,000. The actual amount of the foregone interest is likely to be 
considerably less, as many BIF members can be expected to take 
advantage of the alternate payment date. Accordingly, the FDIC 
considers that the BIF will not suffer any material harm by the loss of 
this revenue.
    In the case of the SAIF, the foregone interest is not expected to 
exceed $108,000. Here again, the actual amount is likely to be 
considerably less. While this sum is not insubstantial, the FDIC 
believes that its loss will not materially harm the SAIF under current 
conditions, and will not impede the SAIF's progress toward 
recapitalization.
b. The Alternate Payment Date
    The alternate payment date would benefit the funds. The funds would 
receive payments from institutions that elect this option several days 
before the funds would otherwise do so. The funds would therefore have 
the use of the money, without being obliged to pay interest.

2. Doubled Payments

    The doubled-payment option, like the alternate payment date, would 
benefit the funds. The funds would receive payments in advance, and 
would not be required to pay interest on them.

3. Interest on Underpaid and Overpaid Assessments

    The change from the TFRM rate to the new rate is not expected to 
have any material adverse impact on either the BIF or the SAIF. The net 
yearly amount routinely subject to the interest rate--that is, the net 
of the amounts that institutions routinely overpay, minus the amounts 
they routinely underpay--is approximately $2,000,000 per year in the 
aggregate for both funds.
    This amount represents a net overpayment. It is outstanding for 60 
days on average; accordingly, at the TFRM rate, the FDIC has ordinarily 
paid out a net annual amount of approximately $16,000 in interest. 
Under the new rate, the FDIC will pay out approximately $18,000 
yearly--for a net change to the funds of just $2,000.

4. The Assessment-Schedule Notice

    The change in the assessment-schedule notice would not affect the 
funds.

E. Assessment of the Reporting or Record-Keeping Requirements

1. Payment Dates for First Payments

a. The Regular Payment Date
    The final rule delays the payment date for the first payment of 
each year, without changing the procedures that institutions must 
follow in order to make that payment. The FDIC considers that, in this 
regard, the final rule's reporting or record-keeping requirements will 
be minimal.
b. The Alternate Payment Date
    The FDIC further believes that the burden of the one-time filing to 
elect the alternate payment date will be so small as to be immaterial. 
The final rule does not require the institution to retain the 
certification form, or to file a new certification each year, or to 
keep any other new records.

2. Doubled Payments

    In the same vein, the FDIC believes that the burden of the one-time 
filing to elect the doubled-payment option will be so small as to be 
immaterial. The final rule does not require the institution to retain 
the certification form, or to file a new certification each year, or to 
keep any other new records.

3. Interest on Underpaid and Overpaid Assessments

    The changes in the interest rate will have no effect on the 
reporting or record-keeping requirements of insured institutions.

4. The Assessment-Schedule Notice

    The change in the assessment-schedule notice would not affect the 
reporting or record-keeping requirements of insured institutions. 

[[Page 50406]]


F. Effect on Competition

    The regulation is not expected to have any effect on competition 
among insured depository institutions.

G. Relationship of the Regulation to Other Government Regulations

    The regulation is not expected to have any impact on other 
government regulations.

H. Cost-Benefit Analysis

1. Payment Dates for First Payments

a. The Regular Payment Date
    The FDIC believes that the January payment date will not impose any 
new costs on institutions. On the contrary, it will benefit them by 
allowing them to retain the use of their funds for an extra interval. 
The final rule will provide a special benefit to cash-basis 
institutions by eliminating an expense they will otherwise have 
sustained in 1995.
b. The Alternate Payment Date
    The alternate payment date will provide significant benefits. The 
FDIC believes that institutions will elect the alternate payment date 
only if doing so is advantageous to them. On the other hand, the only 
costs incurred by electing institutions are the costs of signing and 
submitting the certification. The FDIC considers that those costs are 
not likely to be material.

2. Doubled Payments

    In the same vein, institutions will elect the doubled-payment 
option only if doing so will provide a significant benefit to them. The 
only costs incurred by electing institutions are the costs of signing 
and submitting the certification, which are not likely to be material.

3. Interest on Underpaid and Overpaid Assessments

    The change from the TFRM rate to the new rate will likewise impose 
minimal costs on institutions. The net amount at issue will not be 
material in the aggregate. For any particular institution, the net 
effect of the change will be impossible to predict, because the 
relationship between the TFRM rate and the new rate varies from one 
interval to another.
    Accordingly, the FDIC believes that the benefits of the final rule 
will likely outweigh any costs it might impose.

4. The Assessment-Schedule Notice

    The change in the assessment-schedule notice does not impose any 
direct costs on insured institutions. Indirectly, the change is 
expected to provide a benefit to them, by reducing the likelihood of 
errors in the assessment process.

I. Other Approaches Considered

1. Retaining the Status Quo

a. The Payment Schedule
    The FDIC considered retaining the current schedule without change. 
As noted above, however, the FDIC recognizes that it was responsible 
for establishing the original December 1995 payment date. The FDIC 
further recognizes that cash-basis institutions--ones that keep their 
financial records and make their financial reports on a cash basis--
might be adversely affected if they were required to make a payment on 
that date. The FDIC believes that, if it can mitigate harm of this kind 
by modifying its regulations, it should make every effort to do so.
b. Interest on Underpaid and Overpaid Assessments
    The FDIC also considered retaining the TFRM rate without change. 
The FDIC believed, however, that the rigidities and delays inherent in 
the TFRM rate militate against retaining this interest-rate standard.

2. Alternative Proposal

a. The Payment Schedule
    The FDIC considered retaining the current payment schedule, while 
giving cash-basis institutions the option of electing to defer their 
first payment until January.
    This alternative proposal focused narrowly on the one-time 
disadvantage that cash-basis institutions will suffer in 1995, and 
aimed at protecting those institutions against that disadvantage. 
Accordingly, the alternative proposal did not offer the deferred-
payment option to non-cash-basis institutions, and did not offer the 
option to any institutions after 1995.
    Under the alternative proposal, institutions that exercised the 
option by November 1, 1995, would have made their first payment for 
1996 on the first business day following January 1, 1996, and would 
have continued thereafter to make the first payment on the first 
business day of the year. Institutions that failed to exercise the 
option by November 1, 1995, would have had to make all their payments 
according to the regular payment schedule.
    After an institution had made the election, the institution could 
have terminated the election--thereby reverting to the regular payment 
schedule--by so certifying to the FDIC in writing. For the termination 
to be effective for a given year, the institution would have had to 
provide the certification to that effect to the FDIC no later than 
November 1 of the prior year. The termination would have been 
permanent. The FDIC would not have charged interest on the delayed 
payments.
    The FDIC has chosen to issue the final rule, rather than the 
alternative proposal, for two reasons. The approach set forth in the 
final rule is more evenhanded: all institutions will have the benefit 
of the later payment date, and all will have an equal opportunity to 
earn additional interest on their funds. The final rule also provides 
greater flexibility to all institutions to plan the timing of their 
expenses.
b. Interest on Underpaid and Overpaid Assessments
    The FDIC also considered replacing the single TFRM rate with a pair 
of rates: namely, the composite yield at market of the BIF and SAIF 
portfolios, respectively. These rates would have been determined 
retrospectively, because they are generated by looking at the interest 
that the portfolios actually earned. For the second quarter of 1995, 
the rates would have been 5.70% for the BIF and 5.61% for the SAIF.
    The FDIC would have adopted the ``composite yield at market'' rate 
on the theory that such a rate would represent the FDIC's actual 
benefits (or costs) from the overcollection (or undercollection) of 
assessments. If an institution overpaid its assessment, the FDIC would 
have returned to the institution the full benefit that the FDIC had 
received from the overpayment. Conversely, if an institution underpaid 
its assessment, the institution would have restored to its fund the 
economic value of the interest the fund will otherwise have earned, 
making the fund whole.
    The FDIC has adopted the new rate, rather than the ``composite 
yield at market'' rate, for two reasons. First, the new rate is based 
on a published rate, not on proprietary information, and is easier for 
people in the private sector to determine. Second, the new rate is 
intended to approximate the market value of the funds--that is, the 
interest that an institution earned or may have earned by investing the 
funds--rather than the vagaries of the investment portfolios of the BIF 
and the SAIF.

J. Effective Dates

1. Payment Dates for First Payments

a. The Regular Payment Date
    The FDIC is making the change in the payment date for the first 
payment effective upon publication in the Federal Register. The Board 
of Directors 

[[Page 50407]]
has determined that the new payment schedule ``relieves a restriction'' 
within the meaning of 5 U.S.C. 553(d)(1), because it delays the date on 
which the FDIC regularly collects the first payments, and thereby 
allows institutions to retain their funds for an extra interval. The 
Board of Directors has further determined that there is ``good cause'' 
to make this aspect of the final rule effective upon adoption because 
institutions should have as much time as possible to adjust to the new 
collection schedule and to decide whether to take advantage of the 
election options provided by the final rule.
    The FDIC is making this revision to the payment schedule effective 
at once, rather than delaying the effective date for 30 days, see 5 
U.S.C. 553(d).
b. The Alternate Payment Date
    The Board of Directors has likewise determined that there is ``good 
cause'' to make the final rule effective upon adoption with respect to 
the availability of the alternate payment date because institutions 
should have as much time as possible to decide whether to take 
advantage of this option.
    The FDIC is also making this revision to the payment schedule 
effective at once, rather than delaying the effective date for 30 days, 
see 5 U.S.C. 553(d).

2. Doubled Payments

    The Board of Directors has determined that the doubled-payment 
option ``relieves a restriction'' within the meaning of 5 U.S.C. 
553(d)(1), because it gives institutions additional flexibility to 
arrange their financial affairs. In addition, the Board of Directors 
has determined that there is ``good cause'' to make the final rule 
effective upon adoption with respect to the doubled-payment option 
because institutions should have as much time as possible to decide 
whether to take advantage of this option.
    The FDIC is making this revision to the payment schedule effective 
at once, rather than delaying the effective date for 30 days, see 5 
U.S.C. 553(d).

3. Interest on Underpaid and Overpaid Assessments

    The FDIC is making the revision of the interest rate effective 30 
days after publication of the final rule in the Federal Register, in 
accordance with 5 U.S.C. 553(d).

4. The Assessment-Schedule Notice

    The FDIC considers that the decision to establish an advance-notice 
period--and, accordingly, the decision to shorten the period--is a rule 
of ``agency * * * practice'' within the meaning of the Administrative 
Procedure Act (5 U.S.C. 553), and that notice and comment are therefore 
not required. The advance-notice period is not required by statute. The 
FDIC has adopted the advance-notice period sua sponte, reflecting ``the 
FDIC's intent promptly to make public the basis for any Board decision 
to adjust the rate schedule.'' See 60 FR 42680, 42740.
    The FDIC designed the original advance-notice period with its own 
internal constraints in mind, and those constraints have changed. 
Accordingly, the Board of Directors has determined that there is good 
cause to shorten the advance-notice period without the notice and 
public participation that are ordinarily required by the Administrative 
Procedure Act.
    Furthermore, the Board of Directors has determined that good cause 
exists for waiving the customary 30-day delayed effective date. The 
FDIC has only recently made the determination that the BIF has 
recapitalized. The Board considers that it is particularly important 
that the revenue to be generated in the current assessment cycle will 
accurately reflect the current status of the BIF and the assessment 
bases of the institutions.
    The FDIC is therefore making this revision to the payment schedule 
effective at once, rather than delaying the effective date for 30 days, 
see 5 U.S.C. 553(d).

K. Paperwork Reduction Act

    The proposed rule would have provided that, if an institution 
selected the alternate payment date, the institution could then select 
the doubled-payment option as well. Because the two elections were 
linked, the FDIC developed a single form for them: the form for 
electing the alternate payment date also asked institutions to specify 
the amount they would pay.
    The FDIC was concerned that, by asking for this additional piece of 
information, the FDIC was engaging in the ``collection of information'' 
within the meaning of the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501 et seq.). Accordingly, the FDIC asked the Office of Management and 
Budget (OMB) to review the proposal and submitted the proposed form to 
OMB for approval. OMB has approved the collection of information and 
the form.
    The final rule does away with the need for OMB's review and 
approval, however. The final differs from the proposed rule by 
separating the procedure for selecting the alternate payment date from 
the procedure for selecting the doubled-payment option. Each procedure 
has its own form. Each form contains the appropriate certification and 
specifies the initial payment with respect to which the institution is 
making the election.
    An institution that signs a form does no more than identify itself. 
Self-identification in this manner does not constitute ``information'' 
within the meaning of the Paperwork Reduction Act.

L. Regulatory Flexibility Act

    The Board hereby certifies that the final rule will 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.) The final rule mitigates a cost incurred by certain smaller 
entities--namely, cash-basis depository institutions--that arises from 
the one-time shift from the semiannual assessment process to the new 
quarterly assessment schedule. The final rule further confers a benefit 
on all institutions (including smaller institutions) by allowing them 
to earn interest on their funds for an additional interval.
    To the extent that an institution might incur a cost in connection 
with preparing and submitting the paperwork necessary to make the 
election, the FDIC believes that the cost will be minimal, and will be 
far outweighed by the resulting benefit. In any case, each 
institution's decision to make the election is purely voluntary: The 
final rule does not compel an institution to accept any cost of this 
kind.

List of Subjects in 12 CFR Part 327

    Bank deposit insurance, Banks, Banking, Freedom of information, 
Reporting and recordkeeping requirements, Savings associations.

    For the reasons stated in the preamble, the Board of Directors of 
the FDIC is amending 12 CFR Part 327 as follows:

PART 327--ASSESSMENTS

    1. The authority citation for part 327 continues to read as 
follows:

    Authority: 12 U.S.C. 1441, 1441b, 1817-1819.
    2. Section 327.3 is amended by revising paragraphs (c)(2), (d)(2), 
(e), and (f) and by adding paragraphs (c)(3) and (j) to read as 
follows:


Sec. 327.3  Payment of semiannual assessments.

* * * * *
    (c) * * *
    (2) Payment date and manner. Except as provided in paragraphs 
(c)(3) and (j) 

[[Page 50408]]
of this section, the Corporation will cause the amount stated in the 
applicable invoice to be directly debited on the appropriate regular 
payment date from the deposit account designated by the insured 
depository institution for that purpose, as follows:
    (i) In the case of the first quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is January 2; 
and
    (ii) In the case of the first quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is the preceding 
June 30.
    (3) Alternate payment date.--(i) Election. An insured depository 
institution may elect to pay the first quarterly payment for a 
semiannual period that begins on January 1 of a current year on the 
alternate payment date. The alternate payment date is December 30 of 
the prior year.
    (ii) Certification. (A) In order to elect the alternate payment 
date with respect to a current semiannual period, an institution must 
so certify in writing in advance. In order for the election to be 
effective with respect to the current semiannual period, the 
Corporation must receive the certification no later than the prior 
November 1.
    (B) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (C) The election of the alternate payment date shall be effective 
with respect to the semiannual period specified in the certification 
and thereafter, until terminated.
    (iii) Termination. (A) An insured depository institution may 
terminate its election of the alternate payment date, and thereby 
revert to the regular payment date, by so certifying in writing to the 
Corporation in advance. In order for the termination to be effective 
for a current semiannual period, the Corporation must receive the 
termination certification no later than the prior November 1.
    (B) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as the 
institution's board of directors may designate for that purpose. The 
form shall be sent to the attention of the Chief of the Assessment 
Operations Section of the Corporation's Division of Finance. An 
institution may obtain the form from the Corporation's Division of 
Finance.
    (C) The termination shall be permanent, except that an institution 
that has terminated an election may make a new election under paragraph 
(c)(3)(i) of this section.
    (iv) Manner of payment. Except as provided in paragraph (j) of this 
section, if an insured depository institution elects the alternate 
payment date, the Corporation will cause the amount stated in the 
applicable invoice to be directly debited on the alternate payment date 
from the deposit account designated by the insured depository 
institution for that purpose.
    (d) Second-quarterly payment. * * *
    (2) Except as provided in paragraph (j) of this section, the 
Corporation will cause the amount stated in the applicable invoice to 
be directly debited on the appropriate regular payment date from the 
deposit account designated by the insured depository institution for 
that purpose, as follows:
    (i) In the case of the second quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is March 30; 
and
    (ii) In the case of the second quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is September 30.
    (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 insured depository 
institution's designated deposit account. Each insured depository 
institution shall, prior to each payment date indicated in paragraphs 
(c)(2), (c)(3)(i), and (d)(2) of this section, ensure that funds in an 
amount at least equal to the invoiced amount (or twice the invoiced 
amount if the insured depository institution has elected the doubled-
payment option pursuant to paragraph (j) of this section) 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)(2)(i) falls on a date that is not a business day, the applicable 
date shall be the following business day. If a payment date specified 
in paragraph (c)(1), (c)(2)(ii), (c)(3)(i), or (d)(2) of this section 
falls on a date that is not a business day, the applicable date shall 
be the previous business day.
* * * * *
    (j) Doubled-payment option.--(1) Election. In the case of a 
quarterly payment to be made on March 30, on June 30, on September 30, 
or on the alternate payment date, an insured depository institution may 
elect to pay twice the amount of such quarterly payment.
    (2) Certification. (i) In order to elect the doubled-payment option 
with respect to a selected payment date, an institution must so certify 
in writing to the Corporation in advance. In order for the election to 
be effective, the Corporation must receive the certification by the 
following dates: in the case of a quarterly payment to be made on March 
30, June 30, or September 30, the Corporation must receive the 
certification no later than the prior February 1, May 1, or August 1, 
respectively; in the case of a quarterly payment to be made on the 
alternate payment date, the Corporation must receive the certification 
by the prior November 1.
    (ii) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (iii) The election shall be effective with respect to the selected 
quarterly payment for the year specified in the certification and with 
respect to subsequent quarterly payments made on the selected payment 
date in subsequent years, until the election is terminated.
    (3) Termination. (i) An insured depository institution may 
terminate its election of the doubled-payment option for a selected 
payment date by so certifying in writing to the Corporation in advance. 
In order for the termination to be effective, the Corporation must 
receive the termination certification by the following dates: In the 
case of a quarterly payment to be made on March 30, June 30, or 
September 30, the Corporation must receive the termination 
certification no later than the prior February 1, May 1, or August 1, 
respectively; in the case of a quarterly payment to be made on the 
alternate payment date, the Corporation must receive the termination 
certification by the prior November 1.
    (ii) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as 

[[Page 50409]]
the institution's board of directors may designate for that purpose. 
The form shall be sent to the attention of the Chief of the Assessment 
Operations Section of the Corporation's Division of Finance. An 
institution may obtain the form from the Corporation's Division of 
Finance.
    (iii) The termination shall be permanent, except that an 
institution that has terminated its election of the doubled-payment 
option for a selected payment date may make a new election.
    (4) Manner of payment. If an insured depository institution elects 
the doubled-payment option for a selected payment date, the Corporation 
will cause an amount equal to twice the amount stated in the applicable 
invoice to be directly debited on the selected payment date from the 
deposit account designated by the insured depository institution for 
that purpose.
    3. Section 327.7 is amended by revising paragraphs (a)(2), (a)(3), 
and (b) and adding paragraph (c) to read as follows:


Sec. 327.7  Payment of interest on assessment underpayments and 
overpayments.

    (a) * * *
    (2) Payment by Corporation. (i) The Corporation will pay interest 
on any overpayment by the institution of its assessment.
    (ii) When an institution elects the alternate payment date pursuant 
to Sec. 327.3(c)(3), or otherwise pays an amount due on a regular 
payment date before that date, the payment of the invoiced amount prior 
to the regular payment date shall not be regarded as an overpayment of 
an assessment.
    (iii) When an institution elects the doubled-payment option 
pursuant to Sec. 327.3(j), the payment of any amount in excess of the 
invoiced amount shall not be regarded as an overpayment of an 
assessment.
    (3) Accrual of interest. (i) Interest on an amount owed to or by 
the Corporation for the underpayment or overpayment of an assessment 
shall accrue interest at the relevant interest rate.
    (ii) Interest on an amount specified in paragraph (a)(3)(i) of this 
section shall begin to accrue on the day following the regular payment 
date, as provided for in Sec. 327.3(c)(2) and (d)(2), for the amount so 
overpaid or underpaid, 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. Interest shall continue to 
accrue through the date on which the overpayment or underpayment 
(together with any interest thereon) is discharged.
    (iii) The relevant interest rate shall be redetermined for each 
quarterly assessment interval. A quarterly assessment interval begins 
on the day following a regular payment date, as specified in 
Sec. 327.3(c)(2) and (d)(2), and ends on the immediately following 
regular payment date.
    (b) Rates after the first payment date in 1996. (1) On and after 
January 3, 1996, the relevant interest rate for a quarterly assessment 
interval that includes the month of January, April, July, and October, 
respectively, is the coupon equivalent yield of the average discount 
rate set on the 3-month Treasury bill at the last auction held by the 
United States Treasury Department during the preceding December, March, 
June, and September, respectively.
    (2) The relevant interest rate for a quarterly assessment interval 
will apply to any amounts overpaid or underpaid on the payment date 
(whether regular or alternate) immediately prior to the beginning of 
the quarterly assessment interval. The relevant interest rate will also 
apply to any amounts owed for previous overpayments or underpayments 
(including any interest thereon) that remain outstanding, after any 
adjustments to such overpayments or underpayments have been made 
thereon, at the end of the regular payment date immediately prior to 
the beginning of the quarterly assessment interval.
    (c) Rates prior to the first payment date in 1996. Through January 
3, 1996--
    (1) The interest rate will be the United States Treasury 
Department's current value of funds rate which is issued under the 
Treasury Fiscal Requirements Manual (TFRM rate) and published in the 
Federal Register;
    (2) The interest will be calculated based on the rate issued under 
the TFRM for each applicable period and compounded annually;
    (3) For the initial year, the rate will be applied to the gross 
amount of the underpayment or overpayment; and
    (4) For each additional year or portion thereof, the rate will be 
applied to the net amount of the underpayment or overpayment after that 
amount has been reduced by the assessment credit, if any, for the year.
    4. Section 327.9 is amended by removing the number ``45'' in 
paragraph (b)(3)(ii) and adding in lieu thereof the number ``15''.

    By order of the Board of Directors.

    Dated at Washington, D.C. this 26th day of September, 1995.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 95-24245 Filed 9-28-95; 8:45 am]
BILLING CODE 6714-01-P