| TO: | CHIEF EXECUTIVE OFFICER |
| SUBJECT: | Changes to Payment Dates and the Interest Rate Computation for Assessments |
On September 26, 1995, the FDIC's Board of Directors approved a final rule on assessments that affects payment dates, prepayments and interest rate calculations. A copy of the Federal Register notice explaining the final rule is attached.
The major change involves the quarterly payments of assessments. The first quarterly payment will be due the first business day after January 1 rather than December 30 of the previous year. This eliminates a possible fifth assessment payment in 1995 that would have been required under the previous rule for institutions that use the cash-basis method of accounting.
The final rule provides additional flexibility for institutions to schedule payments to accommodate their particular financial operations. Specifically, the FDIC is providing the options of (1) prepaying assessment premiums for the upcoming quarter or semiannual period and (2) doubling the invoiced payment on March 30, June 30, September 30 or December 30, with advance notice to the FDIC. No double payment is allowed for the January payment dates.
Other key provisions of the final rule are:
- Interest on assessment underpayments or overpayments will be tied to the three-month Treasury bill rate, rather than an average over a 12-month period of the Treasury's value of funds rate. This change is intended to ensure that the interest charged or reimbursed will more closely reflect market conditions.
- A technical amendment to the final rule advances the announcement of the semiannual rate schedule for Bank Insurance Fund members to 15 days before the invoice date instead of the current 45-day advance notice period
| INSTRUCTIONS FOR PREPAYMENTS AND DOUBLED PAYMENTS |
|---|
| Institutions wishing to prepay their assessment premium should complete the attached Prepayment Certification Form (Form I). This form allows institutions to prepay their assessment on December 30 preceding the beginning of the first semiannual period. |
| Institutions wishing to double their invoiced amount should complete the December Doubled-Payment Certification Form (Form II). Institutions electing to pay twice the invoiced amount are also prepayers, as indicated in Form II. |
| Certification Forms should be returned to the FDIC (Assessment Operations, 3501 North Fairfax Drive, Room 6029-S, Arlington, VA 22226) no later than November 1. The institution's chief executive officer, or an officer designated by the institution's board of directors, must sign the appropriate form. |
For more information about the final rule, please call the FDIC's Deposit Insurance Assessment Information Line toll-free at 800-759-6596 or 202-898-7090 (in the Washington, DC, area) between 8:30 a.m. and 4:30 p.m., Eastern Time.
Allan K. Long
Assistant Director, Treasury Branch
| Form I | |
|---|---|
PREPAYMENT CERTIFICATION FORM | |
| THE UNDERSIGNED INSTITUTION HEREBY CERTIFIES THAT IT ELECTS TO MAKE THE PAYMENT DUE FOR THE FIRST QUARTER OF THE FIRST SEMIANNUAL PERIOD OF 1996, AND THE PAYMENT DUE FOR THE FIRST QUARTER OF THE FIRST SEMIANNUAL PERIOD OF EACH SUBSEQUENT YEAR, IN AN AMOUNT EQUAL TO THE INVOICED AMOUNT IN ACCORDANCE WITH THE PROCEDURES AND REQUIREMENTS OF PART 327 OF THE FDIC's RULES AND REGULATIONS, 12 C.F.R. PART 327. THIS ELECTION IS EFFECTIVE FOR THE UPCOMING YEAR AND REMAINS IN EFFECT UNTIL TERMINATED. | |
| (Name of Institution) | (FDIC Certificate Number) |
| ---------------------------------------- | ---------------------------------------- |
| (Contact Name) | (Phone Number) |
| ---------------------------------------- | ---------------------------------------- |
| (Signature and Title of Certifying Official) | (Date) |
| ---------------------------------------- | ---------------------------------------- |
| (Fax Number-Provide Only If Confirmation of Receipt is Desired) | |
| ----------------------------------------------------------------------------- | |
THIS FORM MUST BE POSTMARKED OR FAXED
TO (703) 516-5327 BY NOVEMBER 1, 1995
ATTENTION: Federal Deposit Insurance Corporation
Division of Finance
Assessment Operations Section
3501 N. Fairfax Drive Rm. VS 6029-S7
Arlington, VA 22226-3500
Note
In 1995, December 30 is a Saturday; institutions must fund their accounts by December 29 for the ACH quarterly debit.
| Form II | |
|---|---|
DECEMBER DOUBLED-PAYMENT | |
| THE UNDERSIGNED INSTITUTION HEREBY CERTIFIES THAT IT ELECTS TO PAY TWICE THE INVOICED AMOUNT OF THE FIRST QUARTERLY PAYMENT FOR THE SEMIANNUAL PERIOD BEGINNING ON JANUARY 1, 1996, AND TWICE THE INVOICED AMOUNT OF THE FIRST QUARTERLY PAYMENT FOR THE SEMIANNUAL PERIOD BEGINNING ON JANUARY 1 OF EACH SUBSEQUENT YEAR, IN ACCORDANCE WITH THE PROCEDURES AND REQUIREMENTS OF PART 327 OF THE FDIC's RULES AND REGULATIONS, 12 C.F.R. PART 327. THIS DOUBLED-PAYMENT ELECTION IS EFFECTIVE WITH THE PAYMENT MADE ON THE DECEMBER 30 PAYMENT DATE AND TO ALL DECEMBER 30 PAYMENT DATES UNTIL TERMINATED. | |
| (Name of Institution) | (FDIC Certificate Number) |
| ---------------------------------------- | ---------------------------------------- |
| (Contact Name) | (Phone Number) |
| ---------------------------------------- | ---------------------------------------- |
| (Signature and Title of Certifying Official) | (Date) |
| ---------------------------------------- | ---------------------------------------- |
| (Fax Number-Provide Only if Confirmation of Receipt is Desired) | |
| ----------------------------------------------------------------------------- | |
THIS FORM MUST BE POSTMARKED OR FAXED
TO (703) 516-5327 BY NOVEMBER 1, 1995
ATTENTION: Federal Deposit Insurance Corporation
Division of Finance
Assessment Operations Section
3501 N. Fairfax Drive - Rm. VS 6029-S7
Arlington, VA 22226
Note
This Doubled-Payment Certification requires that institutions prepay the first quarterly payment on December 30, or if December 30 is a holiday or weekend, the preceding business day.