[Federal Register Volume 85, Number 217 (Monday, November 9, 2020)]
[Rules and Regulations]
[Pages 71227-71228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23492]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 327

RIN 3064-AF64


Assessments; Corrections

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Correcting amendments.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is making 
technical amendments to its rules governing deposit insurance 
assessments in two places to conform regulatory text to the text that 
was adopted by the FDIC Board of Directors (FDIC Board). Due to 
publishing errors, incorrect text was printed in the Federal Register 
and the Code of Federal Regulations. The first amendment will conform 
the value of the weighted charge-off rate for loans secured by nonfarm 
nonresidential properties that appears in the FDIC's assessment 
regulations to the charge-off rate adopted by the FDIC Board. The 
second amendment will conform a footnote that defines two terms in the 
descriptions of the counterparty measures for purposes of deposit 
insurance assessments to the language adopted by the FDIC Board. The 
technical amendments will not affect assessments previously paid by 
insured depository institutions (IDIs) or assessments paid by IDIs in 
the future.

DATES: Effective November 9, 2020.

FOR FURTHER INFORMATION CONTACT: Daniel Hoople, Senior Financial 
Economist, Banking and Regulatory Policy Section, Division of Insurance 
and Research, (202) 898-3835, [email protected]; Nefretete Smith, 
Counsel, Legal Division, (202) 898-6851, [email protected].

SUPPLEMENTARY INFORMATION:

I. Technical Amendment Regarding the Loan Mix Index

    The FDIC assesses all IDIs \1\ an amount for deposit insurance 
equal to the institution's deposit insurance assessment base multiplied 
by its risk-based assessment rate.\2\ On May 20, 2016, the FDIC 
published a final rule (2016 final rule) that refined the deposit 
insurance assessment system for established small IDIs.\3\ Under the 
2016 final rule, one of the measures used to calculate the assessment 
rate of an established small IDI is the loan mix index, a measure of 
the extent to which an IDI's total assets include higher-risk 
categories of loans.
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    \1\ As used in this notice, the term ``insured depository 
institution'' has the same meaning as the definition used in Section 
3 of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 
1813(c)(2).
    \2\ See generally 12 CFR 327.3(b)(1).
    \3\ 81 FR 32179 (May 20, 2016).
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    This technical amendment corrects the historical weighted charge-
off rate for loans secured by nonfarm nonresidential properties, one of 
the categories of loans used in the loan mix index, that is currently 
published in the Code of Federal Regulations. Due to an inadvertent 
publishing error, the rate

[[Page 71228]]

that appeared in the Federal Register notice for the final rule on May 
20, 2016 (81 FR 32179), 0.7289274, differs from the historical weighted 
average industrywide charge-off rate that the FDIC Board adopted on 
April 26, 2016, and that the FDIC uses to calculate an IDI's loan mix 
index, 0.7286274, by three ten-thousandths of a percentage point. The 
technical amendment will not affect assessments previously paid by 
IDIs, or assessments paid by IDIs in the future, because the value for 
loans secured by nonfarm nonresidential properties that the FDIC uses 
to calculate the loan mix index is the value adopted by the FDIC Board 
in the 2016 final rule.

II. Technical Amendment Regarding Description of Scorecard Measures for 
Highly Complex Institutions

    In 2014, the FDIC published a final rule (2014 final rule) that, 
among other things, requires highly complex institutions--generally, 
those with at least $50 billion in total assets (or owned by a parent 
holding company with at least $500 billion in assets) or those defined 
as processing banks or trust companies--to measure counterparty 
exposure for deposit insurance assessment purposes using the Basel III 
standardized approach.\4\ Counterparty exposure is captured in two 
measures--the ratio of top 20 counterparty exposures to Tier 1 capital 
and reserves and the ratio of the largest counterparty exposure to Tier 
1 capital and reserves (collectively, the counterparty exposure 
measures)--which are used to determine a highly complex institution's 
assessment rate.
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    \4\ 79 FR 70427 (Nov. 26, 2014).
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    The 2014 final rule, among other things, revised footnote 2 in 
section VI., Description of Scorecard Measures, in appendix A to 
subpart A of the assessment regulations to define two terms--``secured 
financing transactions'' (SFTs) and ``default fund contribution''--used 
in the descriptions of the counterparty exposure measures. Due to an 
inadvertent publishing error, the revisions to the second footnote that 
were adopted by the FDIC Board on November 18, 2014, and published in 
the Federal Register on November 26, 2014, do not appear in the current 
version of the Code of Federal Regulations.
    This technical amendment replaces the footnote that appears in the 
Code of Federal Regulations with the version adopted by the FDIC Board 
in the 2014 final rule. The technical amendment will not affect 
assessments previously paid by IDIs, or assessments paid by IDIs in the 
future, because the definitions the FDIC uses to calculate the 
counterparty exposure measures are the definitions adopted by the FDIC 
Board in the 2014 final rule.

List of Subjects in 12 CFR Part 327

    Bank deposit insurance, Banks, Banking, Savings associations.

    For the reasons stated in the preamble, the FDIC makes the 
following correcting amendments to 12 CFR part 327:

PART 327--ASSESSMENTS

0
1. The authority citation for part 327 continues to read as follows:

    Authority: 12 U.S.C. 1813, 1815, 1817-19, 1821.


0
2. In Sec.  327.16, revise paragraph (a)(1)(ii)(B) to read as follows:


Sec.  327.16   Assessment pricing methods--beginning the first 
assessment period after June 30, 2016, where the reserve ratio of the 
DIF as of the end of the prior assessment period has reached or 
exceeded 1.15 percent.

    (a) * * *
    (1) * * *
    (ii) * * *
    (B) Definition of loan mix index. The Loan Mix Index assigns loans 
in an institution's loan portfolio to the categories of loans described 
in the following table. The Loan Mix Index is calculated by multiplying 
the ratio of an institution's amount of loans in a particular loan 
category to its total assets by the associated weighted average charge-
off rate for that loan category, and summing the products for all loan 
categories. The table gives the weighted average charge-off rate for 
each category of loan. The Loan Mix Index excludes credit card loans.

   Loan Mix Index Categories and Weighted Charge-Off Rate Percentages
------------------------------------------------------------------------
                                                             Weighted
                                                            charge-off
                                                          rate (percent)
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Construction & Development..............................       4.4965840
Commercial & Industrial.................................       1.5984506
Leases..................................................       1.4974551
Other Consumer..........................................       1.4559717
Real Estate Loans Residual..............................       1.0169338
Multifamily Residential.................................       0.8847597
Nonfarm Nonresidential..................................       0.7286274
1-4 Family Residential..................................       0.6973778
Loans to Depository Banks...............................       0.5760532
Agricultural Real Estate................................       0.2376712
Agriculture.............................................       0.2432737
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* * * * *

0
3. In appendix A to subpart A of part 327, revise footnote 2 of the 
table under the section ``VI. Description of Scorecard Measures,'' to 
read as follows:

Appendix A to Subpart A of Part 327--Method To Derive Pricing 
Multipliers and Uniform Amount

* * * * *

VI. Description of Scorecard Measures

* * * * *
    \1\ * * *
    \2\ SFTs include repurchase agreements, reverse repurchase 
agreements, security lending and borrowing, and margin lending 
transactions, where the value, of the transactions depends on market 
valuations and the transactions are often subject to margin 
agreements. The default fund contribution is the funds contributed 
or commitments made by a clearing member to a central counterparty's 
mutualized loss sharing arrangement. The other terms used in this 
description are as defined in 12 CFR part 324, subparts A and D, 
unless defined otherwise in 12 CFR part 327.
* * * * *

0
4. In part I of appendix E to subpart A of part 327, revise the table 
titled ``Loan Mix Index Categories and Weighted Charge-Off Rate 
Percentages'' to read as follows:

Appendix E to Subpart A of Part 327--Mitigating the Deposit Insurance 
Assessment Effect of Participation in the Money Market Mutual Fund 
Liquidity Facility, the Paycheck Protection Program Liquidity Facility, 
and the Paycheck Protection Program

* * * * *

   Loan Mix Index Categories and Weighted Charge-Off Rate Percentages
------------------------------------------------------------------------
                                                             Weighted
                                                            charge-off
                                                           rate percent
------------------------------------------------------------------------
Construction & Development..............................       4.4965840
Commercial & Industrial.................................       1.5984506
Leases..................................................       1.4974551
Other Consumer..........................................       1.4559717
Real Estate Loans Residual..............................       1.0169338
Multifamily Residential.................................       0.8847597
Nonfarm Nonresidential..................................       0.7286274
1-4 Family Residential..................................       0.6973778
Loans to Depository banks...............................       0.5760532
Agricultural Real Estate................................       0.2376712
Agriculture.............................................       0.2432737
------------------------------------------------------------------------

* * * * *

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on October 19, 2020.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2020-23492 Filed 11-6-20; 8:45 am]
BILLING CODE 6714-01-P