This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

39388 

Vol. 87, No. 126 

Friday, July 1, 2022 

1See 12 U.S.C. 1817 and 1819. 

2Under the FDI Act, a restoration plan must 

restore the reserve ratio to at least 1.35 percent 

within 8 years of establishing the restoration plan, 

absent extraordinary circumstances. See 12 U.S.C. 

1817(b)(3)(E). The reserve ratio is calculated as the 

ratio of the net worth of the DIF to the value of the 

aggregate estimated insured deposits at the end of 

a given quarter. See 12 U.S.C. 1813(y)(3). 

3 12 U.S.C. 1817(b)(3)(E)(ii). As used in this 

proposed rule, the term ‘‘bank’’ is synonymous with 

the term ‘‘insured depository institution’’ as it is 

used in section 3(c)(2) of the FDI Act, 12 U.S.C. 

1813(c)(2). 

4See 75 FR 66273 (Oct. 27, 2010) and 76 FR 

10672 (Feb. 25, 2011). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 327 

RIN 3064–AF83 

Assessments, Revised Deposit 

Insurance Assessment Rates 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The FDIC is seeking comment 

on a proposed rule that would increase 

initial base deposit insurance 

assessment rates by 2 basis points, 

beginning with the first quarterly 

assessment period of 2023. The proposal 

would increase the likelihood that the 

reserve ratio would reach the required 

minimum level of 1.35 percent by the 

statutory deadline of September 30, 

2028, consistent with the FDIC’s 

Amended Restoration Plan, and is 

intended to support growth in the 

Deposit Insurance Fund (DIF or fund) in 

progressing toward the FDIC’s long-term 

goal of a 2 percent Designated Reserve 

Ratio (DRR). 

DATES: Comments must be received no 

later than August 20, 2022. 

ADDRESSES: You may submit comments 

on the notice of proposed rulemaking 

using any of the following methods: 

• Agency Website: https://

www.fdic.gov/resources/regulations/ 

federal-register-publications/. Follow 

the instructions for submitting 

comments on the agency website. 

• Email: comments@fdic.gov. Include 

RIN 3064–AF83 on the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant 

Executive Secretary, Attention: 

Comments—RIN 3064–AF83, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street NW, 

building (located on F Street NW) on 

business days between 7 a.m. and 5 p.m. 

• Public Inspection: Comments 

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of this document will be 

retained in the public comment file and 

will be considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Michael Spencer, Associate Director, 

Financial Risk Management Branch, 

202–898–7041, michspencer@fdic.gov; 

Ashley Mihalik, Chief, Banking and 

Regulatory Policy, 202–898–3793, 

amihalik@fdic.gov; Kayla Shoemaker, 

Senior Policy Analyst, 202–898–6962, 

kashoemaker@fdic.gov; Sheikha Kapoor, 

Senior Counsel, 202–898–3960, 

skapoor@fdic.gov; Ryan McCarthy, 

Senior Attorney, 202–898–7301, 

rymccarthy@fdic.gov. 

SUPPLEMENTARY INFORMATION: 

I. Legal Authority and Policy Objectives 

The FDIC, under its general 

rulemaking authority in Section 9 of the 

Federal Deposit Insurance Act (FDI Act), 

and its specific authority under Section 

7 of the FDI Act to set assessments, is 

proposing to increase initial base 

deposit insurance assessment rates by 2 

basis points, effective January 1, 2023, 

and applicable to the first quarterly 

assessment period of 2023 (i.e., January 

1–March 31, 2023).1

The proposed increase in initial base 

assessment rates is intended to achieve 

two objectives. First, the proposal is 

intended to increase assessment revenue 

in order to build the DIF, which is used 

to pay deposit insurance in the event of 

failure of an insured depository 

institution (IDI), and to restore the 

reserve ratio to the statutory minimum 

of 1.35 percent within the deadline set 

by statute, consistent with the 

Restoration Plan, as amended by the 

FDIC Board of Directors (Board) on June 

21, 2022 (Amended Restoration Plan).2

While the banking industry has 

remained a source of strength for the 

economy and the DIF has experienced 

low losses from IDI failures in recent 

years, slowing growth in the fund 

balance combined with continued 

elevated estimated insured deposit 

levels, described below, have decreased 

the likelihood that the reserve ratio will 

meet the statutory minimum by 

September 30, 2028.3 The proposal 

would increase the likelihood that the 

reserve ratio will meet the statutory 

minimum by the required deadline and 

reduce the likelihood that the FDIC 

would need to raise assessment rates 

during a potential future period of 

banking industry stress. 

Second, the proposed change in 

assessment rates is further intended to 

support growth in the DIF in 

progressing toward the 2 percent DRR. 

Therefore, the proposed assessment rate 

schedules would remain in effect unless 

and until the reserve ratio meets or 

exceeds 2 percent, absent further Board 

action. This continued growth in the 

DIF is intended to reduce the likelihood 

that the FDIC would need to consider a 

potentially pro-cyclical assessment rate 

increase, and to increase the likelihood 

of the DIF remaining positive through 

potential future periods of significant 

losses due to bank failures, consistent 

with the FDIC’s long-term fund 

management plan.4 A sufficiently large 

fund is a necessary precondition to 

maintaining a positive fund balance 

during a banking crisis and allowing for 

long-term, steady assessment rates. 

Accomplishing these objectives also 


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Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39389 

5See 12 U.S.C. 1817(b)(3)(B). 

6See 12 U.S.C. 1817(b)(3)(E). 

7See 85 FR 59306 (Sept. 21, 2020). 

8See FDIC Restoration Plan Semiannual Update, 

June 21, 2022. Available at https://www.fdic.gov/ 

news/board-matters/2022/2022-06-21-notice-sum-bmem.pdf. 

9Section 7(b)(3)(A) of the FDI Act, 12 U.S.C. 

1817(b)(3)(A). The DRR is expressed as a percentage 

of estimated insured deposits. 

10Section 7(b)(3)(C) of the FDI Act, 12 U.S.C. 

1817(b)(3)(C). 

11See 75 FR 66272 (Oct. 27, 2010) (October 2010 

NPR) and 76 FR 10672 (Feb. 25, 2011). 

12See 75 FR 66273 and 76 FR 10675. 

13The analysis set out in the October 2010 NPR 

sought to determine what assessment rates would 

have been needed to maintain a positive fund 

balance during the last two crises. This analysis 

used an assessment base derived from domestic 

deposits to calculate assessment income. The DoddFrank Wall Street Reform and Consumer Protection 

Act, however, required the FDIC to change the 

assessment base to average consolidated total assets 

minus average tangible equity. In the December 

2010 final rule establishing a 2 percent DRR, the 

FDIC undertook additional analysis to determine 

how the results of the original analysis would 

change had the new assessment base been in place 

from 1950 to 2010. Both the analyses in the October 

2010 NPR and the December 2010 final rule show 

that the fund reserve ratio would have needed to 

be approximately 2 percent or more before the onset 

of the crises to maintain both a positive fund 

balance and stable assessment rates. The updated 

analysis in the December 2010 final rule, like the 

analysis in the October 2010 NPR, assumed, in lieu 

of dividends, that the long-term industry average 

nominal assessment rate would be reduced by 25 

percent when the reserve ratio reached 2 percent, 

and by 50 percent when the reserve ratio reached 

2.5 percent. Eliminating dividends and reducing 

rates successfully limits rate volatility whichever 

assessment base is used. See 75 FR 66273 and 75 

FR 79288 (Dec. 20, 2010) (December 2010 final 

rule). 

14See 75 FR 79286 (Dec. 20, 2010), codified at 12 

CFR 327.4(g), and 86 FR 71638 (Dec. 17, 2021). 

15See 75 FR 66273 and 75 FR 79287. 

16See 12 U.S.C. 1817(b). 

17See 12 CFR 327.3(b)(1). 

18See 12 CFR 327.5. 

19See 12 CFR 327.16(a) and (b). 

20As used in this proposed rule, the term ‘‘small 

bank’’ is synonymous with the term ‘‘small 

institution’’ and the term ‘‘large bank’’ is 

synonymous with the term ‘‘large institution’’ or 

‘‘highly complex institution,’’ as the terms are 

defined in 12 CFR 327.8(e), (f), and (g), respectively. 

21See 12 CFR 327.16(a); see also 81 FR 32180 

(May 20, 2016). 

would continue to ensure public 

confidence in federal deposit insurance. 

II. Background 

A. Restoration Plan 

Extraordinary growth in insured 

deposits during the first and second 

quarters of 2020 caused the DIF reserve 

ratio to decline below the statutory 

minimum of 1.35 percent.5 As of June 

30, 2020, the reserve ratio had fallen 

below the statutory minimum and stood 

at 1.30 percent. The FDI Act requires 

that the Board adopt a restoration plan 

when the DIF reserve ratio falls below 

the statutory minimum of 1.35 percent 

or is expected to within 6 months.6 On 

September 15, 2020, the Board adopted 

the Restoration Plan to restore the DIF 

to at least 1.35 percent by September 30, 

2028.7

In its June 21, 2022, semiannual 

update to the Board, FDIC projections of 

the reserve ratio under different 

scenarios reflected that the reserve ratio 

is at risk of not reaching 1.35 percent by 

September 30, 2028, the end of the 

statutory 8-year period.8 The scenarios 

are based on updated data and analysis 

and incorporate different rates of 

insured deposit growth and weighted 

average assessment rates, including 

sustained elevated insured deposit 

balances and lower assessment rates 

than previously anticipated. On June 21, 

2022, the Board approved the Amended 

Restoration Plan, which reflects an 

increase in initial base deposit 

insurance assessment rates of 2 basis 

points, beginning with the first quarterly 

assessment period of 2023. Accordingly, 

the FDIC is concurrently publishing in 

the Federal Register an Amended 

Restoration Plan. 

B. Designated Reserve Ratio 

The FDI Act requires that the Board 

designate a reserve ratio for the DIF and 

publish the DRR before the beginning of 

each calendar year.9 The Board must set 

the DRR in accordance with its analysis 

of certain statutory factors: risk of losses 

to the DIF; economic conditions 

generally affecting IDIs; preventing 

sharp swings in assessment rates; and 

any other factors that the Board 

determines to be appropriate.10

In 2010, the FDIC proposed and later 

adopted a comprehensive, long-term 

management plan for the DIF with the 

following goals: (1) reduce the procyclicality in the existing risk-based 

assessment system by allowing 

moderate, steady assessment rates 

throughout economic and credit cycles; 

and (2) maintain a positive fund balance 

even during a banking crisis by setting 

an appropriate target fund size and a 

strategy for assessment rates and 

dividends.11 Based on the FDIC’s 

experience through two banking crises, 

the analysis concluded that a long-term 

moderate, steady assessment rate of 5.29 

basis points would have been sufficient 

to prevent the fund from becoming 

negative during the crises.12 The FDIC 

also found that the fund reserve ratio 

would have had to exceed 2 percent 

before the onset of the last two crises to 

achieve these results.13

The FDIC’s comprehensive, long-term 

fund management plan combines the 

moderate, steady assessment rate with a 

DRR of 2 percent. The Board set the 

DRR at 2 percent in 2010 and has voted 

annually since then to maintain the 2 

percent DRR, most recently in December 

2021.14 The FDIC views the DRR as a 

long-range, minimum goal that will 

allow the fund to grow sufficiently large 

during times of favorable banking 

conditions, increasing the likelihood 

that the DIF will remain positive 

throughout periods of significant losses 

due to bank failures. Additionally, in 

lieu of dividends, the long-term plan 

prescribes progressively lower 

assessment rates that will become 

effective when the reserve ratio exceeds 

2 percent and 2.5 percent. Because 

analysis shows that a reserve ratio 

higher than 2 percent increases the 

chance that the fund will remain 

positive during a crisis, the 2 percent 

DRR should not be treated as a cap on 

the size of the fund.15

C. Deposit Insurance Assessments 

Pursuant to Section 7 of the FDI Act, 

the FDIC has established a risk-based 

assessment system through which it 

charges all IDIs an assessment amount 

for deposit insurance.16

Under the FDIC’s regulations, an IDI’s 

assessment is equal to its assessment 

base multiplied by its risk-based 

assessment rate.17 Generally, an IDI’s 

assessment base equals its average 

consolidated total assets minus its 

average tangible equity.18 An IDI’s 

assessment rate is determined each 

quarter based on supervisory ratings and 

information collected on the 

Consolidated Reports of Condition and 

Income (Call Report) or the Report of 

Assets and Liabilities of U.S. Branches 

and Agencies of Foreign Banks (FFIEC 

002), as appropriate. An IDI’s 

assessment rate is calculated using 

different methods based on whether the 

IDI is a small, large, or highly complex 

institution.19 For assessment purposes, 

a small bank is generally defined as an 

institution with less than $10 billion in 

total assets, a large bank is generally 

defined as an institution with $10 

billion or more in total assets, and a 

highly complex bank is generally 

defined as an institution that has $50 

billion or more in total assets and is 

controlled by a parent holding company 

that has $500 billion or more in total 

assets, or is a processing bank or trust 

company.20

Assessment rates for established small 

banks are calculated based on eight risk 

measures that are statistically significant 

in predicting the probability of an 

institution’s failure over a three-year 

horizon.21

Large and highly complex institutions 

are assessed using a scorecard approach 


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22See 12 CFR 327.16(b); see also 76 FR 10672 

(Feb. 25, 2011) and 77 FR 66000 (Oct. 31, 2012). 

23See 12 CFR 327.16(e). 

24See 12 CFR 327.16(b)(3); see also Assessment 

Rate Adjustment Guidelines for Large and Highly 

Complex Institutions, 76 FR 57992 (Sept. 19, 2011). 

25See 76 FR 10683–10688. 

26See 81 FR 32189–32191. 

27See 12 CFR 327.10(f)(3). However, the lowest 

initial base assessment rate cannot be negative. 

28See 12 CFR 327.10(b)(1). An established 

insured depository institution is a bank or savings 

association that has been federally insured for at 

least five years as of the last day of any quarter for 

which it is being assessed. See 12 CFR 327.8(k). 

29See 12 CFR 327.16(e). 

30See 12 CFR 327.10(b)(2). 

that combines CAMELS ratings and 

certain forward-looking financial 

measures to assess the risk that a large 

or highly complex bank poses to the 

DIF.22

All institutions are subject to 

adjustments to their assessment rates for 

certain liabilities that can increase or 

reduce loss to the DIF in the event the 

bank fails.23 In addition, the FDIC may 

adjust a large bank’s total score, which 

is used in the calculation of its 

assessment rate, based upon significant 

risk factors not adequately captured in 

the appropriate scorecard.24

D. Current Assessment Rate Schedules 

In 2011, consistent with the FDIC’s 

long-term fund management plan, the 

FDIC adopted lower, moderate 

assessment rates that would go into 

effect when the DIF reserve ratio 

reached 1.15 percent.25 In 2016, the 

FDIC amended its rules to refine the 

deposit insurance assessment system for 

established small IDIs (i.e., small IDIs 

that have been federally insured for at 

least five years) and preserved the lower 

overall range of initial base assessment 

rates adopted in 2011 pursuant to the 

long-term fund management plan.26

Those rates are currently in effect and 

are detailed in the sections that follow. 

In addition, the Board is authorized to 

uniformly increase or decrease the total 

base rate assessment schedule up to a 

maximum of 2 basis points or a fraction 

thereof, as the Board deems necessary, 

without further rulemaking.27

Established Small Institutions and Large 

and Highly Complex Institutions 

Current initial base assessment rates 

for established small institutions and 

large and highly complex institutions 

are set forth in Table 1 below.28

TABLE 1—CURRENT INITIAL BASE ASSESSMENT RATE SCHEDULE APPLICABLE TO ESTABLISHED SMALL INSTITUTIONS AND

LARGE AND HIGHLY COMPLEX INSTITUTIONS 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 3 to 16 6 to 30 16 to 30 3 to 30 

1All amounts for all risk categories are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between 

these rates. 

An institution’s total base assessment 

rate may vary from the institution’s 

initial base assessment rate as a result of 

possible adjustments for certain 

liabilities that can increase or reduce 

loss to the DIF in the event the 

institution fails.29 After applying all 

possible adjustments, the current 

minimum and maximum total base 

assessment rates for established small 

institutions and large and highly 

complex institutions are set out in Table 

2 below.30

TABLE 2—CURRENT TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) APPLICABLE TO ESTABLISHED

SMALL INSTITUTIONS AND LARGE AND HIGHLY COMPLEX INSTITUTIONS 1 2

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

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 3 .......................................................... ¥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 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All 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. 3The 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 of lower than 1.5 basis points. 


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31 In lieu of dividends, and pursuant to the FDIC’s 

authority to set assessments, the progressively 

lower initial base and total base assessment rates set 

forth in 12 CFR 327.10(c) and (d) will come into 

effect without further action by the Board when the 

fund reserve ratio at the end of the prior assessment 

period reaches 2 percent and 2.5 percent, 

respectively. 

32See 12 CFR 327.10(e)(1)(iii)(A) and (B). Subject 

to exceptions, a new depository institution is a bank 

or savings association that has been federally 

insured for less than five years as of the last day 

of any quarter for which it is being assessed. See 

also 12 CFR 327.8(j). 33See 12 CFR 327.10(e)(1)(iii)(B). 34See 75 FR 66283 and 76 FR 10686. 35See 12 CFR 327.10(e)(2)(i). 

36 In lieu of dividends, and pursuant to the FDIC’s 

authority to set assessments, the progressively 

lower initial base and total base assessment rates set 

forth in 12 CFR 327.10(e)(2)(ii) and (iii) will come 

into effect without further action by the Board when 

the fund reserve ratio at the end of the prior 

assessment period reaches 2 percent and 2.5 

percent, respectively. 

37See 75 FR 66273 and 76 FR 10675. 

The assessment rates currently 

applicable to established small 

institutions and large and highly 

complex institutions in Tables 1 and 2 

above will remain in effect unless and 

until the reserve ratio meets or exceeds 

2 percent.31

New Small Institutions 

Current assessment rates applicable to 

new small institutions are set forth in 

Tables 3 and 4 below.32 New small 

institutions will remain subject to the 

assessment schedules in Tables 3 and 4 

when the reserve ratio reaches 2 percent 

or 2.5 percent.33 As stated in the 2010 

NPR describing the long-term 

comprehensive fund management plan, 

and adopted in the 2011 Final Rule, the 

lower assessment rate schedules 

applicable when the reserve ratio 

reaches 2 percent and 2.5 percent do not 

apply to any new depository 

institutions; these institutions will 

remain subject to the assessment rates 

shown below, until they no longer are 

new depository institutions.34

TABLE 3—CURRENT INITIAL BASE ASSESSMENT RATE SCHEDULE APPLICABLE TO NEW SMALL INSTITUTIONS 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 7 12 19 30 

1All amounts for all risk categories are in basis points annually. 

TABLE 4—CURRENT TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) APPLICABLE TO NEW SMALL

INSTITUTIONS 1 2

Risk category I Risk category II Risk category III Risk category IV 

Initial 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 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All 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. 

Insured Branches of Foreign Banks Current assessment rates applicable to 

insured branches of foreign banks are 

set forth in Table 5 below.35 The rates 

in Tables 5 will remain in effect unless 

and until the reserve ratio meets or 

exceeds 2 percent.36

TABLE 5—CURRENT INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 APPLICABLE TO INSURED BRANCHES OF

FOREIGN BANKS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 3 to 7 12 19 30 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

III. The Proposed Rule 

A. Overview of the Proposal 

The FDIC is proposing to increase 

initial base deposit insurance 

assessment rates uniformly by 2 basis 

points, beginning with the first quarterly 

assessment period of 2023. The 

proposed change is intended to increase 

assessment revenue in order to raise the 

reserve ratio to the minimum threshold 

of 1.35 percent within 8 years of the 

Restoration Plan’s initial establishment, 

as required by statute, and consistent 

with the Amended Restoration Plan, 

and is intended to support growth in the 

DIF in progressing toward the 2 percent 

DRR. The proposed assessment rate 

schedules would remain in effect unless 

and until the reserve ratio meets or 

exceeds 2 percent, absent further Board 

action. 

The proposed change in assessment 

rates would bring the average 

assessment rate close to the moderate 

steady assessment rate that would have 

been required to maintain a positive DIF 

balance from 1950 to 2010, identified as 

part of the long-term, comprehensive 

fund management plan in 2011.37 This 

continued growth in the DIF is intended 

to reduce the likelihood that the FDIC 

would need to consider a potentially 

pro-cyclical assessment rate increase, 

and to increase the likelihood of the DIF 

remaining positive through potential 


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38See 12 CFR 327.10(c) and (d). 

39See 12 CFR 327.10(f). 

40See 12 CFR 327.16(e). 

41See 12 CFR 327.10(c) and (d). 

future periods of significant losses due 

to bank failures. In lieu of dividends, 

the progressively lower assessment rate 

schedules currently in the regulation 

will remain unchanged and will come 

into effect without further action by the 

Board when the fund reserve ratio at the 

end of the prior assessment period 

reaches 2 percent and 2.5 percent, 

respectively.38 The FDIC is not 

proposing changes to the rate schedules 

that come into effect when the reserve 

ratio reaches 2 and 2.5 percent. 

The FDIC proposes to retain the 

Board’s flexibility to adopt higher or 

lower total base assessment rates, 

provided that the Board cannot increase 

or decrease rates from one quarter to the 

next by more than 2 basis points, and 

cumulative increases and decreases 

cannot be more than 2 basis points 

higher or lower than the total base 

assessment rates set forth in the 

assessment rate schedules.39 Retention 

of this flexibility will continue to allow 

the Board to act in a timely manner to 

fulfill its mandate to raise the reserve 

ratio, particularly in light of the 

uncertainty related to insured deposit 

growth and the economic outlook. 

B. Proposed Assessment Rate Schedules 

Proposed Assessment Rates for 

Established Small Institutions and Large 

and Highly Complex Institutions 

Pursuant to the FDIC’s authority to set 

assessments, the proposed initial and 

total base assessment rates applicable to 

established small institutions and large 

and highly complex institutions set 

forth in Tables 6 and 7 below would 

take effect beginning with the first 

quarterly assessment period of 2023. 

TABLE 6—PROPOSED INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, 

WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS Composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

An institution’s total base assessment 

rate may vary from the institution’s 

initial base assessment rate as a result of 

possible adjustments for certain 

liabilities that can increase or reduce 

loss to the DIF in the event the 

institution fails.40 These adjustments do 

not reflect a change and are consistent 

with the current assessment regulations. 

After applying all possible adjustments, 

the proposed minimum and maximum 

total base assessment rates applicable to 

established small institutions and large 

and highly complex institutions are set 

out in Table 7 below. 

TABLE 7—PROPOSED TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS

LESS THAN 2 PERCENT 2

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

Unsecured Debt Adjustment 3 .......................................................... ¥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 ................................................... 2.5 to 18 4 to 32 13 to 32 2.5 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 3The 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 5 basis points will have a maximum unsecured debt adjustment of 2.5 basis points and cannot have a total base assessment rate of lower than 2.5 basis points. 

The proposed rates applicable to 

established small institutions and large 

and highly complex institutions in 

Tables 6 and 7 above would remain in 

effect unless and until the reserve ratio 

meets or exceeds 2 percent. In lieu of 

dividends, and pursuant to the FDIC’s 

authority to set assessments, 

progressively lower initial and total base 

assessment rate schedules applicable to 

established small institutions and large 

and highly complex institutions as 

currently set forth in 12 CFR 327.10(c) 

and (d) will come into effect without 

further action by the Board when the 

fund reserve ratio at the end of the prior 

assessment period reaches 2 percent and 

2.5 percent, respectively.41 The FDIC is 

not proposing changes to these 

progressively lower assessment rate 

schedules. 

Proposed Assessment Rates for New 

Small Institutions 

Pursuant to the FDIC’s authority to set 

assessments, the initial and total base 

assessment rates applicable to new 

small institutions set forth in Tables 8 

and 9 below would take effect beginning 

with the first quarterly assessment 


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Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39393 

period of 2023. New small institutions 

would remain subject to the assessment 

schedules in Tables 8 and 9, even when 

the reserve ratio reaches 2 percent or 2.5 

percent, until they no longer were new 

depository institutions, consistent with 

current assessment regulations. 

TABLE 8—PROPOSED INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023 

AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS, APPLICABLE TO NEW SMALL INSTITUTIONS 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

1All amounts for all risk categories are in basis points annually. 

TABLE 9—PROPOSED TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS) 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS, APPLICABLE TO NEW SMALL INSTITUTIONS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

Brokered Deposit Adjustment (added) ............................................ N/A 0 to 10 0 to 10 0 to 10 

Total Base Assessment Rate ................................................... 9 14 to 24 21 to 31 32 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All 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. 


khammond on DSKJM1Z7X2PROD with PROPOSALS
39394 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

42See 76 FR 10672 (Feb. 25, 2011) and 81 FR 

32180 (May 20, 2016). In 2016, the FDIC amended 

its rules to refine the deposit insurance assessment 

system for established small IDIs (i.e., those small 

IDIs that have been federally insured for at least five 

years). The final rule preserved the lower overall 

range of initial base assessment rates adopted in 

2011 pursuant to the long-term fund management 

plan. 

43See 81 FR 32180 (May 20, 2016). 

44See 81 FR 32180 (May 20, 2016). 

45See 81 FR 6153–6155 (Feb. 4, 2016). 

46See 81 FR 32181. 

47See 81 FR 32191; see also 81 FR 6116–17. Note, 

subsequent to the adoption of the 2016 final rule, 

the FDIC made other conforming and technical 

amendments to the assessment regulations at 12 

CFR part 327 resulting from other rulemakings. The 

content of Appendix E does not need to be updated 

to reflect such conforming and other technical 

amendments and will be incorporated into the 

current Appendix A without change. See 83 FR 

14565 (Apr. 5, 2018), 84 FR 1346 (Feb. 4, 2019), and 

85 FR 71227 (Nov. 9, 2020). 

Proposed Assessment Rates for Insured 

Branches of Foreign Banks 

Pursuant to the FDIC’s authority to set 

assessments, the initial and total base 

assessment rates applicable to insured 

branches of foreign banks set forth in 

Table 10 below would take effect 

beginning with the first quarterly 

assessment period of 2023. 

TABLE 10—PROPOSED INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 

PERCENT, APPLICABLE TO INSURED BRANCHES OF FOREIGN BANKS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 5 to 9 14 21 32 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

The proposed rates applicable to 

insured branches of foreign banks in 

Table 10 above would remain in effect 

unless and until the reserve ratio meets 

or exceeds 2 percent. In lieu of 

dividends, and pursuant to the FDIC’s 

authority to set assessments, 

progressively lower initial and total base 

assessment rate schedules applicable to 

insured branches of foreign banks as 

currently set forth in 12 CFR 

327.10(e)(2)(ii) and (iii) will come into 

effect without further action by the 

Board when the fund reserve ratio at the 

end of the prior assessment period 

reaches 2 percent and 2.5 percent, 

respectively. The FDIC is not proposing 

changes to these progressively lower 

assessment rate schedules. 

C. Conforming, Technical, and Other 

Amendments to the Assessment 

Regulations 

Conforming Amendments 

The FDIC is proposing conforming 

amendments in §§ 327.10 and 327.16 of 

the FDIC’s assessment regulations to 

effectuate the modifications described 

above. These conforming amendments 

would ensure that the proposed uniform 

increase in initial base deposit 

insurance assessment rates of 2 basis 

points is properly incorporated into the 

assessment regulation provisions 

governing the calculation of an IDI’s 

quarterly deposit insurance assessment. 

The FDIC is proposing revisions to 

§ 327.10 to reflect the assessment rate 

schedules that would be applicable 

before and after the effective date of this 

proposal (i.e., January 1, 2023). The 

FDIC also is proposing to revise the 

uniform amounts for small banks and 

insured branches in §§ 327.16(a) and 

(d), respectively, to reflect the 2 basis 

point increase. Aside from the proposed 

revisions to reflect the assessment rate 

schedules, no additional revisions are 

required for the regulatory text 

applicable to large or highly complex 

banks because the formula in § 327.16(b) 

used to calculate their assessment rates 

incorporates the minimum and 

maximum initial base assessment rates 

then in effect. 

Technical Amendments 

As a technical change, the FDIC is 

rescinding certain rate schedules in 

§ 327.10 that are no longer in effect. 

FDIC regulations provided for changes 

to deposit insurance assessment rates 

the quarter after the reserve ratio first 

reached or surpassed 1.15 percent, 

which occurred in the third quarter of 

2016.42 The FDIC is rescinding the 

outdated and obsolete provisions of, and 

revising references to, the superseded 

assessment rate schedules in its 

regulations. These changes impose no 

new requirements on FDIC-supervised 

institutions. 

The FDIC also is rescinding in its 

entirety § 327.9—Assessment Pricing 

Methods, as such section is no longer 

applicable. The relevant section that 

includes the method for calculating riskbased assessments for all IDIs, 

particularly established small banks, is 

now in § 327.16, which was adopted by 

the Board in a final rule on April 26, 

2016. That final rule became applicable 

the calendar quarter in which the 

reserve ratio of the DIF reached 1.15 

percent, i.e., the third quarter of 2016.43

The FDIC also will make technical 

amendments to remove all references to 

§ 327.9. 

Other Amendments 

The FDIC is proposing additional 

amendments to update and conform 

Appendix A to subpart A of part 327— 

Method to Derive Pricing Multipliers 

and Uniform Amount in accordance 

with the current assessment regulations. 

Specifically, the FDIC is proposing to 

remove sections I through V, which 

were superseded by the 2016 final rule 

revising the method to calculate riskbased assessment rates for established 

small IDIs.44 The FDIC is proposing to 

replace the current language of sections 

I through V of Appendix A to subpart 

A of part 327 with the content of a 

previously proposed, but inadvertently 

not adopted, Appendix E—Method to 

Derive Pricing Multipliers and Uniform 

Amount. Appendix E was published in 

the 2016 revised notice of proposed 

rulemaking refining the deposit 

insurance assessment system for 

established small IDIs.45 Appendix E 

was inadvertently not included in the 

final rule. 

Under the 2016 final rule, initial base 

assessment rates for established small 

banks are calculated by applying 

statistically derived pricing multipliers 

to weighted CAMELS components and 

financial ratios; then adding the 

products to a uniform amount.46 The 

content of Appendix E describes the 

statistical model on which the revised 

and current pricing method is based 

and, accordingly, revises the method to 

derive the pricing multipliers and 

uniform amount used to determine the 

assessment rate schedules currently in 

effect.47


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Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39395 

48 12 U.S.C. 1817(b)(2)(A). 

49The risk factors referred to in factor (iv) include 

the probability that the Deposit Insurance Fund will 

incur a loss with respect to the institution, the 

likely amount of any such loss, and the revenue 

needs of the Deposit Insurance Fund. See Section 

7(b)(1)(C) of the FDI Act, 12 U.S.C. 1817(b)(1)(C). 

50See Section 7(b)(2)(B) of the FDI Act, 12 U.S.C. 

1817(b)(2)(B). 

51See 75 FR 66273 and 76 FR 10675. 

52Weighted average assessment rates do not 

reflect large bank surcharges, which were collected 

beginning December 30, 2016, and ending 

December 30, 2018, or small bank credits, which 

were applied beginning June 30, 2019, and ending 

June 30, 2020. 

The proposed revisions to Appendix 

A to subpart A of part 327 will result in: 

the removal of the superseded language 

currently in sections I through V; the 

addition of the language of Appendix E 

from the 2016 revised notice of 

proposed rulemaking reflecting the 

revised and current pricing method; and 

the retention of the current language 

(without change) of section VI 

(Description of Scorecard Measures) that 

applies to large and highly complex 

institutions. 

D. Analysis 

In setting assessment rates, the Board 

is authorized to set assessments for IDIs 

in such amounts as the Board may 

determine to be necessary or 

appropriate.48 In setting assessment 

rates, the Board is required by statute to 

consider the following factors: 

(i) The estimated operating expenses 

of the DIF. 

(ii) The estimated case resolution 

expenses and income of the DIF. 

(iii) The projected effects of the 

payment of assessments on the capital 

and earnings of IDIs. 

(iv) The risk factors and other factors 

taken into account pursuant to section 

7(b)(1) of the FDI Act (12 U.S.C. 

1817(b)(1)) under the risk-based 

assessment system, including the 

requirement under such section to 

maintain a risk-based system.49

(v) Other factors the Board has 

determined to be appropriate.50

The following summarizes the factors 

considered in proposing a uniform 

increase in initial base assessment rates 

of 2 basis points. 

Assessment Revenue Needs 

Under the Restoration Plan, the FDIC 

is monitoring deposit balance trends, 

potential losses, and other factors that 

affect the reserve ratio. Table 11 shows 

the components of the reserve ratio for 

the third quarter of 2021 through the 

first quarter of 2022. Growth in insured 

deposits outpaced growth in the DIF, 

resulting in a decline in the reserve ratio 

of 4 basis points to 1.23 percent as of 

March 31, 2022. 

While assessment revenue was the 

primary contributor to growth in the 

DIF, the weighted average assessment 

rate for all IDIs was approximately 3.7 

basis points for the assessment period 

ending March 31, 2022, compared to 

approximately 4.0 basis points when the 

Restoration Plan was established. In the 

first quarter of 2022, unrealized losses 

on available-for-sale securities in the 

DIF portfolio contributed to a relatively 

flat DIF balance, driven by rising yields 

as market participants reacted to 

expectations of increased inflation and 

tighter monetary policy. The DIF has 

experienced low losses from bank 

failures, with no banks failing in 2021 

and thus far in 2022. As of March 31, 

2022, the DIF balance totaled $123.0 

billion, up $3.7 billion from one year 

earlier. 

TABLE 11—FUND BALANCE, ESTIMATED INSURED DEPOSITS, AND RESERVE RATIO

[Dollar amounts in billions] 

3Q 2021 4Q 2021 1Q 2022 

Beginning Fund Balance ............................................................................................................. $120.5 $121.9 $123.1 

Plus: Net Assessment Revenue ........................................................................................... $1.7 $2.0 $1.9 

Plus: Investment Income a .................................................................................................... $0.1 ($0.3) ($1.5) 

Less: Loss Provisions ........................................................................................................... ($0.1) (*) $0.1 

Less: Operating Expenses ................................................................................................... $0.5 $0.5 $0.4 

Ending Fund Balance b ................................................................................................................ $121.9 $123.1 $123.0 

Estimated Insured Deposits ......................................................................................................... $9,580.7 $9,733.5 $9,974.9 

Q–O–Q Growth in Est. Insured Deposits .................................................................................... 0.97% 1.59% 2.48% 

Ending Reserve Ratio .................................................................................................................. 1.27% 1.27% 1.23% 

* Absolute value less than $50 million. 

a Includes unrealized gains/losses on available-for-sale securities. 

b Components of fund balance changes may not sum to totals due to rounding. 

In recognition that sustained elevated 

insured deposit balance trends, lower 

than anticipated weighted average 

assessment rates, and other factors have 

affected the ability of the reserve ratio 

to return to 1.35 percent before 

September 30, 2028, the FDIC is 

proposing to increase initial base 

deposit insurance assessment rates 

uniformly by 2 basis points. While 

subject to uncertainty, based on updated 

analysis of deposit balance trends, 

potential losses, and other factors that 

affect the reserve ratio, the FDIC projects 

that the increase in assessment rates 

would increase the likelihood that the 

reserve ratio returns to 1.35 percent 

before September 30, 2028. 

The proposed assessment rate 

schedules would remain in effect unless 

and until the reserve ratio meets or 

exceeds 2 percent. The proposed 

increase is further intended to support 

growth in the DIF in progressing toward 

the 2 percent DRR and would bring the 

average assessment rate close to the 

moderate steady assessment rate of 5.29 

basis points that would have been 

required to maintain a positive DIF 

balance from 1950 to 2010, identified as 

part of the long-term, comprehensive 

fund management plan in 2011.51 The 

assessment rate schedules adopted as 

part of the long-term, comprehensive 

plan came into effect once the reserve 

ratio reached 1.15 percent in 2016. 

Since then, the industry weighted 

average assessment rate has been 

consistently and significantly below the 

moderate, steady assessment rate, 

averaging 3.8 basis points and ranging 

between 3.5 and 4.1 basis points 

through 2019.52 Over the four most 

recent quarters, the weighted average 

assessment rate ranged between 3.6 and 

3.7 basis points. 

The proposed increase in assessment 

rates would bring the average 

assessment rate of 3.7 basis points as of 

March 31, 2022, close to the moderate, 

steady assessment rate that would have 

been required to maintain a positive DIF 

balance from 1950 to 2010. Sustaining 

this additional assessment revenue 


khammond on DSKJM1Z7X2PROD with PROPOSALS
39396 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

53See 12 CFR 327.10(c) and (d). 

54By September 30, 2021, deposit balances would 

have fully reflected the more significant actions 

taken by monetary and fiscal authorities in response 

to the COVID–19 pandemic. September 2021 was 

also the first month that the personal savings rate 

declined to a level within the range reported during 

the year prior to the pandemic. 

would support continued growth in the 

DIF, thereby reducing the likelihood 

that the FDIC would need to consider a 

potentially pro-cyclical assessment rate 

increase and increasing the likelihood of 

the DIF remaining positive through 

potential future periods of significant 

losses due to bank failures. In lieu of 

dividends, progressively lower 

assessment rate schedules will come 

into effect without further action by the 

Board when the reserve ratio at the end 

of the prior assessment period reaches 2 

percent and 2.5 percent, respectively.53

The proposed 2 basis point increase 

in assessment rates would increase the 

likelihood of reaching the statutory 

minimum reserve ratio by September 

30, 2028, and accelerate the timeline for 

achieving the long-term goal of a 2 

percent DRR without imposing 

excessive burden on the industry. The 

proposal would have a modest effect on 

banking industry income, resulting in 

an estimated annual reduction averaging 

less than 2 percent. The banking 

industry remained resilient moving into 

the second half of 2022 despite the 

extraordinary challenges of the 

pandemic, and is well-positioned to 

absorb such a rate increase. 

Overall, it is the FDIC’s view that the 

recommended assessment rate increase 

appropriately balances several 

considerations, including the goal of 

reaching the statutory minimum reserve 

ratio reasonably promptly, the goal of 

strengthening the fund to reduce the 

risk of pro-cyclical assessments in the 

event of a future downturn or industry 

stress, and the projected effects on bank 

earnings at a time when the banking 

industry is better positioned to absorb 

an assessment rate increase. 

Deposit Balance Trends 

Over the past four quarters, insured 

deposits exhibited annual growth that 

was slightly above historical averages. 

As shown in Chart 1, fourth and first 

quarters have historically exhibited the 

highest insured deposit growth rates 

throughout the year. Insured deposits 

grew by 1.59 percent in the fourth 

quarter of 2021, slightly above the prepandemic quarterly average of 1.40 

percent. In the first quarter of 2022, 

insured deposits grew by 2.48 percent, 

slightly above the quarterly average of 

2.32 percent. This moderation in 

insured deposit growth, relative to the 

first half of 2020 and the first quarter of 

2021, was attributable in part to a 

decline in support from fiscal stimulus 

programs and increases in consumer 

spending. Over the last year, insured 

deposits have grown by 4.9 percent, 

which is slightly elevated compared to 

the pre-pandemic average of 4.5 percent. 

While insured deposit growth has 

largely normalized, aggregate balances 

remain significantly elevated. In its 

previous semiannual update, the FDIC 

estimated that excess insured deposits 

that flowed into banks as the result of 

actions taken by monetary and fiscal 

authorities, and by individuals, 

businesses, and financial market 

participants in response to the 

Coronavirus Disease (COVID–19) 

pandemic totaled approximately $1.13 

trillion. This estimate reflects the 

amount of insured deposits as of 

September 30, 2021, in excess of the 

amount that would have resulted if 

insured deposits had grown at the prepandemic average rate of 4.5 percent 

since December 31, 2019.54 Rather than 

receding, as previously expected, these 

excess insured deposits have grown by 

about $200 billion through March 31, 

2022. 

The outlook for insured deposits 

remains uncertain and depends on 

several factors, including the outlook for 

consumer spending and incomes. Any 

unexpected economic weakness or 

concerns about slower than expected 

economic growth may cause businesses 

and consumers to maintain caution in 

spending and keep deposit levels 

elevated. Continued supply chain 

pressures and prolonged higher 

inflation may cause consumer spending 

to rise further as consumers pay more 

for a similar amount of goods, or may 

cause consumers to delay or forgo some 

purchases. Similarly, unexpected 

financial market stress could prompt 

another round of investor risk aversion 

that could lead to an increase in insured 

deposits. 

In contrast, tighter monetary policy 

and reduction of the Federal Reserve’s 


khammond on DSKJM1Z7X2PROD with PROPOSALSEP01JY22.007</GPH>

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Chart l-Qua1terly Insured Deposit Growth Rates 

Compared with Pre-Pandemic Quarterly Average 

2.32% 

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First Quarter Second Quarter Third Quarter Fomth Quarter 

~2019 ■ 2020 112021 : 2022 ■■■ Avg. 2015- 2019 
Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39397 

55FDIC, Annual Report 2021, Assets and Deposits 

of Failed or Assisted Insured Institutions and 

Losses to the Deposit Insurance Fund, 1934–2021, 

page 190, available at https://www.fdic.gov/about/ 

financial-reports/reports/2021annualreport/2021- 

arfinal.pdf. 

56 ‘‘Problem’’ institutions are institutions with a 

CAMELS composite rating of ‘‘4’’ or ‘‘5’’ due to 

financial, operational, or managerial weaknesses 

that threaten their continued financial viability. 

balance sheet may inhibit growth of 

insured deposits in the banking system. 

Despite the recent increases in the shortterm benchmark rate set by the Federal 

Reserve, most IDIs have little incentive 

to raise interest rates on deposit 

accounts and spur deposit growth in the 

near-term, given excess liquidity. If 

competition for deposits remains 

subdued and rates paid on deposit 

accounts remain low, depositors may 

shift balances away from deposit 

accounts and into higher-yielding 

alternatives, including money-market 

funds. 

A year has passed since the latest 

quarter of extraordinary growth in 

insured deposits prompted by the last 

round of fiscal stimulus, but those 

deposits have yet to exhibit any 

indication of receding. The FDIC will 

continue to closely monitor depositor 

behavior and the effects on insured 

deposits. 

Case Resolution Expenses (Insurance 

Fund Losses) 

Losses from past and future bank 

failures affect the reserve ratio by 

lowering the fund balance. In recent 

years, the DIF has experienced low 

losses from IDI failures. On average, four 

IDIs per year failed between 2016 and 

2021, at an average annual cost to the 

fund of about $208 million.55 No banks 

have failed thus far in 2022, marking 19 

consecutive months without a bank 

failure and the seventh year in a row 

with few or no failures. Based on 

currently available information about 

banks expected to fail in the near term; 

analyses of longer-term prospects for 

troubled banks; and trends in CAMELS 

ratings, failure rates, and loss rates; the 

FDIC projects that failures for the fiveyear period from 2022 to 2026 would 

cost the fund approximately $1.8 

billion. 

The total number of institutions on 

the FDIC’s Problem Bank List was 40 at 

the end of the first quarter of 2022, the 

lowest level since publication of the 

FDIC’s Quarterly Banking Profile began 

in 1984.56 The number of troubled 

banks is currently expected to remain at 

low levels. 

Future losses to the DIF remain 

uncertain, although some sources of 

uncertainty have changed since the 

Restoration Plan was adopted in 

September of 2020. The uncertainties 

include, among others, the variable 

trends in COVID–19 infections, rising 

inflation and interest rates, the 

possibility of recession, supply chain 

pressures, geopolitical tensions, and 

evolving consumer and depositor 

behavior, any of which could have 

longer-term effects on the condition and 

performance of the banking industry. 

However, the banking industry has 

remained a source of strength for the 

economy, in part, because its stronger 

capital position has better positioned 

banks to withstand losses compared to 

2008. 

Operating Expenses and Investment 

Income 

Operating expenses remain steady, 

while low investment returns coupled 

with elevated unrealized losses on 

securities held by the DIF have limited 

growth in the fund balance, particularly 

in the first quarter of 2022. 

Operating expenses partially offset 

increases in the DIF balance. Operating 

expenses have remained steady, ranging 

between $450 and $475 million per 

quarter since the Restoration Plan was 

first adopted in September 2020, 

totaling $453 million as of March 31, 

2022. 

Growth in the fund balance has been 

limited by a prolonged period of low 

investment returns on securities held by 

the DIF. Recently, as a result of the 

rising interest rate environment and 

market expectations leading up to such 

rate increases, the DIF has also 

experienced elevated unrealized losses 

on securities. Unrealized losses on 

available-for-sale securities in the DIF 

portfolio contributed to a relatively flat 

DIF balance in the first quarter of 2022. 

Unrealized losses were primarily due to 

rising yields as market participants 

reacted to expectations of increased 

inflation and tighter monetary policy. 

Future market movements may 

temporarily increase unrealized losses 

in the near term, to the extent that 

market participants have not already 

priced in these actions. However, the 

FDIC expects that these unrealized 

losses will be outpaced by higher 

investment returns over the longer-term 

as future cash proceeds are reinvested at 

higher rates. 

Projections for Fund Balance and 

Reserve Ratio 

In its consideration of proposed rates, 

the FDIC sought to increase the 

likelihood that the reserve ratio would 

reach the statutory minimum of 1.35 

percent by the statutory deadline of 

September 30, 2028, and to support 

growth in the DIF in progressing toward 

the long-term goal of a 2 percent DRR. 

With these objectives in mind, the FDIC 

updated its analysis and projections for 

the fund balance and reserve ratio to 

estimate how changes in insured 

deposit growth and assessment rates 

affect when the reserve ratio would 

reach the statutory minimum of 1.35 

percent and the DRR of 2 percent. 

Based on this analysis, the FDIC 

projects that, absent an increase in 

assessment rates, the reserve ratio is at 

risk of not reaching the statutory 

minimum of 1.35 percent by the 

statutory deadline of September 30, 

2028. In estimating how soon the 

reserve ratio would reach 1.35 percent, 

the FDIC developed two scenarios that 

assume different levels of insured 

deposit growth and average assessment 

rates, both of which the FDIC views as 

reasonable based on current and 

historical data. For insured deposit 

growth, the FDIC assumed annual 

growth rates of 4.0 percent and 3.5 

percent, respectively. These insured 

deposit growth rates represent a range of 

excess insured deposits resulting from 

the pandemic being retained. The 

assumption of a 4.0 percent annual 

growth rate reflects retention of all of 

the estimated $1.13 trillion of excess 

deposits in insured accounts, with this 

amount not contributing to further 

growth, while the remaining balance of 

insured deposits continues to grow at 

the pre-pandemic average annual rate of 

4.5 percent. 

Alternatively, a 3.5 percent annual 

growth rate assumption reflects banks 

retaining about 60 percent of the 

estimated excess insured deposits 

resulting from the pandemic, with this 

amount not contributing to further 

growth, while the remaining balance of 

insured deposits grows at the prepandemic average annual rate of 4.5 

percent. 

The two scenarios also apply different 

assumptions for average annual 

assessment rates. The weighted average 

assessment rate for all banks during 

2019, prior to the pandemic, was about 

3.5 basis points and rose to 4.0 basis 

points, on average, during 2020. The 

weighted average assessment rate for all 

IDIs was approximately 3.7 basis points 

for the assessment period ending March 

31, 2022. For the scenario in which all 

excess insured deposits are retained, the 

FDIC assumed a lower assessment rate 

of 3.5 basis points, and for the scenario 

in which some excess insured deposits 

recede, the FDIC assumed an assessment 

rate of 4.0 basis points. 

In developing the proposal, the FDIC 

projected the date that the reserve ratio 

would likely reach the statutory 

minimum of 1.35 percent in each 


khammond on DSKJM1Z7X2PROD with PROPOSALS
39398 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

57For simplicity, the analysis shown in Table 12 

assumes that: (1) the assessment base grows 4.5 

percent, annually; (2) interest income on the 

deposit insurance fund balance is zero; (3) 

operating expenses grow at 1 percent per year; and 

(4) failures for the five-year period from 2022 to 

2026 would cost approximately $1.8 billion. 

58After September 30, 2028, the deadline to 

restore the reserve ratio to the 1.35 percent 

minimum, insured deposits are assumed to grow at 

the pre-pandemic annual average of 4.5 percent. 

59The analysis shown in Chart 2 is based on the 

assumptions used in Scenario B through the 

projected quarter that the reserve ratio meets or 

exceeds 1.35 percent. Afterward, the analysis 

assumes: (1) net income on investments by the fund 

based on market-implied forward rates; (2) the 

assessment base grows 4.5 percent, annually; (3) 

operating expenses grow at 1 percent per year; and 

(4) failures for the five-year period from 2022 to 

2026 cost approximately $1.8 billion, with a low 

level of losses each year thereafter. The uniform 

increase in assessment rates of 1 or 2 basis points 

from the current rate schedule is assumed to take 

effect on January 1, 2023. 

60See 75 FR 66281. 

scenario, shown in Table 12 below.57

Under Scenario A, which assumes 

annual insured deposit growth of 4.0 

percent and an average annual 

assessment rate of 3.5 basis points, the 

FDIC projects that the reserve ratio 

would reach 1.35 percent in the third 

quarter of 2034, after the statutory 

deadline of September 30, 2028. 

TABLE 12—SCENARIO ANALYSIS: EXPECTED TIME TO REACH A 1.35 PERCENT RESERVE RATIO

Annual 

insured deposit 

growth rate 

[percent] 

Average annual 

assessment 

rate 

[basis points] 

Date the 

reserve 

ratio reaches 

1.35 percent 

As of 1Q 2023, average annual assessment rate increases by . . . 

1 BPS 2 BPS 

Scenario A ....................................................... 4.0 3.5 3Q 2034 3Q 2026 4Q 2024 

Scenario B ....................................................... 3.5 4.0 2Q 2027 2Q 2025 2Q 2024 

In Scenario B, which assumed annual 

insured deposit growth of 3.5 percent 

and an average annual assessment rate 

of 4.0 basis points, the FDIC projects 

that the reserve ratio would reach 1.35 

percent in the second quarter of 2027, 

five years from the second quarter of 

2022 and only five quarters before the 

statutory deadline. Even under these 

relatively favorable conditions, which 

assume lower insured deposit growth 

and a higher average assessment rate 

than experienced over the last year, the 

reserve ratio reaches the statutory 

minimum of 1.35 percent close to the 

statutory deadline. While the FDIC 

projects that the reserve ratio would 

reach the statutory minimum before the 

deadline in this Scenario, any number 

of uncertain factors—including 

unexpected losses, accelerated insured 

deposit growth, or lower weighted 

average assessment rates due to 

improving risk profiles of institutions— 

could materialize between now and the 

second quarter of 2027, and easily 

prevent the reserve ratio from reaching 

the minimum by the statutory deadline. 

Both Scenarios apply assumptions for 

insured deposit growth and average 

assessment rates that the FDIC views as 

reasonable based on current and 

historical data, and that do not widely 

differ from each other in magnitude. 

These relatively minor changes in the 

underlying assumptions result in 

considerably different outcomes, as the 

reserve ratio is projected to reach the 

statutory minimum of 1.35 percent in 

2034 in Scenario A, compared to 7 years 

earlier in Scenario B. The disparity 

between outcomes under these 

Scenarios demonstrates the sensitivity 

of the projections to slight variations in 

any key variable. 

Given these uncertainties, the FDIC 

projected the DIF balance and 

associated reserve ratio under each 

Scenario, applying an increase in 

average assessment rates beginning in 

the first assessment period of 2023. 

Under Scenario A, a 1 basis point 

increase in the average assessment rate 

is projected to result in the reserve ratio 

reaching the minimum in the third 

quarter of 2026, and a 2 basis point 

increase is projected to result in the 

reserve ratio reaching the minimum in 

the fourth quarter of 2024. Under 

Scenario B, a 1 basis point increase in 

the average assessment rate is projected 

to result in the reserve ratio reaching the 

minimum in the second quarter of 2025, 

and a 2 basis point increase is projected 

to result in the reserve ratio reaching the 

minimum in the second quarter of 2024. 

While the FDIC projects that the 

reserve ratio would reach the minimum 

before the statutory deadline under 

Scenario B with no increase in 

assessment rates, or under Scenario A 

with a 1 basis point increase in the 

average assessment rate, these outcomes 

are still over 4 years away and carry 

higher risk that the FDIC would have to 

increase assessment rates in the face of 

a future downturn or industry stress. 

In contrast, the proposed increase of 

2 basis points would improve the 

likelihood that the reserve ratio will 

reach the minimum ahead of the 

statutory deadline, building in a buffer 

in the event of uncertainties as 

described above that could stall or 

counter growth in the reserve ratio. 

Under both scenarios described above, 

an increase in assessment rates of 2 

basis points is projected to result in the 

reserve ratio reaching the statutory 

minimum reserve ratio of 1.35 percent 

approximately two years from now. 

Reaching the minimum reserve ratio 

of 1.35 percent ahead of the statutory 

deadline would mean that the FDIC 

would exit its Restoration Plan. If the 

reserve ratio subsequently declined 

below the statutory minimum, the FDIC 

would establish a new restoration plan 

and would have an additional eight 

years to restore the reserve ratio. 

The FDIC also analyzed the effects of 

an increase in assessment rates in 

supporting growth in the DIF in 

progressing toward the 2 percent DRR. 

For this analysis, the FDIC assumed a 

near-term annual insured deposit 

growth rate of 3.5 percent and a 

weighted average assessment rate of 4.0 

basis points.58 These assumptions 

reflect the ranges of insured deposit 

growth and assessment rates used in 

Scenario B, described above, and result 

in the shortest projected timeline to 

reach a 2 percent reserve ratio. As 

illustrated in Chart 2, even under these 

relatively favorable conditions, absent 

an increase in assessment rates, the 

projected reserve ratio would not reach 

2 percent until 2045, over twenty years 

from now.59 When the FDIC proposed 

the long-term, comprehensive fund 

management plan in 2010, it estimated 

that the reserve ratio would reach 2 

percent in 2027.60

Using the same assumptions, an 

increase in assessment rates would 

significantly accelerate the timeline for 

achieving a 2 percent DRR. An increase 

in assessment rates of 1 basis point 

resulted in the projected reserve ratio 

reaching 2 percent in 2036, nine years 

faster. Applying a 2 basis point increase 

in assessment rates would accelerate the 

timeline by an additional four years, to 

2032. 


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61See 75 FR 66273 and 76 FR 10675. 

62All income statement items used in this 

analysis were adjusted for the effect of mergers. 

Institutions for which four quarters of non-zero 

earnings data were unavailable, including insured 

branches of foreign banks, were excluded from this 

analysis. 

63The analysis does not incorporate any tax 

effects from an operating loss carry forward or carry 

back. 

64The analysis uses 4 percent as the threshold 

because IDIs generally need to maintain a leverage 

ratio of 4.0 percent or greater to be considered 

‘‘adequately capitalized’’ under Prompt Corrective 

Action Standards, in addition to the following 

requirements: (i) total risk-based capital ratio of 8.0 

percent or greater; and (ii) Tier 1 risk-based capital 

ratio of 6.0 percent or greater; and (iii) common 

equity tier 1 capital ratio of 4.5 percent or greater; 

and (iv) does not meet the definition of ‘‘well 

capitalized.’’ (iv) Beginning January 1, 2018, an 

advanced approaches or Category III FDICsupervised institution will be deemed to be 

‘‘adequately capitalized’’ if it satisfies the above 

criteria and has a supplementary leverage ratio of 

3.0 percent or greater, as calculated in accordance 

with § 324.10. See 12 CFR 324.403. For purposes of 

this analysis, equity to assets is used as the measure 

of capital adequacy. 

65Estimates and projections are based on the 

assumptions used in Scenario B. 

The proposed 2 basis point increase 

in assessment rates would bring the 

average assessment rate of 3.7 basis 

points, as of March 31, 2022, close to 

the moderate steady assessment rate that 

would have been required to maintain a 

positive DIF balance from 1950 to 2010, 

and identified as part of the long-term, 

comprehensive fund management plan 

in 2011.61 Upon achieving the 2 percent 

DRR, progressively lower assessment 

rate schedules would take effect. The 

proposed 2 basis point increase would 

accelerate the timeline for achieving the 

2 percent DRR significantly, would 

reduce the likelihood that the FDIC 

would need to consider a potentially 

pro-cyclical assessment rate increase, 

and would increase the likelihood of the 

DIF remaining positive through 

potential future periods of significant 

losses due to bank failures, consistent 

with the FDIC’s long-term fund 

management plan. 

Capital and Earnings Analysis and 

Expected Effects 

This analysis estimates the effect of 

the changes in deposit insurance 

assessments resulting from the proposed 

uniform increase in initial base 

assessment rates of 2 basis points. For 

this analysis, data as of March 31, 2022, 

are used to calculate each bank’s 

assessment base and risk-based 

assessment rate, absent the proposed 

increase. The base and rate are assumed 

to remain constant throughout the oneyear projection period.62

The analysis assumes that pre-tax 

income for the four quarters beginning 

on the proposed effective date of the 

rate increase, January 1, 2023, is equal 

to income reported from April 1, 2021, 

through March 31, 2022, adjusted for 

mergers. The analysis also assumes that 

the effects of changes in assessments are 

not transferred to customers in the form 

of changes in borrowing rates, deposit 

rates, or service fees. Since deposit 

insurance assessments are a taxdeductible operating expense, increases 

in the assessment expense can lower 

taxable income. Therefore, the analysis 

considers the effective after-tax cost of 

assessments in calculating the effect on 

capital.63

The effect of the change in 

assessments on an institution’s income 

is measured by the change in deposit 

insurance assessments as a percent of 

income before assessments and taxes 

(hereafter referred to as ‘‘income’’). This 

income measure is used in order to 

eliminate the potentially transitory 

effects of taxes on profitability. The 

FDIC analyzed the impact of assessment 

changes on institutions that were 

profitable in the period covering the 12 

months before March 31, 2022. 

An institution’s earnings retention 

and dividend policies also influence the 

extent to which assessments affect 

equity levels. If an institution maintains 

the same dollar amount of dividends 

when it pays a higher deposit insurance 

assessment under the final rule, equity 

(retained earnings) will be less by the 

full amount of the after-tax cost of the 

increase in the assessment. This 

analysis instead assumes that an 

institution will maintain its dividend 

rate (that is, dividends as a fraction of 

net income) unchanged from the 

weighted average rate reported over the 

four quarters ending March 31, 2022. In 

the event that the ratio of equity to 

assets falls below 4 percent, however, 

this assumption is modified such that 

an institution retains the amount 

necessary to reach a 4 percent minimum 

and distributes any remaining funds 

according to the dividend payout rate.64

The FDIC estimates that a uniform 

increase in initial base assessment rates 

of 2 basis points would contribute 

approximately $4.5 billion in 

assessment revenue in 2023.65 Given the 

assumptions in the analysis, for the 

industry as a whole, the FDIC estimates 


khammond on DSKJM1Z7X2PROD with PROPOSALSEP01JY22.008</GPH>

Chart 2 - Expected Time to Reach a 2 Percent Reserve Ratio 

Average Assessment Rate 

2.40% Year Reserve Ratio Projected to Reach 2.0 Percent 

-4.0 bps - - 5.0 bps ...... 6.0 bps 

2045 2036. 2032 

1.20% -------------------------------- 2021 2024 2027 2030 _2033 2036 2039 .2042 204S 
39400 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

66Earnings or income are annual income before 

assessments and taxes. Annual income is assumed 

to equal income from April 1, 2021, through March 

31, 2022. 

that, on average, a uniform increase in 

assessment rates of 2 basis points would 

decrease Tier 1 capital by an estimated 

0.1 percent. The proposed increase is 

estimated to cause no banks whose ratio 

of equity to assets would have equaled 

or exceeded 4 percent under the current 

assessment rate schedule to fall below 

that percentage (becoming 

undercapitalized), and no banks whose 

ratio of equity to assets would have 

exceeded 2 percent under the current 

rate schedule to fall below that 

percentage, becoming critically 

undercapitalized. 

The banking industry reported an 

increase in full year 2021 income 

primarily due to negative provision 

expense in all four quarters of the year. 

Fourth quarter net income improved 

from a year ago due to higher net 

interest income and negative provisions 

while first quarter 2022 net income 

declined due to higher and positive 

provisions. While provisions are 

positive and caused the decline in 

quarterly net income, the current level 

remains low compared to pre-pandemic 

levels. The net interest margin for the 

industry remained stable from the prior 

quarter and from the year-ago quarter, as 

growth in earning assets has been equal 

to the growth in net interest income. 

The average return-on-assets (ROA) 

decreased from a decade-high of 1.38 

percent in first quarter 2021 to 1.00 

percent in first quarter 2022. The 

banking industry remained resilient 

moving into the second half of 2022 

despite the extraordinary challenges of 

the pandemic, and is well-positioned to 

absorb the proposed rate increase. 

Given the assumptions in the 

analysis, for the industry as a whole, the 

FDIC estimates that the annual increase 

in assessments would average 1.0 

percent of income, which includes an 

average of 0.9 percent for small banks 

and an average of 1.0 percent for large 

and highly complex institutions.66

Table 13 shows that approximately 95 

percent of profitable institutions are 

projected to have an increase in 

assessments of less than 5 percent of 

income. Another 5 percent of profitable 

institutions are projected to have an 

increase in assessments equal to or 

exceeding 5 percent of income. 

TABLE 13—ESTIMATED ANNUAL EFFECT OF THE PROPOSED RULE ON INCOME FOR ALL PROFITABLE INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

($ billions) 

Percent of 

assets 

Over 30% ......................................................................................................... 8 0 1 <1 

20% to 30% ..................................................................................................... 11 <1 1 <1 

10% to 20% ..................................................................................................... 48 1 7 <1 

5% to 10% ....................................................................................................... 145 3 28 <1 

Less than 5% ................................................................................................... 4,400 95 23,724 100 

No Change ....................................................................................................... 3 <1 <1 <1 

Total .......................................................................................................... 4,615 100 23,762 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from April 1, 2021, through 

March 31, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending March 31, 2022. Excludes 9 insured branches of foreign banks and 7 institutions reporting fewer than 4 quarters of reported earnings. Some 

columns do not add to total due to rounding. 

Among profitable small institutions, 

95 percent are projected to have an 

increase in assessments of less than 5 

percent of income, as shown in Table 

14. The remaining 5 percent of 

profitable small institutions are 

projected to have an increase in 

assessments equal to or exceeding 5 

percent of income. As shown in Table 

15, 100 percent of profitable large and 

highly complex institutions are 

projected to have an increase in 

assessments below 5 percent of income. 

TABLE 14—ESTIMATED ANNUAL EFFECT OF THE PROPOSED RULE ON INCOME FOR PROFITABLE SMALL INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

($ billions) 

Percent of 

assets 

Over 30% ......................................................................................................... 8 <1 1 <1 

20% to 30% ..................................................................................................... 11 <1 1 <1 

10% to 20% ..................................................................................................... 48 1 7 <1 

5% to 10% ....................................................................................................... 145 3 28 1 

Less than 5% ................................................................................................... 4,258 95 3,466 99 

No Change ....................................................................................................... 3 <1 <1 <1 

Total .......................................................................................................... 4,473 100 3,503 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from April 1, 2021, through 

March 31, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending March 31, 2022. Some columns do not add to total due to rounding. 


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67Estimates and projections related to the onetime special assessment assume that: (1) insured 

Continued 

TABLE 15—ESTIMATED ANNUAL EFFECT OF THE PROPOSED RULE ON INCOME FOR PROFITABLE LARGE AND HIGHLY

COMPLEX INSTITUTIONS 1

Change in assessments as percent of income Number of 

institutions 

Percent of 

institutions 

Assets of 

institutions 

($ billions) 

Percent of 

assets 

Over 30% ......................................................................................................... 0 0 0 0 

20% to 30% ..................................................................................................... 0 0 0 0 

10% to 20% ..................................................................................................... 0 0 0 0 

5% to 10% ....................................................................................................... 0 0 0 0 

Less than 5% ................................................................................................... 142 100 20,258 100 

No Change ....................................................................................................... 0 0 0 0 

Total .......................................................................................................... 142 100 20,258 100 

1 Income is defined as annual income before assessments and taxes. Annual income is assumed to equal income from April 1, 2021, through 

March 31, 2022, adjusted for mergers. Profitable institutions are defined as those having positive merger-adjusted income for the 12 months ending March 31, 2022. Some columns do not add to total due to rounding. 

Strengthening the DIF 

As discussed above, the proposed rule 

is unlikely to have large material effects 

on any individual institution. However, 

the resulting increase in assessment 

revenue, combined across all 

institutions, would grow the DIF by over 

$4 billion a year. This growth would 

strengthen the DIF’s ability to withstand 

potential future periods of significant 

losses due to bank failures and reduce 

the likelihood that the FDIC would need 

to increase assessment rates during a 

future banking crisis. Accelerating the 

time in which the reserve ratio would 

reach the statutory minimum of 1.35 

percent and the DRR of 2 percent would 

allow the banking industry to remain a 

source of strength for the economy 

during a potential future downturn and 

would continue to ensure public 

confidence in federal deposit insurance. 

E. Alternatives Considered 

The FDIC considered the reasonable 

and possible alternatives described 

below. On balance, the FDIC views the 

current proposal as the most appropriate 

and most straightforward manner in 

which to achieve the objectives of the 

Amended Restoration Plan and the longterm fund management plan. 

Alternative 1: Maintain Current 

Assessment Rate Schedule 

The first alternative would be to 

maintain the current schedule of 

assessment rates. As described above, 

the FDIC projected that the reserve ratio 

would reach the statutory minimum of 

1.35 percent in the third quarter of 2034, 

after the statutory deadline under 

Scenario A, which assumes annual 

insured deposit growth of 4.0 percent 

and an average annual assessment rate 

of 3.5 basis points. Under Scenario B, 

which assumes insured deposit growth 

of 3.5 percent and an average 

assessment rate of 4.0 basis points, the 

FDIC projected that the reserve ratio 

would reach the statutory minimum of 

1.35 percent in the second quarter of 

2027, only five quarters before the 

statutory deadline of September 30, 

2028. 

As described above, the FDIC rejected 

maintaining the current schedule of 

assessment rates. Absent an increase in 

assessment rates, under Scenario A 

growth in the DIF would not be 

sufficient for the reserve ratio to reach 

the statutory minimum of 1.35 percent 

ahead of the required deadline. While 

the reserve ratio would reach the 

statutory minimum ahead of the 

required deadline under Scenario B, 

growth in the fund resulting from 

current assessment rates could be offset 

if unexpected losses materialize, 

insured deposit growth accelerates, or 

risk profiles of institutions continue to 

improve resulting in lower assessment 

rates. 

Additionally, relative to the other 

alternatives and the current proposal, 

maintaining the current schedule of 

assessment rates would not result in any 

acceleration of growth in the DIF in 

progressing toward the FDIC’s long-term 

goal of a 2 percent DRR. Absent an 

increase in assessment rates and 

assuming annual insured deposit 

growth of 3.5 percent and a weighted 

average assessment rate of 4.0 basis 

points, the FDIC projected that the 

reserve ratio would achieve the 2 

percent DRR in 2045, thirteen years later 

than if the FDIC were to apply an 

increase in assessment rates of 2 basis 

points beginning in 2023. 

Alternative 2: Increase in Assessment 

Rates of 1 Basis Point 

A second alternative would be to 

increase initial base assessment rates 

uniformly by 1 basis point. As described 

above, the FDIC projected that a 1 basis 

point increase in the average assessment 

rate would result in the reserve ratio 

reaching the minimum in the third 

quarter of 2026 under Scenario A and in 

the second quarter of 2025 under 

Scenario B. 

However, also as described above, the 

FDIC rejected this alternative in favor of 

a 2 basis point increase. Reaching the 

minimum reserve ratio in 2026, as 

projected under Scenario A, would be 

very close to the statutory deadline and 

could result in the FDIC having to 

consider higher assessment rates in the 

face of a future downturn or industry 

stress. While a 1 basis point increase 

under Scenario B is projected to result 

in the reserve ratio reaching 1.35 

percent in 2025, the increase in 

associated assessment revenue would 

generate a smaller buffer to absorb 

unexpected losses, accelerated insured 

deposit growth, or lower average 

assessment rates that could materialize 

over this period. 

Additionally, the FDIC projected that 

a 1 basis point increase in assessment 

rates would result in the reserve ratio 

achieving the 2 percent DRR in 

approximately 2036, about 4 years later 

than if the FDIC were to apply an 

increase in assessment rates of 2 basis 

points beginning in 2023. 

Alternative 3: One-Time Special 

Assessment of 4.5 Basis Points 

A third alternative would be to 

impose a one-time special assessment of 

4.5 basis points, applicable to the 

assessment base of all IDIs. Utilizing 

data as of March 31, 2022, and assuming 

an effective date of January 1, 2023, the 

FDIC estimated that a one-time special 

assessment of 4.5 basis points would 

contribute approximately $9.8 billion in 

assessment revenue and the reserve 

ratio would reach 1.35 percent the 

quarter following the effective date (i.e., 

the second assessment period of 

2023).67 Accordingly, the FDIC 


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deposit growth is 4 percent annually; (2) the 

average assessment rate before any rate increase is 

3.5 basis points; (3) losses to the DIF from bank 

failures total $1.8 billion from 2022 to 2026; (4) the 

assessment base grows 4.5 percent, annually; (5) 

interest income on the deposit insurance fund 

balance is zero; and (6) operating expenses grow at 

1 percent per year. 

68Earnings or income are annual income before 

assessments, taxes, and extraordinary items. Annual 

income is assumed to equal income from April 1, 

2021 through March 31, 2022. 

69 5 U.S.C. 601 et seq. 

70The SBA defines a small banking organization 

as having $750 million or less in assets, where an 

organization’s assets are determined by averaging 

the assets reported on its four quarterly financial 

statements for the preceding year. See 13 CFR 

121.201 (as amended by 87 FR 18627, effective May 

2, 2022). In its determination, the SBA counts the 

receipts, employees, or other measure of size of the 

concern whose size is at issue and all of its 

domestic and foreign affiliates. See 13 CFR 121.103. 

Following these regulations, the FDIC uses a 

banking organization’s affiliated and acquired 

assets, averaged over the preceding four quarters, to 

determine whether the banking organization is 

‘‘small’’ for the purposes of RFA. 

71 5 U.S.C. 601. 

72Based on Call Report data as of December 31, 

2021, the most recent period for which small 

entities can be identified. 

73 Id. 

74 Id. 

75 Id. For purposes of the RFA, the FDIC generally 

considers a significant effect to be a quantified 

effect in excess of 5 percent of total annual salaries 

and benefits per institution, or 2.5 percent of total 

noninterest expenses. 

76 4 U.S.C. 3501–3521. 

estimates that, on average, a one-time 

special assessment of 4.5 basis points 

would decrease Tier 1 capital by an 

estimated 0.4 percent and reduce the 

annual earnings of IDIs by 

approximately 2.3 percent, in 

aggregate.68

While a one-time special assessment 

of 4.5 basis points is projected to 

increase the DIF reserve ratio to 1.35 

percent the most quickly and precisely, 

and would significantly mitigate the 

potential that the FDIC would need to 

consider a potentially pro-cyclical 

increase in assessment rates, it is 

estimated to result in a quarterly 

assessment expense that is more than 8 

times greater than the proposal. 

Additionally, while the reserve ratio is 

projected to be restored to 1.35 percent 

immediately under this alternative, the 

risk would remain that it could fall back 

below the statutory minimum shortly 

thereafter if a sufficient cushion is not 

built in. This would result in the 

establishment of a new restoration plan. 

Further, a one-time special assessment 

would not meaningfully accelerate the 

timeline for achieving the 2 percent 

DRR. 

The FDIC requests comments on the 

proposal and the alternative approaches 

considered. On balance, in the FDIC’s 

view, the proposed increase in 

assessment rates appropriately balances 

several considerations, including the 

goal of reaching the statutory minimum 

reserve ratio reasonably promptly, 

accelerating the timeline for achieving a 

2 percent DRR, strengthening the fund 

to reduce the risk that the FDIC would 

need to consider a potentially procyclical assessment increase in the 

event of a future downturn or industry 

stress, and the projected effects on bank 

earnings at a time when the banking 

industry is better positioned to absorb 

an assessment rate increase. 

F. Comment Period, Effective Date, and 

Application Date 

The FDIC is issuing this proposal with 

an opportunity for public comment 

through August 20, 2022. Following the 

comment period, the FDIC expects to 

issue a final rule with an effective date 

of January 1, 2023, and applicable to the 

first quarterly assessment period of 2023 

(i.e., January 1–March 31, 2023). 

IV. Request for Comment 

The FDIC is requesting comment on 

all aspects of the notice of proposed 

rulemaking, in addition to the specific 

requests below. 

Question 1: The FDIC invites 

comment on its proposal to increase 

deposit insurance assessment rates 

uniformly by 2 basis points, beginning 

with the first quarterly assessment 

period of 2023. How does the approach 

in the proposed rule support or not 

support the objectives of the Amended 

Restoration Plan and the FDIC’s longterm fund management plan? 

Question 2: The FDIC invites 

comment on the reasonable and 

possible alternatives described in this 

proposed rule. What are other 

reasonable and possible alternatives 

that the FDIC should consider? 

V. Administrative Law Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency, in 

connection with a proposed rule, to 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of a 

proposed rule on small entities.69

However, an initial regulatory flexibility 

analysis is not required if the agency 

certifies that the proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

The Small Business Administration 

(SBA) has defined ‘‘small entities’’ to 

include banking organizations with total 

assets of less than or equal to $750 

million.70 Certain types of rules, such as 

rules of particular applicability relating 

to rates, corporate or financial 

structures, or practices relating to such 

rates or structures, are expressly 

excluded from the definition of ‘‘rule’’ 

for purposes of the RFA.71 Because the 

proposed rule relates directly to the 

rates imposed on IDIs for deposit 

insurance, the proposed rule is not 

subject to the RFA. Nonetheless, the 

FDIC is voluntarily presenting 

information in this RFA section. 

The proposed rule is expected to 

affect all FDIC-insured depository 

institutions. According to recent Call 

Report data, there are currently 4,848 

IDIs holding approximately $24 trillion 

in assets.72 Of these, approximately 

3,478 IDIs would be considered small 

entities for the purposes of RFA.73

These small entities hold approximately 

$905 billion in assets. 

The proposed rule would increase 

initial base assessment rates for these 

small entities by 2 basis points. In 

aggregate, the total annual amount paid 

in assessments by small entities would 

increase by approximately $160 million, 

from $320 million to $480 million.74

At the individual bank level, few 

institutions would be significantly 

affected by the proposed rule. Fewer 

than 330 small entities would 

experience annual assessment increases 

greater than $100,000, and none would 

experience annual assessment increases 

greater than $150,000. When compared 

to the banks’ expenses, the annual 

assessment increases are significant for 

only a handful of small entities: only 

five small entities would experience 

annual assessment increases greater 

than 2.5 percent of their noninterest 

expenses, and only three would 

experience annual assessment increases 

greater than 5 percent of what they paid 

in employee salaries and benefits.75

The FDIC invites comments on all 

aspects of the supporting information 

provided in this RFA section. In 

particular, would this proposed rule 

have any significant effects on small 

entities that the FDIC has not identified? 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) states that no agency may 

conduct or sponsor, nor is the 

respondent required to respond to, an 

information collection unless it displays 

a currently valid Office of Management 

and Budget (OMB) control number.76

The FDIC’s OMB control numbers for its 

assessment regulations are 3064–0057, 

3064–0151, and 3064–0179. The 

proposed rule does not revise any of 

these existing assessment information 


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77 12 U.S.C. 4802(a). 

78 12 U.S.C. 4802(b). 

79Public Law 106–102, section 722, 113 Stat. 

1338, 1471 (1999), 12 U.S.C. 4809. 

collections pursuant to the PRA and 

consequently, no submissions in 

connection with these OMB control 

numbers will be made to the OMB for 

review. 

C. Riegle Community Development and 

Regulatory Improvement Act 

Section 302 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (RCDRIA) 

requires that the Federal banking 

agencies, including the FDIC, in 

determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on IDIs, consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations.77 Subject to 

certain exceptions, new regulations and 

amendments to regulations prescribed 

by a Federal banking agency which 

impose additional reporting, 

disclosures, or other new requirements 

on insured depository institutions shall 

take effect on the first day of a calendar 

quarter which begins on or after the date 

on which the regulations are published 

in final form.78

The proposed rule would not impose 

additional reporting, disclosure, or other 

new requirements on insured depository 

institutions, including small depository 

institutions, or on the customers of 

depository institutions. Accordingly, 

section 302 of RCDRIA does not apply. 

Nevertheless, the requirements of 

RCDRIA have been considered in setting 

the proposed effective date. The FDIC 

invites comments that will further 

inform its consideration of RCDRIA. 

D. Plain Language 

Section 722 of the Gramm-LeachBliley Act 79 requires the Federal 

banking agencies to use plain language 

in all proposed and final rulemakings 

published in the Federal Register after 

January 1, 2000. The FDIC invites your 

comments on how to make this 

proposed rule easier to understand. For 

example: 

• Has the FDIC organized the material 

to suit your needs? If not, how could the 

material be better organized? 

• Are the requirements in the 

proposed regulation clearly stated? If 

not, how could the regulation be stated 

more clearly? 

• Does the proposed regulation 

contain language or jargon that is 

unclear? If so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? 

VI. Revisions to Code of Federal 

Regulations 

List of Subjects in 12 CFR Part 327 

Bank deposit insurance, Banks, 

banking, Savings associations. 

For the reasons stated in the 

preamble, the Federal Deposit Insurance 

Corporation proposes to amend 12 CFR 

part 327 as follows: 

PART 327—ASSESSMENTS 

■ 1. The authority for 12 CFR part 327 

continues to read as follows: 

Authority: 12 U.S.C. 1813, 1815, 1817–19, 

1821. 

■ 2. Amend § 327.4 by revising 

paragraphs (a) and (c) to read as follows: 

§ 327.4 Assessment rates. 

(a) Assessment risk assignment. For 

the purpose of determining the annual 

assessment rate for insured depository 

institutions under § 327.16, each 

insured depository institution will be 

provided an assessment risk assignment. 

Notice of an institution’s current 

assessment risk assignment will be 

provided to the institution with each 

quarterly certified statement invoice. 

Adjusted assessment risk assignments 

for prior periods may also be provided 

by the Corporation. Notice of the 

procedures applicable to reviews will be 

included with the notice of assessment 

risk assignment provided pursuant to 

this paragraph (a). 

* * * * * 

(c) Requests for review. An institution 

that believes any assessment risk 

assignment provided by the Corporation 

pursuant to paragraph (a) of this section 

is incorrect and seeks to change it must 

submit a written request for review of 

that risk assignment. An institution 

cannot request review through this 

process of the CAMELS ratings assigned 

by its primary federal regulator or 

challenge the appropriateness of any 

such rating; each federal regulator has 

established procedures for that purpose. 

An institution may also request review 

of a determination by the FDIC to assess 

the institution as a large, highly 

complex, or a small institution 

(§ 327.16(f)(3)) or a determination by the 

FDIC that the institution is a new 

institution (§ 327.16(g)(5)). Any request 

for review must be submitted within 90 

days from the date the assessment risk 

assignment being challenged pursuant 

to paragraph (a) of this section appears 

on the institution’s quarterly certified 

statement invoice. The request shall be 

submitted to the Corporation’s Director 

of the Division of Insurance and 

Research in Washington, DC, and shall 

include documentation sufficient to 

support the change sought by the 

institution. If additional information is 

requested by the Corporation, such 

information shall be provided by the 

institution within 21 days of the date of 

the request for additional information. 

Any institution submitting a timely 

request for review will receive written 

notice from the Corporation regarding 

the outcome of its request. Upon 

completion of a review, the Director of 

the Division of Insurance and Research 

(or designee) or the Director of the 

Division of Supervision and Consumer 

Protection (or designee) or any 

successor divisions, as appropriate, 

shall promptly notify the institution in 

writing of his or her determination of 

whether a change is warranted. If the 

institution requesting review disagrees 

with that determination, it may appeal 

to the FDIC’s Assessment Appeals 

Committee. Notice of the procedures 

applicable to appeals will be included 

with the written determination. 

* * * * * 

■ 3. Amend § 327.8 by revising 

paragraphs (e)(2), (f), (k)(1), and (l) 

through (p) to read as follows: 

§ 327.8 Definitions. 

* * * * * 

(e) * * * 

(2) Except as provided in paragraph 

(e)(3) of this section and § 327.17(e), if, 

after December 31, 2006, an institution 

classified as large under paragraph (f) of 

this section (other than an institution 

classified as large for purposes of 

§ 327.16(f)) reports assets of less than 

$10 billion in its quarterly reports of 

condition for four consecutive quarters, 

excluding assets as described in 

§ 327.17(e), the FDIC will reclassify the 

institution as small beginning the 

following quarter. 

* * * * * 

(f) Large institution. An institution 

classified as large for purposes of 

§ 327.16(f) or an insured depository 

institution with assets of $10 billion or 

more, excluding assets as described in 

§ 327.17(e), as of December 31, 2006 

(other than an insured branch of a 

foreign bank or a highly complex 

institution) shall be classified as a large 

institution. If, after December 31, 2006, 


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an institution classified as small under 

paragraph (e) of this section reports 

assets of $10 billion or more in its 

quarterly reports of condition for four 

consecutive quarters, excluding assets 

as described in § 327.17(e), the FDIC 

will reclassify the institution as large 

beginning the following quarter. 

* * * * * 

(k) * * * 

(1) Merger or consolidation involving 

new and established institution(s). 

Subject to paragraphs (k)(2) through (5) 

of this section and § 327.16(g)(3) and (4), 

when an established institution merges 

into or consolidates with a new 

institution, the resulting institution is a 

new institution unless: 

* * * * * 

(l) Risk assignment. Under § 327.16, 

for all new small institutions and 

insured branches of foreign banks, risk 

assignment includes assignment to Risk 

Category I, II, III, or IV, and for insured 

branches of foreign banks within Risk 

Category I, assignment to an assessment 

rate or rates. For all established small 

institutions, and all large institutions 

and all highly complex institutions, risk 

assignment includes assignment to an 

assessment rate. 

(m) Unsecured debt. For purposes of 

the unsecured debt adjustment as set 

forth in § 327.16(e)(1) and the 

depository institution debt adjustment 

as set forth in § 327.16(e)(2), unsecured 

debt shall include senior unsecured 

liabilities and subordinated debt. 

(n) Senior unsecured liability. For 

purposes of the unsecured debt 

adjustment as set forth in § 327.16(e)(1) 

and the depository institution debt 

adjustment as set forth in § 327.16(e)(2), 

senior unsecured liabilities shall be the 

unsecured portion of other borrowed 

money as defined in the quarterly report 

of condition for the reporting period as 

defined in paragraph (b) of this section. 

(o) Subordinated debt. For purposes 

of the unsecured debt adjustment as set 

forth in § 327.16(e)(1) and the 

depository institution debt adjustment 

as set forth in § 327.16(e)(2), 

subordinated debt shall be as defined in 

the quarterly report of condition for the 

reporting period; however, subordinated 

debt shall also include limited-life 

preferred stock as defined in the 

quarterly report of condition for the 

reporting period. 

(p) Long-term unsecured debt. For 

purposes of the unsecured debt 

adjustment as set forth in § 327.16(e)(1) 

and the depository institution debt 

adjustment as set forth in § 327.16(e)(2), 

long-term unsecured debt shall be 

unsecured debt with at least one year 

remaining until maturity; however, any 

such debt where the holder of the debt 

has a redemption option that is 

exercisable within one year of the 

reporting date shall not be deemed longterm unsecured debt. 

* * * * * 

§ 327.9 [Removed and Reserved] 

■ 4. Remove and reserve § 327.9. 

■ 5. Amend § 327.10 as follows: 

■ a. Remove paragraph (a); 

■ b. Redesignate paragraph (b) as 

paragraph (a) and revise it; 

■ c. Add new paragraph (b); 

■ d. Remove paragraph (e)(1)(i); 

■ e. Redesignate paragraph (e)(1)(ii) as 

paragraph (e)(1)(i) and revise it; 

■ f. Add new paragraph (e)(1)(ii); 

■ g. Revise paragraph (e)(1)(iii); 

■ h. Add paragraph (e)(1)(iv); 

■ i. Revise paragraph (e)(2)(i); 

■ j. Redesignate paragraphs (e)(2)(ii) and 

(iii) as (e)(2)(iii) and (iv), respectively; 

and 

■ k. Add new paragraph (e)(2)(ii). 

The revisions and additions read as 

follows: 

§ 327.10 Assessment rate schedules. 

(a) Assessment rate schedules for 

established small institutions and large 

and highly complex institutions 

applicable in the first assessment period 

after June 30, 2016, where the reserve 

ratio of the DIF as of the end of the prior 

assessment period has reached or 

exceeded 1.15 percent, and in all 

subsequent assessment periods through 

the assessment period ending December 

31, 2022, where the reserve ratio of the 

DIF as of the end of the prior assessment 

period is less than 2 percent. 

(1) Initial base assessment rate 

schedule for established small 

institutions and large and highly 

complex institutions. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, where the 

reserve ratio as of the end of the prior 

assessment period is less than 2 percent, 

the initial base assessment rate for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be the rate prescribed in 

the schedule in the following table: 

TABLE 1 TO PARAGRAPH (a)(1) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST

ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31 2022, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 3 to 16 6 to 30 16 to 30 3 to 30 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 3 to 16 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 3 shall 

range from 6 to 30 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions 

initial base assessment rate schedule. 

The annual initial base assessment rates 

for all established small institutions 

with a CAMELS composite rating of 4 or 

5 shall range from 16 to 30 basis points. 

(iv) Large and highly complex 

institutions initial base assessment rate 

schedule. The annual initial base 

assessment rates for all large and highly 

complex institutions shall range from 3 

to 30 basis points. 


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(2) Total base assessment rate 

schedule after adjustments. In the first 

assessment period after June 30, 2016, 

that the reserve ratio of the DIF as of the 

end of the prior assessment period has 

reached or exceeded 1.15 percent, and 

for all subsequent assessment periods 

through the assessment period ending 

December 31, 2022, where the reserve 

ratio for the prior assessment period is 

less than 2 percent, the total base 

assessment rates after adjustments for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be as prescribed in the 

schedule in the following table: 

TABLE 2 TO PARAGRAPH (a)(2) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS)1 BEGINNING THE FIRST ASSESSMENT PERIOD, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH

THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR

ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

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 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 1.5 to 16 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 3 shall 

range from 3 to 30 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions total 

base assessment rate schedule. The 

annual total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 4 or 5 

shall range from 11 to 30 basis points. 

(iv) Large and highly complex 

institutions total base assessment rate 

schedule. The annual total base 

assessment rates for all large and highly 

complex institutions shall range from 

1.5 to 40 basis points. 

(b) Assessment rate schedules for 

established small institutions and large 

and highly complex institutions 

beginning the first assessment period of 

2023, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period is less than 2 percent 

(1) Initial base assessment rate 

schedule for established small 

institutions and large and highly 

complex institutions. Beginning the first 

assessment period of 2023, where the 

reserve ratio of the DIF as of the end of 

the prior assessment period is less than 

2 percent, the initial base assessment 

rate for established small institutions 

and large and highly complex 

institutions, except as provided in 

paragraph (f) of this section, shall be the 

rate prescribed in the schedule in the 

following table: 

TABLE 3 TO PARAGRAPH (b)(1) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE FIRST

ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS

LESS THAN 2 PERCENT 1

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

1All amounts are in basis points annually. Initial base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 5 to 18 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all established small institutions with a 

CAMELS composite rating of 3 shall 

range from 8 to 32 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions 

initial base assessment rate schedule. 

The annual initial base assessment rates 

for all established small institutions 

with a CAMELS composite rating of 4 or 

5 shall range from 18 to 32 basis points. 

(iv) Large and highly complex 

institutions initial base assessment rate 

schedule. The annual initial base 

assessment rates for all large and highly 

complex institutions shall range from 5 

to 32 basis points. 

(2) Total base assessment rate 

schedule after adjustments. Beginning 

the first assessment period of 2023, 


khammond on DSKJM1Z7X2PROD with PROPOSALS
39406 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

is less than 2 percent, the total base 

assessment rates after adjustments for 

established small institutions and large 

and highly complex institutions, except 

as provided in paragraph (f) of this 

section, shall be as prescribed in the 

schedule in the following table: 

TABLE 4 TO PARAGRAPH (b)(2) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS)1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE

PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Established small institutions 

Large & 

highly complex 

institutions 

CAMELS composite 

1 or 2 3 4 or 5 

Initial Base Assessment Rate .......................................................... 5 to 18 8 to 32 18 to 32 5 to 32 

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 ................................................... 2.5 to 18 4 to 32 13 to 32 2.5 to 42 

1The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2All amounts are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. 

(i) CAMELS composite 1- and 2-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 1 or 2 

shall range from 2.5 to 18 basis points. 

(ii) CAMELS composite 3-rated 

established small institutions total base 

assessment rate schedule. The annual 

total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 3 shall 

range from 4 to 32 basis points. 

(iii) CAMELS composite 4- and 5- 

rated established small institutions total 

base assessment rate schedule. The 

annual total base assessment rates for all 

established small institutions with a 

CAMELS composite rating of 4 or 5 

shall range from 13 to 32 basis points. 

(iv) Large and highly complex 

institutions total base assessment rate 

schedule. The annual total base 

assessment rates for all large and highly 

complex institutions shall range from 

2.5 to 42 basis points. 

* * * * * 

(e) * * * 

(1) * * * 

(i) Assessment rate schedules for new 

large and highly complex institutions 

once the DIF reserve ratio first reaches 

1.15 percent on or after June 30, 2016 

and through the assessment period 

ending December 31, 2022. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, new large 

and new highly complex institutions 

shall be subject to the initial and total 

base assessment rate schedules provided 

for in paragraph (a) of this section. 

(ii) Assessment rate schedules for new 

large and highly complex institutions 

beginning the first assessment period of 

2023 and for all subsequent periods. 

Beginning in the first assessment period 

of 2023 and for all subsequent 

assessment periods, new large and new 

highly complex institutions shall be 

subject to the initial and total base 

assessment rate schedules provided for 

in paragraph (b) of this section. 

(iii) Assessment rate schedules for 

new small institutions beginning the 

first assessment period after June 30, 

2016, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022—(A) Initial base assessment rate 

schedule for new small institutions. In 

the first assessment period after June 30, 

2016, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022, the initial base assessment rate for 

a new small institution shall be the rate 

prescribed in the schedule in the 

following table: 

TABLE 9 TO PARAGRAPH (e)(1)(iii)(A) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING THE

FIRST ASSESSMENT PERIOD, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS

REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD

ENDING DECEMBER 31, 2022 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 7 12 19 30 

1All amounts for all risk categories are in basis points annually. 

(1) Risk category I initial base 

assessment rate schedule. The annual 

initial base assessment rates for all new 

small institutions in Risk Category I 

shall be 7 basis points. 

(2) Risk category II, III, and IV initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all new small institutions in Risk 

Categories II, III, and IV shall be 12, 19, 

and 30 basis points, respectively. 

(B) Total base assessment rate 

schedule for new small institutions. In 

the first assessment period after June 30, 

2016, that the reserve ratio of the DIF as 

of the end of the prior assessment 

period has reached or exceeded 1.15 


khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39407 

percent, and for all subsequent 

assessment periods through the 

assessment period ending December 31, 

2022, the total base assessment rates 

after adjustments for a new small 

institution shall be the rate prescribed 

in the schedule in the following table: 

TABLE 10 TO PARAGRAPH (e)(1)(iii)(B) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS)1 BEGINNING THE FIRST ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS

OF THE END OF THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022 2

Risk category I Risk category II Risk category III Risk category IV 

Initial 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 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 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. 

(1) Risk category I total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category I shall be 

7 basis points. 

(2) Risk category II total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category II shall 

range from 12 to 22 basis points. 

(3) Risk category III total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category III shall 

range from 19 to 29 basis points. 

(4) Risk category IV total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category IV shall 

range from 30 to 40 basis points. 

(iv) Assessment rate schedules for 

new small institutions beginning the 

first assessment period of 2023 and for 

all subsequent assessment periods—(A) 

Initial base assessment rate schedule for 

new small institutions. Beginning in the 

first assessment period of 2023 and for 

all subsequent assessment periods, the 

initial base assessment rate for a new 

small institution shall be the rate 

prescribed in the schedule in the 

following table, even if the reserve ratio 

equals or exceeds 2 percent or 2.5 

percent: 

TABLE 11 TO PARAGRAPH (e)(1)(iv)(A) INTRODUCTORY TEXT—INITIAL BASE ASSESSMENT RATE SCHEDULE BEGINNING

THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS 1

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

1 All amounts for all risk categories are in basis points annually. 

(1) Risk category I initial base 

assessment rate schedule. The annual 

initial base assessment rates for all new 

small institutions in Risk Category I 

shall be 9 basis points. 

(2) Risk category II, III, and IV initial 

base assessment rate schedule. The 

annual initial base assessment rates for 

all new small institutions in Risk 

Categories II, III, and IV shall be 14, 21, 

and 32 basis points, respectively. 

(B) Total base assessment rate 

schedule for new small institutions. 

Beginning in the first assessment period 

of 2023 and for all subsequent 

assessment periods, the total base 

assessment rates after adjustments for a 

new small institution shall be the rate 

prescribed in the schedule in the 

following table, even if the reserve ratio 

equals or exceeds 2 percent or 2.5 

percent: 

TABLE 12 TO PARAGRAPH (e)(1)(iv)(B) INTRODUCTORY TEXT—TOTAL BASE ASSESSMENT RATE SCHEDULE (AFTER ADJUSTMENTS)1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023 AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS 2

Risk category I Risk category II Risk category III Risk category IV 

Initial Assessment Rate ................................................................... 9 14 21 32 

Brokered Deposit Adjustment (added) ............................................ N/A 0 to 10 0 to 10 0 to 10 

Total Base Assessment Rate ................................................... 9 14 to 24 21 to 31 32 to 42 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 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. 

(1) Risk category I total assessment 

rate schedule. The annual total base 

assessment rates for all new small institutions in Risk Category I shall be 

9 basis points. 


khammond on DSKJM1Z7X2PROD with PROPOSALS
39408 Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 

(2) Risk category II total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category II shall 

range from 14 to 24 basis points. 

(3) Risk category III total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category III shall 

range from 21 to 31 basis points. 

(4) Risk category IV total assessment 

rate schedule. The annual total base 

assessment rates for all new small 

institutions in Risk Category IV shall 

range from 32 to 42 basis points. 

(2) * * * 

(i) Beginning the first assessment 

period after June 30, 2016, where the 

reserve ratio of the DIF as of the end of 

the prior assessment period has reached 

or exceeded 1.15 percent, and for all 

subsequent assessment periods through 

the assessment period ending December 

31, 2022, where the reserve ratio as of 

the end of the prior assessment period 

is less than 2 percent. In the first 

assessment period after June 30, 2016, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

has reached or exceeded 1.15 percent, 

and for all subsequent assessment 

periods through the assessment period 

ending December 31, 2022, where the 

reserve ratio as of the end of the prior 

assessment period is less than 2 percent, 

the initial and total base assessment 

rates for an insured branch of a foreign 

bank, except as provided in paragraph 

(f) of this section, shall be the rate 

prescribed in the schedule in the 

following table: 

TABLE 13 TO PARAGRAPH (e)(2)(i) INTRODUCTORY TEXT—INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD AFTER JUNE 30, 2016, WHERE THE RESERVE RATIO AS OF THE END OF

THE PRIOR ASSESSMENT PERIOD HAS REACHED 1.15 PERCENT, AND FOR ALL SUBSEQUENT ASSESSMENT PERIODS

THROUGH THE ASSESSMENT PERIOD ENDING DECEMBER 31, 2022, WHERE THE RESERVE RATIO AS OF THE END OF

THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 3 to 7 12 19 30 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

(A) Risk category I initial and total 

base assessment rate schedule. The 

annual initial and total base assessment 

rates for an insured branch of a foreign 

bank in Risk Category I shall range from 

3 to 7 basis points. 

(B) Risk category II, III, and IV initial 

and total base assessment rate schedule. 

The annual initial and total base 

assessment rates for Risk Categories II, 

III, and IV shall be 12, 19, and 30 basis 

points, respectively. 

(C) All insured branches of foreign 

banks in any one risk category, other 

than Risk Category I, will be charged the 

same initial base assessment rate, 

subject to adjustment as appropriate. 

(ii) Assessment rate schedule for 

insured branches of foreign banks 

beginning the first assessment period of 

2023, where the reserve ratio of the DIF 

as of the end of the prior assessment 

period is less than 2 percent. Beginning 

the first assessment period of 2023, 

where the reserve ratio of the DIF as of 

the end of the prior assessment period 

is less than 2 percent, the initial and 

total base assessment rates for an 

insured branch of a foreign bank, except 

as provided in paragraph (f) of this 

section, shall be the rate prescribed in 

the schedule in the following table: 

TABLE 14 TO PARAGRAPH (e)(2)(ii) INTRODUCTORY TEXT—INITIAL AND TOTAL BASE ASSESSMENT RATE SCHEDULE 1 BEGINNING THE FIRST ASSESSMENT PERIOD OF 2023, WHERE THE RESERVE RATIO AS OF THE END OF THE PRIOR ASSESSMENT PERIOD IS LESS THAN 2 PERCENT 2

Risk category I Risk category II Risk category III Risk category IV 

Initial and Total Assessment Rate ................................................... 5 to 9 14 21 32 

1 The depository institution debt adjustment, which is not included in the table, can increase total base assessment rates above the maximum 

assessment rates shown in the table. 2 All amounts for all risk categories are in basis points annually. Initial and total base rates that are not the minimum or maximum rate will vary 

between these rates. 

(A) Risk category I initial and total 

base assessment rate schedule. The 

annual initial and total base assessment 

rates for an insured branch of a foreign 

bank in Risk Category I shall range from 

5 to 9 basis points. 

(B) Risk category II, III, and IV initial 

and total base assessment rate schedule. 

The annual initial and total base 

assessment rates for Risk Categories II, 

III, and IV shall be 14, 21, and 32 basis 

points, respectively. 

(C) Same initial base assessment rate. 

All insured branches of foreign banks in 

any one risk category, other than Risk 

Category I, will be charged the same 

initial base assessment rate, subject to 

adjustment as appropriate. 

* * * * * 

■ 6. Amend § 327.11 by revising 

paragraph (c)(3)(i) to read as follows: 

§ 327.11 Surcharges and assessments 

required to raise the reserve ratio of the DIF 

to 1.35 percent. 

* * * * * 

(c) * * * 

(3) * * * 

(i) Fraction of quarterly regular 

deposit insurance assessments paid by 

credit accruing institutions. The fraction 

of assessments paid by credit accruing 

institutions shall equal quarterly deposit 

insurance assessments, as determined 

under § 327.16, paid by such 

institutions for each assessment period 

during the credit calculation period, 

divided by the total amount of quarterly 

deposit insurance assessments paid by 

all insured depository institutions 

during the credit calculation period, 

excluding the aggregate amount of 


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Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39409 

surcharges imposed under paragraph (b) 

of this section. 

* * * * * 

■ 7. Amend § 327.16 as follows: 

■ a. Redesignate paragraphs (a)(1)(i)(A) 

through (C) as (a)(1)(i)(B) through (D), 

respectively; 

■ b. Add new paragraph (a)(1)(i)(A); 

■ c. Revise newly redesignated 

paragraph (a)(1)(i)(B); 

■ d. Redesignate paragraphs (d)(4)(ii)(A) 

through (C) as (d)(4)(ii)(B) through (D), 

respectively; 

■ e. Add new paragraph (d)(4)(ii)(A); 

and 

■ f. Revise newly redesignated 

paragraph (d)(4)(ii)(B). 

The revisions and additions read as 

follows: 

§ 327.16 Assessment pricing methods— 

beginning the first assessment period after 

June 30, 2016, where the reserve ratio of the 

DIF as of the end of the prior assessment 

period has reached or exceeded 1.15 

percent. 

* * * * * 

(a) * * * 

(1) * * * 

(i) Uniform amount. Except as 

adjusted for the actual assessment rates 

set by the Board under § 327.10(f), the 

uniform amount shall be: 

(A) 7.352 whenever the assessment 

rate schedule set forth in § 327.10(a) is 

in effect; 

(B) 9.352 whenever the assessment 

rate schedule set forth in § 327.10(b) is 

in effect; 

* * * * * 

(d) * * * 

(4) * * * 

(ii) * * * 

(A) ¥5.127 whenever the assessment 

rate schedule set forth in § 327.10(a) is 

in effect; 

(B) ¥3.127 whenever the assessment 

rate schedule set forth in § 327.10(b) is 

in effect; 

* * * * * 

■ 8. Amend appendix A to subpart A of 

part 327 as follows: 

■ a. Revise sections I through III; 

■ b. Remove sections IV and V; and 

■ c. Redesignate section VI as section 

IV; 

The revisions read as follows: 

Appendix A to Subpart A of Part 327— 

Method To Derive Pricing Multipliers 

and Uniform Amount 

I. Introduction 

The uniform amount and pricing 

multipliers are derived from: 

• A model (the Statistical Model) that 

estimates the probability of failure of an 

institution over a three-year horizon; 

• The minimum initial base assessment 

rate; 

• The maximum initial base assessment 

rate; 

• Thresholds marking the points at which 

the maximum and minimum assessment 

rates become effective. 

II. The Statistical Model 

The Statistical Model estimates the 

probability of an insured depository 

institution failing within three years using a 

logistic regression and pooled time-series 

cross-sectional data; 1 that is, the dependent 

variable in the estimation is whether an 

insured depository institution failed during 

the following three-year period. Actual 

model parameters for the Statistical Model 

are an average of each of three regression 

estimates for each parameter. Each of the 

three regressions uses end-of-year data from 

insured depository institutions’ quarterly 

reports of condition and income (Call Reports 

and Thrift Financial Reports or TFRs 2) for 

every third year to estimate probability of 

failure within the ensuing three years. One 

regression (Regression 1) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1985 and failures from 

1986 through 1988; Call Report and TFR data 

for the end of 1988 and failures from 1989 

through 1991; and so on, ending with Call 

Report data for the end of 2009 and failures 

from 2010 through 2012. The second 

regression (Regression 2) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1986 and failures from 

1987 through 1989, and so on, ending with 

Call Report data for the end of 2010 and 

failures from 2011 through 2013. The third 

regression (Regression 3) uses insured 

depository institutions’ Call Report and TFR 

data for the end of 1987 and failures from 

1988 through 1990, and so on, ending with 

Call Report data for the end of 2011 and 

failures from 2012 through 2014. The 

regressions include only Call Report data and 

failures for established small institutions. 1Tests for the statistical significance of 

parameters use adjustments discussed by 

Tyler Shumway (2001) ‘‘Forecasting 

Bankruptcy More Accurately: A Simple 

Hazard Model,’’ Journal of Business 74:1, 

101–124. 2Beginning in 2012, all insured depository 

institutions began filing quarterly Call 

Reports and the TFR was no longer filed. 

Table A.1 lists and defines the explanatory 

variables (regressors) in the Statistical Model. 

TABLE A.1—DEFINITIONS OF MEASURES USED IN THE FINANCIAL RATIOS METHOD

Variables Description 

Leverage Ratio (%) ......................... Tier 1 capital divided by adjusted average assets. (Numerator and denominator are both based on the definition for prompt corrective action.) 

Net Income before Taxes/Total Assets (%).Income (before applicable income taxes and discontinued operations) for the most recent twelve months 

divided by total assets.1

Nonperforming Loans and Leases/ 

Gross Assets (%).

Sum of total loans and lease financing receivables past due 90 or more days and still accruing interest and 

total nonaccrual loans and lease financing receivables (excluding, in both cases, the maximum amount 

recoverable from the U.S. Government, its agencies or government-sponsored enterprises, under guarantee or insurance provisions) divided by gross assets.2 3

Other Real Estate Owned/Gross 

Assets (%).

Other real estate owned divided by gross assets.2

Brokered Deposit Ratio ................... The ratio of the difference between brokered deposits and 10 percent of total assets to total assets. For institutions that are well capitalized and have a CAMELS composite rating of 1 or 2, reciprocal deposits 

are deducted from brokered deposits. If the ratio is less than zero, the value is set to zero. 

Weighted Average of C, A, M, E, L, 

and S Component Ratings.

The weighted sum of the ‘‘C,’’ ‘‘A,’’ ‘‘M,’’ ‘‘E’’, ‘‘L’’, and ‘‘S’’ CAMELS components, with weights of 25 percent each for the ‘‘C’’ and ‘‘M’’ components, 20 percent for the ‘‘A’’ component, and 10 percent each for 

the ‘‘E’’, ‘‘L’’, and ‘‘S’’ components. In instances where the ‘‘S’’ component is missing, the remaining 

components are scaled by a factor of 10/9.4

Loan Mix Index ............................... A measure of credit risk described below. 

One-Year Asset Growth (%) ........... Growth in assets (adjusted for mergers 5) over the previous year in excess of 10 percent.6 If growth is less 

than 10 percent, the value is set to zero. 

1For purposes of calculating actual assessment rates (as opposed to model estimation), the ratio of Net Income before Taxes to Total Assets 

is bounded below by (and cannot be less than) ¥25 percent and is bounded above by (and cannot exceed) 3 percent. For purposes of model 

estimation only, the ratio of Net Income before Taxes to Total Assets is defined as income (before income taxes and extraordinary items and 

other adjustments) for the most recent twelve months divided by total assets. 


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2For purposes of calculating actual assessment rates (as opposed to model estimation), ‘‘Gross assets’’ are total assets plus the allowance for 

loan and lease financing receivable losses (ALLL); for purposes of estimating the Statistical Model, for years before 2001, when allocated transfer risk was not included in ALLL in Call Reports, allocated transfer risk is included in gross assets separately. 3 Delinquency and non-accrual data on government guaranteed loans are not available for the entire estimation period. As a result, the Statistical Model is estimated without deducting delinquent or past-due government guaranteed loans from the nonperforming loans and leases to 

gross assets ratio. 4The component rating for sensitivity to market risk (the ‘‘S’’ rating) is not available for years before 1997. As a result, and as described in the 

table, the Statistical Model is estimated using a weighted average of five component ratings excluding the ‘‘S’’ component where the component 

is not available. 5Growth in assets is also adjusted for acquisitions of failed banks. 

6For purposes of calculating actual assessment rates (as opposed to model estimation), the maximum value of the One-Year Asset Growth 

measure is 230 percent; that is, asset growth (merger adjusted) over the previous year in excess of 240 percent (230 percentage points in excess of the 10 percent threshold) will not further increase a bank’s assessment rate. 

The financial variable measures used to 

estimate the failure probabilities are obtained 

from Call Reports and TFRs. The weighted 

average of the ‘‘C,’’ ‘‘A,’’ ‘‘M,’’ ‘‘E’’, ‘‘L’’, and 

‘‘S’’ component ratings measure is based on 

component ratings obtained from the most 

recent bank examination conducted within 

24 months before the date of the Call Report 

or TFR. 

The Loan Mix Index assigns loans to the 

categories of loans described in Table A.2. 

For each loan category, a charge-off rate is 

calculated for each year from 2001 through 

2014. The charge-off rate for each year is the 

aggregate charge-off rate on all such loans 

held by small institutions in that year. A 

weighted average charge-off rate is then 

calculated for each loan category, where the 

weight for each year is based on the number 

of small-bank failures during that year.3 A 

Loan Mix Index for each established small 

institution is calculated by: (1) multiplying 

the ratio of the institution’s amount of loans 

in a particular loan category to its total assets 

by the associated weighted average charge-off 

rate for that loan category; and (2) summing 

the products for all loan categories. Table A.2 

gives the weighted average charge-off rate for 

each category of loan, as calculated through 

the end of 2014. The Loan Mix Index 

excludes credit card loans. 3An exception is ‘‘Real Estate Loans 

Residual,’’ which consists of real estate loans 

held in foreign offices. Few small insured 

depository institutions report this item and a 

statistically reliable estimate of the weighted 

average charge-off rate could not be obtained. 

Instead, a weighted average of the weighted 

average charge-off rates of the other real 

estate loan categories is used. (The other 

categories are construction & development, 

multifamily residential, nonfarm 

nonresidential, 1–4 family residential, and 

agricultural real estate.) The weight for each 

of the other real estate loan categories is 

based on the aggregate amount of the loans 

held by small insured depository institutions 

as of December 31, 2014. 

TABLE A.2—LOAN MIX INDEX CATEGORIES

Weighted 

charge-off 

rate percent 

Construction and Development ....................................................................................................................................................... 4.4965840 

Commercial & Industrial .................................................................................................................................................................. 1.5984506 

Leases ............................................................................................................................................................................................. 1.4974551 

Other Consumer .............................................................................................................................................................................. 1.4559717 

Loans to Foreign Government ......................................................................................................................................................... 1.3384093 

Real Estate Loans Residual ............................................................................................................................................................ 1.0169338 

Multifamily Residential ..................................................................................................................................................................... 0.8847597 

Nonfarm Nonresidential ................................................................................................................................................................... 0.7286274 

1–4 Family Residential .................................................................................................................................................................... 0.6973778 

Loans to Depository banks .............................................................................................................................................................. 0.5760532 

Agricultural Real Estate ................................................................................................................................................................... 0.2376712 

Agriculture ........................................................................................................................................................................................ 0.2432737 

For each of the three regression estimates 

(Regression 1, Regression 2 and Regression 

3), the estimated probability of failure (over 

a three-year horizon) of institution i at time 

T is 

Equation 1 

PiT = 1/((1+ exp(¥ZiT)) 

where 

Equation 2 

ZiT = b0 + b1 (Leverage RatioiT) + b2

(Nonperforming loans and leases ratioiT) 

+ b3 (Other real estate owned ratioiT) + 

b4 (Net income before taxes ratioiT) + b5

(Brokered deposit ratioiT) + b6 (Weighted 

average CAMELS component ratingiT) + 

b7 (Loan mix indexiT) + b8 (One-year 

asset growthiT) 

where the b variables are parameter 

estimates. As stated earlier, for actual 

assessments, the b values that are applied are 

averages of each of the individual parameters 

over three separate regressions. Pricing 

multipliers (discussed in the next section) are 

based on ZiT.4

4The ZiT values have the same rank 

ordering as the probability measures PiT. 

III. Derivation of Uniform Amount and 

Pricing Multipliers 

The uniform amount and pricing 

multipliers used to compute the annual 

initial base assessment rate in basis points, 

RiT, for any such institution i at a given time 

T will be determined from the Statistical 

Model as follows: 

Equation 3 

RiT = a0 + a1 * ZiT subject to Min ≤ RiT ≤ Max 5

where a0 and a1 are a constant term and a 

scale factor used to convert ZiT to an 

assessment rate, Max is the maximum initial 

base assessment rate in effect and Min is the 

minimum initial base assessment rate in 

effect. (RiT is expressed as an annual rate, but 

the actual rate applied in any quarter will be 

RiT/4.) 

5RiT is also subject to the minimum and 

maximum assessment rates applicable to 

established small institutions based upon 

their CAMELS composite ratings. 

Solving equation 3 for minimum and 

maximum initial base assessment rates 

simultaneously, 

Min = a0 + a1 * ZN and Max = a0 + a1 * ZX

where ZX is the value of ZiT above which the 

maximum initial assessment rate (Max) 

applies and ZN is the value of ZiT below 

which the minimum initial assessment rate 

(Min) applies, results in values for the 

constant amount, a0, and the scale factor, a1: 


khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 87, No. 126 / Friday, July 1, 2022 / Proposed Rules 39411 

The values for ZX and ZN will be selected 

to ensure that, for an assessment period 

shortly before adoption of a final rule, 

aggregate assessments for all established 

small institutions would have been 

approximately the same under the final rule 

as they would have been under the 

assessment rate schedule that—under rules 

in effect before adoption of the final rule— 

will automatically go into effect when the 

reserve ratio reaches 1.15 percent. As an 

example, using aggregate assessments for all 

established small institutions for the third 

quarter of 2013 to determine ZX and ZN, and 

assuming that Min had equaled 3 basis points 

and Max had equaled 30 basis points, the 

value of ZX would have been 0.87 and the 

value of ZN ¥6.36. Hence based on equations 

4 and 5, 

a0 = 26.751 and 

a1 = 3.734. 

Therefore from equation 3, it follows that 

Equation 6 

RiT = 26.751 + 3.734 * ZiT subject to 3 ≤ RiT

≤ 30 

Substituting equation 2 produces an 

annual initial base assessment rate for 

institution i at time T, RiT, in terms of the 

uniform amount, the pricing multipliers and 

model variables: 

Equation 7 

RiT = [26.751 + 3.734 * b0] + 3.734 * [b1

(Leverage ratioiT)] + 3.734 * b2

(Nonperforming loans and leases ratioiT) 

+ 3.734 * b3 (Other real estate owned 

ratioiT) + 3.734 * b4 (Net income before 

taxes ratioiT) + 3.734 * b5 (Brokered 

deposit ratioiT) + 3.734 * b6 (Weighted 

average CAMELS component ratingiT) + 

3.734 * b7 (Loan mix indexiT) + 3.734 * 

b8 (One-year asset growthiT) 

again subject to 3 ≤ RiT ≤ 30 6

where 26.751 + 3.734 * b0 equals the uniform 

amount, 3.734 * bj is a pricing multiplier for 

the associated risk measure j, and T is the 

date of the report of condition corresponding 

to the end of the quarter for which the 

assessment rate is computed. 

6As stated above, RiT is also subject to the 

minimum and maximum assessment rates 

applicable to established small institutions 

based upon their CAMELS composite ratings. 

* * * * * 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on June 21, 2022. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2022–13578 Filed 6–30–22; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF COMMERCE 

Bureau of Economic Analysis 

15 CFR Part 801 

[Docket No.: 220616–0136] 

RIN 0691–AA93 

Direct Investment Surveys: BE–12, 

Benchmark Survey of Foreign Direct 

Investment in the United States 

AGENCY: Bureau of Economic Analysis, 

Commerce. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This proposed rule would 

amend regulations of the Department of 

Commerce’s Bureau of Economic 

Analysis (BEA) to set forth the reporting 

requirements for the 2022 BE–12, 

Benchmark Survey of Foreign Direct 

Investment in the United States. The 

BE–12 survey is conducted every five 

years; the prior survey covered 2017. 

The benchmark survey covers the 

universe of foreign direct investment in 

the United States and is BEA’s most 

detailed survey of such investment. For 

the 2022 BE–12 survey, BEA proposes 

changes in data items collected, the 

design of the survey forms, and the 

reporting requirements for the survey to 

satisfy changing data needs and to 

improve data quality and the 

effectiveness and efficiency of data 

collection. 

DATES: Comments on this proposed rule 

will receive consideration if submitted 

in writing on or before August 30, 2022. 

ADDRESSES: You can submit comments, 

identified by RIN 0691–AA93, and 

referencing the agency name (Bureau of 

Economic Analysis), by any of the 

following methods: 

• Federal eRulemaking Portal: 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

For Keyword or ID, enter ‘‘EAB–2022– 

0003.’’ 

• Email: Kirsten.Brew@bea.gov. 

• Mail: Multinational Operations 

Branch, Direct Investment Division, U.S. 

Department of Commerce, Bureau of 

Economic Analysis, BE–49, Washington, 

DC 20233. 

• Hand Delivery/Courier: 

Multinational Operations Branch, Direct 

Investment Division, U.S. Department of 

Commerce, Bureau of Economic 

Analysis, BE–49, 4600 Silver Hill Road, 

Suitland, MD 20746. 

Written comments regarding the 

burden-hour estimates or other aspects 

of the collection-of-information 

requirements contained in the proposed 

rule should be sent both to BEA through 

any of the methods above and to the 

Office of Management and Budget 

(OMB) by submitting comments at 

www.reginfo.gov/public/do/PRAMain. 

Find this particular information 

collection by selecting ‘‘Currently under 

Review’’ or by using the search function 

and entering the title of the collection. 

Public Inspection: All comments 

received are a part of the public record 

and will generally be posted to https:// 

www.regulations.gov without change. 

All personal identifying information (for 

example, name, address, etc.) 

voluntarily submitted by the 

commentator may be publicly 

accessible. Do not submit confidential 

business information or otherwise 

sensitive or protected information. BEA 

will accept anonymous comments (enter 

N/A in required fields if you wish to 

remain anonymous). 

FOR FURTHER INFORMATION CONTACT: 

Kirsten Brew, Chief, Multinational 

Operations Branch (BE–49), Bureau of 

Economic Analysis, U.S. Department of 

Commerce, Washington, DC 20233; 

email Kirsten.Brew@bea.gov or phone 

(301) 278–9152. 

SUPPLEMENTARY INFORMATION: The BE– 

12, Benchmark Survey of Foreign Direct 


khammond on DSKJM1Z7X2PROD with PROPOSALSEP01JY22.009</GPH> EP01JY22.010</GPH>

Equation 4 

Gro =Min-~ • (Mal;-Min) 

Zx-·~ 

Equation 5 

~Vax-Min 

Zx -ZN