Issues Final Rule on Amendments to Assessment Regulations
for Oakar Institutions (Part 327 of the FDIC's Rules
Board of Directors finalized a rule on November 26, 1996,
amending the FDIC's assessment regulations concerning the
Adjusted Attributable Deposit Amount (AADA) for Oakar institutions.
The AADA is used to determine the allocation of an Oakar
institution's assessable deposits between the Bank Insurance
Fund (BIF) and the Savings Association Insurance Fund (SAIF).
It is the amount of an institution's assessable deposits
that is attributable to the secondary insurance fund (the
fund of which the institution is not a member).
amendments are generally intended to eliminate certain
anomalies in the assessment treatment of Oakar institutions.
Following is a summary of the major amendments adopted
by the Board:
for Allocation of Deposit Sales
final rule maintains the FDIC's current principle for
allocating deposits between the two insurance funds when
sales occur. When an Oakar institution sells deposits,
it sells the deposits insured by its primary fund. Secondary
fund deposits are sold only to the extent that the sale
exceeds the amount of the seller's total primary fund
FDIC's previous methodology for calculating growth or
shrinkage of an institution's AADA treated deposit sales
as normal shrinkage. This methodology created an inadvertent
shift in deposits from the secondary to the primary fund.
The final rule amends this treatment so that deposit sales
will not produce this effect.
Adjustment of AADA
Board adopted an amendment to move from an annual to a
quarterly adjustment of the AADA and to use the most recent
quarter's total deposit growth rate as the current quarterly
growth rate for the AADA. Adoption of this approach will
allow the FDIC to maintain a closer correlation between
the AADA and the institution's overall deposit base, resulting
in a more accurate computation of the primary and secondary
funds, assessment bases and reserve ratios. In order to
relieve Oakar institutions of the potential burden of
this change, the final rule provides for the FDIC to take
over the responsibility of calculating each Oakar's AADA
using quarterly call report data. The AADA will be calculated
as part of the current quarterly payment process, and
this calculation, along with supporting documentation,
will accompany each Oakar institution's quarterly assessment
on the quarterly computation of the AADA, the final rule
reinterprets the FDIC's assessment regulation in a manner
that assesses a new AADA beginning in the quarter in which
it was created. Previously, the AADA was required to be
assessed for an entire semiannual period. Accordingly,
when an institution acquired deposits in the second half
of a semiannual period, the institution's assessment payment
was adjusted so that the institution was assessed on its
AADA for both quarters of the period. The final rule allows
the AADA to be assessed in the second quarter only.
Acquired from Troubled Institutions
final rule eliminates certain discounts given to reduce
the buyer's AADA in transactions involving an institution
in FDIC or RTC conservatorship or receivership. The Board
adopted this change to simplify the FDIC's assessment
regulations and to ensure that one set of rules applies
to acquisitions of both healthy and failed institutions.
of Conduit Principle
final rule codifies the FDIC's current principle for "conduit"
deposits. Conduit deposits are those secondary fund deposits
acquired in an Oakar transaction when a federal banking
supervisory agency or the U.S. Department of Justice has
explicitly required that the deposits be divested within
six months. Conduit deposits are not counted as acquired
deposits in computing an institution's AADA after re-transfer.
copy of the final rule is attached. For further information,
please contact Al Long, Assistant Director, Division of
Finance, (202) 416-6991; Stephen Ledbetter, Chief, Assessments
Evaluation, Division of Insurance, (202) 898-8658; Richard
Osterman, Senior Counsel, Legal Division, (202) 898-3523;
or Jules Bernard, Counsel, Legal Division, (202) 898-3731.
Insured Banks and Savings Associations
Paper copies of FDIC financial institution letters may
be obtained through the FDIC's Public Information Center,
801 17th Street, N.W., Room 100, Washington, D.C. 20434
((703) 562-2200 or 800-276-6003).