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FDIC Approves Extended Exam Cycle Rule; Proposes Revised Assessment Formula

Posted on 1/25/2016

At its board meeting this week, the Federal Deposit Insurance Corporation (FDIC) approved an interim final rule extending the examination cycle for banks with up to $1 billion in assets from 12 months to 18 months. The 18-month exam cycle had been only available to institutions with asset sizes less than $500 million.

The interim final rule, which implements a provision included in the 2015 highway funding bill passed by Congress last year, is effective immediately. More than 600 institutions are expected to be eligible for the extended exam cycle.

To read the interim final rule visit: https://fdic.gov/news/board/2016/2016-01-21_notice_dis_a_fr.pdf

During the board meeting, the agency also issued a revised proposed rule for assessing deposit insurance premiums on banks with under $10 billion in assets. The revised proposed rule makes a number of changes to the initial proposal, including eliminating an assessment penalty for funding with reciprocal deposits or Federal Home Loan Bank advances. Under the updated proposal, funding with brokered deposits -- not counting reciprocal deposits for well capitalized banks with CAMELS ratings of 1 or 2 -- in excess of 10 percent of assets would lead to higher assessments, while the existing "brokered deposit adjustment" would be eliminated.

In addition, the revised proposal would not factor core deposit funding into assessments as well as adopt a more balanced standard for assessing growth; assets would have to grow more than 10 percent over a one-year period to trigger higher assessments, meaning that fewer banks will be penalized for well-managed growth. The proposal would also cap assessment rates by CAMELS rating. Comments on the revised assessment proposal are due 30 days after it is published in the Federal Register. The FDIC also posted a revised calculator for bankers to test the impact on their assessments.

To read the revised proposed rule and access the calculator visit: https://www.fdic.gov/news/news/press/2016/pr16004.html




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