Risk Categories & Risk-Based Assessment Rates

Key Provisions Pertaining to Risk-Based Assessments

On February 27, 2009, the FDIC: (1) adopted a final rule modifying the risk-based assessment system and setting initial base assessment rates beginning April 1, 2009, at 12 to 45 basis points; and (2) due to extraordinary circumstances, extended the time within which the reserve ratio must be returned to 1.15 percent from five to seven years. Please see FIL-12-2009 for more information.

Assessment Rates: The new initial base assessment rates as of April 1, 2009, as follows:

*Initial base rates that were not the minimum or maximum rate will vary between these rates.

After applying all possible adjustments, minimum and maximum total base assessment rates for each risk category are as follows:

• All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates.

On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each insured depository institution's assets minus Tier 1 capital as of June 30, 2009. The amount of the special assessment for any institution will not exceed 10 basis points times the institution's assessment base for the second quarter 2009. The special assessment will be collected on September 30, 2009.

Small Risk Category I Institutions and Large Risk Category I Institutions with No Long-Term Debt Issuer Rating: For most institutions in Risk Category I (generally, those institutions with less than $10 billion in assets and those with $10 billion or more in assets that do not have long-term debt issuer ratings), base assessment rates will be based on a combination of financial ratios and CAMELS component ratings (the financial ratios method).

Under the financial ratios method, each financial ratio and a weighted average of CAMELS component ratings is multiplied by a pricing multiplier. The weights applied to CAMELS components are as follows: 25 percent for Capital and Management; 20 percent for Asset quality; and 10 percent each for Earnings, Liquidity, and Sensitivity to market risk. The CAMELS component weights and pricing multipliers are the same for all institutions subject to the financial ratios method.

Beginning April 1, 2009, the FDIC introduced a new financial ratio into the financial ratios method (the adjusted brokered deposit ratio). The adjusted brokered deposit ratio affects institutions whose brokered deposits are more than 10 percent of domestic deposits and whose total assets are more than 40 percent greater than they were four years previously. The adjusted brokered deposit ratio excludes certain reciprocal deposits for institutions in Risk Category I. Brokered deposits that consist of balances swept into an insured institution are included in the adjusted brokered deposit ratio for all institutions.

Large Risk Category I Institutions with Long-Term Debt Issuer Ratings: For large Risk Category I institutions, the FDIC revised the method for calculating the assessment rate for a large Risk Category I institution with a long-term debt issuer rating so that it equally weights the institution's weighted average CAMELS component ratings, its long-term debt issuer ratings (converted to a 1 to 3-point scale) and the financial ratios method assessment rate. Long-term debt issuer ratings are defined as current long-term debt issuer ratings assigned by S&P, Moody’s, or Fitch. If multiple ratings are available, the converted amounts are averaged. The final rule updates the uniform amount and the pricing multipliers for the weighted average CAMELS component ratings and financial ratios method. Additional risk factors will still be considered to determine if the assessment rates should be adjusted. This additional information includes market data, financial performance measures, considerations of the ability of an institution to withstand financial stress, and loss severity indictors. The intent of the adjustments is to preserve a reasonable and consistent rank ordering of risk among large institutions. The increase to the maximum possible large bank adjustment has been increased from 0.5 basis point to 1.0 basis point. See Assessment Rate Adjustment Guidelines for additional information.

Adjustments to Assessment Rates: The FDIC introduced three possible adjustments to an institution's initial base assessment rate: (1) a decrease of up to five basis points for long-term unsecured debt, including senior unsecured debt (other than debt guaranteed under the Temporary Liquidity Guarantee Program) and subordinated debt and, for small institutions, a portion of Tier 1 capital; (2) an increase not to exceed 50 percent of an institution's assessment rate before the increase for secured liabilities in excess of 25 percent of domestic deposits; and (3) for non-Risk Category I institutions, an increase not to exceed 10 basis points for brokered deposits in excess of 10 percent of domestic deposits.

Requesting Treatment as a Large Institution

Institutions with between $5 and $10 billion in assets may request to be treated as a large institution for assessment purposes. A long-term debt issuer rating is not required, and in the absence of a debt issuer rating, financial ratios and supervisory ratings would continue to determine the assessment rate. Banks in this size range that have been approved to be treated as “large” are subject to the same adjustment provisions based on consideration of additional risk factors as those that have $10 billion or more in assets, regardless of whether their rate is based on long-term debt issuer ratings or financial ratios.

Assessment Rate Calculator

A calculator illustrates deposit insurance assessment rate computation for institutions using recent financial data or data supplied by the user.

Treatment of New Institutions

Newly insured institutions (those insured less than 5 years) will be charged the following rates:

For more information and upcoming changes in the treatment of new institutions, see New Institutions.

Effective Date of CAMELS and Long-Term Debt Issuer Rating Changes

CAMELS rating changes will be effective for assessment purposes as of the date the institution is notified of its rating change (transmittal date) by its primary federal regulator (PFR) or state authority. However, if the FDIC disagrees with the CAMELS composite rating assigned by an institution’s PFR, and assigns a different composite rating, the supervisory change will be effective for assessment purposes as of the date the FDIC assigns a rating.

For an institution with a long-term debt issuer rating, a change in a rating will be effective for assessment purposes as of the date the change was announced.