[Federal Register Volume 84, Number 192 (Thursday, October 3, 2019)]
[Proposed Rules]
[Pages 52826-52827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21322]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 327

RIN 3064-AF16


Assessments

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking; supplemental notice.

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SUMMARY: On September 4, 2019, the Federal Deposit Insurance 
Corporation (FDIC) issued a notice of proposed rulemaking with request 
for comments on proposed that would amend the deposit insurance 
assessment regulations that govern the use of small bank assessment 
credits (small bank credits) and one-time assessment credits (OTACs) by 
certain insured depository institutions (IDIs). The FDIC is 
supplementing that notice of proposed rulemaking with an updated 
regulatory flexibility analysis to reflect changes to the Small 
Business Administration's monetary-based size standards which were 
adjusted for inflation as of August 19, 2019.

DATES: Comments on the updated regulatory flexibility analysis must be 
received on or before November 4, 2019.

ADDRESSES: You may submit comments by any of the following methods:
     FDIC Website: https://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the agency 
website.
     Email: [email protected]. Include RIN 3064-AF16 on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington, DC 20429.
     Hand Delivery to FDIC: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street Building (located 
on F Street) on business days between 7 a.m. and 5 p.m.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Please include your name, affiliation, address, email address, and 
telephone number(s) in your comment. All statements received, including 
attachments and other supporting materials, are part of the public 
record and are subject to public disclosure. You should submit only 
information that you wish to make publicly available.
    Public Inspection: All comments received will be posted generally 
without change to https://www.fdic.gov/regulations/laws/federal/, 
including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ryan T. Singer, Chief, Regulatory 
Analysis Section, Division of Insurance and Research, (202) 898-7352, 
[email protected]; Jennifer M. Jones, Counsel, Legal Division, (202) 
898-6768, [email protected].

SUPPLEMENTARY INFORMATION: On September 4, 2019, the FDIC issued a 
notice of proposed rulemaking with request for comments on proposed 
that would amend the deposit insurance assessment regulations that 
govern the use of small bank credits and OTACs by certain IDIs. (See 84 
FR 45443 (August

[[Page 52827]]

29, 2019).) The FDIC is supplementing that notice of proposed 
rulemaking with an updated regulatory flexibility analysis to reflect 
changes to the Small Business Administration's monetary-based size 
standards which were adjusted for inflation as of August 19, 2019. (See 
84 FR 34261 (July 18, 2019).)

Updated Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
generally requires an agency, in connection with a proposed rule, to 
prepare and make available for public comment an initial regulatory 
flexibility analysis that describes the impact of a proposed rule on 
small entities.\1\ However, a regulatory flexibility analysis is not 
required if the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The Small Business Administration (SBA) has defined ``small entities'' 
to include banking organizations with total assets of less than or 
equal to $600 million.\2\ Generally, the FDIC considers a significant 
effect to be a quantified effect in excess of 5 percent of total annual 
salaries and benefits per institution, or 2.5 percent of total non-
interest expenses. The FDIC believes that effects in excess of these 
thresholds typically represent significant effects for FDIC-insured 
institutions. Certain types of rules, such as rules of particular 
applicability relating to rates or corporate or financial structures, 
or practices relating to such rates or structures, are expressly 
excluded from the definition of ``rule'' for purposes of the RFA.\3\ 
The proposed rule relates directly to the rates imposed on IDIs for 
deposit insurance and to the deposit insurance assessment system that 
measures risk and determines each established small bank's assessment 
rate and is, therefore, not subject to the RFA. Nonetheless, the FDIC 
is voluntarily presenting information in this RFA section.
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    \1\ 5 U.S.C. 601 et seq.
    \2\ The SBA defines a small banking organization as having $600 
million or less in assets, where ``a financial institution's assets 
are determined by averaging the assets reported on its four 
quarterly financial statements for the preceding year.'' See 13 CFR 
121.201 (as amended by 84 FR 34261, effective August 19, 2019). 
``SBA counts the receipts, employees, or other measure of size of 
the concern whose size is at issue and all of its domestic and 
foreign affiliates.'' See 13 CFR 121.103. Following these 
regulations, the FDIC uses a covered entity's affiliated and 
acquired assets, averaged over the preceding four quarters, to 
determine whether the covered entity is ``small'' for purposes of 
the RFA.
    \3\ 5 U.S.C. 601.
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    Based on quarterly regulatory report data as of March 31, 2019, the 
FDIC insures 5,371 depository institutions, of which 4,004 are defined 
as small entities by the terms of the RFA. Further, 4,001 RFA-defined 
small, FDIC-insured institutions have small bank credits totaling 
$183.7 million.
    As stated previously, the proposed rule eliminates the possibility 
that affected small, FDIC-insured institutions would begin receiving 
small bank credits in the quarter when the reserve ratio first reaches 
or exceeds 1.38 percent, but that these credits then would be suspended 
if the reserve ratio subsequently falls below 1.38 percent (but remains 
at least 1.35 percent). Therefore, the economic effect of this aspect 
of the proposed rule is a reduction in the potential future costs 
associated with a disruption of the type just described in the 
application of small bank credits by affected small, FDIC-insured 
institutions. It is difficult to accurately estimate the magnitude of 
this benefit to affected small, FDIC-insured institutions, because it 
depends, among other things, on future economic and financial 
conditions, the operational and financial management practices at 
affected small, FDIC-insured institutions, and the future levels of the 
reserve ratio. However, the FDIC believes the economic effects of the 
proposed rule are likely to be small, because an estimated 41 percent 
of the aggregate amount of small bank credits would be applied in the 
first quarter that the reserve ratio is at least 1.38 percent. Further, 
the FDIC estimates that 3,851 small, FDIC-insured institutions (or 96.3 
percent) would exhaust their individual shares of small bank credits 
within four assessment periods. Of the 150 small, FDIC-insured 
institutions that the FDIC estimates would have small bank credits that 
would last more than four quarters, 139 are expected to exhaust their 
individual shares after being applied for two additional assessment 
periods (i.e., after a total of six assessment periods of application), 
and four within four additional assessment periods of application 
(i.e., after a total of eight assessment periods), and seven will last 
more than eight quarters. Therefore, the dollar amount of remaining 
small bank credits declines substantially after the initial application 
of credits in the first quarter of use, reducing the effects of credit 
application being suspended due to a decrease in the reserve ratio. 
Additionally, recent history suggests a generally positive near-term 
outlook for the banking sector (implying lower costs to the DIF), 
therefore the probability of suspension of applying small bank credits 
is low, particularly in the near-term quarters.
    As stated previously, the proposed rule would require the FDIC to 
remit the outstanding balances of remaining OTACs in a lump-sum 
payment, in the next assessment period in which the reserve ratio is at 
least 1.35 percent, at the same time that the outstanding small bank 
credit balances are remitted. As of March 31, 2019, only two IDIs have 
outstanding OTACs, totaling approximately $300,000. However, both 
institutions are subsidiaries of large banking organizations and 
therefore do not qualify as small entities under the RFA. Therefore, 
this aspect of the proposed rule would not affect any small, FDIC-
insured institutions. The FDIC invites comments on all aspects of the 
supporting information provided in this RFA section. In particular, 
would this proposed rule have any significant effects on small entities 
that the FDIC has not identified?

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on September 26, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-21322 Filed 10-2-19; 8:45 am]
 BILLING CODE 6714-01-P