Financial Institution Letter
FIL-85-2007
September 26, 2007
DEPOSIT INSURANCE ASSESSMENTS
Advance Notice of Proposed Rulemaking on Dividends
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC Board of Directors has approved the attached Advance Notice of Proposed
Rulemaking (ANPR). The ANPR seeks comments on alternative methods for allocating dividends as
part of a final rule to implement the dividend requirements of the Federal Deposit Insurance Reform Act
of 2005 (Reform Act) and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005
(Amendments Act). The final rule will replace the existing FDIC regulation on dividends, which will
expire on December 31, 2008. Comments are due by November 19, 2007.
Distribution:
All FDIC-Insured Institutions
Suggested Routing:
Chief Executive Officer
President
Chief Financial Officer
Related Topics:
FDIC Temporary Final Rule on Assessment
Dividends, 12 CFR 327, Subpart C; FDIC One-
Time Assessment Credit Regulations,
12 CFR 327, Subpart B; FDIC Assessment
Dividend Regulations, 12 CFR 327, Subpart C;
FDIC Operational Regulations Governing the
Assessment Process, 12 CFR 327.1 to 327.8
Attachment:
Advance Notice of Proposed Rulemaking
Contacts:
Munsell W. St. Clair, Senior Policy Analyst, Division
of Insurance and Research, (202) 898-8967;
Missy Craig, Senior Program Analyst, Division of
Insurance and Research, (202) 898-8724; or
Joseph A. DiNuzzo, Counsel, Legal Division,
(202) 898-7349. E-mail: assessments@fdic.gov
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2007/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained through the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).
Highlights:
• The ANPR presents two general approaches to
allocating dividends -- the fund balance method
and the payments method.
• The two allocation methods potentially differ in the
way they balance two factors -- institutions’ relative
assessment bases as of the end of 1996 and
assessments paid after 1996 -- as well as the way
the balance changes over time. Thus, the
allocation methods potentially differ in the way they
treat older institutions (with relatively large
assessment bases at the end of 1996) versus
newer institutions (with little or no assessment
bases at the end of 1996). The fund balance
method implicitly balances these two factors. The
payments method can be structured to balance
these factors in different ways.
• The ANPR also seeks comment on the extent to
which the dividend allocation system should
reinforce the risk incentives of the risk-based
assessment system by taking into account the
portion of an institution’s assessment that
represents higher risk.
• Comments are due by November 19, 2007.
FIL-85-2007
September 26, 2007
DEPOSIT INSURANCE ASSESSMENTS
Advance Notice of Proposed Rulemaking on Dividends
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC Board of Directors has approved the attached Advance Notice of Proposed
Rulemaking (ANPR). The ANPR seeks comments on alternative methods for allocating dividends as
part of a final rule to implement the dividend requirements of the Federal Deposit Insurance Reform Act
of 2005 (Reform Act) and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005
(Amendments Act). The final rule will replace the existing FDIC regulation on dividends, which will
expire on December 31, 2008. Comments are due by November 19, 2007.
Distribution:
All FDIC-Insured Institutions
Suggested Routing:
Chief Executive Officer
President
Chief Financial Officer
Related Topics:
FDIC Temporary Final Rule on Assessment
Dividends, 12 CFR 327, Subpart C; FDIC One-
Time Assessment Credit Regulations,
12 CFR 327, Subpart B; FDIC Assessment
Dividend Regulations, 12 CFR 327, Subpart C;
FDIC Operational Regulations Governing the
Assessment Process, 12 CFR 327.1 to 327.8
Attachment:
Advance Notice of Proposed Rulemaking
Contacts:
Munsell W. St. Clair, Senior Policy Analyst, Division
of Insurance and Research, (202) 898-8967;
Missy Craig, Senior Program Analyst, Division of
Insurance and Research, (202) 898-8724; or
Joseph A. DiNuzzo, Counsel, Legal Division,
(202) 898-7349. E-mail: assessments@fdic.gov
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2007/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained through the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).
Highlights:
• The ANPR presents two general approaches to
allocating dividends -- the fund balance method
and the payments method.
• The two allocation methods potentially differ in the
way they balance two factors -- institutions’ relative
assessment bases as of the end of 1996 and
assessments paid after 1996 -- as well as the way
the balance changes over time. Thus, the
allocation methods potentially differ in the way they
treat older institutions (with relatively large
assessment bases at the end of 1996) versus
newer institutions (with little or no assessment
bases at the end of 1996). The fund balance
method implicitly balances these two factors. The
payments method can be structured to balance
these factors in different ways.
• The ANPR also seeks comment on the extent to
which the dividend allocation system should
reinforce the risk incentives of the risk-based
assessment system by taking into account the
portion of an institution’s assessment that
represents higher risk.
• Comments are due by November 19, 2007.