Vol. 81 Thursday,
No. 23 February 4, 2016
Part II
Federal Deposit Insurance Corporation
12 CFR Part 327
Assessments; Proposed Rule
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asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
No. 23 February 4, 2016
Part II
Federal Deposit Insurance Corporation
12 CFR Part 327
Assessments; Proposed Rule
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asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
6108 Federal Register / Vol. 81, No. 23 / Thursday, February 4, 2016 / Proposed Rules
1 Subject to exceptions, an established insured
depository institution is one that has been federally
insured for at least five years as of the last day of
any quarter for which it is being assessed. 12 CFR
327.8(k).
2 See 80 FR 40838 (July 13, 2015).
3 A financial institution is assigned a CAMELS
composite rating based on an evaluation and rating
of six essential components of an institution’s
financial condition and operations. These
component factors address the adequacy of capital
(C), the quality of assets (A), the capability of
management (M), the quality and level of earnings
(E), the adequacy of liquidity (L), and the sensitivity
to market risk (S).
4 12 U.S.C. 1817(b). A ‘‘risk-based assessment
system’’ means a system for calculating an insured
depository institution’s assessment based on the
institution’s probability of causing a loss to the DIF
due to the composition and concentration of the
institution’s assets and liabilities, the likely amount
of any such loss, and the revenue needs of the DIF.
See 12 U.S.C. 1817(b)(1)(C).
5 See 80 FR at 40838 and 40842.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AE37
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice of proposed rulemaking
and request for comment.
SUMMARY: On July 13, 2015, the FDIC
published a notice of proposed
rulemaking in the Federal Register
proposing to amend 12 CFR part 327 to
refine the deposit insurance assessment
system for small insured depository
institutions that have been federally
insured for at least 5 years (established
small banks). In response to comments
received regarding the notice, the FDIC
is issuing this revised notice of
proposed rulemaking (revised NPR or
revised proposal) that would: Use a
brokered deposit ratio (that treats
reciprocal deposits the same as under
current regulations) as a measure in the
financial ratios method for calculating
assessment rates for established small
banks instead of the previously
proposed core deposit ratio; remove the
existing brokered deposit adjustment for
established small banks; and revise the
previously proposed one-year asset
growth measure.
The FDIC proposes that a final rule
would take effect the quarter after the
Deposit Insurance Fund (DIF) reserve
ratio has reached 1.15 percent (or the
first quarter after a final rule is adopted
that the rule can take effect, whichever
is later).
DATES: Comments must be received by
the FDIC no later than March 7, 2016.
ADDRESSES: You may submit comments
on the notice of proposed rulemaking
using any of the following methods:
• Agency Web site: http://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the agency Web site.
• Email: comments@fdic.gov. Include
RIN 3064–AE37 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: 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.
• Public Inspection: All comments
received, including any personal
information provided, will be posted
generally without change to http://
www.fdic.gov/regulations/laws/federal.
FOR FURTHER INFORMATION CONTACT:
Munsell St. Clair, Chief, Banking and
Regulatory Policy, Division of Insurance
and Research, 202–898–8967; Ashley
Mihalik, Senior Financial Economist,
Division of Insurance and Research,
202–898–3793; Nefretete Smith, Senior
Attorney, Legal Division, 202–898–
6851; Thomas Hearn, Counsel, Legal
Division, 202–898–6967.
SUPPLEMENTARY INFORMATION:
I. Background
The 2015 Notice of Proposed
Rulemaking
On June 16, 2015, the FDIC’s Board of
Directors (Board) authorized publication
of a notice of proposed rulemaking (the
2015 NPR) to refine the deposit
insurance assessment system for
established small banks (that is, small
banks other than new small banks and
insured branches of foreign banks).1 The
2015 NPR was published in the Federal
Register on July 13, 2015.2 In the 2015
NPR, the FDIC proposed to improve the
assessment system by: (1) Revising the
financial ratios method so that it would
be based on a statistical model
estimating the probability of failure over
three years; (2) updating the financial
measures used in the financial ratios
method consistent with the statistical
model; and (3) eliminating risk
categories for all established small
banks and using the financial ratios
method to determine assessment rates
for all such banks. CAMELS composite
ratings,3 however, would be used to
place a maximum on the assessment
rates that CAMELS composite 1- and 2-
rated banks can be charged and
minimums on the assessment rates that
CAMELS composite 3-, 4- and 5-rated
banks can be charged.
The FDIC received a total of 484
comment letters in response to the 2015
NPR. Of these, 45 were from trade
groups and 439 were from individuals
or banks. The majority of commenters
expressed concern regarding the
proposed treatment of reciprocal
deposits in the 2015 NPR.
The FDIC is issuing this revised NPR
in response to comments received
regarding the 2015 NPR. The broad
outline of this revised NPR remains the
same as the 2015 NPR, but this revised
NPR revises the proposal by: (1) Using
a brokered deposit ratio (that treats
reciprocal deposits the same as under
current regulations) as a measure in the
financial ratios method for calculating
assessment rates for established small
banks instead of the previously
proposed core deposit ratio; (2)
removing the existing brokered deposit
adjustment for established small banks;
(3) revising the previously proposed
one-year asset growth measure; (4) re-
estimating the statistical model
underlying the established small bank
deposit insurance assessment system;
(5) revising the uniform amount and
pricing multipliers used in the financial
ratios method; and (6) providing that
any future changes to the statistical
model underlying the established small
bank deposit insurance assessment
system would go through notice-and-
comment rulemaking.
The FDIC also received comments on
parts of the proposal in the 2015 NPR
that have not changed in this revised
NPR. These comments included
suggestions to more heavily weight
CAMELS supervisory ratings over
various financial ratios and to tailor the
loan mix index to individual banks, and
assertions that the proposed minimum
and maximum assessment rates are
inappropriate. The FDIC will consider
all comments submitted in response to
the 2015 NPR, as well as comments
submitted in response to this revised
NPR, in developing a final rule. Thus,
to reduce burden, those who submitted
a comment on the 2015 NPR need not
resubmit the comment for it to be
considered by the FDIC in developing
the final rule. Comments on any aspect
of this revised NPR, however, are
welcome.
Policy Objectives
The primary purpose of the proposed
rule, like the 2015 NPR, is to improve
the risk-based deposit insurance
assessment system applicable to small
banks to more accurately reflect risk.4
Additional discussion of the policy
objectives of the proposed rule can be
found in the 2015 NPR.5
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asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
1 Subject to exceptions, an established insured
depository institution is one that has been federally
insured for at least five years as of the last day of
any quarter for which it is being assessed. 12 CFR
327.8(k).
2 See 80 FR 40838 (July 13, 2015).
3 A financial institution is assigned a CAMELS
composite rating based on an evaluation and rating
of six essential components of an institution’s
financial condition and operations. These
component factors address the adequacy of capital
(C), the quality of assets (A), the capability of
management (M), the quality and level of earnings
(E), the adequacy of liquidity (L), and the sensitivity
to market risk (S).
4 12 U.S.C. 1817(b). A ‘‘risk-based assessment
system’’ means a system for calculating an insured
depository institution’s assessment based on the
institution’s probability of causing a loss to the DIF
due to the composition and concentration of the
institution’s assets and liabilities, the likely amount
of any such loss, and the revenue needs of the DIF.
See 12 U.S.C. 1817(b)(1)(C).
5 See 80 FR at 40838 and 40842.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AE37
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice of proposed rulemaking
and request for comment.
SUMMARY: On July 13, 2015, the FDIC
published a notice of proposed
rulemaking in the Federal Register
proposing to amend 12 CFR part 327 to
refine the deposit insurance assessment
system for small insured depository
institutions that have been federally
insured for at least 5 years (established
small banks). In response to comments
received regarding the notice, the FDIC
is issuing this revised notice of
proposed rulemaking (revised NPR or
revised proposal) that would: Use a
brokered deposit ratio (that treats
reciprocal deposits the same as under
current regulations) as a measure in the
financial ratios method for calculating
assessment rates for established small
banks instead of the previously
proposed core deposit ratio; remove the
existing brokered deposit adjustment for
established small banks; and revise the
previously proposed one-year asset
growth measure.
The FDIC proposes that a final rule
would take effect the quarter after the
Deposit Insurance Fund (DIF) reserve
ratio has reached 1.15 percent (or the
first quarter after a final rule is adopted
that the rule can take effect, whichever
is later).
DATES: Comments must be received by
the FDIC no later than March 7, 2016.
ADDRESSES: You may submit comments
on the notice of proposed rulemaking
using any of the following methods:
• Agency Web site: http://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the agency Web site.
• Email: comments@fdic.gov. Include
RIN 3064–AE37 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: 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.
• Public Inspection: All comments
received, including any personal
information provided, will be posted
generally without change to http://
www.fdic.gov/regulations/laws/federal.
FOR FURTHER INFORMATION CONTACT:
Munsell St. Clair, Chief, Banking and
Regulatory Policy, Division of Insurance
and Research, 202–898–8967; Ashley
Mihalik, Senior Financial Economist,
Division of Insurance and Research,
202–898–3793; Nefretete Smith, Senior
Attorney, Legal Division, 202–898–
6851; Thomas Hearn, Counsel, Legal
Division, 202–898–6967.
SUPPLEMENTARY INFORMATION:
I. Background
The 2015 Notice of Proposed
Rulemaking
On June 16, 2015, the FDIC’s Board of
Directors (Board) authorized publication
of a notice of proposed rulemaking (the
2015 NPR) to refine the deposit
insurance assessment system for
established small banks (that is, small
banks other than new small banks and
insured branches of foreign banks).1 The
2015 NPR was published in the Federal
Register on July 13, 2015.2 In the 2015
NPR, the FDIC proposed to improve the
assessment system by: (1) Revising the
financial ratios method so that it would
be based on a statistical model
estimating the probability of failure over
three years; (2) updating the financial
measures used in the financial ratios
method consistent with the statistical
model; and (3) eliminating risk
categories for all established small
banks and using the financial ratios
method to determine assessment rates
for all such banks. CAMELS composite
ratings,3 however, would be used to
place a maximum on the assessment
rates that CAMELS composite 1- and 2-
rated banks can be charged and
minimums on the assessment rates that
CAMELS composite 3-, 4- and 5-rated
banks can be charged.
The FDIC received a total of 484
comment letters in response to the 2015
NPR. Of these, 45 were from trade
groups and 439 were from individuals
or banks. The majority of commenters
expressed concern regarding the
proposed treatment of reciprocal
deposits in the 2015 NPR.
The FDIC is issuing this revised NPR
in response to comments received
regarding the 2015 NPR. The broad
outline of this revised NPR remains the
same as the 2015 NPR, but this revised
NPR revises the proposal by: (1) Using
a brokered deposit ratio (that treats
reciprocal deposits the same as under
current regulations) as a measure in the
financial ratios method for calculating
assessment rates for established small
banks instead of the previously
proposed core deposit ratio; (2)
removing the existing brokered deposit
adjustment for established small banks;
(3) revising the previously proposed
one-year asset growth measure; (4) re-
estimating the statistical model
underlying the established small bank
deposit insurance assessment system;
(5) revising the uniform amount and
pricing multipliers used in the financial
ratios method; and (6) providing that
any future changes to the statistical
model underlying the established small
bank deposit insurance assessment
system would go through notice-and-
comment rulemaking.
The FDIC also received comments on
parts of the proposal in the 2015 NPR
that have not changed in this revised
NPR. These comments included
suggestions to more heavily weight
CAMELS supervisory ratings over
various financial ratios and to tailor the
loan mix index to individual banks, and
assertions that the proposed minimum
and maximum assessment rates are
inappropriate. The FDIC will consider
all comments submitted in response to
the 2015 NPR, as well as comments
submitted in response to this revised
NPR, in developing a final rule. Thus,
to reduce burden, those who submitted
a comment on the 2015 NPR need not
resubmit the comment for it to be
considered by the FDIC in developing
the final rule. Comments on any aspect
of this revised NPR, however, are
welcome.
Policy Objectives
The primary purpose of the proposed
rule, like the 2015 NPR, is to improve
the risk-based deposit insurance
assessment system applicable to small
banks to more accurately reflect risk.4
Additional discussion of the policy
objectives of the proposed rule can be
found in the 2015 NPR.5
VerDate Sep<11>2014 18:14 Feb 03, 2016 Jkt 238001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\04FEP2.SGM 04FEP2
asabaliauskas on DSK5VPTVN1PROD with PROPOSALS