Effective July 1, 2016, all established insured institutions receive a risk rate scorecard to determine their FDIC assessment base rate. Only new small institutions, as discussed below, receive a Risk Category assignment.
Current FDIC Assessment Rates effective July 1, 2016 - Present
Rates first applicable on the invoice dated December 30, 2016
|Established Small Insitituions
|Large & Highly
Complex Institutions **
|1 or 2||3||4 or 5|
|Initial Base Assessment Rate||3 to 16||6 to 30||16 to 30||3 to 30|
|Unsecured Debt Adjustment ***||-5 to 0||-5 to 0||-5 to 0||-5 to 0|
|Brokered Deposit Adjustment||N/A||N/A||N/A||0 to 10|
|Total Base Assessment Rate||1.5 to 16||3 to 30||11 to 30||1.5 to 40|
* Total base rates that are not the minimum or maximum rate will vary between these rates. Total base assessment rates do not include the Depository Institution Debt Adjustment (“DIDA”).
** See 12 CFR 327.8(f) and (g) for the definition of large and highly complex institutions.
*** The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an initial base assessment rate of 3 basis points will have a maximum unsecured debt adjustment of 1.5 basis points and cannot have a total base assessment rate lower than 1.5 basis points. The unsecured debt adjustment does not apply to new institutions or insured branches.
On April 26, 2016, the FDIC adopted a rule amending small institution pricing for deposit insurance. Changes to the pricing system for established small institutions were effective July 1, 2016 and first appeared on the December 30, 2016 invoice. The new pricing system does not require institutions to report any additional data, Changes to the pricing system include:
- An elimination of all risk categories (that is, Risk Categories I, II, III, and IV) and applied the Financial Ratios Method to determine assessment rates for all small established institutions. However, CAMELS composite ratings are used to set minimum and maximum assessment rates for an institution. CAMELS composite ratings set a maximum on the assessment rates that CAMELS composite 1- and 2-rated institutions are charged and minimums on the assessment rates that CAMELS composite 3-, 4- and 5-rated institutions are charged. 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.
- A revision of the Financial Ratios Method so that is it based on a statistical model estimating the probability of failure over three years; and updates the financial measures used in the Financial Ratios Method so the measures are consistent with the statistical model.
Since the second quarter of 2011, all large institutions are assessed for deposit insurance using the large bank scorecard method set forth in the final rule adopted by the board on February 7th, 2011. Please see FIL-8-2011 for more information. Current small institutions must continue to meet the current criteria of 4 consecutive quarters of total assets greater than $10 billion to be designated a large institution; however, new institutions with total assets over $10 billion upon establishment will be subject to the large institution scorecard and a weighted average CAMELS rating of "2" will be used until ratings are assigned.
The large institution scorecard determines a performance score between 0 and 100 using forward-looking risk measures which are also scored between 0 and 100 based on historical cutoffs. The performance score is increased or decreased by up to 20% based on the loss severity model to determine a total score. The total score, with a minimum of 30 and maximum of 90, is converted to an initial assessment rate based on the current rate schedule of 3 - 30bps. Additionally, the FDIC board adopted revised guidelines to allow for both upward and downward discretionary adjustments to the total score up to 15 points, subject to the total score minimum and maximum. The FDIC only intended to pursue material adjustments and expects that a limited number of adjustments will be made on a quarterly basis. In general, the FDIC primarily considers two types of information in determining whether to make an adjustment: (a) a scorecard ratio that exceeds the maximum cutoff value or is less than the minimum cutoff value; and (b) information not directly captured in the scorecard.
Adjustments to Assessment Rates
The FDIC has three possible adjustments to an institution's initial base assessment rate: (1) a decrease of up to five basis points (or 50% of the initial base assessment rate) for long-term unsecured debt, including senior unsecured debt (other than debt guaranteed under the Temporary Liquidity Guarantee Program) and subordinated debt; (2) an increase for holding long-term unsecured or subordinated debt issued by other insured depository institutions known as the Depository Institution Debt Adjustment ("DIDA"); and (3) for new small or large institutions not well rated or well capitalized, an increase not to exceed 10 basis points for brokered deposits in excess of 10 percent of domestic deposits.
Assessment Rate Calculators
These calculators illustrate deposit insurance assessment rate computation for small, large, and highly complex institutions using recent financial data or data supplied by the user.
Newly Insured Small institutions (those insured less than 5 years) will be charged the following rates.
|Risk Category I||Risk Category II||Risk Category III||Risk Category IV|
|Initial Base Assessment Rate||7||12||19||30|
|Brokered Deposit Adjustment (added)||N/A||0 to 10||0 to 10||0 to 10|
|Total Base Assessment Rate||7||12 to 22||19 to 29||30 to 40|
* Total base assessment rates do not include the depository institution debt adjustment.
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. 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. To request a change in your institution’s treatment, please follow the steps for a Request for Rate Review.
Effective Date of CAMELS
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.
When the CAMELS composite changes during a quarter, for assessment billing purposes, the institution receives a blended rate for the quarter. The blended rate is composed of the pro-rated assessment rates for the quarter. For example, if the transmittal date of the rating change is May 3rd, the institution would be charged at its rate that was in effect for the first 32 days of the second quarter (April 1 – May 2) and at its new rate for the last 59 days of the quarter (May 3 – June 30). The blended rate would appear on the September invoice since that invoice is payment for the second quarter. See the attached Sample Blended Rate Sheet.